Real health care reform (not ObamaCare)

“Learn from the mistakes of others. You can never live long enough to make them all yourself.” — Groucho Marx

It’s no laughing matter – well, actually it is. The late night comedians have found lots to laugh about in what otherwise would be a tragedy. ObamaCare that is.

Most of us have heard the horror stories about the so-called “Affordable” Care Act. The least of the problems is the web site that doesn’t work. Much worse is the huge increase, sometimes even doubling or tripling, of premiums and deductibles for many people. Perhaps worst are the millions of people who have suffered cancellation of the health plans they liked.

ObamaCare is a disaster. This year when the employer mandate takes effect, tens of millions more people are likely to find that the plans they like are canceled to comply with the dictates of big government. But there is hope. Real health care reform is coming – not from politicians, but from doctors.

One surgeon wrote in the Wall Street Journal about a patient who needed a fairly simple operation. His bare-bones insurance would easily cover the cost of the surgeon, the anesthesiologist, and, they thought, for the operating room, nurses, etc. But when the patient went to check in, the hospital wanted an additional $20,000 from him above and beyond what the insurance would pay.

The patient canceled the operation and returned to the surgeon. Dr. Singer told his patient an open secret: that hospitals and other providers will usually negotiate a much lower cash price for people who don’t use insurance. The doctors are happy to take a lower fee now instead of paying office staff to wade through the insurance paperwork for reimbursement much later.

Dr. Singer made a few phone calls; the anesthesiologist accepted an upfront cash price, a different hospital charged a reasonable fee for its services. The patient had the operation the next day with a total out-of-pocket charge of a bit over $3,000. He saved $17,000 by not using his insurance.

Most people don’t shop around like this because they have no incentive to do so – their insurance picks up almost all of the bill. But with insurance deductibles becoming higher and higher, more people are beginning to shop around. That’s not easy to do because most hospitals keep their prices a secret.

One hospital that is very public about its prices is the Surgery Center of Oklahoma, a for-profit facility that offers first-rate care at low prices. About five years ago, they posted their price list for more than 100 common procedures. And those prices can be as low as one-tenth the prices at other hospitals.

Compare the cost of a “complex bilateral sinus procedure” performed at a nearby non-profit hospital, to the cost performed by the same surgeon at the Surgery Center. The other hospital charged $33,505, not including the surgeon’s or anesthesiologist’s fees. The Surgery Center charged just $5,885 total for the entire procedure.

The other hospital delivered a four-page bill with detailed cost items for such things as $360 for a steroid that wholesales for 75 cents, and a total of $630 for three pills that cost about $1.50. The Center’s bill was a single line with every cost item included in the published fixed price.

The Surgery Center is able to keep its prices so low partly because it takes cash upfront; it does not accept insurance. But what about people who can’t afford several thousand dollars for an operation? In many cases, the Center’s total price is less than just the co-pay and deductible would be at another hospital.

The Surgery Center pays “tons of attention” to making systems more efficient. One surgeon reports that he can perform twice as many surgeries per day at the Center because it operates so efficiently. At the other hospital, he spends half of his time waiting around for the patient to arrive and then for the equipment to arrive.

As one measure of efficiency, the Center has no administrative employees. At the other hospital, the eighteen top administrators are paid an average of $413,000. At the Center, all of the staff except a small clerical staff are involved with patient care. The head nurse does double duty as chief of human resources and building maintenance.

The Surgery Center of Oklahoma might have been the first to provide transparent pricing but they are far from the only ones. One commentator described the movement toward transparent pricing as a “fever pitch … pretty soon [all providers] will be fully transparent.”

The effect of published cash-upfront pricing is nationwide and even international. Canadians who could get “free” treatment at home are flying to Oklahoma to save months or even years on waiting lists. Other patients are taking a firm price quote from the Surgery Center along with an airline ticket for Oklahoma City, and are challenging the local hospital to charge a competitive price.

Much lower prices, higher quality, whether it is Direct Primary Care or surgery, physicians are producing real reform, effective reform. Politicians think reform means forcing more people to buy insurance they don’t like. Doctors know that real reform is to get insurance out of the way, to let nothing come between doctor and patient. My money is on the doctors.

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