Oklahoma Hospital Stirs Controversy with Online Prices

Health care is a hot topic these days – and not just for patients who are struggling to cover medical bills. Last year, one Oklahoma hospital  began posting prices on the Internet for approximately 100 surgical procedures. This transparency is forcing a closer look at the reasons why the U.S. has some of the most expensive health care in the world. And the answer isn’t necessarily what you would expect.

The Surgery Center of Oklahoma, based in Oklahoma City, which was started by two anesthesiologists, Dr. Keith Smith and Dr. Steven Lantier, has been challenging the conventional health care model in the U.S. by appealing directly to patients’ pocketbooks and showing that the price for many surgical procedures these days is grossly inflated.

The Surgery Center, which bills itself as a “free-market-loving, price-displaying, state-of-the-art … doctor-owned multi-specialty surgical facility in Central OK” offers prices that would make any hospital executive balk – especially since some of them have been low enough to be paid out-of-pocket by the patient. One uninsured patient for example who suffered a torn patella was able to pay for the procedure outright, to the tune of $5,700, instead of $30,000. Similarly, a fracture repair, which can run into the tens of thousands at a major Oklahoma hospital, is less than $5,000 at the Surgery Center.

http://www.youtube.com/watch?v=0uPdkhMVdMQ

What’s their secret? According to Lantier and Smith, it isn’t reduced services, although they admit that the Surgery Center operates a bit differently than the mega-hospital in the same city:

• Different allocation of duties. Just like in many small business models, employees wear more than one hat. A nurse is still a nurse, but she or he may also have the added duties of overseeing a function outside of a nurse’s standard job description. This keeps staffing costs down for functions that don’t take a 40-hour-a-week position to do.


• Billing for the services, not for the insurance approval. Instead of billing with an eye on what insurance may or may not allow, they bill for what the actual job costs. When the nearby auto mechanic bills your insurance for a fender bender, he knows (and the insurance adjuster knows) that he often must figure high to offset any limits or incidental disallowed costs by the insurance company. According to this Oklahoma hospital, that isn’t the way health care was meant to work.


• Smaller size, less overhead. It remains to be seen whether this particular Oklahoma hospital model could keep its prices to a fourth or fifth of its competitors’ bill if it were four or five times its current size. Odds are, however, prices would still be lower than what health care costs on average today. Incidentally, health care costs in British Columbia, Canada went through much the same conundrum in the 1970s when its healthcare needs exploded and it began building hospitals with more staff and more services. While B.C.'s system was based on a socialist government concept, it's still worth asking: could the Surgery Center really duplicate its model with significantly more demand?

It’s interesting that Lantier’s and Smith’s concept of health care services has many of the benefits built into it that the Affordable Health Care Act – or Obamacare – touts: more patient control, less restrictions, more transparency. Yet Smith’s blog makes it clear that he is anything but a fan of federally controlled health care.

“Repeal and replace.  This has been the strategy and slogan of the Republican party with regards to TUCA (The Unaffordable Care Act). By and large what they want to replace it with is another 'plan.'  ... Here’s a different idea for the Republicans.  Repeal and acknowledge. Acknowledge that government has no role in health care at all, never mind what the central plan looks like.”

Many of Smith’s ideas are laudable, such as his assertion that “cancer doesn’t have to represent a bankrupting experience.” But given the fact that the Oklahoma hospital doesn’t accept Medicare patients (according to Smith, “they should rely on charity care instead”) I wonder how well this model would work in all instances. The Surgery Center’s prices are dramatically less expensive than what would be paid at many large hospitals, but are they affordable for the millions who are just emerging from America’s latest recession and may be without insurance or adequate salary? Does this model take into account that America’s Medicare population is represented by the baby boomer generation, many of whom aren’t in a position to pay out-of-pocket? In assigning those cases to charity, do we risk endorsing a two-class medical system?

One thing is for sure: this small Oklahoma hospital has forced patients, insurance companies and hospitals to take a closer look at what the real problems are with America’s health care system. Maybe the main problem isn’t so much an issue of cost of materials and services as the need for ethical repricing of one of America’s biggest businesses. And the cure for that woe may take more than the nudging of a few doctors with stellar ethics and big hearts.

Photo #1 courtesy of John Crawford and National Cancer Institute

Photo #2 courtesy of  RL Hyde