Surgery Center of Oklahoma Blog

This is what a Tampa hospital billed the estate of a deceased patient. Now, in defense of the hospital, the patient was there for 5 years.  For those of you that are following this blog you know that I’m wondering how the whole “uncompensated care” thing factors into this.  Well, it turns out that the hospital expects to collect no more than 1 million of this incredible charge…ok…maybe 2 million.  But that means…cough…they lost 7.2 million! Right?  And guess who pays this? You do!  See my previous blog (uncompensated care) on how they will pull this off.  This 7.2 million dollar “write off” will also help them maintain the fiction that they are a not-for-profit facility, as well.

Think they will use this to justify cost-shifting?  Think they will use this to bolster their argument for a provider tax?

G. Keith Smith, M.D.

What in the world is this?  This is fraud, that’s what it is.  This is a number that hospitals come up with at the end of the year.  It’s a number that supposedly represents the amount of charitable care delivered for which they were not paid.  The hospitals report this number to the feds.  Then….ready?….they get car dealer like rebates from….ready?….YOU!  Yes, that’s right.

“But wait,” you say!  “Hospitals are all losing money because they have to see everyone that comes to their emergency room!  The uninsured are breaking the backs of our health care system!  The hospitals have to charge more for you and me to cover these losses sustained by caring for the uninsured!”

Ahhh.  If only that were true.  I suppose that’s why there’s a crane in front of every emergency room to build on and expand!  The hospitals are actually incentivized to overcharge the uninsured and poor to maximize their take at the end of the year!  What?!  That’s right.  The less you obviously have, the more you will likely be charged. Take a look at the state of Arkansas questionnaire on how to calculate eligibility for the “disproportionate share” program (what I’m calling rebates). To confuse matters further, the “rebates” don’t arrive until the subsequent year (what is called “prospective payment”).

Now, in all fairness, there is some argument amongst the hospitals about all of this.  You see, some of the hospitals, although participating in this scam, are angry at some of the others that are taking advantage of the “program.”  Some of the hospitals calculate this number differently than the others.  While the number is supposed to be the amount of uncompensated charitable care, some are actually using the difference between what they billed and collected…..for everyone receiving care.  What?  If the hospital charges $100 for an aspirin and insurance only pays them $5 for the aspirin…well, you see, they lost $95.  This number then is added to the big tally and the feds (your money and mine) compensate them for this terrible loss.  This loss also helps the hospitals maintain the fiction of their not-for-profit status.

The discipline of the free market is absent in so much of medicine.  The free market is the medicine that so much of American medicine needs (sorry that came out kind of corny).  The idea that more government, not less, will make things better in any way in the delivery of health care is simply idiotic.  This example illustrates that, I think.

G. Keith Smith, M.D.

Sen. Coburn and Rep. Lankford have proposed that states be allowed to opt out of the federal highway programs/system and keep the huge tax levied at the gas pump to do with as they see fit, not fight to get it back from the feds.

The significance of this concept was probably lost on the journalist that included this blurb in our local paper or they would not have included it in our local paper.  What they are recommending is simple:  secession.  That’s right, I said it.  Let me state what they are proposing in different terms:  “..we folks down here in Oklahoma think that we can do a better job on our own without the help/influence/expertise/brilliance/infallability/bureaucracy/corruption/graft …ok…I could go on…of our federal government.”  Get that?  “We are better off without you, Uncle Sam.”  This proposal you say only pertains to roads and bridges, though.  Yes.  But how can you not think that maybe this concept is valid for other areas of government?  How about schools?  Are Oklahoma schools better for the influence/graft/corruption..ok I’ll stop there…of the feds?  The governors of Utah and Virginia have adopted a gold-backed currency, basically seceeding from the U.S. dollar!

Sen. Coburn and Rep. Lankford need to be careful with this idea.  This could solve the budget crisis!  How about no longer paying Medicare or Social Security Taxes to the feds and dismantling these Ponzi schemes over time at the state level (see my previous blog on this)?  After all, is Oklahoma a state or a colony?  If we keep the money here that we now send to Uncle Sam, the idea of federated states might flourish once again resulting in unprecedented growth and freedom. 

This idea could result in a firestorm of local activity to separate in ever- increasing ways from the menace  and liablity our federal government has become.  Let’s hope it catches on.  Great job guys!

G. Keith Smith, M.D.

In yesterday’s Sunday paper, a letter was printed by a local person advocating national health care.  She said, “…… a single-payer system is the only plan guaranteed to stop skyrocketing health care costs by taking the profit margin out of health care.  It would reduce costs, guarantee choice and ensure that all Americans have quality, affordable health care.  It would give Americans far more in savings than other options.”

