Editor's Note: Welcome to Medical Economics' blog section which features contributions from members of the medical community. These blogs are an opportunity for bloggers to engage with readers about a topic that is top of mind, whether it is practice management, experiences with patients, the industry, medicine in general, or healthcare reform. The opinions expressed here are that of the authors and not UBM / Medical Economics.
One of the accepted dogmas in medicine today is that the free markets in American healthcare do not work. The evidence for this usually comes from those pointing to the expense of an American system that is not even able to provide universal health coverage.
We are told that the free market incarnated in the current fee-for-service model that pays per unit of healthcare delivered is the source of the problem. In this system, incentives for profit trump ethics, volume trumps value, and the only solution appears to be some type of single-payer system that would ensure affordable healthcare for everyone.
The only trouble with this analysis is that it gets everything precisely backwards because it conflates the current broken fee-for-service system with the free market. What we have instead is a mechanism that insulates patients from the price of healthcare through a web of third-party payers. Labeling this “the free market” is about as pure as labeling the offspring of a Great Dane and a Chihuahua a purebred.
This becomes quickly obvious to anyone who has heard of the story of the Surgery Center of Oklahoma, a cash-only facility founded in 1997 by two anesthesiologists—G. Keith Smith, MD, and Steven Lantier, MD. Fed up with the system, these two chose to do a little more than the rest of their physician colleagues getting a PhD in whining. They quit cushy jobs that forced participation in a system that was financially toxic to patients and started their own surgical facility.
This surgery center doesn’t deal with any third-party payers. They simply list all the procedures with an all-inclusive price. Patients pay the cash price upfront. Their bundled prices are a fraction of the local hospitals without any sacrifices made for quality. Patients are happy because the care is cheaper and surgeons at the facility are paid more than what they would ordinarily make at the local hospital.
I recently sat down with Dr. Smith to chat about his journey and gleaned a number of important insights.