Sunday, January 29, 2012

Blog for Surgery Center of OK

Readers of this blog might also enjoy the blog by Dr. G. Keith Smith for the "Surgery Center of OK".

Dr. Smith's tagline: "I blog about free markets in medical care and pricing."

Here's an extended excerpt from his latest post, "Another 'not making a profit' story":
A nurse with whom I am acquainted told me the following story this morning. A relative of hers was recently diagnosed with breast cancer and a course of chemotherapy was advised. She has a high deductible insurance policy (good for her!) but just after the holidays is a little short on cash. After having received the news of her diagnosis and just having received her first round of chemo, she was told by the cancer treatment facility (owned by a LARGE health system in Oklahoma employing oncologists) that she must show up with no less than $495 at her next appointment or the deal was off: no more chemotherapy for her.

Now those of you that know me or read this blog know that I'm a fan of the free market. TANSTAAFL (there ain't no such thing as a free lunch). Here at the Surgery Center of Oklahoma, we charge for what we do and we make a profit. We just happen to charge about a fifth as much as our hospital friends who claim to "not make a profit." I continue to be amazed and shocked at the strong-arm money grubbing that characterizes these "not for profit" health systems (big hospitals). Come on! Seriously, this woman receives a diagnosis during the holidays of breast cancer and she is shoved against the wall for money? You think my characterization of this is unfair? This shakedown mentality isn't limited to the poor, either. Just ask Garth Brooks.

There's more. The oncologists, previously independent physicians with their own chemotherapy center, were free to make allowances for hardship prior to their sell out to the hospital for which they now work. The fees for their services are now higher than before by virtue of their affiliation with the "hospital system" and their old cancer treatment center is now abandoned. This is important to understand for those of you who think that physician-owned facilities represent a conflict of interest for the owners and that price gouging will be the inevitable result.

The opposite is actually true. Physicians who own their own facilities must also own and claim responsibility for the billing practices of the facility in addition to that of their private office.

This "accountability of ownership," as I like to call it (economists would refer to this as a lack of moral hazard, I think) represents a powerful deflationary effect on prices charged patients. Then there is the compassion factor. The physician-owned facility and its staff (including the billing and business staff) can't aggressively shake patients down for money without tarnishing the image of the physician...
Read the rest of the post for how his facility deals with this issue, "Another 'not making a profit' story".

I thought the discussion of reputation effects and accountability for the physician-owned medical facilities were especially interesting and worth wider circulation.

In medicine as in the rest of the modern economy, the enlightened self-interest of an honest provider of goods and services is the customer's best guarantee of good quality.

(Note: I've only begun looking into the various posts, so this isn't a blanket endorsement of everything on the website. But I am looking forward to exploring it in more depth.)