“First they ignore you, then they laugh at you, then they fight you, then you win.”  Mahatma Gandhi

I think it might be useful to review the objections of the cartel to the medical free market and price transparency movement, more or less in the order of their appearance.  First we heard that the provision of upfront and guaranteed pricing by medical facilities was not possible, even though we were currently doing this and Lasik and plastic surgeons had done this for decades.  Others, too, who were providing honest and upfront pricing were basically ignored and disregarded.  There were far too many variables for those in health care to provide upfront pricing, we were told.  Hospitals simply did not know what their costs were and were therefore incapable of quoting prices.  Soon, far too many were aware of this lie for it to remain effective and the second deceptive phase began.

Part two consisted of “laughing” off the facilities and physicians providing pricing.  The cartel insisted that these were anomalies and exceptions, “niche” players, “cherry pickers,” none of whom faced the daunting task of calculating the complicated overhead that plagued modern day hospitals.  At this point, those of us who were posting prices online were dismissed, or discounted by the cartel, marginalized if you will.

When cardiac and orthopedic specialty hospitals began to embrace price transparency, this second deceptive tactic became more difficult to employ.  When Deaconess Hospital, a full service hospital here in Oklahoma City, began providing prices to patients who had contacted me for a price, but needing an inpatient environment for their procedure, the cartel could no longer ignore or marginalize what was going on.  It was time for a new strategy.

After a brief tryst with “you get what you pay for,” an attempt to denigrate the quality associated with affordable and honestly-priced health care, the cartel embraced a strategy that I believe they will stay with for some time.  Using the fact that companies with self-funded health plans were happy to pay the entire bill (at a facility like ours) for one of their employees, a move which simultaneously saved their employee and their company health plan large sums (one company with 1700 employees saved $400,000 in two months) the counter from the cartel was that many of the surgeries done were simply unnecessary.  

Following this argument, no claim of “savings,” compared to what a big hospital would have charged, is accurate if the more affordable surgeries were unnecessary in the first place.  Continuing this line of reasoning, the carriers have maintained that without surgeons jumping through the hoops the big carriers have in place to prevent unnecessary procedures (because they only want to keep the employer’s costs down!!) any “savings” that has been claimed merely represents unnecessary expense.

More specifically, the cartel logic goes something like this:  an employee who is charged or billed nothing will recklessly and needlessly seek “free” surgery.  A surgeon who will be paid his full price, will operate unnecessarily, this revenue too juicy to resist.  In the insurance world this is called “over-utilization.”  What makes this an effective argument is the fact that employers new to providing incentives to their employees to steer clear of the bankrupting charges of the big hospitals actually fear this “over-utilization” due to their employees having no “out of pocket” expense.  

Before I dissect this, I would like to point out that it is quite ironic that those who have been fleecing and robbing in the health care industry for decades are the default standard bearers of “over-utilization” judgement and fraud, the anointed finger pointers.  Fortunately this irony is not lost on more than a few self-funded employer groups, groups that have connected the dots:  honest pricing comes from honest people.  

One of the reasons that “over-utilization” is highly unlikely in a facility like ours or any other that has a direct contract with a company’s health plan is this:  even the suspicion that “over-utilization” is an issue would interrupt the flow of patients from this employer, if not destroy the relationship entirely.  With this direct contract arrangement, an additional layer of accountability rests on the shoulders of the physicians and facilities contracted to provide the care, an additional accountability that is absent in one of the big box, cartel hospitals.  Any hint of inappropriate surgery in our facility would be met with a swift and decisive response from the partners and owners, the offending surgeon shown the door.  None of the surgeons working here would do anything to jeopardize the referral of patients from the companies whose trust we have all worked so hard to earn.  It should be noted that no such accountability exists in one of the big box hospitals.  It should also be noted that over the 17 years we have been in operation, and in the absence of any direct contracts with self-funded company health plans, some surgeons have demonstrated in their (brief!!!) trial at our facility, that they were operating unnecessarily and were shown the door.  As owners of our facility, none of us wants to be associated with someone like this.  The direct relationship with the employer health groups makes this accountability even more keen.

I don’t need to theorize, though.  The facts speak for themselves, those companies that have used the “no out of pocket” incentives to steer their employees clear of the cartel facilities have saved huge amounts.  This savings is not just compared to the same surgeries if they had been performed at the big hospitals.  This savings can also be expressed as a total spent over a unit of time on “outpatient services.”  The “Beta” test or the “interim study” has been done.  The results are in, no more theorizing needed.

I expect this “over-utilization” argument to persist.  As my partner Dr. Lantier pointed out recently, this will be particularly embarrassing for the cartel if the number of surgeries does rise (possibly because many of the employees can only now afford it with this arrangement, relieved of the deductible and co-pay) while the total spent on outpatient services declines.  This will mark the appearance of the next strategy, the next excuses the cartel will use to maintain the price opacity that has allowed them to financially devastate so many.  As the Gandhi quote would predict, when it looks like the corporate health crowd is engaged in a fight you will know the cartel will soon lose their grip.

G. Keith Smith, M.D.

For more information about free market healthcare visit:

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