Surgery Center of Oklahoma Blog

Check out this blog. Pretty wordy, so I wouldn’t recommend reading the whole thing.  Skip to the last paragraph and check out his question.  ..”..Is there any example or evidence, within the U.S. or abroad, that shows that free market health care can work in driving down expenses and ensuring access without government regulation and subsidies?”

The essence of his blog is that there must be a middle ground:  a compromise.  Free markets by themselves are inadequate, he would say.  But communism doesn’t work either.  Can’t there be a third way, a third path?  Isn’t Obamacare a third path we should support?  And besides, there aren’t any examples of free market medicine driving down prices.

OK.  Looks like fresh meat to me all of this talk.  First, the author isn’t reading this blog.  Duh! Second, he has reminded me of a famous story about Ludwig von Mises.  When Mises was asked a similar question about a third path of regulated free markets he said there was indeed a third path “…and it leads directly to the third world.”  Honest economists call regulated markets “economic fascism” where property is owned privately but heavily regulated by the state.  This is very similar to what was called “mercantilism” centuries ago.

That this author is not able to imagine a free market in health care doesn’t mean that it is not possible.  This is more an indictment of his imagination than a free market health care system.  But then, I am being too kind.  What does this guy think our system of health care was like prior to the Ponzi scheme Medicare was enacted?  Medicare was what drove prices so high that private health insurance became necessary in the first place.  The bill my mother has shown me for my birth in 1961 was about $50.  An elderly, retired orthopedist here in Oklahoma City has told me that a hospitalization for a hip fracture with its repair was under $300 in the 1950′s (even adjusted for inflation this is significantly cheaper than today’s cost).  No one had insurance.  People and/or their families paid these bills and physicians and hospitals couldn’t bill exorbitant amounts because people and their families paid these bills….not insurance companies, certainly not the government.

The author should visit our website.  He should perhaps watch this video of my recent visit to D.C.  The author’s socialist leanings are unfortunately what the policy makers in D.C. have been exposed to for many years.  His blog sounds as if it could have come from the hopelessly compromised AMA, having been purchased by Uncle Sam with the contract for printing code books.  Maybe the free market message will get a fair hearing and more will come to know the real life example of how the free market in medicine is currently working at our facility. I anxiously await his challenge to our model:  ”…yeah, yeah…but what about the poor?”  OK.  I promise to write about that even if he doesn’t prod me.

G. Keith Smith, M.D.

Here’s a good one for you.  A physician I know who continues to deal with Medicare discovered that he had been accidentally overpaid by them for a particular patient.  He notified the Medicare carrier of their mistake and informed them that he would refund the overpayment promptly.  He got a letter.  The first paragraph acknowledged the mistake and recognized his refund as the solution.

Second paragraph. Ready?  ”….this refund of the overpayment made to you does and will not protect you from future prosecution.”

This should help you understand why fewer and fewer physicians are willing to see Medicare patients.  I’ve said before that it is no coincidence that Medicare is the only insurance company that has its own F16′s and tanks.  The good news for the elderly is that as fewer and fewer physicians deal with Medicare, paradoxically more and more of them will be available to see the elderly.  As Medicare unwinds due to its inevitable bankruptcy, the market will perhaps be allowed a chance once again in the delivery of health care to the current elderly.  Don’t forget that Medicare and the concept of health insurance is a fairly new thing.  In the 1950′s surgery for hip fractures and C-sections for child birth were very affordable events, the payment for which came directly from the patients or their families and without the involvement of insurance at all.

The return to rational pricing in health care is a real possibility, I believe.  The market must be given a chance, though.  The introduction of market discipline into this economic health care mess begins with transparent pricing.  If you are following this blog, you know that is exactly what we are trying to do here at our facility.  As we attract more business, our competitors will be forced to offer price transparency, not because of some government mandate, but because the harshest disciplinarian of them all, the free market, will force them to post prices or lose all of their business to those who do.  As prices fall and the quality of care improves (both natural consequences of competition) the fear of bankrupting medical bills will begin to subside and the importance of insurance for health care will begin to fade.

This is all good news.  It is particularly good news for the elderly and the poor, as without events unfolding as I have outlined above, the already scarce resources will be rationed out to fewer and fewer of the sick and more and more patients will go without care.  This “good news” message was the one I recently delivered in Washington D.C. and was well received.  This message is not good news for everyone, however.  Those who profit from the current unsustainable scams and those bureaucrats who would need  to find a new line of work are not pleased with what I had to say.  The scams and shell games are finding fewer places to hide, though, and like it or not the market will deliver in spite of all the attempts to stop it.

