G. Keith Smith, M.D.

An Update on Our Facility

Sun, 19 May 2013 21:50:26 -0400

Here is an update on some of what’s happening at The Surgery Center of Oklahoma.

We have recently decided to accept credit cards for payment of services. The price online will be adjusted at the time of payment to reflect the percentage the respective card company charges us. We are very excited to see how this develops.

I am travelling and speaking all over the country about medical free markets and price transparency. The greatest demand for speaking opportunities seems to be from self-funded employers and their benefits administrators who are interested in sending us referrals from out of state.

Our new website and logo will be launched/unveiled in a few weeks now. This new website will allow me to nimbly change prices as new competitors in the marketplace appear, will allow me to add new procedures with pricing and will also allow for video display….even some video blogs. This has been a huge undertaking but will allow for us to showcase our facility and staff.

Many of you already know that I have been on the John Stossel Show and CNBC. There is much more national media exposure to come. As I wrote recently, this message has been received as “good news in a bad news industry.” It is hard to criticize cheaper and better, although the statists always seem to find a way. Our local media are beginning to get in on the act, interestingly risking alienating some of their largest media buyers in doing so.

Patrick McGuigan, modern-day Joseph Sobran, has asked me to contribute a biweekly column to his publications, Capitol Beat OK, The City Sentinel and OklahomaWatchdog.org. I look forward to contributing to his fine outlets. Many of the writings will be blogs, but will reach a large audience otherwise not exposed to our message.

We are in the process of organizing a national symposium on free markets in medicine and price transparency, involving everyone in the medical industry that is participating, businesses who are increasingly demanding this, benefit administrators who “get it,” and think tanks and even policy makers. I’ll keep you posted on this as it progresses.

G. Keith Smith, M.D.

TARP-like Bailout Comes to Oklahoma!

Fri, 17 May 2013 16:45:20 -0400

It looks as if the Oklahoma legislature has provided the dowry to the Oklahoma State University osteopathic hospital that Mercy Hospital Oklahoma City was looking for. The state budget provides for $18.5 million to bail out this hospital, interestingly, $250,000 more than they said they needed.

Mercy, Oklahoma City was looking at an arrangement to “partner” with the Tulsa osteopathic hospital (no giant Tulsa hospital wanted anything to do with them, even with a dowry/bailout), but was waiting to see if they received this taxpayer gift.

If anyone knows how to make money at a not for profit hospital, it is Mercy. Of all the hospitals in the country, TIME magazine singled them out as price abusers. I predict that the bills from the osteopathic hospital will soon reach the level of the bills at their mothership in Oklahoma City. I also predict that the other Tulsa hospitals will raise their prices, knowing that all they really need to do is stay just below the new bankrupting standard across town.

As the free market movement in health care gathers steam in Oklahoma, I also predict that these medical corporatists will find that they have miscalculated. If patients are willing to travel to Oklahoma City from Mendocino, California, Charleston, South Carolina and Montreal, to mention just a few of our sources of referrals, patients from Tulsa will certainly drive to Oklahoma City to avoid medical bankruptcy.

Mercy got their wish then. They married the Tulsa hospital bride with an extra $18.5 million in her purse. Maybe they will use the extra $250,000 they hadn’t counted on receiving for a party, and invite taxpayers from all over the state and from whom this loot was extracted.

G. Keith Smith, M.D.

Good News in a Bad News Industry

Wed, 15 May 2013 15:34:00 -0400

I have come to the conclusion that the main reason my medical free market and transparent pricing message has been so widely and warmly embraced is very simply that it is good news. I have been viewed as a good news guy in a bad news industry. That “here is what we do and here is how much it will cost,” has been received as such good news is an indication of how truly cartelized the medical industry has become.

To be fair, the bad news of Obamacare, has made our message even more appealing. Nothing about this Unaffordable Care Act is good news. Insurance premiums and the costs of healthcare are skyrocketting due to this legislation, access to care is problematic due to physician retirements and employers are laying people off or moving them to part time positions in order to keep their doors open. Recently, The Associated Press’s Ricardo Alonso-Zaldivar reports that some of the sickest and most vulnerable patients will be unable to afford the increasingly high out-of-pocket costs for the drugs they depend on for their very survival.

All of this is quite predicable, actually, as Obamacare was, I believe, meant to fail. The purpose of this legislation, seen in this rare slip by Rep. Barney Frank, was to introduce such price increases that the American people would beg the government for relief: single payer.

This failure currently and long term, however, is beneficial to this administration’s corporate healthcare buddies on Wall Street. Seriously, how would you like to provide a product or service(health insurance) the purchase of which the federal government made mandatory? How would you like to know that your business (giant hospital) will collect from the distant taxpayers, rather than the patients you are supposedly meant to serve? The giants of corporate healthcare are making record profits, profits that will pale when compared to their future ones as the great consolidation of this industry takes place.

But I said I was a good news guy. Here then is the reason for hope. As the costs of healthcare and insurance spiral out of control patients and businesses will increase their out of pocket deductible exposure and do something that has long been absent in the medical industry: shop. Patients will shop for price and quality just like they do for everything else. This, of course, is the unanticipated nightmare of the Obamacare bureaucrats, as real competition will appear (it already has, check out my pricing listed on our website) and actual price deflation will result. The crisis this adminstration has attempted to create will paradoxically create the cure to the mess that the government and their cronies have made of the medical industry.

