I blog about free markets in medical care and transparent pricing.
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.
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.
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.
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.
I once wrote about how happy one of my mother’s friends should have been when Medicare decided to no longer pay for her B-12 shots, as the private sector would figure out a way to make sure there were no shortages of B-12 injections. Ever. Central planners, on the other hand, those in medicine in particular, who assign pricing to products and services always get it wrong. This is the fatal conceit, about which Hayek warned us. A bureaucrat can never discover a market clearing price (that price at which there are neither surpluses or shortages) because this price must emerge from market interactions, not be imposed on an economy.
Thousands of Medicare patients with cancer are getting their first glimpse of what the death panels will look like. In this article by Sarah Kliff of the Washington Post, thousands of Medicare patients are reported to have been turned away from their usual cancer treatment centers because the government has decided on a different price these centers are to be paid. If you guessed that they got it wrong on the low side, you go to the head of the class.
The real story actually has a sinister side. Kliff touches on it but doesn’t know and probably can’t even imagine the mercenary tactics at work here by the big hospitals and Uncle Sam. Remember that hospital-employed physicians are paid 40% more by Medicare for the very same service as physicians that are in private practice. Likewise, hospitals are paid more by Medicare for the administration of chemotherapy than private clinics. Keep this in mind when you hear some government apparatchik moaning about the impending bankruptcy of Medicare. These Medicare cuts, affecting only the private clinics, will not only put them out of business, but that is the intent, the goal, the very purpose.
Remember the lesson from Jim Epstein of Reason Magazine: “industry consolidation is the smoking gun of government corruption.” Or apply Murray Rothbard’s penetrating question: “cui bono?”…who benefits? If you said the big hospitals, you get a gold star.
The short term solution, of course, to save Medicare money on chemotherapy, is to insure that no Medicare patients are treated in a hospital! This is far too logical, though, and the private clinics don’t have the money to throw at lobbyists that the corporate hospitals do.
This is a great example of Jane Orient’s quote that “coverage doesn’t mean care.” These thousands of Medicare patients are getting a feel for what this president means by a “right” to health care, aren’t they? What they really have is a right to hope for chemotherapy. The current regime doesn’t care if you have “coverage.” They don’t care if you get care. What they want is control of your healthcare. Collecting premiums from the taxpayers while simultaneously denying care is a recipe for a profitable “insurance” enterprise, no?
Welcome to Obamacare. We haven’t begun to see the worst. I remain hopeful, however, that this tyranny will usher in a market economy in medical care. I remain hopeful that rather than be corralled into health camps and clinics, the American people will take matters into their own hands and seek alternative sources of “coverage” and “care.” These patients with cancer really haven’t been given much choice though, have they?
G. Keith Smith, M.D.
Thanks to the indefatigable Jeremy Snavely of the Association of American Physicians and Surgeons (AAPS) for filming and posting this video of my remarks to a group of AAPS members in Austin.
You can more closely follow the diagram with an explanation at the LewRockwell.com website, here.
G. Keith Smith, M.D.
Here’s a Forbes review of a WSJ article that gives us a heads up about what exchange insurance products will look like and how they will work. Dr. Scott Gottlieb points out that the design of Obamacare is identical to Medicaid, in that increased demand will be managed with less access.
This will be accomplished in two ways. Patients will be funneled to networks that are already extremely overworked, creating the waiting lines we know all to well in countries like Great Britain and Canada. An additional rationing tool will be the physician reimbursement at rates lower than the market-clearing-price, a payment amount that will lead many physicians to limit their exposure to this population or quit participation altogether.
“Yet the higher costs of taking care of the Medicaid population hasn’t been made up with more funding, but fewer services that these patients are able to get access to.”
Actually he’s wrong here. In many states Medicaid funding has gone up while access has suffered, just what you would expect from a Postal Service business model. Read more here. Gottlieb’s description is rosy, it turns out.
Later in the article, Gottlieb writes:
“The Medicaid benefit is great on paper, but often stingy when you try to use it.”
Remember “coverage doesn’t mean care,” from Dr. Jane Orient, executive director of the Association of American Physicians and Surgeons? And what is Obamacare’s solution? Expand Medicaid!
Dr. Todd Rice sent me the following quote recently which applies to this perfectly:
“If you think the problems that government creates are bad, wait until you see its solutions.”
G. Keith Smith, M.D.
A very interesting article by CATO’s Michael Tanner about Obamacare is here. He’s wondering if Obamacare is about to fall flat on its face. How popular is this plan going to be, after all, when many young people find that their insurance premiums have increased 169%?! The most incredible part of this article is the revelation that the number of folks who were supposedly uninsured prior to this law’s passage will not change after this law is fully implemented, as many will lose their insurance due to the bill and many others will simply be dumped into Medicaid.
Ah. But there’s the rub. The feds and their health cartel thought that the governors couldn’t resist the federal money. This was the part of the decision by Chief Justice Roberts (removing the teeth of the feds to retaliate against states who chose to reject Medicaid expansion) that left this “president” so glum-faced in his press conference following the ruling. Now that many of the governors (Oklahoma’s Governor Mary Fallin, included) have rejected the Medicaid expansion of Obamacare, more people will be without insurance coverage than prior to the bill’s passage!