I have two words.  ”Atlas Shrugged.”  Ok, I have a few more words…this is a blog, you know.  If you take “the profit margin out of health care,”  why would anyone deliver health care?  ”…mandating only a single automobile manufacturer is the only way to stop the price of cars from skyrocketing by taking the profit margin out of selling cars.  It would reduce costs, guarantee choice (?) and ensure that all Americans have quality, affordable personal transportation.”….sound crazy?  Substitute a single home builder.  Try a single telephone provider.  Try….well, you get the idea.  I would encourage this person to ask why no Oklahomans go to Canada for their health care.  After all, they have taken the profit margin out of health care there and don’t they have choice guarantees and quality affordable care?  Why are they coming to Oklahoma for their surgery?  Is that really what this individual wants?

Anyone advocating a single payor system should try getting their care at the VA hospital or the Indian Health Service to get a taste of what true government medicine is all about.

G. Keith Smith, M.D.

Turns out Representative Joe Wilson of South Carolina was right.  The man in the white house is a liar.  This, of course, should come as no surprise…what occupant of this expensive public housing has not been a liar?  Wilson is the one that called the man in the white house (I won’t foul this blog with his name) a liar during a state of the union address. 

Kathleen Parker of the Washington Post ventured into the same territory with her recent editorial about his fabrication of his mother’s cancer treatment.  Turns out she wasn’t denied any treatment at all due to a pre-existing condition and the insurance paid for the treatment contrary to his story.  Why is this important?  This was the fraudulant story used to buffalo that part of his health care plan that eliminates pre-existing conditions as a basis for denial of coverage.

So, if he would lie about this, would he lie about other stuff?  Could it be that other parts of the health care plan are based on lies?
Maybe he should apologize to Rep. Wilson. 

G. Keith Smith, M.D.

Economists from the “Austrian” school of thought (this includes brilliant men like Hayek, Mises, Rothbard, Hoppe, Salerno, Higgs, Herbener, and many, many others) reject the idea of economic modeling, as human actors have different ideas of value.  This is called, I think, the subjective theory of value….that a painting or a bottle of wine or a mansion might be worth different amounts to different people…more for a collector or tycoon than for a monk, for instance.  Economic modeling is used to predict what groups or populations of people will do in response to a change…like a tax increase.  Governments typically rely on economists who subscribe to the validity of modeling and issue statements such as, “…an increase in the income tax for the wealthiest Americans will raise X billion dollars.”  The Austrians reject this type of analysis and so do I.  It’s really common sense when you think about it.  What the government economists are really saying is..”..we are going to change this one variable (the tax rate) and no one else is going to make a change or adjustment on their end, therefore producing the result we are predicting.”  This is not just stupid.  This is dishonest. Stupid?  If taxes are increased, what will you do?  If the rate goes to 70% are you going to continue to work hard just so you can have it taken from you?  Dishonest?  Every time taxes have been lowered, federal revenues have increased.  Why?  Because people changed their behavior.  This is what I think is an example of what economists call “dynamic analysis.”

Dynamic analysis is the prediction method used by entrepreneurs.  If their predictions about the changes in human behavior are correct, they get rich.  If they are wrong, they lose their shirt.  This is why the free market works.  Static analysis is the prediction method used by governments and ultimately why they fail.  You see, if we raise taxes on corporate jet ownership, fewer corporate jets will be flown/used/sold.  What does that mean for the aluminum welder at the plant making the jet wings?  Could one more person be unemployed by this insanity and cease to be one of the tax slaves?

“If we institute price controls on physicians so that they are paid half of what they are now, think of the money that would save and all of the people that could get health care with the savings.”  That’s if the physicians come to work at all.

“I am going to wait to have my knee replaced until Obamacare kicks in so it will be free!”  There won’t be any knee replacements if it’s “free.”

This brings me to my point.  You don’t have a right to health care.  You can’t make me come to work.  You can’t prevent me from seeking some other line of work.  You can’t make me be a doctor.  Any “action” by our wonderful government will cause consequences and “reactions” by many people affected by the change.  And the folks that continue to be doctors when health care is “free,” you won’t want to see…just ask Hugo Chavez.

G. Keith Smith, M.D.

What does this mean?  This means that a company is willing to take the risk of the expense of providing health care to its employees.  Rather than pay gigantic amounts of health insurance premiums, the company actually pays the bills.