Patients travel to our surgery center from all over the country to take advantage of our upfront and fair pricing. Indeed, the first patients to show up after we put our prices online were Canadians! In addition to the patients who travel to our center, many patients are using our pricing to leverage better pricing in their local medical markets. As I stated on the John Stossel Show last month, a Georgia hospital recently agreed to charge a patient $4000 for a prostate surgery (rather than the $40,000 initially quoted) after the patient showed them our online price of $3600 and a plane ticket.

There is more good news.

Medical facilities and physicians all over the country are jumping on this free market medicine model. The AMA continues, and deservedly so, to lose members, while membership in the free market Association of American Physicians and Surgeons (AAPS) soars. The AAPS growth is largely due to its advocacy of third-party-free physician practices, a model that removes the bureaucrat from the exam room. Big hospitals on physician hiring binges are finding that once they become employees, doctors go on vacation, working less and less, making this patient-disenfranchising model very unstable. More employers are punching out of traditional insurance and seceding from this cartelized system by self-funding, taking the control of their employee health plans away from those insurance carriers whose interests differ from their own.

I could go on. The good news in health care is not Obamacare, but rather is in spite of Obamacare. The free market competition that this legislation has unintentionally spawned will improve quality and lower prices just as competition has done (without exception) in every other industry.

G. Keith Smith, M.D.

A Swing and a Miss

Sat, 11 May 2013 21:42:58 -0400

If this is the best the statists can do we are in good shape. Dr. Peter Ubel, no Rothbardian, asserts that price transparency could actually increase the price of healthcare (Lasik?) and that while cardiologists and other super specialists make too much money, primary doctors don’t make enough.

Dr. Peter Ubel, like all central planners, suffers from the fatal conceit Hayek brilliantly described in “The Road to Serfdom.” Once again, prices emerge from a free market…they are not imposed. That Ubel thinks or feels some doctors make too much money is irrelevant and more than likely relates to an unresolved envy issue with which he is struggling, not unlike that Mises dissected in “The Anti-Capitalist Mentality.”

I wasn’t going to respond to this silly article but there is something to learn, after all. In response to a question about the free market and price transparency movement we are seeing in the U.S., Ubel says this:

The free market is a wonderful thing, when it enables consumers to make informed choices about which products to buy. But medical consumers, a.k.a. patients, often have a hard time making the kind of savvy choices that will bring discipline to the market. Moreover, they are often in positions of making high-stakes, emotional decisions, in short time spans, without fully understanding their choices. To make matters worse, many physicians I’ve spoken with say they feel it would be inappropriate to discuss the cost of care with patients, especially when they face life-or-death decisions. Hard to imagine how the market, on its own, will work effectively in such circumstances. We need to bring more market efficiency to healthcare, but it is unrealistic to think that a completely unregulated free-market is going to solve our problems.

Now the first thing to say, is that while he is pontificating and thinking deeply about things, we are doing everything he says can’t be done. Also, patients are well-informed in spite of his arrogant characterization of them.

Second, he has contaminated his view with a time twist. Here’s what I mean. He is judging the applicability of free market principles in the future, using a current time context. Here is why that is absurd.

In Oklahoma City, there are car dealerships that are interested in selling you not only your first car, but every car you ever buy. These businesses have built reputations over time, reputations of fair dealing and thinking long term, not the hit-and-run “gotcha” mentality at some car lots. Everyone knows who the reputable dealerships are. The same goes for roofers and plumbers and tire stores and banks and….and now healthcare. Everyone in Oklahoma City knows that if they need surgery, The Surgery Center of Oklahoma is the place they can go that will treat their pocketbook with respect while rendering the best care. The same goes for those needing a total joint replacement. They go to the McBride Clinic Orthopedic Hospital. The same goes for a colonoscopy. They go to Digestive Disease Specialists. The same goes for cancer chemotherapy. They go to my friend Dr. Aleda Toma and her partners at Cancer Specialists of Oklahoma. The same goes for mammography. They go to Breast Imaging of Oklahoma. The same goes for cardiac disease or surgery. They go to my friend Dr. John Harvey and his partners at the Oklahoma Heart Hospital. The same now goes for major gynecological and urological and general surgery requiring an inpatient stay. Patients will very soon know more about Deaconess Hospital, the latest to join us in this price transparency movement.

Here’s my point. The reputations of these facilities have taken time to create. To say that after flipping the switch to free market, people won’t instantaneously know where to go for care, is to disallow the necessary time for discovery of which facilities represent the best value and is logically a cheap trick.

Dr. Ubel thinks the price paid for healthcare is out of whack. Here, he and I agree. Dr. Ubel thinks there is some better way to allocate scarce resources than the free market. This is where we disagree. He has nothing to back up his stance other than his feelings. I think the countless patients we have treated and simultaneously helped to avoid bankruptcy are sufficient to make my case.

G. Keith Smith, M.D.

Medicare's "False Flag" Price Revelation

Fri, 10 May 2013 11:17:41 -0400

The release by CMS (Medicare) of hospital charges and Medicare payments this week deserves a response, partly because the figures are wrong. While most of the newspaper reports focused on the gigantic differences between what hospitals charged and what they were paid, the real story is the irrational and nonsensical pricing of the CMS central planners. Also notable is that while this story appears to bash the hospitals to some degree, the true amounts they receive from Medicare are hidden, as the prices released don’t include the uncompensated care kickbacks or the provider tax rebates.

