I blog about free markets in medical care and transparent pricing.
We used to do knee and hip replacements at our surgery center. Patients were kept overnight then transferred to a rehabilitation unit for the balance of their recovery. As an outpatient surgery center we are limited by our license to keeping patients for one night only. We were able to provide this operation for a tenth of the price charged at the “hide a profit” hospitals. If you are thinking that many people received this surgery that would otherwise have been unable to afford it, you get a gold star. If you are also thinking of “what is not seen,” the money that many of these people didn’t waste on their surgery at a big hospital, money they used for other things, you get Bastiat’s gold star.
A market was created for these rehabilitation hospitals, as these units provided exactly what post-operative patients needed: less intensive nursing care and more attention to regaining their strength and transitioning to independence. Physical therapists and their aids were seen in large numbers protecting patients from falls while they tested the limits of their recuperation, coaching and coaxing them all the way. The use of rehabilitation units helped to “decompress” the full service hospitals, making these beds available for other patients. Operating rooms were no longer under constraints to restrict surgeries based on the availability of rooms for the patients afterwards.
Specialty hospitals took note of this. Orthopedic and spine specialty hospitals, in particular, could operate even more efficiently as their rehab units could absorb these patients easier than their scarce hospital beds. Economies of scale had the effect you would expect: surgical prices in these facilities fell dramatically. The care patients received in these rehab units was also more suited to their needs and the incidence of falls and injuries plummeted. Facilities like mine could offer our affordable surgical care to vastly more patients, many of which, as I said above, would never have been able to afford these more intense operations.
If you’ve guessed already that the reaction of the federal government was to shut down these rehab units you go to the head of the class. At the height of their popularity, the rehab units were basically outlawed. These units had to comply with new “population ratios,” that, impossible to comply with, shut them down. Basically, none of these units could accept a patient for post-surgical care until they had accepted 9 others that had suffered strokes. Understand that these rehab units could be completely empty, and be proscribed from accepting patients needing their services! Political hacks masqueraded as protectors of access to care for stroke victims, all the while stuffing their pockets with cash from the true beneficiaries of these new regulations.
Cui bono? Certainly not the patients. This move was primarily directed at the specialty hospitals, physician-owned centers of excellence with which the “not for profits” couldn’t compete. Physician-owned specialty hospitals represented lower prices and extreme quality like none ever seen. What would you do if you were the CEO of a big hospital chain? Why, go to your legislator, of course! If you can’t beat ‘em, have ‘em outlawed. Future construction and even expansion of specialty hospitals was outlawed by the Unaffordable Care Act. Seeing a pattern here?
This move also made affordable joint replacement surgeries at our facility, more difficult if not impossible to do, although more and more outpatient facilities are doing these operations, sending patients home after an overnight stay and relying then on home-health agencies.
I am writing this blog so you will better understand the significance of the recent zoning approval in St. Louis (home of SSM health care and the Sisters of Mercy…both gigantic hospital systems) for Dr. George Paletta’s outpatient surgery center. He obtained permission to keep patients for 3 days after surgery, without having to swallow the “hospital license sword.” This is an incredible achievement and development. You can read about the reaction of the hospitals here. This will embolden others to try the same thing, allowing even more patients access to extremely high quality and low priced care previously unavailable to them due to the cartel’s lock on the gate.
Great progress often times starts with small steps. I’m not sure Dr. Paletta realizes what he has done, but countless future patients and their pocketbooks could be the beneficiaries of his work. Until Uncle Sam rides in to the rescue.
G. Keith Smith, M.D.