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Cash and carry: Is this OKC surgery center the future of health care?

By   /   December 18, 2012  /   3 Comments

By Patrick B. McGuigan | Oklahoma Watchdog

CASH ONLY: Dr. Keith Smith, Surgery Center of Oklahoma City, is causing a stir with a “cash only” approach to payments for medical procedures.

OKLAHOMA CITY – Taking a “cash only” free market approach, the Surgery Center of Oklahoma City is causing a stir locally, and attracting nationwide attention.

What the company calls “price transparency” with guaranteed rates for procedures is even triggering a home-grown version of medical tourism.

A company in the Dallas metroplex has designated Surgery Center a partner for employee health care. Savings from procedures performed at the center, even with lodging and travel covered, yield lower costs for the employer.

Admirers laud physician-founder Dr. Keith Smith, who founded the center in 1997, for “lighting a candle, rather than cursing the darkness.”

At a state Capitol event, Dr. Smith explained the center’s up-front pricing of medical procedures in diverse areas of practice, including orthopedics, ear/nose/throat, general surgery, urology, ophthalmology, foot and ankle, and reconstructive plastics.

Bottom line, the institution’s operational structure and market-oriented billing methods provide an intriguing alternative to the third-party payer systems that now dominate American health care, including the highly centralized structure envisioned under the Affordable Care Act, or “ObamaCare.”

The center has avoided entanglement in Medicare and Medicaid, and only carefully engages with private health insurance plans.

This week, Brandon Dutcher and Tina Dzurisin of Oklahoma Council of Public Affairs hosted a seminar to tout Smith’s work, which has begun over the past few months to garner favorable attention in local news reports. Lobbyists for major health care institutions in the region were present, as well as association executives interested in the Center’s approach, either to support or oppose it.

That’s not all: Reasontv has taken notice, producing a mini-documentary on the price transparency, overall efficiency and affordability in the Surgery Center’s approach.

Three years ago, Dr. Smith, who describes himself as a libertarian, began to post prices for 112 common surgical procedures at the facility, which was established with his partner, Dr. Steve Lantier, in 1997.

The original founding of their health-care business was predicated on the confidence they could provide top-tier procedures at a fraction of the cost traditional hospitals charge. Their already-successful venture took off after the online price posting was implemented.

He recalls, “The first people who showed up at our door were Canadians. Then we heard from the heads of Human Resource departments at local and regional companies.”

The center works directly with several businesses that are self-insured, and which pay employee bills directly. Today, Smith reported, the vast majority of patients at the center are individuals drawn initially by lower prices, and retained by high-quality care.

The center lists a guaranteed price for procedures, including facility fee, surgeon’s fee and anesthesiologist’s fee. Prices listed include those for initial consultation and uncomplicated follow-up.

Not included in the listings are diagnostic studies prior to surgery, consultations, therapy and rehabilitation, hardware or implants. As Smith noted, hardware and implants are priced at cost with no mark-ups. Overnight stays at the facility are not included, nor are lodging and travel expenses.

As a practical matter, the center’s approach leads to patient bills that can be laid out, with all costs listed, on a single page. The actual cost of the center’s procedures is sometimes one-tenth, and often around one-sixth, of the price at a traditional hospital.

The Reasontv  video, shown at the Capitol briefing, highlighted some of the most dramatic price differentials, including for a “complex bilateral sinus procedure.” At the Surgery Center, the all-inclusive price is $5,885. At nearby Integris Hospital the price in 2010 was $33,505 – but that did not include either the surgeon’s or the anesthesiologist’s fees.

In response to a question from CapitolBeatOK, Dr. Smith said there are presently no legal impediments to the Surgery Center’s approach embedded in the Affordable Care Act, widely deemed “Obamacare.” He said he hopes that remains the case, but pointed out that regulatory mandates are a moving target under the law.

The Surgery Center of Oklahoma City does not deal with Medicaid or Medicare systems, although some patients access those systems separate from the center’s work.

While making it clear he is no fan of big insurers, Dr. Smith said the potential key impediments to emergence of more systems like his are “The federal government, the federal government, and the federal government.” He said what he dubbed “the Unaffordable Care Act” is “driving out what’s left of markets in American health care.”

In dialogue with CapitolBeatOK, Dr. Smith said the center’s approach is helping to restore an old-fashioned medical ethic for provision of charity care. Many referrals to the hospital come from churches and other groups helping the poor. Patients are encouraged in those cases to pay what they can, while physicians and anesthesiologists can (and often do) waive their fees for individuals in need.

Surgery Center does work with insurance companies, but that triggers a separate pricing structure. Dr. Smith explained, “We take on a lot of risks when we file with insurance companies, so we have to charge for that risk.”

Oklahoma Commissioner of Labor Mark Costello, who attended the Capitol briefing, will be presenting an Entrepreneurial Excellence Award to Surgery Center next month.

Dutcher, vice president at OCPA, reflects, “The remarkable things Dr. Smith and his colleagues are doing deserve to be spotlighted. They are demonstrating that competition and price transparency can drive down costs in health care just as in every other sector of the economy.”

You may contact Patrick B. McGuigan at Patrick@capitolbeatok.com and follow us on Twitter: @capitolbeatok.

 

 

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Patrick B. McGuigan is bureau chief for the Oklahoma City Bureau of Watchdog.org, and works from the press room at the state Capitol. He is also the editor of CapitolBeatOK, and Associate Publisher of The City Sentinel newspaper. In 2013, The Washington Post blog “The Fix” designated Pat one of the best reporters in Oklahoma. In addition to the Oklahoma Society of Professional Journalists, where he serves as state secretary-treasurer, Pat is a member of the National Press Club and the Tulsa Press Club.

  • Debra Seger

    Bring this to Chicago. I need a lap band….I’ll be driving to oklahoma. Great idea.

  • Gregory in Vernint

    We need this in Vermont! However, our state Legislature is so liberal, socialist I get dick listening to these ppl, and the media makes it worse and never challenges them.

  • Ryan Kauffman

    This is now available in Georgia for ear, nose, throat, and sinus procedures.

    http://www.nwentsurgerycenter.com

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