The witholding of these amounts from the final numbers makes the payments to certain hospitals (physician-owned facilities like the McBride Clinic Orthopedic Hospital who don’t accept this money looted from the taxpayer) look high compared to the corporate and not-for-profit hospital payments, as their actual payments for the procedures and diagnoses are much higher than shown. It’s bad enough that the hospitals lie about their income, but to have the federal government join in on the act while posing as the great champions of price transparency is disgusting, although not surprising.

This New York Times article about the CMS “revelation”asks the question, the answer to which followers of this blog now know by heart: ”Why are the hospitals charging so much more than they know they will receive?” If you are drinking the hospital Kool-Aide, you believe that this overcharging is justified to combat the discounts demanded by the insurance carriers. You also believe that hospitals with large amounts of “indigent” care are charging more to offset these “losses.”

But if you think that these giant hospital bills:

1) Provide the “losses” and red ink necessary to maintain the fiction of the not for profit status of these creators-of-personal-bankruptcy

2) Provide larger DSH (disproportionate share hospital), uncompensated care payments to the extent that the hospitals claim they don’t collect on their giant bills

…if you believe these two points, you know the true answer to the question posed by the NYT reporter.

If you understand that the extent to which a hospital claims losses is the extent to which they collect DSH or uncompensated care payments, you also understand whythe patient with no insurance or no money at all, is likely to receive the highest bill of all, in order to maximize the take from the taxpayer!

There is a simple reason that the CMS pricing makes no sense. True prices emerge from a market economy. They are not imposed. I have said many times that I won’t know if my online pricing is “right” or not until someone starts competing with me. Prices send signals to the marketplace, signals indicating relative shortages and surpluses. That the prices for various hospitals in the same community are not even close shows the truly fatal conceit of the CMS central planners.

Here’s the bigger question, though. Why did CMS release this and why now? I think that it is no mistake that the cost of health care was never discussed during the Obamacare debates. Getting everyone “coverage” was the focus. Now that “coverage” is mandated, cost is center stage. Why?

Imagine that you own an insurance company that has a good relationship with Uncle Sam. Imagine that you have been successful in getting your government pals to mandate the purchase of your product (health insurance). This is now a great revenue stream. How do you maximize your profits, now? How do you maximize your net?

You ratchet down the price paid for “care,” ideally to a price where few physicians or facilities will see patients or participate. Presto! You have fewer claims to pay and they are cheap! You are seriously in the money, now. Lots of premiums rolling in, very few claims paid out. Simple math.

This is, of course, how HMO’s and Medicaid work. HMO’s collect premiums, pay so poorly that few physicians will participate and then actually pay some doctors a bonus to the extent that care is denied. This creates huge profits for the home office.

Medicaid vendors are typically paid a price per head. In Arizona, for instance, this number is about $8000/ head. If the physicians are paid a pathetic amount, few will participate and this will result in subtle price rationing where few claims roll in and long lines form. This creates gigantic profits.

This is the whole idea behind Obamacare. Make everyone buy insurance, then use the IPAB (independent payment advisory board) to step in to make sure that prices paid are below the market clearing price, using this low price as a rationing tool. ”Best practices” will also eliminate many of the health care services that people need and want and the “health researchers,” if they want to keep their government grants will find whatever they are paid to find, that mammography or prostate screenings are not necessary for instance. This has already begun. My personal favorite rationing tool is “pay for performance,” where the sickest of patients, those needing the care can’t get near a physician, as doctors increasingly shy away from complicated patients who might damage their “profile.”

You would think that a bankrupt program like Medicare would be looking for the best deals they can find. This revelation by CMS shows the effects of years of lobbying by the hospitals and other connected players: prices all over the place. Hospitals are paid 40% more for physician services than private practice physicians are paid. Wouldn’t you think that in order to save 40% on physician services, Medicare would seek out the private practitioners and shun the hospital employed doctors? Chemotherapy administered by a hospital is paid at a 40% greater rate than at a private physician clinic. Seems like Medicare would save a bundle by keeping patients away from the hospital chemo units. Our online prices are half what the big hospitals are paid by Medicare for the same surgeries. I could go on and on.

These federal programs are not about getting care for the poor and elderly, as much as they are about funneling money to connected cronies in the medical industry. This revelation from CMS reveals just as much about the government as it does about the hospitals. I don’t think that was their intention, though.

G. Keith Smith, M.D.

Canadians Finally Figuring Healthcare Out

Wed, 08 May 2013 21:02:04 -0400

Dr. Jeffrey Singer wrote this piece for Reason Magazine this week. His article explains why the number of Canadians fleeing to the United States for surgery may have peaked and might indeed be falling. As the Canadian system continues its death spiral, private health clinics and mini-hospitals operating on a cash basis are springing up all over the country, this new trend due to the heroic efforts of one physician, Dr. Jacques Chaouilli, profiled in Dr. Singer’s article.

Dr. Singer also clubs the U.S. system on the head and mentions the wave of private clinics and hospitals (The Surgery Center of Oklahoma amongst them) that are rising to meet demand and provide affordable and rationally priced care. He very appropriately lays the blame for the mess in the U.S. at the feet of the federal government and their corporate health cronies. Even the disastrous practice of hospitals employing physicians receives this article’s barbs.

