I blog about free markets in medical care and transparent pricing.
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.
Fareed Zakaria, noted editor of TIME magazine and known plagiarist recently tweeted this:
“A pure free market model simply cannot work in providing health care unless we’re willing to let people who can’t pay die.”
My first inclination is to ask him who should be given credit for having said this first. Let’s break his (maybe it’s his) statement down. First, he assumes that without government, those who can’t pay wouldn’t receive care. The fact is that it is the very intervention of the state, rigging the game for their crony pals (insurance and hospital buddies) that made healthcare costs explode, making access more difficult. People within the Medicaid system have worse health and outcomes than those without insurance. This is the compassion of the state. We should ask how many people have died because we did not operate within a free market medical model, perhaps.
Zakaria also confuses government with society. Remember Bastiat’s lesson:
“Socialism, like the ancient ideas from which it springs, confuses the distinction between government and society. As a result of this, every time we object to a thing being done by government, the socialists conclude that we object to its being done at all.”
There is nothing preventing Mr. Zakaria from donating some of his ill-gotten gains to a foundation or fund that helps the poorest among us obtain medical care. I sometimes think that statists promote and embrace lots of government programs to hide their unwillingness to assist their fellow man. They’d rather be in control of spending other folks money, rather than write a check themselves.
There is more to his little sound bite, but it is subtle. Look closely at the last part. “…unless we’re willing to let people…..” He’s saying we are all in this together. He’s saying that we bear the burden and the guilt of this path communally, isn’t he? This is typical of the seasoned statist busybody. He is saying that this is a “national” problem, not a local one. He is also saying that we need a “system,” not a case-by-case sort of local approach. He’s also saying that if you disagree with him, you’re a killer.
Let’s go further. The last part of his soundbite is also revealing. “…willing to let people who can’t pay die.” Here he is saying that it is within our power to prevent death. Wow. This part discounts the extent to which people lead suicidal lives, doesn’t it? The morbidly obese smoker with a family history of heart disease: are we “letting this person die” or are they killing themselves, to some degree? Why should money you are saving for your kid’s college be confiscated from you to help this individual whose behavior is a self-destructive black hole?
Inherent in his statement is the hospital propaganda about the costs of care being so high. As I have said, “healthcare doesn’t cost that much, but what the hospitals charge for it is another matter altogether!” (It’s fun to quote myself while writing about a plagiarist.) Hospitals like utility companies have what economists call high “fixed costs.” After the initial expense of starting these companies, the cost of adding an additional customer approaches “zero.” The additional cost of seeing another patient in the emergency room, once this institution is built and staffed, approaches “zero,” contrary to all we’ve been told. Just because hospitals charge 70,000% mark ups on supplies and drugs doesn’t mean that their costs are high. Very simply, it doesn’t cost much to provide the care that Zakaria says folks would die without.
Finally and most offensively, Zakaria’s statement makes clear that he believes that if a physician is not going to be paid, that physician will provide no care. Actually, the truth is that if a hospital is not going to be paid, they will likely provide no care. I know this because we see patients all the time that hospitals have refused. Unlike the hospitals, who as I have said wave the charity flag with one hand and fleece the taxpayers for their uncompensated care payments with the other, when we provide charity care, we do it for no charge, or for a minimal charge. Does providing 10 gall bladder surgeries for what the hospitals charge for 1, mean that we provided 9 charity gall bladder surgeries? I don’t think Zakaria would see things that way.
I hope this wasn’t a boring blog. His statement was so loaded up with statist assumptions, I couldn’t resist.
G. Keith Smith, M.D.
Florida’s governor, Rick Scott and Ohio’s governor, John Kasich have done an about-face on embracing Obamacare’s Medicaid expansion in their respective states. Or have they simply “grown” in office?
I think they are more like feral hogs. Domestic pigs that have been released or have escaped their controlled surroundings very quickly assume the characteristics of their primitive ancestors with long, coarse coats, tusks, savage tendencies (some mothers cannibalize their young) and insatiable gorging appetites, destroying everything in their paths.
