Surgery Center of Oklahoma Blog

What do we mean when we say our price for a rotator cuff repair is $6160?  Or the price for an inguinal hernia repair is $2860?  That price includes the surgeon’s fee, the anesthesia fee and the fee for the facility.  But you say,”what if you get inside of my shoulder and find a whole bunch of other stuff that needs to be fixed?”  If we quote a fee and then find that there are other things wrong that require repair we stand by our original quote.  Yes, that’s right.  Not even an automobile service department will do that.  I figure that if we find lots going on that we didn’t anticipate that’s no fault of the patient’s…it’s ours for not picking up on it in the first place.  Occasionally a surgeon will call and say, “in order to fix this rotator cuff tear I am going to need special sutures or anchors and I think I’m going to need 3 of them.”  These can be expensive…$200-300/each.  When this happens I add this anticipated expense to the web price up front.  If we don’t use the sutures or anchors then we refund that money.  We also provide copies of invoices for the hardware or special implants that are used so that the patient can see that there is no markup whatsoever for these supplies.

What is the average markup for supplies/implants at the big hospitals?  I’ll get into that in a future post.

G. Keith Smith, M.D.

A recent editorial in our local paper made the case that one answer to alleviate big hospital cost-shifting was to pass the pending provider tax…ostensibly that more money coming in from Washington (taxpayers) for Medicaid meant that costs would fall for those who actually pay for their care.  But it apparently did not occur to the author that the costs are still shifted…just to another ledger…whatever savings might appear to be realized (and really…what are the chances that the big hospitals will lower their prices just because they step up to the trough and gorge on federal matching funds) will be more than offset by the increase in federal taxes that everyone will pay!  I guess he meant that cost shifting wouldn’t be eliminated…just ….well…cough..shifted.

An exciting update of our website is coming soon.  Many of the procedures that we offer are not on the web site due to space considerations.  We also have not published prices for urological procedures or gynecological procedures.  That’s about to change, however.  I also hope within the next few months to have a file with all of our procedure prices that is accessible from the website.  This is an exciting time.  Our having published prices has caused more of a stir here in Oklahoma City than I had any idea.  Many of the people and institutions that have benefitted from price ignorance can no longer claim that they did not know that prices like ours were available.  We are very excited to be part of a market solution to one of the most expensive aspects of health care:  surgical pricing.  I invite everyone involved in the delivery of all types of health care to give serious consideration to the concept of price transparency.  Every other business does this.  Experienced physicians and surgeons can reliably “bid” work rather than use the old “time and materials” approach.

Part of the basis for the prices that you see on our website are the prices that are charged overseas for similar procedures.  We thought that if you weren’t going to be out the cost of international travel that a similar or slightly higher price than the price in Thailand would result in an overall savings.  We thought that people from the U.S. that were uninsured and traveling to foreign countries would make up the bulk of our patients.  We were wrong.  Most of our patients have come from….Canada! Yes, this wonderful country to the north with the excellent health care system everyone is raving about is responsible for most of our tourism referrals.  You are asking yourself, “why would anyone in Canada with their “free” health care come to Oklahoma City for a surgical procedure and pay out of their pocket?”  As P.J. O’Rourke famously said, “..if you think health care is expensive now, wait until it’s free.”  Health care in Canada isn’t free, of course…nothing is.  But folks up there think it’s free because they don’t have “out-of-pocket” expense at the time of care (if and when that occurs…if ever).  And this causes the demand to outstrip any possibility of an adequate supply.  This demand (due to the perceived “freeness” of care) has bankrupted their government.  The government has responded with…you guessed it….Soviet-style prices controls (which have worsened the shortages) and rationing.  As one Canadian has said, “the Canadian health care system only guarantees you a place in line.”  Want to wait 3 years for a heart bypass procedure?  Want to wait 2 years to see a neurosurgeon for your brain tumor (which will probably kill you or become inoperable by the time you get to see the surgeon).  Want to wait 2 years to see an orthopedist after you have torn your knee ligaments skiing?  Want your sick child to wait 2 years (at age 2) before they can be seen by an ear, nose and throat surgeon to have their tonsils and/or adenoids removed?  I could go on and on  with examples we have seen and stories we have heard.  If we adopt a similar system here, we will be going to Thailand to have surgical procedures performed in a timely fashion if the Canadian model is a predictor.

What other evidence does anyone need that the Canadian single payor system has failed except that patients are coming to Oklahoma City and paying for their care out of their pockets?

G. Keith Smith, M.D.

Here is a unique concept:  state legislators vote to increase your federal taxes.  That’s right.  The “provider tax” is a tax that hospitals will pay to the state and that money will be used to “leverage” federal dollars…every dollar paid in tax brings two dollars from the feds…cough..taxpayers. This money then goes to…you guessed it….mostly the big hospitals!  You see, the government doesn’t have any money that it didn’t first take from taypayers….you and me.  So a vote to levy a tax on a hospital creates an increased tax burden for taxpayers from the feds!  And these big hospitals need this money….right?  Let me see…in Oklahoma City one hospital system bought the hospital in Edmond.  Another hospital is building a new hospital in Edmond (never mind that the Edmond hospital was incredibly underutilized).  Another hospital spent over 100 million (yes..that’s correct) on an electronic medical records system (one physician there told me it was 500 million).  That same hospital is building office/clinic space in Edmond (I think the price tag is 88 million).  All of the hospitals are buying smaller rural hospitals…of course if they don’t make a lot of  money for the hospital system they dump them later (Stroud).  And then, of course, the hostile purchase and takeover of private physician practices continues.  And they need more money?  This is corporate welfare at its finest.  Once again, we need healthy and successful hospitals, however,  this tax only serves to make the hospitals richer than they already are and at the expense of the already overburdened taxpayer.  Hopefully folks will wake up to the poor mouthing antics of those who are happy to fleece anyone that buys this foolishness.

