I blog about free markets in medical care and transparent pricing.
Several people sent me the same two articles this week to read and blog about. You can read them here and here. Both articles have one thing in common. Pricing in health care makes no sense. The first article from Consumer Reports was written by someone who doesn’t understand the genesis of the health cartel and how the schizophrenic pricing has evolved to benefit those who set it up. There is money to be made with all of this uncertainty. After all, once folks know that they can get a CT scan for under $500 and virtually every surgery we do at our facility for under $10,000 (see our pricing page at www.surgerycenterok.com) they might be less susceptible to the fear necessary to purchase these silly insurance products. Actually, these products, like HMO’s, are so ridiculous that no one would buy these on their own. Employers buy these products because they are cheap (cheap because they won’t get you much) and so they can say they are providing a health benefit. I also fault the Consumer Reports article as granting an undeserved legitimacy to Medicare pricing. Medicare pricing is arbitrary and meaningless, just what you would expect from a power-drunk D.C. bureaucrat.
Why don’t the prices make sense in health care? Because the market has been thwarted at every turn by our friends in D.C. and their pals in the insurance and big hospital industry. Remember the concept of PPO repricing, where insurance companies receive a fee for the extent to which they “reduce” a large health bill, an arrangement that perversely inclines the insurers to seek out the most expensive hospitals?! Remember the uncompensated care scam where hospitals actually maximize their profits to the extent that they report losses?! Of course the pricing doesn’t make sense because it is not rational and transparent. Once markets are allowed to work (which means less government involvement, not more) prices will begin to make sense, conveying the important buy/sell signals like they do in other areas of the economy.
In mid-March I wrote a blog about a $4400 CT scan here in Oklahoma City, the same scan done by a physician-owned facility for $800. You can read it here. This same “not for profit” hospital jacked up the price of the contrast dye from $19 to $643, about a 3300% markup! The physician-owned facility isn’t in any insurance networks. They aren’t more expensive, they are less expensive. Insurance companies won’t contract with them in spite of this. What gives? This is no accident.
Price transparency like that exhibited by our facility will break the back of the health cartel, a racket that has used this price uncertainty for wild profiteering, all at the expense of the sick. Maybe these two articles will help more people ask questions about pricing. Displaying our prices has brought us countless uninsured patients, patients with high deductibles, Canadians and increasingly, patients covered by self-funded employer plans. We welcome others who would join us in this effort.
G. Keith Smith, M.D.