An Oklahoma City surgeon has found a unique way to explain to patients the true costs of their health care: He tells them.
Dr. Keith Smith posts prices for surgical procedures performed at his practice, the Surgery Center of Oklahoma. He adopted transparent pricing five years ago, soon after President Barack Obama signed the Affordable Care Act, in response to Smith’s slackening number of patients.
The clinic’s website allows patients to select a desired surgical procedure from a dropdown menu. Prospective patients, with or without insurance, can research prices in advance and choose between the Surgery Center and other providers, most of which do not post prices.
‘A Free-Market Guy’
“It was an act of self-defense,” Smith said of his strategy. “We had established a reputation in the community as a high-quality, reasonably priced facility, but we were seeing our case numbers dwindle.
“I’m a free-market guy, and I thought, ‘This is not right. We should have a line out the door.’ So we decided to put our money where our mouth was and post the prices online for everyone to see,” Smith said. “We have made ourselves more known to people who have health care sticker shock. We’ve been very busy.”
One of Smith’s goals was to help start a free-market movement in health care, so he and other like-minded people created the Free Market Medical Association.
“Its purpose is to put the buyers and the sellers together,” said Smith. “There are people out there complaining how expensive health care is. They are looking for people like me who are attaching an honest value price to an extremely high quality service. So the buyers and sellers are actually finding each other through this association.”
Smith described the initial industry reaction to his strategy as “shock and denial.” Then, copycats emerged.
“The big hospital systems initially shrugged us off, saying transparent pricing is not possible in the real world,” Smith said. “Now we see outfits copying my website exactly, putting prices online.
“The surgeons who work in my facility love it,” Smith said. “There are fewer and fewer physicians that are threatened by this. Most physicians I talk to now are very intrigued by it. I guess they realize it’s really nothing new; it’s just a throwback to the way things used to be done, where physicians dealt with patients directly without an interfering third-party intermediary.”
Encouraging Competition, Low Prices
Bypassing third-party intermediaries, such as insurance companies and governments, creates a payment system known as direct primary care. Proponents say patients paying doctors directly encourages competition and drives down prices.
“I would like to see a real health care marketplace, where patients and doctors and employers and employees see real prices that reflect real opportunity costs,” said Dr. John Goodman, a senior fellow at the Independent Institute. “Right now we don’t have that. We so suppressed the market that for the most part none of us ever see the real price for anything.”
Goodman points to India’s health care system as an example of the power of the free market.
“In India, it’s not just a few hospitals; it’s really the whole hospital system,” Goodman said. “There is very little insurance in India, and there is no private insurance to speak of. Government has a very minor role, and so most of the time when Indians go to hospitals they’re paying out of pocket. And so the hospitals have to compete on price, and they have to compete on quality. And [because] they do that, they have package prices, they have price competition, and they have quality competition. We don’t have that in America.”
Concerns Over Federal Intrusion
Goodman and Smith view the federal government’s actions toward the health care industry as harmful.
“Most members of Congress have no understanding whatsoever of health economics, and very few of them have an incentive to find out how it would work, and that’s too bad,” Goodman said. “That’s one of the reasons why we don’t have a Republican alternative to Obamacare right now.”
Goodman says the Affordable Care Act itself is in “real trouble.”
“I think the exchanges are in danger of spiraling into a death spiral,” said Goodman. “And what I mean by ‘death spiral’ is the healthy people leave, and the people who are left are sick, and the premiums covering their costs keep rising so fast that no one can afford them. So it’s the insurance industry equivalent of bankruptcy.”
Smith calls the federal government “the real culprit” in health care.
“It’s important to always remember who the real bad guys are,” Smith said. “It’s the people who have auctioned off our health care freedom in Washington, DC, and I think that’s important because that makes the idea of turning the whole thing over to them all the more illogical.”
Tony Corvo ([email protected]) writes from Beavercreek, Ohio.
William F. Jasper, “Healthcare’s Free Market Alternative,” The New American, July 7, 2014: https://www.heartland.org/policy-documents/healthcares-free-market-alternative