I blog about free markets in medical care and transparent pricing.

 

Oklahoma County Taxpayers Receive a $140,000 Gift from Surgery Center of Oklahoma

Jon Wilkerson, Director of Human Resources/Benefits of the largest county in Oklahoma (Oklahoma County) bravely proposed to the elected officials of Oklahoma County that they enter into a direct contract with Surgery Center of Oklahoma.  Aware of the experiences other self-funded companies have had with whom we have these arrangements, Jon hoped that the County’s self-funded health plan could be spared the outrageous charges for outpatient surgical procedures to which the health plan had been previously exposed.  

Three weeks following County’s decision to accept Jon’s recommendation he delivered the results of this decision:  a net savings of $140,000.  County had paid us about $58,000 for surgeries that would previously have cost County $200,000.  The significance of these results, beyond the actual amount saved, requires comment.  

As far as I know this arrangement is the first of its kind, where a public entity has abandoned the corporate healthcare syndicate to secure guaranteed and transparent pricing directly.  It was not The Unaffordable Care Act, it was not price control dictates, it was not central planning that brought these savings to Oklahoma County’s health plan.  The savings resulted from the application of the principles of the free market to our medical practice, with the pricing and quality that predictably result when market forces are trusted and allowed to work their magic.

On another level I feel personally vindicated because for many years I have told state legislators that unlike corporate healthcare, I wanted no part of their favors, asking only to be left alone.  I have for many years assured lawmakers (many of which were determined to legislate our surgery center out of business in favor of their hospital pals) that if they left us alone, allowed to bring market principles to healthcare delivery, everyone would realize an improvement in quality and a lowering of prices.  To their credit, over the years enough of the state lawmakers in Oklahoma have resisted pressure from corporate healthcare to hamstring our efforts, allowing us to deliver the results promised.  

To a legislator, it is one thing to hear the praise heaped on us by a large self-funded company spared corporate healthcare’s pricing.  It is another matter altogether for a public entity to realize the savings many private self-funded companies now enjoy due to our guaranteed pricing, as obviously this public savings interests the lawmaker much more than any private savings.  Indeed, any future legislative push to hamstring the operation of our facility (like we have seen in the past) would now be seen as an attack on the interests and finances of Oklahoma County.

The elected officials (and the taxpayers) of Oklahoma County aren’t the only ones toasting Jon Wilkerson.  The employees of Oklahoma County, joking about Jon wearing a cape and an “S” on his chest, are also celebrating, as they now have a direct line to the fine physicians and surgeons on our staff and have been relieved of the outrageous copays previously demanded from them when they required surgery. 

While we have been contracting with self-funded companies for years now, the arrangement with Oklahoma County has definitely “hit a nerve.”  I will relay the reactions in my next blogs.

G. Keith Smith, M.D.

For more information on free market healthcare visit:

www.surgerycenterok.com

Obamacare, ethanol gasoline and cock fights

It is getting more and more difficult to find gasoline without ethanol, even though the demand for the more efficiently burning pure gasoline remains strong.  Central planners have decided to remove to some degree this choice from individuals.  That’s what central planners do, always justifying their tyranny with our wellbeing.  Behind the curtain, money is changing hands faster than at a third world cock fight, between the planners and those cronies who benefit from interfering with the natural choices of individuals.

I think about Obamacare whenever I can’t find 100% pure gasoline. Obamacare prohibits the purchase of the health insurance policies people want forcing the purchase of the ones the government wants us to have, ostensibly because the ones we want  aren’t good for us.  All the while, money is changing hands faster than at a third world….ok…I already said that.

This is the nature of government, isn’t it?  If we let people exercise their own free will, buying what they want to buy without interference, then all the folks willing to bribe their legislator wouldn’t do so well, would they? Perhaps fewer folks would want to become legislators!  

Someone who has been supportive of our business model at the surgery center asked me on a social media site recently, “what’s wrong with making everyone have health insurance?”  I don’t think I ought to make anyone do anything.  If someone thinks it is a good thing for them, they will do it on their own without anyone making them.  What this person really unintentionally meant was, “I believe people should be forced to accept the decisions of those who claim to know best,” notwithstanding the massive evidence that the pockets of these “all-knowers” and do-gooders are being lined by those who lobby for this or that mandate. 