Rick Scott, implicated in one of the largest Medicaid fraud cases in history while running the healthcare giant HCA, has become a feral politician. As a governor, he is largely uncontrolled and above the law and has assumed the characteristics of a destructive predator, placing an un-fillable trough in front of Floridians, one from which his old hospital pals will relentlessly feed. He very cynically said he could not in good conscience deny Floridians access to health care. What he really means is that he cannot deny his old hospital pals access to unlimited taxpayer loot. What a pig.
John Kasich makes Scott look like a saint. Also undoubtedly “influenced” by the big hospital boys, he has invoked his “Christian faith” as a justification for embracing Obamacare! A pig in a religious blanket. Saying that the Bible runs his life almost every day, he went on to say, “And I’ve got to tell you, I can’t look at the disabled, I can’t look at the poor, I can’t look at the mentally ill, I can’t look at the addicted and think we ought to ignore them.” He is clearly implying that you can’t claim to be a “good” Christian without being a socialist. A true socialist, Kasich fits Bastiat’s admonition quoted earlier this week:
“Socialism, like the ancient ideas from which it springs, confuses the distinction between government and society. As a result of this, every time we object to a thing being done by government, the socialists object to its being done at all.”
Given enough time in the wild and uncontrolled surroundings of politics, we should not be surprised, really, that men like Rick and John will go feral on us, showing us their true character, one of a destructive and predatory nature. While these hogs gorge themselves on the massive “contributions” from corporate health care, corporate health care will gorge itself on taxpayer loot in the expanded and un-fillable trough of Medicaid.
G. Keith Smith, M.D.
Meet Dr. David Mokotoff, soon to be a casualty of the federal government’s involvement in health care. His article in “Physician’s Practice” is here, where he very kindly mentions our facility. He is tired, sick and tired, not of taking care of patients but rather jumping through the hoops and taking the abuse the federal government and its health cartel reserves for private practice physicians.
It is impossible to quantify the damage done to the clinical work force the departure of experienced clinicians like Dr. Mokotoff represents. The clinical judgement of countless physicians with 30 or more years of practice will soon be gone, as doctors like Dr. Mokotoff quit. This brain drain of older, more experienced clinicians will translate into a higher titer of the sophomoric mistakes characteristic of every beginning clinician’s practice. I’m not suggesting that young physicians enter medical practice unprepared for what’s coming at them. I’m simply stating that we all become wiser with time, benefitting from years of experience, highlighting, I think why we refer to medical “practice.”
I’ve heard old neurosurgeons talk of their mentors whose neurological exam was so intricate, even elegant, that discreet neurological lesions could be identified, long before the appearance of CT scanners or MRI machines. Older orthopedists diagnosed meniscal tears and cruciate ligament tears and rotator cuff tears with uncanny accuracy prior to the technology used today to confirm these diagnoses. Many of these doctors will soon, like Dr. Mokotoff, retire from practice.
This is a very chilling and sad example of Bastiat’s concept of “what is not seen,” in this case, the disappearance of the not infrequent, out-of-the-box and life-saving clinical judgement calls, that many times are made by our older and more experienced colleagues. After all, after seeing thousands of patients, we are all more adept at identifying patients who don’t “fit the mold.”
While there is much to be said for the ebullience and boundary-questioning of the bright, young new physicians, the loss of wise and experienced clinicians in large numbers due to the latest federal intrusion into medical practice, should not be overlooked.
G. Keith Smith, M.D.
My friend Jonathan Small of the Oklahoma Council of Public Affairs writes the following in response to the outcry resulting from a suggested cut to the budget of the State Arts Council and the “economic devastation” that would result:
Based on all the dubious economic impacts of taking families incomes from them and earmarking them through the Arts Council, policymakers should give all of the state’s $16.8 billion in spending to the Arts Council. Especially since we wouldn’t have a “creative workforce” unless government took people’s hard earned money from them and redistributed it.