G. Keith Smith, M.D.

HMO’s are trying to make a comeback.  I guess those marketing these schemes to get rich denying care think that people’s memories are short.  They may be right.  Another nightmare making a comeback is the Physician Hospital Organization (PHO).  These little gems are sometimes called something else, but essentially, hospitals lure physicians into thinking that if the two (doctors and hospitals) act together in contracting with the government or insurance companies, they will both be better off for having not acted alone.  Several hospitals tried this in Oklahoma City back in the early 90′s, trying to capitalize on the physician’s fears of the Clinton Health Care Plan.  When the dust settled these attempts to make the physicians SUCKERS! failed.  In spite of the attempts by the AMA to make it a reality, the Clinton plan failed before any of these unholy alliances were finalized.  It was clear afterwards that the physicians were seen as chumps by the hospitals and had these efforts been successful, the doctors would have found themselves trapped by a contractual arrangement that would have destroyed their independence and made the hospitals loads more cash.  The doctors that nearly fell for this were angry.  The brownshirt physician collaborators were vilified.  And now….they are back.  This collaboration between the hospitals and the physicians has taken two forms.

One hospital (let’s call them hospital #1) in Oklahoma City is aggressively hiring doctors.  This will not end well for this hospital, as human nature being what it is, the hired doctors will not work as hard with a salary guarantee and relieved of much of their overhead.  This will not end well for the doctors, as upon contract renewal, they will be offered half of their previous salary and find themselves saddled with a malpractice policy “tail” that is so expensive they can not realistically separate from the hospital.  In addition, that part of their practice that was independent of the hospital will be gone, their entire patient volume originating from the “hospital network” referral doctors.  They would also labor under non-compete clauses that would prevent them from practicing within a certain mile radius of the hospital and would probably be precluded from seeing any of the patients currently in their practice.  Ok…I could go on but this is exhausting and I’m pretty  sure you’ve got it by now.

Another hospital (how about hospital #2) in Oklahoma City is enjoying the influx of physicians that hospital #1 has run off.  Some physicians, fed up with the aggressive physician practice takeovers by hospital #1 have simply left.  Hospital #2, another large hospital, has taken a different approach.  This, too, will not end well.  This hospital has a few physician employees but has decided to revive the old PHO concept.  Physicians are told that the hospital doesn’t want to hire them.  They just want to work with them.  You know…work together.  ”Just agree to a few provisions in this contract and together we will all prosper like never before.”  My advice to you if you are a physician and have been approached with a PHO offer is thus:   look for your exit strategy…what my favorite lawyer calls your “punch out clause.”  Start the conversation with the hospital administrator with a discussion of “…what if this doesn’t work out between us.”  They won’t like that.  You aren’t supposed to ask that.  ”But it will work out,” they will say.  Or ask,”..I think I hear what you are offering me but what is in this for you?”  These are the types of questions that any businessman would ask but that physicians tend not to ask.  You will be tethered and bound in some way.  Your independence will be diminished.  They will own some part of you, not unlike if you had succumbed to the offer of employment.

Hospitals #1 and #2 are both in the business of controlling physicians and their practices, they have just gone about it differently.  The only ones who suffer more from these arrangements than the physicians are the patients with whom they formerly had an uncontaminated relationship.

G. Keith Smith, M.D.

We have had another first at our facility.  A patient that found us through our website and had shoulder surgery about a year ago  returned to have his other shoulder operated on.  He was one of the most appreciative patients I have ever met.  The closest bid he could find to our price….well, let’s just say it wasn’t even close.  An internet patient return customer.  Maybe I shouldn’t get so excited about each of the breakthroughs like this but I just can’t help myself.

Patients paying for their surgery directly and finding our facility through our website has picked up significantly in the last month.  Someone told me in D.C. today that our prices were so low that people would be inclined to drop their health insurance altogether, a month or two of premiums being all it would take to pay for many of the procedures on our list!

Hat’s off to the surgeons and staff at The Surgery Center of Oklahoma.  Together we may have ushered in a whole new level of competition in the medical marketplace with implications at the local and national level.

G. Keith Smith, M.D.

Greetings from Washington, D.C.  What a strange place.  Like anywhere else there are folks here that are trying to do the right thing.  Then there’s almost everyone else.  I am here to discuss the connection between free market principles and health care, specifically, price transparency.  Having posted our surgical prices online makes our facility truly unique and has generated some interest at the national level.

I can’t help but think of the meaning of prices and how I owe my limited understanding of prices to the economists of what is referred to as the “Austrian School.”  The Godfather of this group was Ludwig von Mises, an intellectual giant, whose name few recognize.  My apologies for what follows if I butcher the material.  In a free market, prices indicate scarcity.  High prices generally mean that there’s not much of whatever commands the high price.  Low prices are an indication of an abundance of whatever is being sold.  The “right” price is referred to as the “market clearing price,” that price where the buyer and the seller both end up happy and still willing to make the voluntary exchange.