Obamacare represents an interference in individual choice, plain and simple. In addition to your inability to decline health insurance, you must also buy an “approved” plan, not one that fits your needs.  I prefer the free market, not so much because it results in the best allocation of resources, but simply because like the vast majority of people, I wish to be free.

G. Keith Smith, M.D.

Dan O’Connor Writes with a Sledgehammer

Dan O’Connor, editor in chief of “Outpatient Surgery” magazine has written yet another stinging article, one he has kindly allowed me to post on my blog…sorry about the disjointed format.  Important definitions:  ASC, ambulatory surgery center, typically physician-controlled.  HOPD, Hospital Outpatient Departments.

The industry suffers every time an ASC is converted to an HOPD.

Last month in Springfield, Ill., ophthalmologist Sandra Yeh, MD, did what a growing number of ASC physician-owners are doing these days:

She sold out to the local hospital. Boy, did she. Dr. Yeh sold Prairie Surgery Center to St. John’s

Hospital for a cool $8.5 million. Dr. Yeh paid $3 million to build and equip the center 3 years ago. Not only did she flip her ASC for nearly 3 times what she paid for it, but she’ll continue cashing the hospital’s checks.

St. John’s will lease from Dr. Yeh the building in which the surgery center operates. The hospital will hire 19 of Dr. Yeh’s employees who staff the surgery center and offer them signing bonuses of $500 to $2,500. Best of all, Dr. Yeh will continue doing sur- gery and running the facility under a management contract with St. John’s. She’s not boasting when she tells you that she can do 20 8-minute cataract cases by noon. “I do great surgery, have happy patients and make a profit,” she says. “There’s noth- ing wrong with that.”

St. John’s made Dr. Yeh, 51, an offer she couldn’t refuse. The burden of running an ASC was getting to

her: the growing disparity in Medicare’s payment rates, slow-paying payors, increasing reporting require- ments, EMRs, ICD-10. “ASCs are paid 47% less than the hospital,” she says. “You can’t throw a thousand- pound weight on a horse and expect it to jump a wall.”

Plus, she knows St. John’s. She worked for 20 happy years at the hospital. Three years ago, things changed. Cataract patients were forced to wait 11 weeks to get on the schedule. A disruptive renovation project. An interim CEO who wanted to phase out ophthalmology and all but showed Dr. Yeh the door.

“When I left there, I knew they were making a mis- take,” she says. “You can’t hide the exit of 1,200 cases.”

We can’t fault Dr. Yeh for selling out and seeking shelter. But let’s examine why the hospital is forking over a boatload of cash to a surgeon it let walk away 3 years ago. It’s not the naming rights. The hospital has renamed the ASC St. John’s Hospital Surgery Suites. Nor is it the cataract profits it was surely and sorely missing since Dr. Yeh hung her shingle across town. Pride of ownership and a booming book of business are nice, but the real prize is that the hospital now gets to bill cataract cases at much higher HOPD rates.

For 2014, the Medicare rate for cataract removal with IOL insertion (CPT 66984) is $959.97 in an ASC and $1,740.50 in an HOPD, a difference of $780.53. Good intentions and glad reunions aside, Medicare’s cockeyed payment rates are what’s driving today’s ASC-to-HOPD conversions.

Of the 285 ASCs that left the Medicare system from 2009 through 2013, at least 101 were converted to HOPDs, according to the Ambulatory Surgery Center Association. If Dr. Yeh and her colleagues perform the same number of cases this year that they did last year (3,498), St. John’s will bill insurers an additional $2.73 million. Whoever thought that the ASC model would be used as a pawn to need- lessly drive up healthcare costs?

8 | OUTPATIENT SURGERY MAGAZINE | MARCH 2014

Keep in mind that the source of the money the hospitals use to buy out practices like Dr. Yeh’s, is the gross overcharging for “care” rendered in their facilities, resulting ultimately in the bankruptcy of the sick.  I thought this was a timely editorial to share, as the media focuses on Medicare payments to physicians, shedding no light on the much more outrageous and abusive hospital billing practices.  While a few doctors game the system for millions, the hospitals make off with billions, using this taxpayer dough to buy out practices like Dr. Yeh’s by the hundreds (thousands, actually).  