It is very unusual for me to encounter an article like this where I agree with every single point the author makes. I do agree with Dr. Singer on all but one point and I would look forward to discussing this with him at some point…and here it is.

If the movement toward rational and transparent healthcare pricing continues, the resulting price war will bring prices down to a level where even those of modest means will be able to afford care, without government and even without insurance (catastrophic insurance will still have a place, I think).

Call me an optimist, but in the pricing trenches, I like what I am seeing so far. If the “state” intervenes, however, the dismal future of medicine Dr. Singer predicts where only the wealthy and connected will have access is likely, however. Let’s hope my optimism isn’t proven naive.

G. Keith Smith, M.D.

Hospital Bailout and Medicaid Expansion Economics Exposed

Tue, 07 May 2013 10:20:00 -0400

The April 27th edition of the Daily Oklahoman contains an article by Silas Allen about the impending closure of Oklahoma State University’s osteopathic hospital in Tulsa. Hospital officials think they can stay open though if a bunch of taxpayers that never utilize their facility pony up $18.25 million bucks to bail them out. This isn’t their first bailout it turns out.

In 2009, a trust was formed by the city of Tulsa to prevent a shutdown, a trust into which $5 million dollars of “state” money was pledged every year for 5 years. St. John’s Hospital in Tulsa managed the hospital during this time, but their agreement has expired and they are no longer interested in being involved.

To make its case for a bailout the hospital claims that it provides a vital role in preventing an even more severe doctor shortage in Oklahoma by providing residency training programs for students enrolled in the osteopathic school. The thinking is that residents who train in Oklahoma will stay in Oklahoma to practice. That this “stay-home-itis” would trump practice conditions and financial considerations young physicians examine when deciding where to locate is not credible as evidenced from all of the foreign trained physicians who practice in the state, but let’s move on.

Here is a quote from the article…see if this sounds familiar:

“An economic impact study released Friday shows the OSU Medical Center contributes 2,375 jobs to the Tulsa area, generating more than $120 million in income.

According to the internal study prepared by OSU’s Oklahoma Cooperative Extension Service, the hospital generated about $1.2 million in state sales tax during the 2011-12 fiscal year.”

Think of all of the jobs they could have created if they had lost $100 million dollars! Why, they could have eliminated unemployment from this whole region if allowed to lose a billion. Medicaid expansion, socialism and crony capitalism (corporatism) all share this faulty and absurd model of finance and economics, don’t they? No one ever asks how many jobs were destroyed by the tax confiscation inflicted to keep this entity afloat, do they? Even fewer recognize that this failure is due to the lack of a market for this enterprise.

It turns out that the giant St. Francis Hospital wants nothing to do with the osteopathic hospital either. If you guessed that there is one hospital system (one singled out for their abusive billing practices by TIME magazine) that is interested in “partnering” with the osteopathic hospital, you would be correct. Here is the Tulsa World’s account of this “merger.” Mercy Oklahoma City, however, wants no part of this marriage without a dowry, Mercy’s future bride much prettier with an $18.25 million taxpayer bailout in her purse. St. Johns and St. Francis don’t even want her with a stuffed purse! Talk about ugly!

Maybe Mercy is afraid that there aren’t going to be enough doctors around for them to employ and they want their own doctor production factory. Or maybe they are planning on charging so much for the “care” delivered there that the facility will become a profitable not for profit hospital. In either case, the people in Tulsa will be ringside witnesses to the economics and finance of Medicaid expansion, crony capitalism and corporatism should this bail out and merger materialize. This merger, of course, will be destructive of the goal of recruiting physicians to work in Oklahoma. I still say letting the rural physicians own the hospitals in which they work (just like the old days) would be the greatest recruiting move ever for rural medicine, a much better move than the taxpayer shakedown about to happen in Tulsa.

G. Keith Smith, M.D.

Wishy Washy Obamacare Buddies

Sun, 05 May 2013 10:19:00 -0400

The poor and the sick folks who currently make too much money to qualify for Medicaid in Oklahoma have pooled their meager resources to lobby hard for Medicaid expansion, buying expensive media ads under the name, “Oklahomans for a Healthy Economy.” O.K. Enough sarcasm. These ads are funded by those who would benefit from more taxpayer Medicaid loot—the big hospitals. If the poor had organized this push, for instance, they would not have minded mentioning the word “Medicaid,” which, of course, the ads never do.

I wish these hospitals would make up their mind. On the one hand, they claim that Medicaid payments (more than what we have listed online) are killing their profits, set way below their costs forcing them to shift the losses to other patients/payers. On the other hand they want to expand this program. This is kind of like, “..our emergency room is a loss leader, but we are going to build on to it.” None of this adds up.

The hospital lobby is pushing hard in Oklahoma because the governor of the state has taken a stand, a hard stand, to reject the Obamacare exchanges and its expansion of Medicaid. Even our local media, heavily funded by corporate medicine, has turned on the hospitals, one media outlet recently characterizing the Obamacare vehicle these hospitals want so badly, as a Ford Pinto. The editorial in the Sunday Oklahoman asks essentially if Oklahomans want to ride as a passenger in such a vehicle.

Sometimes I think that these hospital folks have forgotten some of the lessons of childhood, where, for instance, the more a child begs at the grocery store for a candy bar at the check out counter, the less likely they are to get one as the parent’s frustration with them grows. I hope that our governor’s disgust with the hospital whining helps her to grow even more resolute in her stance. This is politics, though, and while the governor has remained strong, the Republican version of crony politics continues to raise its head, attempting in new devious and renamed ways to funnel money to their hospital pals.

