I blog about free markets in medical care and transparent pricing.
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 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 16th’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.
1). It is expensive to provide health care.
It actually is not that expensive. What most hospitals charge for healthcare is another matter altogether. Even the supply costs are not that expensive and as a health care facility owner/manager I can speak from experience. Understand that medical facilities are not economically unlike utility companies that incur high fixed costs at startup, but once they are up and running, the additional cost of adding another consumer/patient approaches “zero.” In other words, hospital overhead doesn’t significantly increase with the addition of more patients.
2). Big city hospital emergency rooms are a big money loser.
See #1. Also, if this were true why is there a crane in front of almost everyone of them, building on? This hospital department represents the portal to some of the most lucrative activities a hospital encompasses with imaging, laboratory and surgery. One hospital system in Oklahoma is building free standing emergency rooms! Enough said.
3). Cost shifting is necessary for hospitals to stay afloat.
I’d say they have overdone this a bit, as plenty of money is available for the sponsorship of sports franchises, hostile takeovers of physician practices (particularly those in rural communities), subsequent hostile takeovers of rural hospitals, building and advertising campaigns….I could go on. Also keep in mind that when hospitals admit to shifting costs to those who pay from those who don’t, they are admitting that they provide no indigent care, after all. All they are doing is fronting the money to one they are going to take from another, while complaining that they have “lost” money.
4). Not for profit means not make a profit.
It actually means, “don’t pay tax.” How would you like this deal? Charging giant sums and “writing down the balances” allows these entities to maintain the fiction of their “not for profit” status. As I’ve said before, “the one thing these not for profit hospitals are good at is making money.” Over sixty percent of personal bankruptcies are due to the medical bills that these “charitable” hospitals create.
5). Physicians referring their patients to the facilities they own represents a conflict of interest, while doctors employed by a hospital referring to their mother ship does not.
Doctors who over-utilize, doctors who do unnecessary surgery are out there. They typically work for corporate hospitals, though, as fellow physicians don’t want to be co-owners with these idiots due to the increased liability involved. Seriously, why is it not ok for physicians to own hospitals but it is ok for hospitals to own physicians? Hospitals lean on their employed doctors to order more MRI’s and lab and do more surgeries all the time, so that they will “earn their keep.” Exaggerating the complexity of daily hospital visits by hospital-employed physicians, using “cut and paste” electronic medical record technology, is also widely encouraged.
6). Upfront and transparent pricing is impossible in health care.
We have done it. Enough said. Hospitals can’t do this. Hospitals are doing this. Ok. I said more than I should have.
7). Free market principles don’t apply to health care.
Free market principles always apply, in spite of all attempts by the state to thwart them. Acting in concert and consistent with free market principles allows for the most rational and fair and least wasteful and most moral allocation of resources. Acting in concert with the free market and its characteristic open competition causes quality to soar and prices to plummet. Every time, no exceptions. Patients from all over the country are using our online pricing to leverage better deals in their local medical markets, as our facility and others embracing transparent pricing are only a short plane ride away! As hard as many hospitals are trying to avoid it, they are in a competitive marketplace whether they like it or not. Those in the medical industrial complex who say that free market principles don’t apply to their industry are typically those who benefit from avoiding competition at all costs.
8). Patients have no idea how to shop for quality health care.
I have found just the opposite. Most patients are adept at spotting a charlatan doctor or a poor quality facility. The first thing many notice is the “treated like a number” feeling. Patients tend to trust the doctors that will take time to talk with them and explain their condition and options, not force feed them some canned speech. Contrast this with patients going to see corporate hospital employee doctors, having no idea that these doctors are sending them to specialists and surgeons they are told to patronize, not specialists who are any good. I think that patients are better off shopping for quality themselves, rather than leaving this to the “network” of employed doctors. These doctor-employees are too conflicted and compromised.
9). The more you pay for healthcare the better it must be.
