KOCO TV, here in Oklahoma City, did a story on our facility and the center’s transparent and packaged pricing recently. You can view it here. In response to the question ..”how can you be so much cheaper than the hospitals..” I said, “..we didn’t have an administrator in a $3000 suit.” While this is true, there is a better answer, I think, to this question.
The question posed presumes that the prices charged by the hospitals are reasonable and legitimate, when in fact, they are not. The question is not, “how can you be so much cheaper, ” but rather, “how can they justify charging ten times what we do,” as is the case, much of the time. Starting with the notion or idea that hospital charges are legitimate is a mistake. The lack of the free market in medicine (well…except for places like The Surgery Center of Oklahoma!) has guaranteed the absence of rational pricing. Mises made this point in his brilliant book “Socialism.” Economic systems without rational pricing are always doomed to fail as the feedback to producers and consumers is faulty, resulting in inevitable surpluses or shortages. I have told people recently that we won’t really know whether our prices are “right” until we have competitors displaying their prices, bringing about the price competition that is so sorely needed in healthcare. I think that 1/10 of the hospitals’ price is a great starting place though!
I have been approached by insurance companies that offered payment contracts to our facility based on a super-percentage of Medicare. ”We will pay you 125% of the Medicare rate.” You should see the looks of consternation I get when I tell these executives that Medicare rates mean nothing to me, that these numbers are arbitrary, capricious and not legitimate. But “Medicare” pricing, which is completely illegitimate, is the standard. Why? Because most have weakly accepted it as such. My point here is that hospital charges should command our scrutiny, not represent some mysterious standard.
Everyone complains about the cost of health care. How is it that few are connecting the dots, asking whether the costs are related to what the hospitals charge and that these charges might not be legitimate? Why is the question put to me to justify my low charges instead of spotlighting those who have been fleecing the sick for years?
Kudos to KOCO TV for airing a piece that may help more people begin to challenge the health care giants whose prices have been foolishly trusted for so long. Many thanks to the patient in the piece, Paul Freeman, for traveling to Oklahoma City for the interview and to Jay Kempton, as well, for his contribution and insight.
G. Keith Smith, M.D.