The hospitals aren’t the only ones who can’t make up their minds, though. Remember the government promise that the uncompensated care scam would end with Obamacare? Remember the hospitals begging for Medicaid expansion because of the end of this revenue stream? Well, it turns out that the hospitals are going to get to keep their uncompensated care scam, after all! You would think that this would dampen their media and political push for Medicaid expansion. Nope. And that’s not all.

Remember the Medicare payment cuts that were going to hit the hospitals as part of Obamacare? Remember the hospitals using this, as well, to bolster their arguments for the need for an expansion of Medicaid? Well, it turns out that they are now getting a raise from Medicare!

Why can’t any of these hospital or government folks make up their minds? I’m thinking that the question most commonly asked at the Obamacare drawing board was perhaps,”..how much do you think we can get away with?” All of this wishy-washiness then makes sense.

G. Keith Smith, M.D.

P.S. Here’s a great article on this issue by Michael Carnuccio, President of the Oklahoma Council of Public Affairs.

My interview with CNBC-Asia

Fri, 03 May 2013 08:07:37 -0400

Here is a link to my CNBC Asia interview with Bernard Lo recently. He was very well-informed, had done his homework about our facility and was a gracious host.

G. Keith Smith, M.D.

The Healthcare Price Wars Have Begun

Wed, 01 May 2013 23:14:29 -0400

Here is a link to my portion of the interview with John Stossel for those of you that are interested. This interview led to my interview tonight with CNBC Asia-Pacific with host Bernard Lo. I’ll post that link as soon as I have access to it. These two shows have reached huge audiences and the response has been impressive, particularly the number of people that are requesting price quotes. Our website actually melted down due to the traffic Sunday night during the Fox News Channel broadcast of Mr. Stossel’s show.

The price war has begun. The competition in health care on quality and price has begun. The beneficiaries will be patients and their pocketbooks. Nothing will create better quality at lower prices than the free market. Nothing will create unaffordable care and poor quality like state involvement in health care. Thanks to all of you who are helping to spread this message, essentially good news in an otherwise bad news industry.

G. Keith Smith, M.D.

The Real Victims of the Free Market

Tue, 30 Apr 2013 21:36:00 -0400

Let’s say that i have advertised the price of an anterior cruciate ligament reconstruction (all-inclusive) at $6990. Let’s say that the implants (screws, fixation devices, etc) are included in that price (I don’t mark up implant costs). Let’s say that 1 of the 10 surgeons at my facility that does this operation insists on using an extremely expensive implant, one coming from a manufacturer with which he has a “relationship”….no such partner exists here…this is just for illustration. I can either send him patients (business) which means we lose money at the surgery center, or I can charge a whole lot more if he does the surgery, which prices him out of range, or at least begs the question of why is he so much more?

This is the market at work. While central planners would work to institute price controls in the market place, the unfettered market would place the outlier physician’s price under the microscope. Transparent pricing would quickly reveal that something didn’t smell right. While legislators would outlaw physician owned distributorships, transparent pricing would empty the waiting rooms of physicians who play these games.

Who benefits from non-transparent pricing? All of the folks who would suffer if their shenanigans were discovered, that’s who. The only way that unethical physicians, pharmacies, hospitals, physical therapy clinics, etc. can thrive is for pricing to be veiled to some degree. Otherwise, comparison shopping would create value questions, none of which would have satisfactory answers in the case of the gougers.

The answer to “implant” profits is not a tax on implant makers any more than the answer to fraud in medicine is government goons. The answer is price honesty and a movement away from third party payment, government payment for healthcare, in particular. What is Obamacare? If you guessed “just the opposite,” you go to the head of the class.

G. Keith Smith, M.D.

Crony Hospitals are the Winners!

Tue, 30 Apr 2013 18:24:07 -0400

As Murray Rothbard asked, “cui bono,” or “who benefits.” Here is the answer to his question when it comes to Obamacare, plain and simple. Just as the corporate hospital stocks soared after Justice Robert’s ruling, they soared with the announcement that pay cuts became pay raises and the elimination of the uncompensated care payments became a maintenance of this scam at a 25% reduced level.

It should be increasingly clear who the real beneficiaries of this legislation are, and increasingly clear who they are not (the patients). It would have been more honest to call this “Cronycare,” as the corporate medical players and their stockholders are making a bundle off of the increasingly poor taxpayers.

G. Keith Smith, M.D.

Hunger Games, HMO-style

Sat, 27 Apr 2013 14:50:00 -0400

One of my partners, an ear nose and throat surgeon resigned years ago from a particularly abusive HMO. He said, “never again,” as did all of the reputable ear nose and throat surgeons in the area, physicians whose practices were already solid and busy without having to deal with this outfit. Even though many of the HMO’s are long dead and gone from Oklahoma, this particular HMO has lingered on, only to crawl back to this partner of mine, telling him to make them an offer. They had, very simply, lost every single ear nose and throat surgeon from their “panel,”even the not-so-good ones.

He made them an offer he knew they would refuse, a ridiculous amount, one that would make this pathetic organization his best source of payment. They accepted.