One more thing.  Doctors accused of Medicare fraud go to jail, innocent or not, as the cost of defense would leave their families homeless.  Hospitals and their execs accused of Medicare fraud?  Like big bankers, paltry fines.  Since the government will never abolish Medicare, there is really only one solution and it is fast approaching, as physicians walk away from this program en masse.

N.B.  I am embarrassed to have accepted Medicare money in my past but happy to say that I kicked this habit in 1992, 2 years after I began my practice. 

G. Keith Smith, M.D.

For more information on free market healthcare, visit:

www.surgerycenterok.com

HIPPA Audits, F-16’s and Tanks

Here is just a glimpse of what the government’s presence in medicine looks like.  Read the entire thing if you can, although I admit I had trouble getting through it.  

Two of the things I remember about Dr. Ron Paul’s office were the picture of Murray Rothbard looking over his left shoulder and the sign on his desk:  ”Don’t steal.  The government hates competition.”  Perhaps that is why the state wants to fine or imprison individuals who violate others’ privacy.  Perhaps the state wants to keep privacy violations jealously and exclusively to itself.

I have stated many times that “Medicare is the only ‘insurance company’ that has its own F-16’s and tanks and that is no coincidence.”  After all, the state is that institution with ideas so great that they have to be mandatory. The link above demonstrates:

1) the unveiled desire of the state to destroy the little guy

and (simultaneously)

2) the intentional creation of a demand for the services of those “consultants” needed to stay within compliance parameters, “consultants” who many times lobby for laws and regulations like HIPPA.

Many physicians and facilities are doing the unthinkable though, opting out of government payments altogether, a path the health apparatchiks did not foresee and a path devoid the teeth of the state.  The Association of American Physicians and Surgeons has macheted this path, providing step by step instructions on how to escape the trap of government payment.

Reports from physicians I know indicate that almost without exception, the Medicare “beneficiaries” understand their physician’s decision to walk away, not from the patient, but rather from the state payment.  The link above would perhaps make a good brochure for those “beneficiaries” who are angered by or don’t understand their physician’s move to “opt out.”

G. Keith Smith, M.D.

For more information on free market health care visit:

www.surgerycenterok.com 

Free Market Medical Warriors, Part 1: Jay Kempton

I have decided to write a blog series on the people in the the medical free market trenches, some of the people I most admire.  The positions and stances taken by this group of principled individuals have simultaneously alienated them from certain industry circles while endearing them to their clients to an even greater extent.

It is fitting, I think, that the first person I recognize is my friend Jay Kempton, President and CEO of The Kempton Group.  Indeed, a tribute to Jay from me is long overdue, as almost any connection I have with the self-funded world can be traced back to Jay and his willingness to share and promote the story of the Surgery Center of Oklahoma, sharing our story even with his competitors.  Rather than seek exclusivity from me, he has instead worked tirelessly to widely promote the idea and achievability of free market health care to anyone who would listen.

A client of Jay’s who is a close friend of mine introduced us and we have worked together closely ever since.  The latest press release for Jay’s “Advantage Health Plans Trust” announced a 4 million dollar savings (over a three year period), a result of the launch of Jay’s medical price transparency initiative, and the manifestation of his client-focused, non-conflicted work ethic.  

Congratulations to Jay and his staff for their success in bringing health care price transparency to the self-funded world and for his tireless dedication to the principles of the free and competitive market.  Jay has an uncanny ability to present the business side of health care in the most understandable fashion and so rather than continue with my thoughts, here is a link to an article Jay wrote himself, his thoughts on the new price transparency in health care and what it means.  

G. Keith Smith, M.D.

For more information on free market health care visit:

www.surgerycenterok.com

Californians Receive a Gift, Courtesy of the Free Market

Ocean Surgery Center in Torrance, California has done what surrounding hospitals in their area have declared to be impossible:  they have launched a website with all-inclusive pricing.  Here is a link to their good-looking site.  

Take it from one who knows….this took some work and planning.  This also took some guts, as those in control of this facility and their decision to launch this site did so under threats from big hospitals and carriers (likely also well-paid state officials) and are now bracing for those threats to materialize.  Like any other entrepreneur, they have calculated that the benefit will outweigh the risk, the benefit partially composed of a clear conscience.  

How many families, run off by a corporate hospital’s monopolistic pricing, will now see their children live normal lives after an affordable, sleep apnea curing tonsillectomy at this facility?  How many families will be spared bankruptcy because those running this facility have bravely stepped up to the free market plate?  How many patients will use this pricing to leverage more affordable pricing at facilities near this surgery center?  How many physicians and facilities in the area will respond in a like manner, a move that like here in Oklahoma City, continues to drive down the cost of health care?

