August 26, 2014 — [By Shalva Ginsparg | Watchdog.org] — About a year before the birth of Obamacare, Dr. Keith Smith, director of the Surgery Center of Oklahoma, posted all the prices for his center’s surgeries online.
Today, he’s in expansion mode, looking to build two more operating rooms. His fastest-growing group of patients? Obamacare enrollees.
Though armed with Obamacare health insurance plans, the patients are saddled with high deductibles. Looking for alternatives, some of them fly from around the country to the Surgery Center of Oklahoma, where the cost of care and travel together amounts to less than their deductibles under their Affordable Care Act plans.
The Surgery Center of Oklahoma is a physician-owned operation that does not take Medicare or Medicaid and only selectively works with private insurance plans. Patients pay in cash or with cashier’s checks.
“Even if someone has this (Obamacare) insurance card in their pocket, they are soon going to find out that it’s worthless,” Smith said, citing both higher prices and doctor shortages under Obamacare. “Coverage doesn’t mean care.”
As proof, he points to the fact that among his first waves of patients to the center were Canadians, who though covered under their country’s socialized health care system, found themselves in the back of a long line of patients in desperate need of care.
When questioned about the influx of Obamacare patients at Smith’s facility, Tasha Bradley, a spokesperson at the U.S. Department of Health and Human Services, merely pointed to the many financial benefits of enrolling in Obamacare.
“Before the Affordable Care Act, consumers could face unlimited out-of-pocket expenses for plans with limited benefits and high deductibles, if they could even get coverage without being denied for a pre-existing condition,” he said. “In the Marketplace, out-of-pocket expenses are capped for the first time, prescription drugs are now covered, and many consumers may qualify for cost-sharing reductions that reduce their out-of-pocket costs.”
But Smith and others argue Obamacare is moving America even farther away from the real solution to its health care woes. What’s needed, they say, is a free-market model in which Americans are not just patients, but health care consumers.
But being a savvy health care consumer doesn’t come easy, even for health care professionals.
Dr. James Totoro has been a general surgeon at the Surgery Center for more than 12 years. Recently, he had to have a medical procedure. As he left the doctor’s office and began driving down the street, it suddenly hit him — he had not asked his doctor how much the procedure was going to cost.
“Now, I know this is about my health and maybe it shouldn’t make a difference,” Totoro said, “but if I went to buy a car, would I leave the showroom going, ‘Oh! I forgot to ask them how much that car was going to cost?’”
Health care is one of the few commodities Americans buy blindly. Because of complicated health care plans and middlemen in the insurance industry, a patient really never knows what the cost will be until the bill arrives.
The American Hospital Association, in its 2014 report “Hospital Pricing Transparency”, presents health care pricing as an impenetrable maze through which hospitals must gently guide patients.
Hospitals are encouraged to “present information in a way that is easy for consumers to understand and use,” to “create common definitions and language to describe pricing information for consumers, and “to include price information as just one of several considerations in making health care decisions,” said the AHA in the report.
According to Smith, patients suffer a lack of price transparency because listed prices would empower consumers and force hospitals to be more accountable for waste and high cost.
Sarah King is a 27-year-old dental assistant from South Dakota. When she was 11-weeks pregnant with her first child, she had a gallbladder attack that landed her in the emergency room. After her daughter’s birth, she said she realized the gallbladder needed to be removed. Instead of going to the local hospital, she began researching alternatives. The price she ended up paying at the Surgery Center of Oklahoma was more than 50 percent less than the amount she said she would have paid for the same procedure at her local hospital.
King is a member of a Christian health-sharing group Samaritan Ministries. Rather than pay through a faceless third party, members of the ministry send each other money for medical expenses directly, with little notes of encouragement and well-wishes. Because of the camaraderie she developed with fellow members, King said she felt inclined to keep costs down.
“When I think of having surgery and having to have people pay for it, I want to go the cheaper route,” she said.
She also said if the ministry didn’t have the money that month to match up with all of its members’ needs, she would have to foot some of the bill.
But King said there was another reason she chose the Surgery Center, and it has nothing to do with price. Her local hospital’s infection rate was significantly higher than the Surgery Center’s, which posts its infection rate along with its prices.
“The money played somewhat of a role, but at the same time, their infections rates were incredibly low compared to surgical centers and hospitals in my area,” King said. “I felt a lot safer going there.”
On the surface, transparent pricing wouldn’t seem to have anything to do with lower infection rates, but Smith insists “the dots between transparent, upfront pricing connect to quality and efficiency.”
His reasoning is that because his listed price is the final price patients pay, he benefits most if his center embraces efficiency. Hospitals, he said, do the opposite.
“They bill for what they use, not for what they do. They are inclined to embrace waste. They make more money when there are complications because the bill goes even higher. If we waste, we won’t stay open very long.”
And high prices in health care actually point to lower quality, Smith said, because high prices likely mean that the hospital is not facing competition and is confident it is going to get all patient referrals.
“If the price is low, it means that someone has entered the marketplace wanting to compete,” he said. “And they don’t just compete on price but on quality.”
Totoro said the increased efficiency at the center is “significant” and that while he can perform about four or five surgeries at the center in about two hours, “in the hospital, if I did five cases, chances are it would take me six to eight hours.”
One reason it goes faster at the center is because Smith does not accept government funding and is not bound by administrative “red tape” that bog down most hospitals. For example, the center doesn’t have to comply with hospital standards for electronic documentation, an innovation Totoro said is more of a hindrance than a help. Not only is the center’s paper documentation system more efficient, Totoro said, it also allows him to spend more time with his patients and less at a computer.
Also, doctors at the center are scheduled based on surgeries, not on shifts, so they can go home as soon as they finish. Because a longer operation often results in higher infection rates, the added incentive for efficiency can further account for the low infection rates at the center.
Ultimately, Totoro said, it’s a “win-”win” for doctors who work fewer hours and are paid more and patients who pay a set price and get quality care.
“I can’t imagine someone not wanting to get into this situation,” he said. “I can’t imagine it not being a firestorm across the country.”
Critics of Smith’s Surgery Center model say that he cherry picks his patients or simply offers “concierge medicine,” which will never be available to those who don’t have thousands of dollars of cash on hand.
Others say transparent pricing may be a nice idea for a small surgery center, but it is silly to think the health care industry across the board could really work in the same way. To that, Smith said one need only look at Oklahoma City, which now has a cardiac, spine and full-service hospital with transparent pricing.
Shalva Ginsparg is a junior at Stern College for Women in New York City majoring in English Literature and Judaic Studies, and a a graduate of the 2014 Franklin Center Journalism Internship program.