His presence on their “panel” allowed the HMO to advertise….well…to advertise his presence on their “panel.” Having quality ear nose and throat coverage made their product easier to sell to reluctant employer groups, most of which know the HMO hunger games by now. Things seemed to be going well for about three months when he noticed a sudden change. The HMO had made it impossible to schedule a patient for surgery. Phone call after phone call. Extended phone consultations with remote nurse manager-gatekeepers to review the indications and justify the need for surgery. Lost, needing-to-be-refiled paperwork. Waiting on hold for 30 minutes while attempting to obtain pre-authorization for CT scans for patients needing sinus surgery. And more.

It dawned on my partner that what the “beneficiaries” of this HMO had as a benefit, was not unlike what the beneficiaries of the Canadian system have and what people in this country under “Obamacare” will have: a right to hope for care, or a right to a place in line. A health care card in your wallet may mean nothing. As Dr. Jane Orient has now famously said, “coverage doesn’t mean care.”

The poor child with gigantic tonsils and adenoids with sleep apnea and chronic ear infections who could be spared all of this misery with a 20 minute operation is left holding the bag. The parents, frustrated with this waiting game of insurance approval, are now very troubled to find out that my partner has resigned once again from this HMO. What will they do now?

If they follow the example of many patients that have been down this road, they will wind up at our facility, paying a fair price for their child’s surgery, a price that is within their budget and having their child’s surgery done immediately, and done by the surgeon they have rightly come to trust and respect. They will wonder afterwards why they have “insurance” at all. They will wonder if some “insurances” are really a black mark, that actually prevent them from receiving care. Finally and angrily they may conclude that this whole HMO idea must be good for someone, just not the patients covered by “the plan.”

I think this illustrates that while the central planners of HMO’s or ACO’s or government health care may boast that the reimbursement levels they have arbitrarily concocted are sound and fair, they will always retain the powerful tool of rationing-access-by-bureaucracy, an incredibly cruel way to balance a budget or book a profit.

G. Keith Smith, M.D.

You can see our prices here.

Stossel Show to Re-Air on Fox News Channel

Sat, 27 Apr 2013 09:39:57 -0400

The John Stossel Show on free market healthcare during which I was interviewed will re-air this Sunday at 9 pm CST. The significance of this re-airing is that the show will be shown on the Fox News Channel, rather than Fox Business, to which fewer viewers have access. Here is the promotional link from Mr. Stossel’s webpage about the show.

G. Keith Smith, M.D.

New Jim Epstein Video Flogs Medicaid Expansion

Thu, 25 Apr 2013 15:38:47 -0400

5 months ago I posted this blog about Dr.’s John and Alieta Eck. Toward the end of the post, there is a link to a video of Alieta’s congressional testimony at the end of which Dr. Rand Paul delivers a scathing rebuke to those on the panel who had spoken of a “right” to health care and what that really means.

The Dr.’s Eck are featured now in another video blockbuster by none other than our good friend from Reason Magazine, Jim Epstein, producer of the video about our facility. With his uncanny ability to pack these brief videos with such large amounts of factual material all the while maintaining perfect clarity, he devastates the Medicaid expansion movement like nothing I have seen up to this point.

Congratulations to Jim Epstein on this new project and also to John and Alieta, whose work may now begin to receive the attention that it so richly deserves.

G. Keith Smith, M.D.

Obamacare's True Beneficiaries Identified by Bastiat in 1845

Tue, 23 Apr 2013 23:17:00 -0400

In Frederic Bastiat’s “Economic Sophisms,” he begins by quoting the English philosopher, Jeremy Bentham:

“In political economy there is much to learn and little to do.”

Bastiat thought this so important that he begins his powerful book with this quote, one which at once acknowledges the natural power and tendency of free markets to benefit everyone, while simultaneously discounting the ability of the legislator to achieve little but mischief.

Almost all legislative efforts, all protests to what I am about to write notwithstanding, are geared toward the benefit of the producers in a respective industry, not the consumers of any individual product or service. Bastiat, with piercing and brutal logic, demonstrates that the interests of the producer and those of the consumer to be completely and absolutely opposed. The producer benefits from scarcity of his product, as this brings him a higher price, while the consumer benefits from an abundance of the same product, this absence of scarcity manifesting as a lower price.

Any consideration of law or policy, must therefore, consider the effect it will have on both the consumers and the producers, or the economic analysis is at best absurd, at worst duplicitous. Expanding Bastiat’s analysis, then, any law or policy the result of which brings higher prices to an industry, whether intended or not, demonstrates without further proof or theorem needed, that the producer was the beneficiary.

If you think that this applies to Obamacare, you get a gold star. No further proof is required that the producer (hospitals, insurance companies, etc) is the beneficiary of this law, other than the fact that the price of healthcare and health insurance has gone up. Furthermore, as mentioned above, that the interests of the producer and consumer are diametrically opposed, to the extent that the producer is benefitted, the consumer is impoverished. When the market is allowed to function, these opposed interests arrive at a mutually beneficial space. When the “state” makes its entrance, usually due to the bidding of the producers, the consumer is robbed of some of his marketplace influence and power.

Ever wonder why as an individual you can contribute to a 401K with pre-tax dollars but can not buy health insurance with pre-tax dollars? If you guessed that:

1)this is a way to make you buy more of what Wall Street has to offer than you normally would and you also guessed

2)that the insurance companies benefit from selling one policy covering 1000 group lives, rather than 1000 individual policies, grab another gold star.