If I lowered my prices at the surgery center to “zero,” we would have more patients than we knew what to do with and would quickly run out of supplies and shortly thereafter, go out of business.  If I raised my prices to ten times what they are now, we would likely never see a patient.  We would have an abundance of supply and go broke.  In the former example, our artificially low prices would result in a shortage of the supply of care (we would be out of business!).  This intricate dance of the market is truly awesome, as both parties in any mutually beneficial exchange are actually better off (in terms of value) than they were prior to the transaction, otherwise, neither party would engage in the transaction (man acts in order to improve his current state or condition).

What’s the point?  The point is that Mises wrote a book called “Socialism.”  In it he makes the irrefutable case that without rational pricing, economic systems collapse.  If you don’t know what something costs, you don’t know whether to buy it or not.  You also lose the power of comparison, if no one tells you what stuff costs.  This is the case with health care.  Other than our facility, no one will tell you how much your hernia surgery will cost you.  How then, can you decide whether to do it?  Or how do you decide to have your surgery at one place or another?  The collapse of this “costless” health care system, is, I would argue, largely due to the lack of transparent pricing.  This is, in turn, due to market pricing distortions introduced by none other than our wonderful government bureaucrats who seem to think they know what stuff should cost.  When the bureaucrats get it wrong, and place artificially low prices on medical services, the demand outstrips supply and shortages result.  This pricing can be actual prices or price distortions caused by regulations.

What should be done?  Let the market set the prices.  Allow the price dance between the purchaser of health care and  those rendering the care to occur in an unfettered way.  Price wars between medical facilities would cause prices to crash and for the quality of the delivered product to soar.  Competition between businesses always benefits the consumer in this way.  I know of no businesses that avoid obeying this concept…health care is no different.

This is the message that I am delivering in Washington with Dr. Jane Orient, the backbone of AAPS (Association of American Physicians and Surgeons).  Cross your fingers with me that someone will hear us.

G. Keith Smith, M.D.

This past Thursday we set a record for ourselves.  Five patients in one day scheduled their surgery through our internet “hotline.”  We have had lots of days when one or two patients requested surgery, but never five in one day.  This is remarkable in that we have done no marketing of any kind other than the usual internet Google stuff.  The only other marketing we have undertaken is indirect, that exposure resulting from press the facility has received from various interviews or articles I have been involved with.

I suspect that more and more people will drop their insurance as it becomes prohibitively expensive and pay the penalty to Uncle Sambama.  The increasingly large number of uninsured people would do well to familiarize themselves with our website so that they will know what to expect in terms of the costs of various surgical treatments, if for no other reason than to know what it should cost them wherever they live.

Once again, we proudly post our all-inclusive prices and encourage others to join us in this effort, as price transparency will do much to bring market discipline to the practice of medicine and also serve to end much of the cartel-like business practices that have driven the price of care through the stratosphere.

G. Keith Smith, M.D.

That’s the headline on the Friday business page  of the Daily Oklahoman.  An AP story by Ricardo Alonso-Zaldivar entitled, “Feds design health insurance,” is more honestly labeled, “Fox Designs the Hen House.”  What arrogance.  Here’s a radical idea.  Let’s have the free market provide insurance products tailored to individuals’ needs without federal mandates.  How about this one:  health insurance policies with no coverage for child birth or mental health.  Let’s say you and your wife are 50 years old, finished having children and have no history of mental illness in your family.  Cutting out those coverages saves you money and lowers your premium.  But NO!  The all-knowing bureaucrats living in the Distric of Criminals are going to mandate a “basic benfits package.”  This includes:  ..”outpatient, hospital, emergency, maternal, newborn and children’s care, prescription drugs, mental health and substance abuse treatment, rehabilitation, labs, prevention and wellness.”

What if this was more like car insurance.  You could decide if you wanted basic liability coverage or comprehensive coverage.  You could decide if you wanted uninsured motorist coverage.  You could take a lot of the risk yourself with a high deductible, lowering your premium.  But wait.  The feds are mandating that you buy insurance coverage you don’t want or need.  Don’t have children?  Too bad, you get to pay for that coverage.  Willing to take the risk that alchoholism or schizophrenia isn’t in your future?  Too bad, you get to pay.