We are self insured here at the Surgery Center of Oklahoma.  Our employees have a health savings account.  That means that the company gives them a certain amount of money at the beginning of the year and what they don’t spend they keep.  The employees love this.  The owners of the Surgery Center of Oklahoma love this.  How does it work so well?  The employees are incentivized to spend very little of the money in their account, that’s how.  They are incentivized to stay as healthy as they can in order to protect the balance of their account.  When a doctor  says, “you need this procedure or this drug,” our employees say….ready?….”..how much does it cost?”  Why would they ask such a question?  Because it’s their money!  Not uncommonly they will say,” well, I’m going to shop around.  That sounds kind of high to me.”  Not uncommonly the doctor hearing this concern over costs drops their price right there and then on the spot.

Why don’t more companies self insure?  Because it’s not the usual way of doing things.  Because people working in human resources departments are caught between a rock and a hard place.  Anything they do that’s good for the employees makes the owners uncomfortable and mad.  Anything they do that’s good for the owners of the company typically makes the employees angry.  Best to do nothing or next to nothing.  Find a comfortable groove and keep your head down.  Fight change at every turn.

This may change.  Health insurance companies have played this game with big hospitals for far too long.  ”It is simply not sustainable,” as one health insurance company executive told me recently.  I think we will see more and more self insured companies.  They will be shopping for quality and transparent pricing.  They will be looking for ways to incentivize their employees to feel ownership in the health plan.  They will cease doing business with the insurance companies that have raked them over the coals for years.  Fewer and fewer of their employees will go to the big hospitals for their care.   The Surgery Center of Oklahoma will be in a hiring frenzy due to the demand for our affordable high quality of care.

The sooner the better.

G. Keith Smith, M.D.

We call the insurance company and do our part.  The company authorizes payment for the surgery in question.  We perform the surgery at a price less than half that of the hospital this insurance company tries to force patients to go to.  The insurance company doesn’t pay us.  Sounds like a great way to make money if you ask me.  Collect premiums and don’t pay claims.  This is an incredibly successful strategy for making money!

Now the patient is responsible for the bill.  The patient is furious as they should be.  And they are furious at the insurance company.  This hasn’t always been the case.  Patient’s used to take their anger out on us but the abuses of certain insurance companies have become so commonplace and people are much better informed so they direct their anger where it belongs.  Angry patients are much more effective than collection agencies.  We typically get paid soon after the patient throws a fit.

What will happen when the government is the  only insurance “company?”  There won’t be any concern on the government’s end that they had better handle some patient issue or there will be hell to pay.  There won’t be any concern that “we might lose business or a customer.”  There won’t be any concern at all.

Is there a place for health insurance?  Sure there is.  But they should be subject to the same market forces that discipline the rest of us.  They have lobbied hard and received many protections from the federal government to free them from that discipline and that is part of the problem with medicine in the US.  One way or another, when the government gets involved, they screw things up.

Our prices at the Surgery Center of Oklahoma are lower for patients who either don’t have insurance or save us the trouble of messing with their insurance company.  The lack of risk of not getting paid as described above is part of the reason we have such discounted pricing.  What business, other than health insurance companies, could conduct business this way and stay in business?

G. Keith Smith, M.D.

Until the mid-1990′s Medicaid was administered by the DHS here in Oklahoma.  Medicaid now is administered by the Oklahoma Health Care Authority.  How and why did this shift happen?  David Walters, the governor of Oklahoma, in an effort to ingratiate himself to the newly elected president (B. Clinton) and in anticipation of Clinton’s health care plan passing, brought a young socialist physician, Garth Splinter, to town to set up a “health exchange.”  Heard this phrase before?  The Canadian model was the “best health care model on earth” we were told by Dr. Splinter (that’s why so many Canadians travel to Surgery Center of Oklahoma for their surgery!)  Splinter set up the Oklahoma Health Care Authority, once again, in anticipation of Clinton’s health care plan becoming law.  Jumping on board early was supposed to boost the likelihood of Governor Walter’s securing one of those cushy Washington jobs…maybe even one in the White House.

Slowly but surely, this “Authority” began to assume more and more of the functions of the DHS and lo and behold, there were redundancies.  What?  In government agencies?

Recently the head of the “Authority” has been in the paper for his large compensation and  bonuses (due in large part to his having secured the provider tax deal….SWEET).  His compensation has been characterized as scandalous in the face of actual cuts in services to the poor.

Here’s a radical idea for you budget cutting types in the state legislature.  Why not abolish the “Authority?”  Give Medicaid back to the DHS.  This would not only save money but would eliminate an agency that could easily be confused for just the type of  ”exchange” that the current tyrant in charge of Washington is looking for.

I’m not holding my breath.  Maybe if the legislature abolishes the “Authority” they can then abolish the new and wonderful “Business Activity Tax.”

G. Keith Smith, M.D.