Isn’t it amazing how there is no negative impact to taking an individual’s or a family’s hard earned money from them, you know, because taxpayers don’t stimulate the economy until they have their money taken from them by government—but government expenditures yield economic multiplier returns of jackpot proportions.
Why let taxpayers have any money to begin with?
This is Hayek’s “fatal conceit” and Bastiat’s reductio ad absurdum all rolled into one! I have another idea, though.
Since corporate healthcare in Oklahoma and its sycophants claim that gigantic job creation will occur due to the Medicaid expansion our governor bravely rejected, why not give the big hospitals the entire state budget using the same logic? Don’t Small’s comments reveal the true and self-serving nature these mind games represent? Government and its various agencies create nothing, after all. On the contrary, the state can only consume and destroy capital leeched from the private sector. True wealth creation with its attendant jobs occurs only to the extent that government is denied money. Small’s biting and insightful comments help put this in proper perspective, I think.
G. Keith Smith, M.D.
The “Journal of American Physicians and Surgeons,” the flagship publication of the Association of American Physicians and Surgeons (AAPS) can be found here, free of charge. Many of the articles are layman-friendly, particularly those having to do with health policy. I have an article on Bastiat in the current edition. Not to be overlooked are the book reviews on the final pages.
Dr. Tamzin Rosenwasser of Venice, Florida provides an interesting review of a book in the current edition called “Open Wide and Say Moo! The Good Citizen’s Guide to Right Thoughts and Right Actions Under Obamacare.” I don’t know about you but the title of the author’s (Dr. Richard Fogoros) book is enough for me….I have to read this book. He has made it available free of charge at www.covertrationingblog.com.
Coincidentally, I read Dr. Rosenwasser’s review just moments after reading an article in our local paper (“The Oklahoman”) by Paula Burkes. Let’s start with Burke’s article then examine the same material through Dr. Rosenwasser’s lens.
Burkes writes: “Imagine if your doctor-before prescribing a drug or ordering a scan, lab work or some other kind of test-was prompted by a computer screen that told him whether his diagnostic or treatment plans aligned with medical evidence for best health outcomes, and then gave him the choice to change his mind and, potentially, your well-being.”
Continuing: “The Commonwealth Fund President David Blumenthal is a former primary care doctor who worked at Massachusetts General Hospital, where he saw the use of evidence-based medicine, engineered into the network’s electronic health records, dramatically reduce the number of radiology tests ordered, and ensuing costs, ‘by simply reminding doctors of best practices at the point of making a decision.’”
Blumenthal said that building a high-performance health system will be about “unleashing that kind of bottom-line, innovative spirit,” including standardizing claims, processing and billing services, and bundling payments for acute hospital episodes.
Burkes writes: “The Houston-based Actuarial Research Corp. has shown that The Commonwealth Fund’s initiatives would slow health care spending by an estimated $2 trillion by 2023, holding increases in national health expenditures to no more than long-term growth.” ?
She continues: “The benefit to individuals would be the real win.” ????
Stuart Guterman, the fund’s vice president said, “I don’t think the answer (to controlling costs) is to make a frail 85-year-old woman a better shopper.”
Wow. These guys must be really smart. Burkes is sure impressed by them.
Now the part Burkes has missed. Evidence-based medicine is an arrangement whereby a bureaucrat steps in between a doctor and patient and quite simply interferes with whatever suits them. Sure, this sounds optional and voluntary at first, but down the road are the usual penalties for “non-compliant” physicians. How many of the radiology studies not done at Mass. General resulted in harm coming to a patient because the patient didn’t fit some cookie-cutter mold? Do any patients fit a particular mold?
Blumenthal thinks that standardizing claims, processing and billing services and other such blather will improve care. He also likes the idea of bundling payments to hospitals who then pay the physicians. Think the corporate hospitals like this idea? Guterman attempts to denigrate all savvy health care consumers with his distorted example of the frail 85 year old. God forbid the elderly woman’s family should be part of her care decisions. I guess in Guterman’s fantasy world, the government should be responsible for our health care decisions.