Actually the less you pay for health care the more likely it will be of higher quality! This is counterintuitive but let me explain. A new participant in the medical marketplace must compete in order to draw patients. Price is one way to compete. High quality is another. Medical entrepreneurs risking their own capital are like any others in that they compete on price and quality to mitigate the risk of losing their shirt. On the flip side, corporate medicine (most hospitals) has taken steps over the years to insulate their facilities from competitors (licensing requirements, certificates of need, etc.) and feeling less need to compete, don’t risk nearly as much by ignoring quality in their institutions. When someone recently said to a large hospital CEO,” ..shouldn’t it bother you that your hospital is the worst value, highest priced player in the market,” the CEO said, ”No. We have leverage.”
10). Obamacare was promoted by people who care about our health care.
The stock prices of corporate health care soared after Justice Robert’s ruling. These are the true beneficiaries and the reason this legislation was pushed. Rather than serve customers and profit from this market action, these corporate hospital players will extract their loot from the taxpayers, the quality of their product or service divorced from any quality or value perception by the patient. Poor patient care in hospitals will now be treated the same as poor outcomes in public schools. More money will be thrown at them. This model of rewarding incompetence will insure that the health care bureaucrats, those who promoted this “law,” will thrive.
- G. Keith Smith, M.D.
Here is my talk earlier today with Alex Chamessian, president of the Duke School of Medicine’s chapter of the Benjamin Rush Society. The video is about an hour long, beginning with the Reason.tv video of our facility, the end of which was a little jumpy. I talk about our facility then answer questions from Alex and some of his classmates.
G. Keith Smith, M.D.
Years ago, a hospital at which I took obstetrical anesthesia call, made a move that at the time I didn’t understand. They built a brand new obstetrical unit (it looked like something Frank Lloyd Wright designed) and began aggressively promoting this new facility to the Medicaid population. They simultaneously hired family practitioners and started a residency training program.
Medicaid reimbursement for anesthesia services was very low, so I found this troubling that more and more of my time would be spent working for a fraction of what I considered fair compensation. I also saw the private practice physicians with “paying” clientele (these experienced doctors also took care of the Medicaid patients) leave this hospital, sort of a Gresham’s law demonstration. To keep the anesthesiologists from walking out, the hospital began subsidizing our services. I simply couldn’t understand why the hospital was doing this. They had chased the good business out with the bad business…at least that’s what I thought.
With the private practice obstetricians gone, later understood to be part of the hospital’s design, the new department of family medicine could take over the new obstetrical unit. Now keep in mind this was a large, urban hospital near downtown Oklahoma City and no stranger to the most complicated, sick pregnant patients, some walking in having had no prenatal care. They were now face to face with interns, kids just days out of medical school, with no experience, whatsoever. Backing them up was a family medicine doctor who had completed a course in the performance of Cesarean sections.
Needless to say, there were problems. I had a difficult time with this as you can imagine, for several reasons. It didn’t seem right for 18 year olds having their third child to have the taxpayers pay for them to have an epidural anesthetic so the experience would be completely painless at 3 am. It didn’t seem right accept this money. And I felt like an accomplice, enabling inadequately trained folks to “practice” on these poor women. I was also very concerned about the liability involved.
One day, a new administrator appeared at this hospital, whose wife was a certified registered nurse anesthetist (CRNA), nurses who do extra training so they can provide anesthesia care. I had hopes that this new administrator would grasp the insanity of this new setup in the obstetrical unit, thinking that perhaps his spouse could translate what this all meant to him. Two of my anesthesia partners and I were summoned to the administrator’s office and asked a simple question:
“Can you tell me that your anesthesia services for the next fiscal year will cost the hospital no more than this last year?”
My partners, overjoyed at hearing that their hospital income subsidy was safe, quickly said, “Yes.” My misgivings were intensified. Two weeks later, the hospital administrator awarded the obstetrical anesthesia contract to his wife, for the amount we were paid the previous year. She hired young nurse anesthetists and paid them poorly, doing little of the work herself, but keeping the lion’s share of the money.
