Hello. Dr. Keith Smith with you. Surgery Center of Oklahoma. Thank you for joining me.

“A race to the bottom”. That is a phrase that I’ve heard physicians who are skeptical of the free market use many times. By this, they mean that the natural conclusion of any competitive activity, even in the medical space, is a race to a price where no one wants to provide the service. This is, of course, an economic fallacy.

As the prices fall below the price where someone feels that the provision of the service is no longer mutual benefit, that service will become more scarce, then the prices will rise. I prefer this: a race to a market clearing price. After all, the market clearing price is an economic concept. It’s that price where the buyer and the seller have both and simultaneously achieved maximum satisfaction. A market clearing price is called a market clearing price because it is that price that tends to minimize any shortages or surpluses of services available.

So, if you ever hear someone use the phrase “a race to the bottom”, be sure to correct them. It’s a race to a market clearing price, and that is a good thing. It’s a good thing for the buyers, and it’s a healthy thing for the sellers to embrace the discipline every other industry in this country must endure.

Thank you for joining me. We’ll see you next time.