I blog about free markets in medical care and transparent pricing.
Someone asked me in disbelief earlier today how we could charge so little for surgical care at our facility. You can see our prices here. ”It’s one thing,” I said, “that our prices are so low. It is another thing, altogether, that you can view them online.”
Posting our prices is what my friend Jay Kempton of the Kempton Group calls, “doing the unthinkable.” Jay is the principle of The Kempton Group, a firm that provides benefit advice to and processes claims for companies that choose to self-fund, for purposes of health benefits for their employees. Imagine how his clients feel about paying a fraction of what they were paying for the same surgeries (and I would argue better quality) at “not for profit hospitals” and that they know in advance how much it is going to cost.
Continuing with questions from this morning: “How did you come up with these numbers,” I was also asked? ”What percentage of Medicare?” I explained that physicians basically bill for their time and that we know how long surgery will take most of the time and that as the managing partner, I know what the supply costs are and basically how much it costs to run an operating room for an hour. I also explained that “Medicare reimbursement” doesn’t really mean anything to me. Anyone setting fees will be wrong, one way or the other, as the market clearing price will vary from place to place, day to day and vary according to the facility or surgeon. A very busy, high quality surgeon will be unlikely to make himself available for Medicare rates, for instance.
I informed this individual that I stopped accepting Medicare and Medicaid funds in 1994. “This doesn’t make sense.” ”Since you are running a physician-owned facility and are self-referring, your prices must be higher than the ‘not for profit’ hospitals, since they are not as greedy for profits.”
I explained that it is precisely because we are a physician-owned facility that our prices can be reasonable, as, unlike our mis-named “not for profit” hospital competitors, we don’t care if the facility makes a bundle, we just don’t want the facility to lose money. As long as our professional, physician fees are reasonable, we don’t need for the facility to charge much above what it actually costs, to be content. Physicians’ (taking in less than 10% of the health care dollars) fees are cheap compared to the typical institutional fees.
“So you’re telling me that I am more likely to find a reasonable price at a physician-owned facility that at a “not for profit hospital?” Followers of this blog know by now that this person had never seen my blog.
In a completely different tone now: ”Is it fair to say then that physician-owned facilities will lead the way in price transparency and reasonably priced delivery of health care?”
“Yes,” I said. I restrained myself from telling them to go to the head of the class with this remark.
Continuing, I said, “that is why the Unaffordable Care Act specifically stopped the development of any new physician-owned hospitals, some even already under construction, like the Texas Spine and Joint Hospital. This proscription gave the cartel cover, protecting them from high quality and affordable competitors, consistent with the intentions of the bill’s authors, increasing the cost of care dramatically.”
I have come to believe that the reasonable amounts we charge at our facility are not the most radical departure from the rest of the medical industry, but rather our display of those charges. That our display of prices is seen as so radical is, however, an indication of how sick the medical economic system is in this country, as every other industry must contend with price calculation challenges.
The answer to our problems from Washington? More government, price controls, less competition for the big hospitals, more regulation, insurance industry consolidation bordering on monopoly, budget caps, tax code tweeks, mandated computerized medical records and mandated first dollar insurance purchases. And it’s called the Affordable Care Act?
G. Keith Smith, M.D.