What effect does the ownership of medical facilities by  physicians  have on the quality of health care and on prices?  My great uncle was the only physician in a small town in Oklahoma for many years and his home doubled as his living quarters(upstairs) and as the town hospital(downstairs).  Eventually he built a hospital away from his residence and I have subsequently learned that this was the situation in most of rural Oklahoma. Indeed, if it weren’t for the willingness of physicians to take this risk, there would have been no hospitals in these small communities.  My great uncle was never able to wash his hands of the care rendered to patients in his facility, saying, “well…I did my part, but the folks in the hospital messed up.”  He was accountable for not only the care he rendered but of that given his patients by everyone in his hospital.  He was also not able to say,”I can’t do anything about that bill…that’s the hospital…my fees are fair.”  The patients knew that it was his hospital and that he could charge whatever he wanted and that whatever they were charged it was his decision and certainly his responsibility.  He was also not able to say,”I don’t know why the credentials committee gave that incompetent butcher privileges.”  He was in control of who he worked with and who was allowed to work in his hospital.  Indeed, the poor practice of medicine by anyone in his facility was a reflection on him.

Little has changed.  Physician facility owners are accountable to their patients on more levels than physicians that are not facility owners.  Multiple levels of accountability to the patients we serve makes the likelihood of high quality care, fair pricing and regular policing of all those working at the facility a natural occurrence.

You say, “Yeah, but doctors who own their own facilities are going to churn and overutilize to pad their pockets!”  Physicians who act in this manner are everywhere, but are less likely to be found in a physician-owned facility because their reputations (and that of every physician working in the facility) are on the line.  If a surgeon is going to perform unnecessary surgery he is more likely to get away with that in a facility where he has no interest in the long term success of the facility and where his actions don’t affect the reputation of his colleagues.  And for those of you who object to physician ownership, how is it that no conflict of interest exists when hospitals own doctors but one supposedly does when doctors own hospitals?

There is lots of talk about cost-shifting these days.  We have been told that big hospitals, for instance, increase the cost to those who can pay to cover their losses for those who can’t pay.  This is , of course, a situation that the big hospitals regret,  and they only engage in this slight of hand to the extent absolutely necessary without overdoing it.  Right?  We’ve heard “we have to take all comers in our emergency rooms and we lose money there.”  Or, “our emergency rooms are the clinic of last resort for the uninsured and most of them don’t pay.”

Questions:

Why is there a crane in front of so many emergency rooms in the country, building on and remodeling?  If you ran a business and knew that some aspect of that business was losing money, would you expand it?

Why (with such shaky financial resources from having “lost” all of this money on the poor) are hospitals throwing serious cash around to buy competitors and build new hospitals and aggressively buying physician practices?  Could it be that “cost shifting” is a myth…a tool in the bag used to justify prices 6 to 10 times that of independent facilities like surgery centers?

G. Keith Smith, M.D.

Health care costs too much.  I think that everyone agrees that this is the case.  This is a fairly new situation, however.  Hardly anyone had health insurance 50 years ago and the prices of the delivery of a baby or the repair of a hip fracture were such that most people could pay for it without difficulty.  What happened?  Medicare happened.  No physician wanted to take part in this system because the money came from the government (cough…taxpayers).  Taking this money was seen as the first step to becoming an employee of the government.  Most physicians also knew that divorcing the patient from who was paying for the care was ultimately a bad idea, as the source of the money would finally determine what if any care was going to be available to the patient.  So the government told the physicians that if you will participate in this scheme we will pay you 100% of your charges…that’s right…the doctors were promised to be paid whatever they charged.  Guess what?  As Dr. Walter Williams would say, “if you guessed that the doctors dramatically increased their fees, go to the head of the class!”  The combination of the distortion of guaranteed payment along with the payment coming from a faceless third party shifted the price point and removed the normal market discipline imposed on those whose price is higher than what economists call the market clearing price.  More to follow.

G. Keith Smith, M.D.

Posting prices for surgical procedures is unique.  I am not aware of another facility that has done this…I would welcome any other facilities that have posted prices online to comment and welcome other facilities that haven’t posted their prices to do so and we’ll begin (to the benefit of the purchasing public) a friendly price war!  Confident that our prices were lower than most of our competitors and that our quality of care was unsurpassed, we decided to post our prices in hopes of gaining patients who were paying for their own care (uninsured, high deductible, Canadians).  Rather than have self-insured companies divulge what they were paying to large in-network hospitals for the same services we offered, we thought it made sense to post what we would provide the service for…for all to see.  This approach has brought us very appreciative patients but has also raised some interesting and very important questions. Why is the same procedure at a not-for-profit hospital 4 to 6 times the cost?  Why would insurers design their policies with separate out of network deductibles and penalties to increase the likelihood that the very expensive big hospitals are more likely to “capture” the patient?

G. Keith Smith, M.D.

Ever wonder why your physician recommends you to an out of network facility or refers you to a physician that is not in your insurance network?  Aggravated by this?  I challenge you to think of this situation another way.  The easy path for your physician is to refer you within the network.  He or she are likely operating under threats from the insurer or their network (usually controlled by a big hospital that may or may not employee them) but choose at some peril to their livelihood to refer you outside of the network.  Could it be that they believe that the right (best) place for you is out of the network and they are just wanting the best for you…that the best at a given specialty or field do not reside in the network in which they work?  Isn’t that what you want your physician to do?  Get you to the right people or to the right (best) facility?  Many physicians are risking their position in a network trying to do the best thing for their patients.  Hooray for these heros for doing the right thing…not the easy thing….a future post on the hostile takeovers of many physician practices by big hospitals coming soon.

G. Keith Smith, M.D.