In both instances above, the tax law is twisted in favor of the producer, not the consumer. In addition, having priced their insurance product beyond what freely acting consumers consider reasonable with record numbers of “uninsured,” the government has responded with Obamacare, a law which makes everyone buy an insurance product they wouldn’t buy on their own.

Corporate hospitals didn’t support Obamacare because it would help the poor and uninsured. They supported it because they would have guaranteed payment for every person who came through their doors, direct payment from the taxpayers in many cases, with no need to deal with reluctant paying or unsatisfied patients. How’s that for a business plan, where you get paid whether the customer wants your product or not (insurance) and whether the patient is satisfied with their service or not (hospitals)?

Any legislation that rewards producers does so at the direct expense of consumers. This is a game that has gone on as long as politics and the “state” have existed, a game that must be accompanied by a propaganda campaign meant to convince its victims are its beneficiaries. As I have said before, nothing oozes out of Washington that doesn’t benefit those who wrote or promoted it. The last thing on the mind of these central planners, was greater accessibility, lower prices and higher quality. Re-reading Bastiat’s brilliant and timeless analysis helps make this even more clear to me.

G. Keith Smith, M.D.

Quid Pro Quo...Oh, Nevermind

Sun, 21 Apr 2013 20:06:04 -0400

Thanks to Brandon Dutcher for passing this along, an article that contains an admission by the “president” that his own health care bill is a failure. That’s right. He has rescinded the cuts in the “uncompensated care” payments to the hospitals because….ready?….because the Unaffordable Care Act will do nothing to lessen the amount of uncompensated care!

This is embarrassing. This is also devastating for the hospitals attempting to continue to spew propaganda about how the states need to expand Medicaid in order to make up for their loss of uncompensated care payments. I wrote in August of 2012 that the hospitals would perhaps support the Unaffordable Care Act and in return agree to let their uncompensated care payments go, only to get these payments anyway.

It will be interesting to see if this mess continues to unravel or if Uncle Sam starts to play rough. Kudos to the governors (ours, Mary Fallin, included) who have said no thanks to the exchanges and the expansion of Medicaid. The political pressure by the hospital lobby here in Oklahoma has been intense, just as I am sure it has been in other “rebel” states.

G. Keith Smith, M.D.

My Interview With John Stossel

Sun, 21 Apr 2013 18:20:23 -0400

This past Thursday, I travelled to New York City for the taping of an episode of the “John Stossel Show.” For now, I just want anyone interested to know that it will air this Thursday, 4/25, at 8pm CST on Fox Business. The theme of the show is free market healthcare, containing four segments, one of which was his interview with me. I plan to post a link to the show on this site as soon as it is available.

This interview with Mr. Stossel will, more than anything up to this point, help to spread the message of the applicability of free market principles to the health care industry. Many thanks to Mr. Stossel and his staff for the invitation and for the hospitality they showed to my wife and to me. More about this experience after the show.

G. Keith Smith, M.D.

Obamacare's Primary Promises Kept

Wed, 17 Apr 2013 17:44:03 -0400

The Daily Oklahoman, our local newspaper, while initially in opposition to Governor Mary Fallin’s rejection of the health exchanges of the Unaffordable Care Act, is now happily printing supportive editorials of her decision. April 16^th’s editorial title, “With Obamacare, Nearly Every Promise Going Unmet,” is perhaps more true than the author(s) has any idea.

Here are some of the unmet promises in the article:

You can keep you doctor. Not with the more restrictive network “panels” and certainly not if as many of the physicians quit practicing as polls show!

You can keep your insurance, if you like it. No you can’t, and even if you wanted to, you will probably not be able to afford it.

This law makes healthcare affordable….you know…the Affordable Care Act….my personal favorite unmet promise.

The cost estimate for setting up the exchanges is now double last year’s estimates. Wow. This has never happened in government, has it?

And soon to be realized by states embracing Medicaid expansion, will be the lie of how the federal government will pay for all of this. The federal government has never promised to pay for something, only to not pay for it have they? Oh, and then there’s this…the federal government is broke.

Here is the part, the editorial left out. When they said that nearly every promise has gone unmet, they were correct, in that several promises that were made have been delivered on, though none the current regime would like to have discussed.

Incentives have been created to force more private practice physicians into the indentured servitude of hospital employment. This allows the hospitals to make money off of these hapless doctors and makes the physicians easier for government bureaucrats to control, corralled into groups.

The Medical Loss Ratio is indeed creating the consolidation of the insurance industry it was meant to create, benefitting the big insurance companies who came up with this, a scheme meant to crush their smaller competitors.

The health information technology industry has made off with billions in revenue they would not otherwise have collected, as a result of the federal government making the purchase of their product essentially mandatory. Physicians are, after all, paid less by Medicare, if they don’t buy these systems and subscribe to this insanity.

I wrote prior to Justice Robert’s ruling that the players involved in the creation of this law, really didn’t care how the supreme court ruled, as they had already accomplished many of their goals, identical to the list above. This law was never about healthcare. It was, rather, like almost everything else that oozes out of D.C., a diversion of wealth from the many, to the well-connected.

While national and state legislators harp, “..get over it….Obamacare is now the law of the land,” keep this quote from Kathleen Sebelius in the Oklahoman’s editorial in mind:

“It is very difficult when people live in a state, where there is a daily declaration, ‘We will not participate in the law.’ “ This rare show of weakness and frustration by one of this law’s architects and primary henchmen should buoy the spirits of those involved in what the French would call, La Resistance.

