Surgery Center of Oklahoma Blog

June 9, 2011

Pricing Pressure

Filed under: Uncategorized — surgerycenterok @ 7:00 pm

Two days ago an amazing thing happened here in Oklahoma City which was not reported by any of the television stations or by any newspapers.  This event went completely unnoticed just as those involved hoped that it would.  I have predicted that this would happen but never thought in my wildest dreams that it would happen this quickly.  A local hospital quoted a surgical fee to an uninsured patient at…. the exact, same price as ours as listed on our website.  Why is this significant?  Ask someone without insurance who has ever had surgery and tried to get a fixed price from a hospital prior to their procedure and you will get the same answer every time:  ”they wouldn’t give me a price.”  That this particular uninsured patient was given a price guarantee up front by a local hospital in and of itself is incredible and earthshaking in the medical pricing world.  That’s just the beginning though.  Hospital pricing (when it is given which is rare) is typically 3-6 times our pricing depending on the procedure.  What does it mean that a local hospital quoted a more reasonable fee?   What does it mean that they quoted the exact same fee as listed on our site?  Could it be that the big hospitals are feeling some pricing pressure?  Is this a good thing for the community?  Have you ever been in a position where several salesmen were fighting for your business?  Isn’t it common sense that the more they compete the better off you are?  Margins are typically whittled down until one of the parties doesn’t care whether they lose the business.  It’s the same as when you are selling your home and two bidders are fighting over it…the more they squabble the better off you are.

In this particular case a $5000 price was quoted (it wasn’t exactly $5000 which is why the odd number quoted got my attention).  This particular hospital isn’t known for bargain pricing and would normally have charged about four times this amount (having been in this business since 1997 I have seen my share of hospital bills from disgruntled patients and have a pretty good idea about the price multiples at various facilities and big hospitals). That means that they have discounted their fee by ten to fifteen thousand dollars…..and still want the business! As usual, though, the hospital didn’t quite get it right and lost the case to our facility.  Why?  Because their quote was only for the facility.  Our price included the surgeon and anesthesia charges.  The patient got in to see the surgeon the day after he called our facility and will have surgery here early next week.

I am trying not to overstate things here but I hope readers understand the significance of this event.  Even if the patient had gone to this local hospital, they still would have saved at least $10000 because of  the competition generated by the price transparency at our facility. The benefit to the uninsured patient  paying their bill is obvious.  The value of the introduction of price competition in the medical marketplace is incalculable.  As F. Bastiat would remind us, what is not seen is the productive result of the use of  the $10000 saved.  We at the Surgery Center of Oklahoma welcome this development and hope more will join this local hospital in an effort to provide affordable health care and enter the arena of free market pricing.

G. Keith Smith, M.D.

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1 Comment »

  1. It is unfortunate that many medical needs are still controlled and only available, in some cases, in the big hospitals; disabling many patients from seizing the opportunity to let free market keep their health care, healthy.

    Comment by Kevin Hargrove — June 9, 2011 @ 10:55 pm

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