And why were we told health insurance was so expensive?  The goons behind this scam are too numerous to list.  What sort of profit do you think an insurance company stands to make by selling coverage that no one will use?  Or even better…how about making you buy coverage for something to which you will have no access?  What sort of money has already changed hands to make sure that this or that medical service got on the “basic benefit package?”  Let me see…a large corporation that owns mental health centers says to their elected representative….”people won’t buy our services on their own.  Help me find a way to make them pay us whether they use us or not.”…or something like that.

The only answer is for government at all levels to get out of the health care business.  If the free market is not allowed to allocate resources, malinvestment will always be the result.  That some arrogant bureaucrats  think they can design a health insurance policy that remotely meets the needs of individuals and allows for the best allocation of resources is unfortunately typical.  And remember:  insurance companies can deny payment for services rendered.  Government can now deny treatment for illnesses.  Time to wake up.

G. Keith Smith, M.D.

Check out this article.  Basically, the writer says that unnecessary cancer screening tests are a serious problem and quotes two or three people that agree.   If all of this cancer screening for Medicare patients were cut out, think of all of the money we would save.  Something like that.  Oh.  And that’s just chump change, according to one of those quoted, Dr. Welch.  The serious expense comes after the screening with all of the unnecessary biopsies and surgeries.  Back to all of this shortly.

Check out this website.  This is the “independent” government group that determines whether medical care is necessary or appropriate for you.  Seriously?  If you think this is creepy stuff, you go to the head of the class.  Can you say “death panel?”  Can you say “it’s none of your #$%%^&& business what my doctor and I think is appropriate for my health?

But here’s the catch.  If your neighbor has to pay for your mammogram, or cervical cancer screening, it is his or her business.  Remember that once diseases are socialized, one man’s illness becomes everyone’s problem.

What’s the solution?  If you take the lead of those quoted in the article, or if you carefully read the “government guidelines” you’ll see that a simple stroke of the pen, declares this or that test, at this or that age, simply “unnecessary.”  There.  Fixed.  Budget closer to balanced!
“But wait,” you say!  ”I am seventy two years old but have taken great care of myself and still walk 4 miles a day and have never felt better and I have this history of colon cancer in my family and want the peace of mind  my regular screenings provide because that is not what I want as a cause of death!”   If the government and those in this article have their way….TOO BAD.  There is only one solution.  You pay for it yourself.  No one can better determine your individual needs than you and your trusted doctor.  What sort of arrogance produced the guidelines in the above link?  Academic arrogance.  And who knows if money changed hands to make sure that this or that disease made their “list.”  You need to wake up if you don’t think that this is how our government works.

Friedrich Hayek, author of “The Road to Serfdom,” also wrote, “The Fatal Conceit.”  This latter book is an examination of the idea that tyrants and socialists have that they know what is best for everyone.  Frederic Bastiat’s version of this was a little known article he wrote called “How is Paris Fed?”  The idea is that this top down management by even the most insightful and brilliant individuals cannot possibly compete with the decisions by individuals at the local level.  The result of individual market decisions at the most local level always results in the best utilization of resources and minimizes the opportunities for graft and fraud.

Bastiat’s definition of government is fitting:  ”Government is the great fiction, through which everybody endeavors to live at the expense of everybody else.”  This is the path we have taken.  This is the recipe for bankruptcy we have followed.

Simply “cutting the benefits” of the elderly and soon, everyone on this new health plan, is not the solution we want, I think, to the high cost of health care.  How about, “leave me alone and I’ll take care of my family myself!” Local communities and churches can pick up the slack for the poor and we can all celebrate these “experts” finding a new line of work.

G. Keith Smith, M.D.

Check out this article.  Just in case you think your medical records are safe and secure once digitized.  The number of patients whose information was leaked in this article is troubling.  Even more troubling, perhaps, is that no one discovered that the records were online and in public view for over one year.  One more example of how the electronic medical record makes patient confidentiality a thing of the past.

G. Keith Smith, M.D.

Check out this video.  The accompanying article mistakenly says that “market forces” are to blame for this fiasco.  At the end of the video the fool reporter quotes some government regulator that suggests that more regulation is needed to prevent this from happening in the future.  If you are a regular reader of this blog you will know exactly why this happened.  Different “not-for-profit” hospital groups fed on this man’s unfortunate condition like hyenas.  This has nothing to do with the free market.  These are mercenaries and shakedown artists continuing to get rich “not making a profit.” 

This is a great lesson for patients, too.  If you ever hear a surgeon or physician say that “..I am the only one in this part of the country that can manage your condition…” or something like that, RUN…the other way.  Narcissistic predators are in all professions, medicine being no exception.  Oh.  And this whole episode was kicked off due to the use of webcam medicine.  I guess there are several lessons here.  My apologies for the title…I couldn’t resist.

G. Keith Smith, M.D.