Surgery Center of Oklahoma Blog

Times are hard.  Everyone is cutting back.  Well, not everyone.  I see government spending money like never before.  Police with fancy new race cars, surveillance cameras at every intersection, new or renovated offices for federal employees..you get the idea.  The other sector that appears to be thriving is the hospital sector.  New hospitals, new rehab units, new facilities and acquisitions show up every time I open the paper.  New chic outlying emergency rooms with attached physician offices, breast imaging and MRI units…wow..these guys sure act like they are making a profit!  Maybe they have to spend all of this money to make it look like they are not making a profit.  Maybe the big hospitals have overdone the cost shifting thing a bit.  Maybe.

Our prices for the identical surgical procedure at a big not for profit facility are often times 20% of their charge.  Not 20% less….20% of their charge.  And our charges include the facility/surgeon/anesthesia charges.  Incredible, no?  And we are making money!  Your insurance company in all likelihood wants you to go to these more expensive facilities and punishes you with out of network penalties if you don’t.

There are many things about health care financing that don’t make sense.  We decided to put our prices online in an effort to expose this insanity.  Cartels have prevented the market from working.  I think the cartels are at the end of their game, though.  Self-insured companies are tired of propping up the massive profits of the big hospitals and the insurance companies are having an increasingly difficult time giving this scam the cover it needs.  Transparent pricing is an indispensable component of the free market.  The days of the old bait and switch of “well..we’ll need to wait until your operation is over to tell you what you owe us” are about at their end.  The big hospitals and their cartel buddies have extracted untold wealth from this country and although will probably never be held accountable might very well go the way of the dodo if the market is allowed to work.

G. Keith Smith, M.D.

Not the Arby’s dessert, silly!  Turnovers in the operating room.  This is the time it takes a surgeon to get back into the same operating room for his subsequent surgery.  My partner, Dr. Steve Lantier, came up with a great idea years ago:  ”let’s not have any turnovers.”  What?  This was one of the critical decisions made early on at our surgery center that has set us apart.  This decision/goal has changed the way that operating rooms in Oklahoma City work.  The pressure to emulate our model has been simply too much to bear for our competitors and hence their feeble attempts to match us come as no surprise, really.

Normally a surgeon finishes a surgery case then waits for the anesthesiologist to wake their patient up, the operating room to be cleaned, the instruments to be washed, the staff to take a break and for the anesthesiologist to anesthetize his next patient….and then for that patient to be “prepped,” or prepared for their procedure.  Dr. Lantier said, “wait!” “Why not give the surgeon two operating rooms, two surgical crews and two anesthesiologists?  Then the surgeon can go from room to room without waiting.”  Keep in mind that the typical “turnover time” in a big hospital is about an hour.  If a surgeon does five surgeries, there are four hours of turnover involved.  When the surgeon does that same five cases at our facility, they just saved four hours.  It is not uncommon for a surgeon to complete in 2 hours at our facility the same surgical caseload that would take 6-7 hours to complete at one of the big facilities.

“But wait a minute!”  ”Didn’t you have to hire more people than you would have needed and don’t you have more expensive anesthesia staff on board to make this happen?”  Yes and yes.  We have committed to provide the best and most efficient service to the patients and surgeons even though it probably costs us money.  Although, completing 7 hours of surgery in 2 hours frees the schedule up for more cases to be done, so maybe we are guilty of having spent capital to increase volume/profits.  Probably.  This “flipping” of the surgeons from room to room is, however, one of the early decisions that has made us the favorite of both patients (not having to wait until late in the day to have their procedure) and surgeons (who can go about their business without having their time wasted….surgeons value their time).

Hats off to a great idea that has resulted in efficiency improvements even in our competitors facilities in an attempt to try to keep up.

G. Keith Smith, M.D.

Why am I such a fan of free markets?  Why are most people in the health care business not big fans?  Why are most people in any business not free marketeers?  I think the answer is complicated and simple all at the same time.  I mean by this that there are many reasons, each of which is fairly easy to explain.  Many businessmen start off as free marketeers only to succumb to the help that the “government” can provide.  Why is this?

Fear

Any organization or institution or business has one goal after it comes into being:  staying in business….survival.  When competition rears its unforgiving head, two paths present themselves:  the desire to improve and compete or alternatively the fearful path, one where  the business’s shortcomings will be found irremediable leading to the pursuit of “protection” from this competition.  Enter the politician/legislator.  He/she is all too willing to “sell” protection to this business by bestowing some advantage on the already established yet threatened business, or by hamstringing the upstart such that the threat if not completely eliminated is rendered a manageable threat at best.  I choose to reject fear of competition.  I choose to reject offers of protection from competitors, a devil’s bargain.  Competition makes us better than we would be on our own and forces us to examine how we value our services in terms of time and price.  If as physicians we take our oaths seriously and consider our patients’ welfare and wellbeing to be  paramount, there is no better check on our hubris and no better quality taskmaster than the free  market and we should welcome the  oversight the market mechanism provides.