Contrast Burke’s article with Dr. Rosenwasser’s, who writes of evidence-based medicine: ”Obamacare’s accountable care organization (ACO) is characterized accurately as the final noose around the necks of physicians, who will be practicing ‘herd medicine’ in which they will be interchangeable puppets in a pitiless machine, and their patients will be reduced to anonymous members of a herd. Herd medicine will choke off innovation and lives.”
Dr. Rosenwasser continues: “(Dr.) Fogoros explains how Obamacare will stifle medical progress, using examples anyone can readily grasp. He uncovers what has been concealed from many, including major conflicts of interest involving the central authority.” ”He (Fogoros) explains that the central authority determines what constitutes healthcare and what does not; if the government says it’s healthcare, it must be covered; if it’s not covered, you cannot have it. No physician will actually make a medical decision, and patients will be pieces of livestock on a government ranch.”
Burkes appears to be gaga over the central planners. Dr. Rosenwasser finds their methods chilling, a start down the same road that all totalitarian health plans have taken. Burkes would do well to familiarize herself with the writings of Dr. Rosenwasser and others in the AAPS. Her article inadvertently grants legitimacy to the health statists who would control our lives and those of our loved ones.
G. Keith Smith, M.D.
My piece comparing the economic benefit of Obamacare’s Medicaid expansion to the economic benefit of Willie Sutton’s bank robberies made the cut at World Net Daily’s opinion section. This is the first time they have published anything of mine. The link is here.
G. Keith Smith, M.D.
My stepdaughter thought a great blog could be constructed around the similarities of the Santa Claus myth on the one hand, and the relationship between the “state” and its entitled subjects on the other. At first I couldn’t see a “medical” twist on this comparison. Then I got some unsuspected help from Rex Smitherman, interim president and CEO of i2E Inc.
Some background. i2E Inc., is a company that mentors many of the start up technology companies here in Oklahoma with tax dollars. Basically, if the folks at i2E think you’ve got a good idea for a tech start up, they’ll use state taxpayer dollars to fund your concept. This is bad enough, but they also “mentor” these same start up companies on how to grab federal tax dollars, as well. In short, Oklahoma taxpayer’s bank accounts are raided by the Oklahoma Tax Commission in order to pay a “nonprofit” company (i2E) to help individuals better gain further access to your bank account using Uncle Sam as the intermediary. Once these companies get off the ground, the individuals reap the benefit, not those who funded their enterprise (the taxpayers).
Here is Smitherman in the December 25th edition of “The Oklahoman:” “When the startups we’ve worked with for months or even years start hitting their milestones-when they sign that big contract with an all-important customer and accomplish the things that they and we believed they could-it feels like Christmas, no matter what time of the year it is.” I’ll bet it does feel like Christmas when the pay offs for these techies appear under the tree, courtesy of the mysterious and forgotten taxpayer. Magical!
“But these tech companies will bring high paying jobs to our state,” you say! But what would have become of this money had taxpayers controlled the destiny of their own funds? This is where Bastiat is so useful and important, to help us see “what is not seen.” Please understand that I consider Bastiat’s utilitarian argument against state theft as secondary and downstream of the primary argument against state theft, that being that it is theft, after all, and as a violation of individual property rights, simply wrong on a moral level.
Isn’t the advocacy of expanding Medicaid the same Santa Claus economics, where no thought is given to the source of the funding? I guess using this logic, “federal dollars” fall off trees and are there for anyone to pick up, the damage done extracting this money from private individuals mysteriously nonexistent?
“But the Medicaid money will be a boost to the economy,” you say! The “boost” can be no greater than the equal amount of destruction of the economy rendered by this theft in the first place- and only a handful benefit at the expense of the many.
Here’s what I say. If you want to take personal risk and start a company, by all means do it. I wish you the best. Do it with your own money, though. If you don’t have adequate funds, seek investors the way everyone else does. Let private individuals risk their own wealth, not that of the unsuspecting taxpayer.
