I’ve been asked a lot lately some version of “how do you do what you do at your center for those prices and not cut corners?” “How can you be so much cheaper that the hospitals for the same thing?”  

If you are a follower of this blog, you know that I am not the one that has some explaining to do.  It is those charging 10 times what we charge from whom we are due an explanation.  Furthermore, it is the myth of the mysteriously “high cost of healthcare,” a myth created by the big hospitals and insurance companies, that we have to thank for our latest government intrusion into the healthcare marketplace.  

I’ll answer, nevertheless.  We are cheaper for one simple reason.  By virtue of our physician ownership of the facility in which we work, we have eliminated the most inefficient and greedy profit seeker in the entire healthcare equation:  the big corporate hospital.  You see, as physicians, we are happy to receive fair compensation for our professional fees, anesthesia and surgeon fees for doing the surgery, that is.  If our facility makes a profit that’s great, too.  We don’t need for our facility to generate a giant profit to fund sports teams and buy high-priced advertising and pay administrators and….well…you know the rest.  We can operate the center at a small marginal profit, maintain fair physician compensation and underprice our hospital friends by a factor of 5-10.  

Twice, in the month of September, patients came to our facility with no insurance with a surgical problem for whom a church was willing to pay their bills.  I talked to the surgeon about his fee which he deeply discounted and I matched his discount on my anesthesia fee.  For the facility fee, I basically charged for the cost (the real cost) of our supplies.  The church was prepared, needless to say, for over 15 times what I had quoted them.  And we didn’t lose money.  Our facility didn’t make money, but we didn’t lose money either.  

The lessons?  The culprit for the high prices in health care (I didn’t use “cost,” on purpose) is the hospital.  That the church expected a number 15 times the number we quoted is evidence enough of this.  Physicians owning and controlling a facility allow for the accommodation of special circumstances like this much easier than a corporate hospital.  No uncompensated care rebates will come to us for having done this.  And finally, people tend, I think, to take care of other people in need without a gun in their ribs (a government program).  

Ironic, isn’t it, that these churches sought us out rather than the many “faith-based,” “not for profit” hospital options in the area.  I’d love to hear about any other lessons you think can be derived from this.

G. Keith Smith, M.D.