No one put a gun to the head of the owners of this surgery center to reveal their pricing.  I say this to point out that as devastating as this move is to the health care syndicate, it is even more devastating to the proponents of central planning.  All the bureaucrats, all the government programs in the world could not generate this move by Ocean Surgery Center.  Ocean Surgery Center did this in spite of (and undoubtedly opposed by) the California health bureaucrats, the same good-ol’-boys that have passed legislation mandating healthcare price transparency in that state, only (undoubtedly, as discreetly agreed) to look the other way as their hospital pals have refused to comply.

Congratulations to the men and women of Ocean Surgery Center.  While we will miss meeting so many sick and injured individuals from California at our facility here in Oklahoma, we celebrate the access to local and affordable surgical care many Californians now have.

G. Keith Smith, M.D.

For more information on free market health care visit:

www.surgerycenterok.com

ronpaulproblems:

Obamacare screws over our generation. But congrats on complying with that federal mandate to buy that expensive comprehensive coverage you didn’t need.

ronpaulproblems:

Obamacare screws over our generation. But congrats on complying with that federal mandate to buy that expensive comprehensive coverage you didn’t need.

The Truth Behind the ICD-10 Implementation Delay

I am writing this from Colorado Springs, about to speak to a large group of health benefit administrators.  These are individuals who by and large assist businesses who have chosen to self-insure for the health needs of their employees rather than participate in the corporate pocket-lining scam known as “health insurance.”  These are individuals who must keep abreast of all of the new federal health regulations that have oozed out of the swamp in D.C. and continue to bubble to the surface.  

I have addressed groups like this several times now and the agenda for these meetings invariably contains lecture after lecture about how to comply with various parts of the Unaffordable Care Act.  Keynote speakers, experts in their field, deliver hour-long talks on the “latest” rules and regulations to appear and with which compliance is mandatory.  People travel from all over the country and pay big money to attend these conferences, only to read in the paper the following day that the implementation of the new rules and regs they have worked so hard to understand and to comply with has been delayed or stricken from the original bill by executive order.

In addition, physicians have been struggling to implement and understand the new coding language inflicted on us by the American Medical Association, an organization that claims to represent the very physicians it has victimized.  Charging physicians for the ICD-10 code books (and also charging the doctors and their staffs to attend conferences to understand how to code for an injury caused by a turkey while water skiing….seriously), is like charging people for water boarding them.  After working so hard and spending so much to be ready for the implementation of ICD-10, we now receive the news that its implementation has been delayed at least a year!  Yes, doctors, those meetings you and your staff went to and for which you paid so much dough to the AMA cronies were indeed a waste of time and money.  

Accompanying the announcement of the delay of forcing physicians to use the ICD-10 codes was the announcement that the American Hospital Association was opposed to such a delay.  The big hospitals undoubtedly saw ICD-10 as one of several blows that delivered to private physician practices would render them more amenable to an “offer” to buy out their practice.  The D.C. detritus got the hospitals to go along with the delay though, buying them off with something else the hospitals wanted.

Money will pour in to D.C. when the next ICD-10 deadline looms, hospitals paying for its implementation to beat down the private practice physician holdouts, and physicians, in retreat mode, will pay to buy more time.  The AMA, whose financial health almost completely rests on the printing of these code books (a contract they were given by Uncle Sam) will fight for the implementation of this new coding maze, while representing themselves the champions of the physicians in this country.  They will sell even more compliance seminars, as during the implementation interlude, even more changes to ICD-10 will appear, the essence of which can only be revealed to those who pay to receive the latest.

I am thinking that if all of the money that is spent on this foolishness were counted accurately, the health needs for those this vicious law was supposedly intended to help would be satisfied.  Remember Albert Camus:  ”The welfare of the masses is always the alibi of tyrants.”

