This past October, I was asked to appear before the Florida Governor’s Commission on Healthcare and Hospital Funding to discuss the development and effects of price transparency initiatives (Surgery Center of Oklahoma’s, in particular) here in Oklahoma. My first thought was that the government of the state of Florida was considering mandating price transparency for medical facilities and I made clear before I agreed to speak and during my presentation to this group that legislating or mandating healthcare price transparency was certain to derail any meaningful healthcare free market.
I have stated that mandating price transparency will afford legislators the opportunity to sell exemptions and will additionally and likely lead to a new and altered definition of “transparency,” one which fits the needs of the corporate healthcare crowd: in short, one which embodies no transparency whatsoever (I am not alone in thinking this). Governor Scott and the Commission took my advice…sort of.
While the state of Florida didn’t mandate transparency, they did essentially ban “out of network” balance billing practices. “Out of network” physicians and facilities are not bound by PPO “allowable” charges, as they have no contractual agreement with the PPO. While the state of Florida’s action was meant to deal with a common healthcare bait and switch (where a patient receives care at an “in network” facility, but is treated by “out of network” doctors there…completely out of the patient’s control) this move puts brass knuckles into the fists of the PPO cartel (I’ll explain below). While I have no sympathy for those issuing abusive “out of network” charges, I understand what it means to give the PPO cartel more power.
In this day and age, to think corporate hospitals and their PPO pals aren’t capable of entering into agreements that specifically exclude certain other facilities (or physicians) from the “network,” would be outrageously naïve. There was a time that I thought that the Surgery Center of Oklahoma needed to be in the “networks.” We were never allowed in the “networks.” We have worked since 1997 as an “out of network” facility known for our quality and fair pricing, yet we have no PPO’s beating down our doors to include us in their “networks” (not that I would join them at this point). In fact, our online pricing (surgerycenterok.com, where all of our all-inclusive prices are listed) has ensured that we will never be allowed in the networks, as this robs the PPO’s of their ability to profit from claims re-pricing or selling “discounts” (See my blog about the $100 aspirin.)
With the Florida initiative, “in network” physicians will be paid as usual, consistent with the contracts and fee schedules to which they have agreed. “Out of network” physicians will be paid based on the same “in network” fee schedule (to which they have not agreed), but only after larger and disparate deductibles and “out of network” penalties have been imposed, reducing the payment many times to nothing. This will have a chilling effect on the availability of physicians who are unwilling to endure this type of uncertainty and will line the pockets of the PPO cartel, for when “out of network” care is rendered, many times, no payment will be issued. That’s a recipe for more profits if I’ve ever seen one! “Out of network” non-abusers will be left no choice but to join the herd (if they are allowed to).
While my advice about what not to do (see above) was followed…sort of…my advice about what to do was not. If the state insists on using its muscle, why not direct Florida state employees who need health care to facilities that post their pricing? The effects of these patients seeking market-based and honestly-priced facilities and physicians would be predictable. Fearful of losing access to this large number of patients, even the most price-gouging and unethical over-chargers would figure out a way to compete in this honestly-priced space or face the devastating loss of these patients from their practices or facilities. The competition unleashed would benefit everyone seeking health care, not just the Florida state employees. And facilities and physicians wouldn’t just compete on price. They would compete on quality, as well, and once again, everyone would benefit. This is, after all, what is happening in Oklahoma, as the legislature was bold enough to waive all out of pocket charges for state employees who choose an honestly-priced and transparent facility/physician. Embarrassingly, the fees paid for their care are less than the fees paid to the so-called “not for profit” hospitals by Medicaid for the same services. The Oklahoma state legislature was also smart to avoid mandating price transparency.
I applaud Governor Rick Scott and the Commission (led by the fearless Carlos Beruff) for their attention to the dysfunctional healthcare system and government’s role in creating it. While the private sector is wildly benefitting from healthcare free market initiatives all over the country (see the Free Market Medical Association), the example those in the public sector should be following is right here in Oklahoma, at both the state and county levels. I look forward to Florida and other states taking the next step, as has been done here in Oklahoma.
(Many thanks are due to the courageous staff at the Oklahoma Council of Public Affairs for their tireless dedication to this initiative (ocpathink.org) and to Ken Willey who inspired me to write this.)