Principle

Every man’s concept of justice is different.  In some men’s minds the economic mindset of conquest seems just.  In this view, taking property/goods/services by force with no compensation to the victim is justified by the notion that in the hands of the ordained/brilliant/enlightened this property or these goods/services are better distributed.  For those who value property rights and peace, the philosophy of non-aggression and mutually beneficial exchange dictates our actions.  This transition from a civilization of conquest to one of mutually beneficial exchange is equivalent to the transition from barbarism to modernity.  Fans of free markets embrace this notion of non-aggression and leaving other folks alone and to their own devices, and make their living by providing goods and services which people value enough to engage in voluntary exchange:  their goods/services/wealth/money for another’s…a fair trade, the determination of which is made between the parties involved.  If this seems like common sense, I apologize, for the very notion of non-aggression and mutually beneficial exchange and the subjective determination of value remains an elusive group of economic ideas for many, particularly those with lots of formal education.

Time Preference

Short sighted actors (those with a high time preference) are wanting to “cash in now!”  ”Get it while the getting is good.”  ”Damn the future…take what you can however you can get it.”  Those who accept government money, those who depend on this funding, those who lobby for even more….they have a high time preference.  People who start businesses, the revenue for which comes from a robbed taxpayer, have every reason to lobby for the continual robbery of taxpayers and embrace a very unstable business model, for once the taxpayer resists this robbery either by refusing to pay or refusing to work, the revenue stream is cut off for the beneficiary of this theft.  Those with a low time preference have a more stable business as the budget fights in D.C. and the impending bankruptcy of government at all levels does not represent the threat that it does for the businessman depending on this loot.  I maintain that a low time preference is a pragmatic and stable business philosophy, not unlike the tortoise and the hare.

Envy

“I want what you have” is jealousy.  ”I want what you have but know that I can never have it so I want to destroy it so you can’t have it either” is envy.  Ludwig von Mises wrote a little book entitled “The Anti-Capitalist Mentality.”  I highly recommend it.  He describes how academicians, for instance, become envious of the “haves.”  They figure that they are smarter and have more education than that “stupid car salesman” therefore should make more money.  The concert pianist cannot abide by the riches sent the rock star’s way.  People vote with their dollars.  Rock stars get more “votes” than concert bassoonists, even though the skill, practice and talent necessary to play a bassoon well dwarfs that necessary to perform even the most demanding guitar lick.  Mises says basically, “if you want to make a lot of money, don’t be a bassoonist or harpsochordist.”  The envy that results from this situation leads many to reject rather than embrace the free market.  This is a common thought process amongst those in academia and in the arts, in particular.

If I choose to embrace the free market and the discipline it provides, does that make me better (ethically or morally)  than the guy who is lobbying for more and more theft of your wages?  Yes, I think so.  The thief wants your wages without having earned it.  I want to earn your wages and want you to part with your hard-earned money at my surgery center voluntarily.  I also embrace the market out of self interest as I believe it to be more stable long term.  Health related businesses that rely for instance on Medicare funds are inherently unstable as this source of funding is constantly under threat of cuts/bankruptcy.

Let me know what you think about these thoughts.

G. Keith Smith, M.D.

I remember in a presidential debate one time when Robert Dole was asked if there was an issue over which he was willing to lose.  Dole could not answer the question, obviously because there was no issue he felt strongly enough about to lose.  Like the vast majority of legislators he had no principles.   Last week I met two state legislators that are principled.  The are not registered libertarians but they might as well be.  I hope that the foul political process doesn’t change their thinking.   I hope that when and if they see this blog they will know how much that principled leadership is appreciated and needed.  They are under constant pressure to bend and compromise but do not appear to be swayed.  I am not sure if I should feel hopefulness that individuals like this are involved in politics or to despise them for giving me that hope and optimism, as I have been let down many times before by the political trimmers.  Has the time come for people to follow principled leadership or are the vast majority of voters still willing to sell their vote for promises of government handouts? Time will tell.

G. Keith Smith, M.D

Check out this highlight video from the recent republican presidential debate in Iowa. At about 4:19 into the video, Dr. Paul talks like no other, mentioning the government and corporate influence on medical practice and how it interferes with the doctor-patient relationship.  This is blockbuster stuff.  He is wielding a meat axe at those who would control our health care and making an extremely strong case for free markets in medicine.

G. Keith Smith, M.D.

In June of 1995 the journal of the American Society of Anesthesiologists published this letter of mine.  I was beginning to understand that the political process contaminates everything it touches, including medical research.  A shocking article on LewRockwell.com shows how the CDC collaborated with the World Health Organization to create the phony swine flu pandemic.  Incredibly, the article linked at the end of this article reveals that experts advising the World Health Organization had conflicts of interest with companies manufacturing the recommended vaccines.

Medical research is too important to involve the corrupt influence of politics D.C. style.  The decisions for what diseases and drugs are investigated and the conclusions themselves have to be suspect if government money is involved at any point in the process.  As I have said in previous blogs, what are the chances that a cure for AIDS, for instance, will ever be found if this discovery puts all of the labs looking for it out of business?  What is the likelihood that money changes hands at the FDA so that the bribing company’s drug is the one found to be effective for treatment  and the only one getting approval by the FDA?

