Self-Funded Awareness and Frank Herbert’s “Dune”

Self-Funded Awareness and Frank Herbert’s “Dune”

“The sleeper has awakened.” Anyone who has seen the movie “Dune” knows the scene where Paul Atreides proclaims his new awareness. Having recently attended the annual meeting of the Self-Insurance Institute of America I was witness to a new awareness among the participants. Price transparency and reference pricing are seen as the most powerful of all of the cost-containment tools available to those who having taken the risk of self-funding and are seeking the best health care value. Remember that 60% of all non-government medical bills are paid by those companies who are self-funded, companies, that having seceded from the normal insurance game have elected to pay the medical bills of their employees out of operational revenue. This strategy has become increasingly popular, as the risk/benefit ratio underlying the decision to self-fund has been radically altered due to the Unaffordable Care Act.

Rooms full of employers and benefit managers knowingly nodded their heads when “Surgery Center of Oklahoma” was mentioned.  I had never met nor spoken to the vast majority of the people in these rooms, yet they knew all about our online pricing and are now demanding that those providing medical care all over this country subscribe to our model.  The cat is out of the bag.  The panel on which I spoke was completely limited to a discussion of medical travel, as employers are increasingly willing to pay travel and lodging costs for their employees in an effort to escape the health cartel’s pricing.

Normally, an entrepreneur’s success depends on the accurate predictions of future consumer demands, those who have an accurate finger on the pulse rewarded and those predicting poorly, ruined.  In short, successful entrepreneurs have a knack for the subtle indicators of future consumer preferences.  Needless to say, there is nothing subtle about the future demand for transparently priced medical care, as the current demand so grossly outstrips its availability, that one must be in blind denial to avoid embracing this path.  Recognition of the demand from those who are self-funded (this includes by the way, individuals with huge deductibles), has provided a soft landing for physicians who have embraced Direct Primary Care practices and increasingly, physicians who are leaving positions of hospital employment.

As the medical marketplace caters to the needs of high-deductible individuals and the fiercely independent self-funded crowd (highly motivated medical consumers with “sticker shock” as Jim Epstein would say), competition will emerge that will raise the quality bar and lower prices for everyone, not just these consumers. Lower prices, better quality and improved access.  This is the opposite of what those who crafted the Unaffordable Care Act had in mind.  The self-funded giant is now fully awake and aware of the alternatives to the many traps set for them by the giant hospital systems and their crony pals. I believe the self-funded giant will represent the demand in the medical marketplace that drives the supply and once again, everyone will benefit. That the Surgery Center of Oklahoma has become a bit of a household name at giant conferences like this one is evidence, indeed, that the self-funded community has, like Paul Atreides, awakened. This is bad news for the empire of corporate health elites.

G. Keith Smith, M.D.