G. Keith Smith, M.D.

For more information on free market healthcare visit:

www.surgerycenterok.com

Breaking Ranks

(Background info:  Insurance carriers either:

1)Collect premiums in order to pay claims

                               or

2)They pay claims with money a “self-funded” client has saved.  These companies have elected to not line the pockets of the insurance carriers, but rather pay “premiums” to themselves, this account then accessed by the carriers to pay the claims.  These are the self-insured companies I mention from time to time.  Self funded companies that have recognized that the large carriers often administer health benefits in their own interest (and their crony hospital pals) rather than that of their client, hire “third party administrators (TPA’s), a move that is much more likely to be mutually beneficial.)

A large national insurance company called this past week to negotiate a rate for a single case.  This would not be remarkable were it not for the fact that this company has refused to enter into any sort of contractual agreement with us since we opened in 1997.  It was only after the conversation ended that I realized the significance of what had just happened, the import of which I will relay after revealing the conversation, itself.

INS. CO.

      “We have a beneficiary needing a tympanoplasty and wondered if you would be able to provide us with a price, you know, a single case rate quote?  What you would charge to do the case?  We are convinced that if this patient has their procedure at XXXX (very large, local) hospital, it will cost much more than if the procedure is performed at your facility.”

ME

      “Do you want the all-inclusive price?”

INS. CO.

      “No.  Just the facility fee.”

ME

     ”I think I will give you the facility fee plus the anesthesiology charges since our anesthesiologists are not contracted with you.”  $4800.

INS. CO.

     ”How long is that price good for?  The rest of the day?  Can I send you a contract and you get it back to me today holding you to that price?”

ME

    “Sure.”

After the call ended, I wondered what the CEO of the hospital they named would have thought about this “breaking ranks” conversation.  More importantly is the question, why?  Why did this insurance company make this call?  If you are up to speed on how the repricing scam works, you now know that it is actually in the best interest of the insurance company to seek out the most gigantic bills they can find to maximize their repricing opportunities.  This call to our facility makes no sense.  Unless the insurance carrier is administering the benefit plan for a self-funded company and that company is on to the scam.

What if someone at this self-insured company had heard about our facility and our pricing and had demanded that their benefit administrator (in this case, the giant insurance company) seek a better price than what they had historically seen from the “not for profit” hospital?  What if the employer demanded that their benefit administrator (insurance company) go “out of network” to secure a better price?!!

This is exactly the case and the answer to the “why” question.  Can you see that the self-funded client was basically pressuring his vendor (giant insurance company) to act in the self-funded company’s interest (for a change), rather than in the insurance company’s interest?  Can you now imagine that the CEO of the self-funded company is wondering why the insurance company has not been working in his interest for all of these years, acting instead in a way that benefits the insurance company and their hospital pals?

I had mixed feelings about making this deal.  On the one hand, I can see some long term benefit to having told the insurance company to take a hike, placing them in a position to explain to their client that…well….”Dr. Smith told us to take a hike.”  This would have served to demonstrate the lack of value that this particular insurance carrier brings to their client and would have further weakened their relationship with their client.  On the other hand, agreeing to a price (probably 1/6th or 1/10th) far less than the client had historically been charged for this procedure probably solidified the impression the client had about our facility and vindicated the decision to pressure the insurance carrier to make this deal.  

I decided the latter course damaged the carrier’s credibility more while simultaneously allowing the patient to have their surgery at our facility, more than likely sparing the patient any out of pocket expense.  As I have written previously, more and more self-funded clients are paying the entire bill for their employees who chose to have their procedure at our facility, as this decision many times spares their health plan bankruptcy at the hands of those hospitals so aggressively trying to not make a profit.  The vast majority of the time this “go out of network”decision is made in spite of the insurance carrier and over their objections.  This scam has worked well for the carriers and the hospitals but the phone call relayed above shows cracks in the cabal, cracks which show that the carriers will toss their hospital co-conspirators aside rather than lose their client.  Then there is this irony:  employers, sold a bill of goods from the big carriers about how necessary their “network” is to keep their costs down, are now demanding that this same “network” be shoved aside in order to keep their costs down!

I predict that as this syndicate comes apart, the members, once pals, will begin to devour each other not unlike what happens in most gangster movies.  If the market discipline that rules most other industries is allowed even a window of opportunity in the arena of healthcare, I predict that the resulting competition will bring prices down drastically and quality will soar.  As more and more of these cronies break ranks, high quality and affordable health care will soon become a reality, a manifestation of the power of the market not the product of central planners and their failed legislation.

G. Keith Smith, M.D.

For more information about free market health care visit:

www.surgerycenterok.com