MCGUIGAN: Markets, mandates and the right doctors

By   /   January 9, 2013  /   1 Comment

by Patrick B. McGuigan

OKLAHOMA CITY – When I was formally diagnosed with arthritis more than two decades ago, our general practitioner said I had to see a specialist.

PAY NOW: Paying cash for medical services saves a lot of money.

My wife Pam and I embarked on a search for that person. That’s when we learned the country was facing a shortage of rheumatologists, that many were not accepting new patients, and that those who were had waiting lists months long.

So, Pam prayed for “the right doctor” to come along. We got on several waiting lists, then one day got a call from the office of a fellow we hadn’t even contacted.

That’s how I met Dr. Philip Wright. The right doctor, indeed. It took a couple of years to deal with my unusual mix of symptoms, but soon the disease was manageable and my life more livable. Perhaps it was too good to last, because one day he called to say he was leaving his private practice behind.

When we had our last appointment, I asked why he was hanging it up. His answer focused almost equally on “the damn insurance companies” and government regulations that had, over the past few years, taken the joy of medical practice away from a joyful man. We parted with a hug and a handshake, and I went on to several years of wonderful care from a young colleague of his.

When people say the health care system has been broken for a long time, and needed reform, they have a point. That doesn’t mean President Barack Obama’s 2010 health care law was any kind of answer.

Last month, the Oklahoma Council of Public Affairs (OCPA) hosted a forum featuring Dr. Keith Smith of the Surgery Center of Oklahoma, a business that avoids Medicaid, Medicare, and often even traditional private health insurance. The center delivers — largely on a cash basis — affordable health care for willing patients and employers.

That is causing a stir as attention focuses on bold price transparency, including online posting of guaranteed costs. With efficient and affordable procedures, the center is even triggering a domestic version of medical tourism, with patients coming regularly from Canada and from across the United States.

A company in the Dallas metroplex has designated the 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. After reporting all this on the national website Watchdog.org, I had phone calls from across the nation, including from fellow reporters, dubious that such things are possible.

At the Surgery Center, Dr. Keith Smith and Dr. Steve Lantier have established an operational structure and market-oriented billing as explicit alternatives to the third-party payer systems that now dominate U.S. health care. They post online an upfront price for medical procedures in diverse areas of practice, including orthopedics, ear,nose and throat, general surgery, urology, ophthalmology, foot and ankle, and reconstructive plastics. In all, a total of 112 procedures are listed.

The typical bill at the Surgery Center is a page long, compared to 3-4 pages for the same procedure at a hospital. The real kicker? The Center’s prices are one-sixth — and in some cases one-tenth — those charged at large hospitals in Oklahoma City.

The Reason Foundation, a 44-year-old think tank based in Los Angeles, has devoted one of its Reason.tv documentaries (“Oklahoma Doctors vs. Obamacare”) to the shocking cost differentials between the Surgery Center and one local hospital — focusing on the Surgery Center’s charge of $5,885 for a complex bilateral sinus procedure, compared to $33,505 at the large hospital.

At last month’s OCPA briefing, Smith told me 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.

Rather than get hung up on hospital-bashing or Obama-bashing, let me limit myself to the obvious. In provision of frequently provided procedures, a variety of incentives have been built into government-regulated “private” care that drive up prices, including mark-ups on medical material and prescriptions, duplicate practices, governing price-setting as a “floor,” and consumer ignorance of pricing.

The state flag of Oklahoma, the 46th state in the Union.

Rather than go deeply into specific examples of the price differences between the Surgery Center and the larger players in the state and region, it seems clear the burden of proof ought to be on the higher-priced players, rather than on a place meeting needs at a lower cost.

Several years after  Wright’s retirement, my wife and I faced the challenge of living without health insurance for three years. After a lifetime of playing by the rules and always meeting co-pays promptly, we were faced with the anxiety of operating “without a net.”

Through no fault of our own, an insurer operating with an odd exemption dumped us without warning, and got away with it. It took us three years to work our way back into a tenable situation with a new employer and new source of coverage, and another year after that to overcome pre-existing condition limitations. (No surprise to us, the provider that had dumped us went out of business in 2011.)

Those were difficult days, but Pam and I came to understand the cash market, and I grew to understand its utility, even in a mixed-market increasingly dominated by government fiat and insurer diktat — or maybe that’s government diktat and insurer fiat.

We were no more worthy than any other Americans of modest means facing similar circumstances, but we had the good fortune and determination to seek out affordable alternatives. (Note: the number of companies providing health insurance for employees is declining since passage of Obamacare — and self-insured companies and religious institutions are under new regulatory pressures to drop coverage.)

John Lennon wrote: “All we are saying is give peace a chance.” So, all I am saying is give a real market in health care a chance.

Several months ago, before the U.S. Supreme Court’s arguments in the health care case, I pressed a career public servant on the fundamentals of the legislation and the complexities of insurance markets. Promising anonymity, I cashed in the trust from a long-term relationship to insist on an answer to this question: “Is there any way that the ‘Affordable Care Act’ can ‘work’ as its advocates contend?”

The wise old sage paused a moment, sighed deeply, and looked all around to assure that we were alone, then replied to this enquiring journalist of a certain age: “Absolutely not. It cannot work.”

All I am saying …

Brandon Dutcher of OCPA, who organized that Capitol event highlighting the Surgery Center as a positive example of market provision in health care, reflects, “Dr. Smith and Dr. Lantier have done a great service by posting their prices online, and there are signs this transparency movement is spreading. I’m hearing of proposed legislation in other states requiring all providers who receive government money to post their ‘cash price’ to the public, and I think this is a discussion we need to be having in Oklahoma.”

As Canadians and people from across America fly to Oklahoma City to get important medical procedures performed at a fraction of what they cost elsewhere, it seems reasonable to ask: Why not give the free market in medicine a chance? It is the right thing to do, and compared to the mess our nation is working itself into right now, it seems only right to continue to leave room in the system for alternatives.

With rational incentives and cultural support rather than professional disdain and operational frustration, I am confident there are a lot of Dr. Wrights out there who could be kept in the profession, or coaxed back into active practice.

NOTE: This essay is adapted from McGuigan’s commentary which also appeared in the January 2013 edition of Perspective Magazine (http://www.ocpathink.org/articles/2155), monthly publication of the Oklahoma Council of Public Affairs. You may contact Patrick B. McGuigan at Patrick@capitolbeatok.com and follow us on Twitter: @capitolbeatok.

 

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Patrick B. McGuigan

  • http://health.usnews.com/top-doctors/directory/best-in-oklahoma-city-ok Danial Garcia

    I wonder how the healthcare system can be fixed if at all. Meanwhile another good Oklahoma doctor thinks its better to quit than to be under the pressure of government and insurance companies.