G. Keith Smith, M.D.

The Real Story on Self-Dealing in Healthcare

Wed, 17 Apr 2013 15:35:00 -0400

The Oklahoma Council of Public Affairs passes on this quote from the late, great Joseph Sobran:

“What puzzles me is why journalism should be so reflexively on the side of government. During the Watergate era, we heard about the ‘watchdog press,’ the ‘adversary press,’ the press as the ‘fourth branch of government.’ That old skepticism about government, largely illusory then, hardly survives today even as a pose. Today the press seems to see itself as government’s partner, assisting and promoting the expansion of the state. The only politicians it treats with skepticism, verging at times on open hostility, are those who try to put the brakes on government. You might think that after a century of tyranny, total war, genocide and mass murder, not to mention organized robbery through taxation, inflation, debauched currencies, and redistribution, all of which have generated more corruption and social decay—well, a little skepticism toward the modern state itself is long overdue. But the news media still persist in the faith that government is the natural instrument for the betterment of the human condition.”

As I read this it occurred to me that while the modern state and its crimes and folly tend to get a journalistic free ride, any individual even suspected of committing any of the same acts or crimes makes headlines. One of the concepts I encountered when first reading the classical liberal scholars was the notion that the “state” should not be allowed to do anything an individual could not get away with. In short, if an action is considered a crime by an individual, that same action should be considered criminal for the state. This restraining concept, perhaps more than any other, serves to limit the scope of government to a more proper role.

It also occurred to me that while the modern press makes headlines with the possible conflicts of interest physicians may have owning the facilities in which they work and to which they refer, the same journalists look the other way as self-dealing hospitals account for 60% of personal bankruptcies in this country. The gravity and depth of the conflicts of interest present in the every day corporate hospital dwarf the worst examples of physician conflicts to which you could point. After all, if you were trying to make money by self-referral, which would you rather own, an MRI machine, or the doctor and the MRI machine? Which would you rather own, the hospital, or the doctor and the hospital?

Are there doctors who own MRI machines who are by virtue of this arrangement more likely to order an MRI? No doubt they are here and there, ordering the studies that are indicated and a few that are not. The price of these MRI’s are almost without exception, however, the lowest in town, wherever you look. Are there hospital employed doctors who are told to order more MRI’s by their boss? Duh. This overutilization pressure is widespread and standard operating procedure. These hospital MRI’s are, by contrast, the most expensive studies in any town or city you might examine.

What is more damaging? A few doctors who think they can get away with ordering a few unnecessary MRI’s for a low price, or widespread and institutionalized overutilization and abuse of high-priced hospital MRI units? Which of these situations gets the most press? Which of these situations is likely to worsen, the physician owner who acting unethically constantly runs the risk of ruining his reputation and practice by acting in this manner, or the physician employee, who out of fear of his job, orders as many MRI’s as he is told to by his boss?

Conflicts of interest seem to have escaped the notice of lawmakers, as well, when pertaining to the giant hospital interests, while the very name “Stark,” referring to the California ex-congressman, strikes fear in the hearts of many doctors, as this man made a career of restraining physician entrepreneurs, all to the giddy applause of his hospital crony pals. “Stark” laws have served to regulate the manner and the extent to which physicians can own medical facilities in an ostensible effort to curb self-referral abuses. Hospitals in the meantime have been hiring physicians whose various diagnostic and specialty referrals are thereby controlled and funneled to their employers’ institution, representing self-referral abuse on steroids. Exhibiting perhaps the ultimate conflict of interest, many giant hospitals have started their own health insurance companies, another massively corrupt story and missed opportunity by modern media.

Perhaps the crimes of the “state” and the gross hospital conflicts of interest are less noticeable or offensive due to their anonymity. The press actually provides cover for institutional abuses by headlining an individual physician as a “self dealer,” as this provides a useful distraction for the wildfire of entrenched hospital “self-dealing” going on right in front of our face.

The ultimate in self-dealing occurs, of course, in Washington, D.C., the Unaffordable Care Act representing perhaps one of the most gross examples of this “pay to play” game. It is always important to remember that the only thing worse than unethical businessmen and tyrannical government is when the two work together generating laws like Obamacare, a law that will make corporate medicine even richer and grant unimaginable power to would-be tyrants. Keep in mind that this law prevents the construction or expansion of any physician owned hospitals. Keep in mind that this law will result in bundled Medicare payments to the hospitals, from which the doctors will be paid an increasingly smaller portion . Keep in mind that private practice physicians will be paid 40% less than their hospital-employed counterparts for the same services. Keep all of this in mind when you read a front-page account about some individual doctor accused of self-dealing.

Just as the crimes of individuals pale when compared to those of the “state,” the conflict of interest issues of individual physicians (while making great headlines) pale when compared to the well-established and institutionalized self-dealing of the big hospitals. It seems obvious to me that the best way to deal with ownership conflicts of interest in health care would be to prohibit hospitals from employing doctors. That no lawmaker has ever suggested this demonstrates, I think, that the gang in D.C. means to protect their hospital pals more than they wish to curb any abuses of self-referral. Is the press really missing this or are they just looking the other way? After all, if it isn’t ok for doctors to own hospitals, why is it ok for hospitals to own doctors?

G. Keith Smith, M.D.