The idea that the market is somehow inadequate to identify worthy opportunities and that the “state” must favor this or that business is a recipe for mal-investment and failure, the perfect example of which is Solyndra. Even if these state-sponsored “businesses” are successful, we must account for the damage done by the initial robbery.
The way I see it, i2E is basically helping individuals buy lottery tickets with stolen bank notes. When they pick a lucky number, it may feel like Christmas on their end, but feels like a mugging to all those whose bank accounts have been victimized, those taxpayers who not only purchased the tickets against their will, but are encouraged by Smitherman and others to cheer these fellows on as they run off with the winnings.
G. Keith Smith, M.D.
We operated on a young man today with a torn Achilles tendon. This is a devastating injury, the treatment for which is not optional. He had no insurance. We did his surgery for $5730. This included the facility fee, the surgeon’s fee and the anesthesia fee.
His next best price? $15,000, from a “faith-based” “not for profit” hospital. This fee did not include the surgeon’s fee or the anesthesiologist’s fee. They sure need a whole lot more dough to not make a profit than we do. Except, oh yeah, we are making a profit at our price!
How do we do this? By cutting corners? Certainly not. Using cheap supplies? Nope. ”Greedy doctors who own their facilities charge more than anyone, right?” Nope. We are able to do this for one simple reason as I’ve written here many times. By virtue of our physician ownership, we have eliminated the most inefficient, greedy, bankrupting, corrupt, vicious profit seeker from the equation: the “not for profit” hospital.
What will this man do with the $10,000 he didn’t pay the nuns and their hospital? Bastiat’s economic lessons are all around us, his what is seen and what is not seen, foremost among them, I think. Think about this whenever you hear one of these hospital suits droning on about their “benefit to the community.” However they calculate that, this man benefitted by at least $10,000 by steering clear of their doors.
G. Keith Smith, M.D.
Crony capitalism is alive and well here in the state of Oklahoma. This past week a pharmaceutical company (Selexys) announced a 23 million dollar investment by a venture capital firm, MPM Capital. Furthermore Selexys has given Novartis Pharmaceuticals an exclusive option to buy them later for 665 million. Isn’t this wonderful?
Problem is, much of the original startup money was provided by unwilling taxpayers, state and national. Here is where some of their start up capital came from:
Oklahoma Center for the Advancement of Science and Technology
Oklahoma Applied Research Support Program
Oklahoma Seed Capital Fund (managed by a “not for profit” company that is funded with state tax dollars)
Accelerate Oklahoma! funds from the U.S. Treasury’s State Small Business Credit Initiative program
Small Business Innovation Research grant (federal government)
How about this for a proposition: all of the original investors (mugged taxpayers) should be compensated for their “contribution” of capital should this sale/merger occur. On the contrary, here is the Selexys business plan: taxpayers take all of the risk and private cronies take all of the profit. Of course, they will wrap themselves up in “JOBS!” and that will make their theft OK. ”ECONOMIC IMPACT! will be their other mantra.
This company is Bastiat’s broken window fallacy. We are financially no better off for Selexys’s presence in the community than we are with violent criminals who would rob us at gunpoint in a non-mutually beneficial exchange. We are simply denied our property with nothing to show for it, while the bandit stimulates the economy with confiscated goods. You at least have a chance to defend yourself and your property from a violent criminal! Keeping this in mind, one cannot help but realize that the primary difference between a violent criminal and a crony criminal is that the violent criminal has assumed significant personal risk.
This is not wealth creation. This is wealth transfer. Theft. No one asked you or me if we wanted to invest in Selexys. They just took the money. Where’s our return on investment?
The most outrageous part of this is that state taxpayers actually fund a “not for profit” entity called i2E, that helps companies like Selexys obtain all of the stolen property needed to fund their ideas. i2E picks our pockets to better teach others how to join in. This is pro-business corporate welfare. I prefer a pro-free market approach. Selexys might be a great company, one that might have stood on its own, doing what it needed to do to attract private investors over time. Alas, we will never know, just as we will never know what might have resulted had we been left alone to dispose of our own money as we had seen fit.
G. Keith Smith, M.D.