If, as Dr. Jane Orient has famously coined, “coverage doesn’t mean care,” what consolation is “no coverage” for those who had it, who now don’t because their employer dropped them or the premiums became unaffordable? Thank you Uncle Sam!
In one section of his article Tanner writes: “That’s become a theme for Obamacare: costs more, does less.” Kind of like a postal service that increases the price of stamps and stops delivery on Saturdays. This is the story every time, isn’t it? Any area in which the government at any level (but the federal government, in particular) becomes involved, the crowding out of any private sector competition inevitably results in higher costs and watered-down, rude service. I wonder if in the not-too-distant future, Obamacare supporters will figure out that the best thing that ever happened to their health was the melt-down of Obamacare, a meltdown which Tanner believes to be inevitable.
G. Keith Smith, M.D.
A fellow physician told me recently that he had seen a worker’s compensation patient who had been treated and released by another surgeon for a wrist fracture. He was now in my friend’s office complaining about his hips, knees, spine and shoulders. The patient’s records indicated that he had recently seen an occupational medicine doctor who had ordered 12 MRI scans, all performed at a facility in which he had an ownership interest. He then recommended that the patient have both knees and both shoulders operated on by his business associate, a surgeon who also has an ownership interest in the same MRI facility and one not known for his ethical leadership skills.
Before you conclude that this is an argument against physicians owning and controlling medical facilities, consider the following.
An orthopedic surgeon employee of a local hospital was called on the carpet for not ordering enough MRI scans on his patients. The next month he ordered 77 of them to get the administration off of his back.
How are these two stories different? In the first instance, rogue and unethical physicians have positioned themselves to take complete and utter advantage of the third party system known as worker’s compensation, a notoriously corrupt system where many times unscrupulous lawyers team up with unscrupulous physicians to insure that the medical bills, and hence, the “settlement” amount is maximized. These physicians and their actions hurt the reputations of all physicians, not just those of us who own and control medical facilities. After all, physician ownership of a medical facility represents a situation which almost invariably benefits patients financially when compared to any alternative.
In the second instance we are witness to the institutionalization of corruption and fraud, rather than an exception. Unlike the first example, a regrettable and shocking exception, the second is just the way business is done…business as usual. Remember that the hospital administration leaned on the physician employee, just as they had leaned on many others, to act in this unethical way, this theft becoming standard operating procedure, company-wide policy.
Whenever I hear the hospital cronies complain about conflicts of interest for physician facility owners, I ask the rhetorical question, “If it’s wrong for physicians to own hospitals, why is it o.k. for hospitals to own physicians?” Those in the hospital business that would denigrate physician ownership in general while hoping no one will notice the magnitude of their established and unethical ways, is not unlike the federal government’s prosecution of Bernie Madoff, all the while conducting a little Ponzi scheme of their own known as social security. Bernie stole a billion. Social security has stolen trillions. Also keep in mind that the federal government, Obamacare, in particular, has pushed hard for the “physician-as-employee” model, directly attacking the institution of the private practice of medicine and insuring the predominance of the giant hospital brand of fraud.
Are there some bad physician actors out there? Of course there are. At a meeting in Austin, Texas several weeks ago, I listened to health policy folks go on and on about a particularly notorious and unethical physician-owned hospital in Texas, while they defended the predatory and bankrupting giant hospital “systems” in their state, whose criminal practices are widespread and institutionalized. I would further make the point that most of the unethical physician actors are unwelcome in physician-owned facilities such as mine as the mere association with doctors like this would affect the reputation of our facility and that of each of us as private practitioners. This phenomenon of shunning actually increases the concentration of the unethical actors that are hospital employees, I would argue, a condition that bodes well for the profits of the institution with which they are affiliated, but bodes poorly for patients ending up in their lair.
What is the real problem? The real problem is the absence of the free market. It is the presence of third parties and the absence of the sticker shock that introduces the moral hazard into medical economics. When someone else is paying, patients are not inclined to question these aggressive money-making schemes by the bad actors, whether the occasional rogue physician-owners, or routinely abusive hospitals and their employed doctors. The introduction of price transparency is the beginning of the end of these scams, as a hard look at the pricing begs questions of value. ”Is a tonsillectomy at this big hospital 10 times as good, because it costs ten times as much!?” ”Is it necessary for me to have all of this expensive lab work prior to surgery at the hospital when the physician-owned facilities usually require no lab work whatsoever, in accordance with national standards?” ”Do I really need all of these MRI’s and surgeries?” ”Is this doctor sending me to this MRI facility because his employer is pressuring him to keep his numbers up?”
Let’s not let a few bad apples in the physician-owner group cause us to take our eye off of the most unethical promoters of unnecessary care: the giant, corporate hospitals and the doctors that work for them. It is they who have created and manipulated a dysfunctional, largely “corporatist” system to their outrageous advantage, subjecting countless individuals to bankruptcy, and shoved this country to the brink of insolvency.
G. Keith Smith, M.D.