This is how Medicaid works for the poor. This is how Soviet-style central planning in health care always works. Bring in all the money, then ratchet down the quality and access so it functions as the cash cow it was intended to be, after all. With the hospital in charge of distributing the money (to the resident Coolie labor and the administrator’s wife), this was a guaranteed money-maker. This “bundled payment by Medicare to hospitals” is a central provision of Obamacare, by the way. I thought my experience was a good example showing the hospital greed that drives this “Medicaid expansion” craze, and part of the reason that outcomes for Medicaid beneficiaries are not as good.
Now before you go off and accuse me of bashing family medicine doctors hear this. My brother is a family medicine doctor. My best friend from medical school is a family medicine doctor. Neither of them would dream in a thousand years of running an inner city, giant hospital obstetrical unit, including provision of emergency Cesarean sections on women who can present with some of the most life-threatening conditions ever seen.
While the hospitals want this Medicaid expansion so badly, I think that after a short time, many of those absorbed into this Medicaid system in states embracing the expansion of this disaster will wish to once again be uninsured and out of this mess. Expanding Medicaid is not unlike cramming more folks on the Titanic, paying attention only to the amount of ticket revenue generated. Charity to the poor is always more compassionate than groveling before the almighty state.
G. Keith Smith, M.D.
What if I were to tell you that those hospitals which were “outed” as charge abusers by Steven Brill in his massively boring TIME Magazine article will ultimately be the biggest beneficiaries of this diabolical piece of journalism?
Stay with me and we’ll go through it. Looking back at my initial reaction to this piece by Brill, I was excited that he revealed how obscenely wealthy these poor-mouthing hospitals really were. I was troubled, however, by what he didn’t mention (the uncompensated care scam and PPO cartels and repricing schemes) and even more troubled that he embraced the efficiency of Medicare. I am now convinced that the reason this piece appeared in TIME (no bastion of libertarianism) at this time is to fuel the movement for a single payer system. Here’s how I came to this conclusion.
I have maintained all along that Obamacare was meant to fail, designed to fail. The purpose of this legislation was to introduce such chaos into the medical marketplace, eliminating what little was left of the free market in medicine, that prices for care would soar, prices for “insurance” would soar and that access to medical care would be restricted. The creation of this “crisis” will lead to a crying out for the government to ride in to rescue us with their final solution, the sequel to Obamacare: single payer. Watch this 37 second youtube video of Barney Frank where he carelessly reveals the ultimate goal.
Nothing in Brill’s article is new. Charge-master price gouging by these big hospitals has been going on for years and many articles have been written about it. The full effect of Obamacare’s “high price crisis” haven’t yet been felt or realized by the public, so corporate healthcare must tell everyone how expensive health care is at these out of control hospitals….with a megaphone. Brill’s article pours gasoline on the “crisis,” a crisis the most gigantic beneficiary of which are the big hospitals!
Jim Epstein of Reason Magazine encouraged me while filming his mini-documentary about our facility to look for industry consolidation in all its forms. This, he maintained, was the smoking gun of government corruption and bribery. The primary purpose of Obamacare is just this, fewer players in the hospital and insurance industry, with all health care dollars going to them. Can you imagine the money flowing into the D.C. cesspool when discussions begin about carving the country into regions, each region provided “insurance” by a single company or care provided by a single hospital health “system?” The intention of Brill’s piece, I believe, was the creation of the outrage, a necessary precursor of “crying out for a solution.”
Karl Denninger devastates the Wall Street Journal’s pathetic response to Brill’s article here. Denninger gets it. One thing Denninger left out, however, was the Hill-Burton legislation and the devastation that followed that piece of crony-benefitting legislation. He is right to call the WSJ out for their silence on how we got into this mess.
Corporate healthcare and their Wall Street chums are licking their chops right now, as Brill’s article brings the crisis from which they will all profit from so obscenely, closer and closer. I’ve decided that Brill is a shill. I’d bet that Brill’s stock portfolio is full of corporate health care stocks, too.
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.
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.