Here is a piece I recently wrote for RetireEarlyLifestyle.com I thought I’d pass along:
A little over 15 years ago, Dr. Steve Lantier and I began the operation of The Surgery Center of Oklahoma. We invited 10 surgeons to join us in this venture, physicians who like us were tired of the old hospital games. We had grown tired of the way hospitals treated us, the surgeons we worked with and the way they treated patients, frankly. We decided that we could complain about this the rest of our careers or try to do something about it.
From day one our mission was very simple. Provide a quality surgical experience that was second to none, charge patients fairly and honestly and never deal with the federal government programs, Medicare or Medicaid. In our 16th year now, we have never deviated from our mission.
Over the years, uninsured patients in the Oklahoma City and surrounding area came to know our facility as the place to go, as we would quote them prices over the phone, prices that were a tenth or less the amount they would be charged at the so-called “not for profit” hospitals here in town. As I tell people now, by virtue of our physician-ownership structure, we had eliminated the most inefficient and greedy profit seeker from the surgical price equation: the big hospital.
We very naively thought that insurance companies would flock to us, as in a market economy, high quality at very low prices usually brings ample business. On the contrary, insurance companies assiduously avoided us, steering with all the power they could muster (through various “out of network” penalties and deductible tricks) those who were under their policies to the large, more expensive hospitals. This “steerage” away from our facility led us to a point where about 4 years ago, we decided to post our prices online for all to see. We could not in our wildest dreams have foreseen the effect this move would have here in Oklahoma City and indeed, in the whole country (even outside of the country).
We had hoped to make ourselves more “known” to the uninsured population requiring surgery, but primarily wanted to expose the price-fixing arrangements between hospitals and insurance groups. The first thing that happened, however, shocked us. Canadians started calling. And then flying to Oklahoma City for their surgery. Individuals with high deductibles and increasingly, self-insured companies have been drawn to our upfront and bundled pricing as well, pricing that is all-inclusive, the facility, surgeon and anesthesia fees altogether.
Other physician-owned facilities in Oklahoma City, following our lead, are now providing price quotes for joint replacement and open-heart surgery. Oklahoma City has now become a medical tourist destination for people from all over the United States and beyond.
Upfront and honest pricing has been absent from health care for far too long. While our price transparency has led others locally to join us in this effort, it has spurred a national effort, as well. Some physicians and facilities are inclined to emulate our model simply because it is the right thing to do. Others are frantic to do so, as patients are coming to Oklahoma City, rather than have their operation in the town where they live, whether in Anchorage or Fort Lauderdale. Surgeons and hospitals far from here don’t like to see patients head out the door for Oklahoma City for any reason, least of all for not having provided them a price for their care. This fear of loss of business we believe will continue to fan the flames of price transparency in this country, leading invariably to a deflationary effect on pricing everywhere.
We are blessed to have met grateful patients from all over the country and beyond and there are so many great stories to tell. I often think of the Canadian woman who was told she would have to endure her painful uterine bleeding for 3 years before she could see a gynecologist for a hysterectomy. She was quoted $40,000 at a big name hospital (not including the surgeon or anesthesia fees) in the northeast U.S. We did her surgery for a fifth of that. I often think of the man from Minnesota who had ruptured a disk in his back and was unable to walk and in constant pain, with a numb and useless foot, as a result. He was quoted $80,000 after begging for a price by a big name hospital in his state. We did it for a tenth of that. He did well, but went home only to slip and fall, an injury that required another level of his back to be operated on. We did that surgery too, for only the cost of the supplies, the surgeon and anesthesia fees, waived.
While we hope our model catches on, we also look forward to meeting more patients requiring affordable surgery from all over the world.
G. Keith Smith, M.D.