Surgery Center of Oklahoma Blog

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.

Are there shortages of physicians in rural parts of Oklahoma?  Of course there are.  A recent article from the Tulsa World, reprinted in the Daily Oklahoman tells the story about a typical, overworked physician, Dr. Michael Woods.  The writer misses the point entirely, as is typical for this topic and in articles like this.  This one is easy.  Ready?  Whenever a shortage of anything exists, it is due to price controls. 

Where did the price controls come from and in what form?  The federal government.  Medicare and Medicaid payments.  The elderly that were perfectly willing to pay for their medical care for decades, have been placed in a program we all know as “Medicare” that underpays physicians and punishes them severely for any mistakes or mis-steps in the billing process.  The paperwork and hassles associated with this program are not even remotely describable.  This is not rocket science.  If  you pay poorly and create alot of problems you are not going to be the client restaurants want in their establishment.  If the majority of clients in a town are covered by an incredibly bureaucratic restaurant food stamp program that doesn’t pay their bills, the restaurant will relocate.  Why would anyone think that medicine is different?  As the demographics of rural America have definitely aged, the likelihood of a high cost, high hassle, low pay job for physicians can’t possibly compete with one that is otherwise. 

So, should Medicare pay physicians more money?  Certainly not.  Medicare should be abolished, albeit gradually, as most seniors have not prepared for their medical expenses and no market alternative to this horrible Ponzi scheme exists yet. 

Hassles gone.  Pay goes up.  Doctors establish practices in rural America.  Seems obvious to me.

G. Keith Smith, M.D.

I was in downtown Oklahoma City the day of the Murrah Bombing, anesthesitizing a patient for a knee arthroscopy.  I was working at a local hospital and treated/anesthetized several of the injured.  This event revealed some of the best in people I have ever seen.  The spirit of volunteerism and the lack of looting distinguished the Oklahoma City disaster from violent events elsewhere in the country.   Medical personnel responded to this disaster just as you would have expected them to.  They did their job.  There was no heroism in it.  People did what they were trained to do.  Local, retired physicians without their medical licenses or insurance made themselves available to treat and many did treat the wounded. 

 Then there were those who sought notoriety due to their connection with this disaster.   This desire for fame in the midst of this carnage revealed to me perhaps the worst I have ever seen in people.  Press conferences by hospital administrators seeking their moment of “glory” actually physically impeded the movement of injured patients from the emergency rooms to the operating rooms.  This desire for national television exposure was quite a thing to behold.  Some physicians rather than actually help the injured sought to identify themselves as “the person in charge” to capture as much of the limelight as possible.  One hospital in town actually complained that they didn’t get their “fair share of vicitms.”  Local, state and federal politicians used this disaster to brazenly advance their own careers and agendas.  Some business owners far from the blast claimed total damage to their structures and made off with insurance checks that insurance carriers didn’t dare deny them.  Gordon Liddy’s show was taken off of the radio for accusing then president Bill Clinton of “dancing in the blood of the Murrah bombing victims,” as this crisis undoubtedly rescued him from impeachment for a time.   Liddy was probably right, in hindsight, having watched the political class feed on this as some sort of gift to them and their careers.

I am reminded of the Oklahoma City disaster when I look at photos of the tornado damage in Joplin, Mo.  I have recently seen articles about medical personnel that are self-aggrandizing attempts to cast themselves as heros and garner all of the press they possibly can.  This is a disgusting sight to me, having seen what I have seen as described above.  There is no heroism in doing your job.  In all fairness to those seeking fame, I think that our culture has a hard time finding true heros and tends nowadays to celebrate victims.  

My heart goes out to all of those affected in Joplin and also to those battling a new cynicism resulting from watching the limelight seekers and opportunists feed on the crisis.