Don’t think this can happen?  Don’t think this has happened?  Federal funds for medical research should be eliminated for lots of reasons, not the least of which is the looming bankruptcy of the government.

G. Keith Smith, M.D.

Do free markets in medicine exist?  Barely.  The Surgery Center of Oklahoma is an example.  There are others.  Many physicians in private practice do not accept government money.  There are more and more that don’t accept payment from third parties, at all.  Most of the medical care delivered in this country is not free market, though.  Most of it is paid for by third parties and by the government.  The extent to which the market is absent is the extent to which the price tends to rise and the quality tends to fall.  The extent to which the market is absent is the extent to which fraudulent billing practices rear their ugly head.  But make no mistake.  The market-based practice of medicine even though battered and bruised and under constant attack  wields a power that no government thug or agency can match.  In fact, I would maintain that it is the small but powerful force of free market, private practice medicine that holds the entire mess of health care in this country together (otherwise why would Canadian politicians come to the U.S. for their care?!).  If every hospital were like the government VA hospitals or the Indian Health Service, there would be riots by angry patients.  Where is the drive for excellence and price fairness most acute?  In the private market where competition is intense.  If a private practice doctor is no good and charges too much, he is out of business…unemployed.  If a government doctor is no good he probably gets transferred to torture patients somewhere else  that likewise can’t do anything about it and have no alternatives.

An article in our local newspaper today mentions the need for more money for Indian health facilities and Indian doctors.  Seriously?  Why not close these abysmal facilities and make great care available to these folks?  Why not close the VA hospitals altogether and use local hospitals for the military and veteran care?  Why shouldn’t the vets and Indians have access to great care, not the trashy government provided type they have put up with for years?  Wow!  Better care for less money with the savings of closing these  government facilities?  Makes too much sense, doesn’t it?

The Surgery Center of Oklahoma has had arrangements and contracts with Oklahoma tribes over the years.  This has worked beautifully for the tribes with regard to the quality of services provided and the price charged.  I have often wondered why the tribes didn’t outsource all of their medical care rather than maintain their own facilities that are high priced and extremely inefficient.  The money that we have saved the tribes over the years is a great example of Bastiat’s “what is not seen.”  The complications that have not occurred due to the high standards at physician offices and facilities exposed to the discipline of the free market is another example of Bastiat’s “what is not seen.”    Less government medicine and more free market alternatives are what the Indian tribes should be working for as this will provide the quality and price combination that is otherwise unattainable.

G. Keith Smith, M.D.

The man in the White House is an idiot.  He has issued new fuel standards that vehicles (even existing ones) must meet.  Changes to these vehicles necessary to comply with the new fuel regulations will cost hundreds of dollars for some vehicles and thousands of dollars for others.  The idiot said that over the life of the vehicle this money will be saved many times over due to lower fuel consumption.

This above is true and is how I would have written it 15 years ago when I thought people in D.C. were stupid.  The political class in D.C. should not be given the benefit of the accusation of stupidity.  The political class in D.C. is no more than a criminal gang.  While most of the folks in the grim shake-down business of government didn’t start off as coercive advocates of the criminal activity they are involved in now, the vast majority quickly succumb to the various temptations D.C. offers.  There are exceptions.  Not many.  Probably not 10 men in the house/senate/white house in the last 25 years.

Here is how I would write it now:

The man in the White House has shown once again that he is bought and paid for.  The new fuel standards issued for new and existing vehicles will serve to direct money to the unions of the major car companies and the “green” groups that have no doubt geared up their aftermarket modifications in anticipation of this political pay off.  If indeed a company would save in fuel costs many times over what these mandatory new government standards will supposedly save, wouldn’t the business owner do this on their own without the coercion of the state?  Why would the state need to force businesses to do for themselves what was good for the businesses?  Answer:  if you answered because this is all lies and will not be good for these businesses you go to the head of the class.

The same holds for health care.  Remember how the thugs in D.C. told us that the  health care plan would save businesses and the country money?  Remember how we were all promised that this bill would reign in the deficit?  Read this.  The political class knows what they are doing.  All of the time and energy spent trying to educate our representatives so they will make an informed decision is wasted.  The decision made will be the one that makes them the most money and/or increases their power/position the most.  The criminal class in D.C. knows that national health care will be a disaster.  They know that there will be rationing.  They know that people will die in line.  They know that the care will be awful.  They knew that this bill would significantly contribute to unemployment.  They knew that more unemployed folks meant more folks dependent on Uncle Sam.  A larger constituency.  More votes.  More, secure power.  And don’t forget the countless opportunities for bribes.  Think folks will try to bribe their way to the front of the line so their child can have their heart surgery before they die waiting?  Extortion and bribery will be the rule all along the rationing lines.  The most sought after jobs will be those government positions where access to various government goodies can be sold and bribery is commonplace.  Think Mexico/Latin America type corruption where the bribery is open and assumed.  I maintain that this is what the political class wants for the rest of us.  They do not get to play stupid.  Don’t give them that.