G. Keith Smith, M.D.

An attempt was made to justify electronic medical records in our local paper today.  The writer said,”..some doctors are wary of electronic medical records at all, arguing that they take extra time and can actually decrease efficiency.”  This is true, but only partly true.  Physicians have multiple objections to electronic medical records, not the least of which is the breach of confidentiality these records, once digitized, represent.    Computerized medical records in the operating room arena are a disaster, distracting the operating room nurse from the surgery and the recovery room nurses from the patient.  Several surgeons have told me that the introduction of computerized medical records in the operating room has added one hour to time between cases.  Rooms and rooms of paper medical records can be stored now on a small disk.  Health records, like any others, once digitized are much easier for bureaucrats to grab.

Here is the creepy part, though.  The federal government is paying physicians and facilities to install these systems.  Have companies that peddle these systems contributed to certain political campaigns?  Why exactly do the folks in D.C. care whether our records are on paper or on a disk?  Is it because they care about you and me and want what is best for us?  Don’t make me laugh.  If electronic medical records made sense in the marketplace, physicians and facilities would have done this long ago on their own without the bribes and extortion of the feds.

Knowledge is power.  The health care zealots in D.C. want to know what is wrong with you.  Not because they want to feel your pain.  Remember that one man’s disease or illness or injury becomes every man’s problem once health care is socialized.  ”Those in charge” will eventually ration care and they know it.  This digitalization of medical records is a precursor to the national illness statistics, that once compiled will undoubtedly be reviewed so that “appropriate care” can be determined by some brilliant bureaucrat far from your reach.  More than likely, certain illnesses will fit into a bracket of “untreatable” due to the history of costs associated with this or that disease.

I believe that you are better off if no one, particularly government bureaucrats, knows what ails you.  If you have a chronic illness and are covered by national health insurance, the bureaucrats want you dead.  Your death will help their balance sheet when they show how efficiently health care dollars have been managed by them once in control.  Any excuse to make this health information available to the government will do:  helping rural doctors stay connected, everyone knowing your medications and allergies, emergency rooms made aware of your health history before you get there….I’m sure there are others.

Electronic medical record keeping in certain practice settings might make sense.  I know ophthalmologists who love them because they can take digital pictures and include them in the record.  I know orthopedists who love them because they have eliminated carrying x-rays around.  Making this information shareable online is a slippery slope, though.  That our government is paying physicians and facilities (and actually punishing them for not converting by promising lower Medicare payments) is reason enough to question if not resist this effort.  Our records are made of paper and we intend to keep it that way.

G. Keith Smith, M.D.

Let’s close the loop on this PPO repricing mess then leave this topic for awhile.  This is an important part of understanding why health care is so expensive and is therefore important to go over.  Up to this point the concept of why health insurance companies are motivated to seek out the highest priced care has been discussed.  If the insurance company’s agreement with the insured group or employer provides the insurance company a commission-like incentive to ratchet down the bill from the original billed amount (the commission paid as a percentage of the extent to which the bill is reduced), it is not hard to see how the insurance company benefits from an extremely large initial bill from the hospital.

Connect the dots now.  Why would the big hospitals play this game?  Two reasons.  First, in return for this “gift” to the insurance companies, many insurance companies will shut out competitors to these big hospitals, in effect, protecting them from lower priced, higher quality competitors (..if you are thinking Surgery Center of Oklahoma go to the head of the class!).  Second, the hospitals actually make money to the extent that the insurance company underpays them.  WHAT?!  Remember that if a hospital is paid $5 for an aspirin for which they charged $100, they claim to have lost $95.  It doesn’t matter that they paid 1 cent for the aspirin.  This $95 loss is necessary for the hospitals to maintain the fiction of their not-for-profit status.  But there’s more.  This $95 is uncompensated care.  This number is plugged into a complicated formula and the next year’s Medicare/Medicaid payments (your money) are bumped up through a program called “disproportionate share.”  Get it?  YOU pay them part of the $95 which they claim to have lost, which, of course, they didn’t lose at all.

None of this is possible without incredibly effective and well-funded lobbyists in D.C., one of which is our own former Senator, Don Nickels.  Wait until some brave legislator proposes a bill that requires posting of prices by hospitals and medical facilities.  Money will flow into D.C. to crush this like no one has maybe ever seen before.

G. Keith Smith, M.D.