Director of Surgery Center of Oklahoma Believes
Consumer-Driven Care’s Future Is Bright
people want the government to protect the consumer. A much more urgent problem is to protect the
consumer against the government.
Friedman (1912-2006), economist
What follows is an interview with Keith Smith, MD, a 53 year
old anesthesiologist. He has been managing partner and medical director of the Surgery Center of Oklahoma in Oklahoma City for
17 years. He co-founded the center in 1997 with a fellow anesthesiologist, Doctor Steve Lantier.
Fifty two surgeons now operate at the center. It offers bundled prices, which include all
fees, for its services. It posts these
prices online at surgerycenterok.com. For
more information, you may go to their website or call 1-405-475-0678.
Two kinds of health reform exist – top-down government
reform and bottom-up consumer reform.
The reform described here is physician-driven, in this case by two visionary
anesthesiologists. It is a superb example
of disruptive innovation, a term coined by Professor Clayton Christensen of
Harvard Business School( The innovators
Dilemma, Harvard Business School Press, 1997). At the surgery center, the innovation consists
of transparent bundled prices available online.
The innovation produces lower prices for surgical procedures, convenient access to surgeons in the
community, and greater satisfaction for
payers, patients, surgeons, and anesthesiologists.
Q: Your center has
been a huge success, hasn’t it?
A: Yes, we’ve boldly
embraced the free market, and it’s working out beautifully.
Q: I understand you price online.
A: We started doing that five years ago this month.
Q: What has been the response?
A: The first thing
that happened was Canadians started showing up.
Uninsured patients from Oklahoma came next. Then we attracted the national media – CNBC,
O’Reilly, The Huffington Post, Reason Magazine, and others. That attracted national attention among people
who thought surgery was unaffordable at the so-called not-for-profit
hospitals. We’ve had patients come here
from from every state except Hawaii.
to Bundled Prices
Q: It is true your
prices are bundled and include the anesthesiologist and other fees?
A: That’s right.
Every price you see online is all-inclusive and they are listed upfront online at our website,
surgerycenterok.com. Also listed are prices at other facilities who do not have
a website. In other words, we list prices at our website done at other
Q: You mentioned the
national media response. What about
Oklahoma City, which has a metropolitan population of 1.5 million among
patients, hospitals, businesses, and
A: Self-funded businesses are just thrilled about what we are
doing, not just because they know now what to expect but because of the
deflationary pressure it has put upon others.
It is not uncommon now for patients to hold hospitals feet to the fire
about their high prices. The mood of the
business community, particularly
self-funded businesses, is very excited about us.
One of the most incredible success stories is recent.
Oklahoma County, the largest county in Oklahoma, entered into an agreement
with us, effective March 1.
In the first three weeks,
the County calculated their
savings to be almost a quarter of a million dollars.
The business community and county officials are happy to deal with a group of physicians
who embrace the market concept.
Q: How have the hospitals reacted?
A: It’s strangely
quiet. All we hear from the hospitals
are excuses about why they can’t discount their bills and attempts to discredit
transparent pricing. They portray us as
a niche player. They say they can’t do
what we’re doing. One of the most
devastating counters to that argument is that one of administrators came to us and asked, “ How can we help you?
Can you help us? Are there any synergies?” We are now working closely with a hospital
here in Oklahoma City, Deaconess.
Q: I know Deaconess. I was a pathologist
there for 5 years, and as Chairman of their PHO, my partner and I developed bundled fees for over 100 hospital
procedures, which the Blues refused to
A: Not all surgical procedures are done in an outpatient
setting. When I call or email Deaconess about the need for
a hospital-based procedure within an hour they will give me a price. Guaranteed upfront pricing is possible.
of Health Plans
A: How have health
plans responded to your hospital initiative?
Q: The carriers have never done any business with me. They want nothing to do with transparent
pricing. Their attitude stems from the Chargemaster
type of pricing that makes it possible for carriers to make money from the claims
adjudication process. When I say a
gallbladder at our facility is $5865, that is devastating to the carrier who is
making money discounting that claim. The carriers want no part of what we are
doing. It is just not in their interest.
and Specialties of Participating Surgeons
Q: How many surgeons participate in providing your services?
A: We have 52 surgeons, and we anticipate having 60 by the fall. We have general surgeons, gynecologists, urologists, pediatric surgeons, ophthalmologists, ENT, dentists, oral
surgeons, reconstructive plastic
surgeons, podiatrists. All of the
services provided are on the website.
Q: Do you offer
A: We do offer
overnight stays for some services like hysterectomies
or spine surgeries. We do not do joint
replacements except for an occasional shoulder replacement. There is a doctor-owned joint replacement center
next door, and we do not compete with them.
Q: Do you deal with concierge,
no-insurance, cash only practices? Are your procedures covered by 3rdparties?
A: We deal with a number of physicians with 3rd
party-free practices? They direct their
patients our way. We have connections with direct pay practices in Texas and
Idaho. We file insurance as a courtesy for many patients, whatever the charges
are applied to their deductibles. We’re rapidly transitioning to the point where
we won’t deal with 3rd parties at all. I’m hoping we are able to do so within 12
Q: Are there similar surgical centers in other states?
A: There are other
surgical centers who are posting their web prices. There’s one in Monticello, Virginia, operated
by Dr. Bill Grant. There’s Regency
Healthcare in Manhattan. The medical
director there is Doctor Bob Haar. There’s
another in Torrance, California. There
are others in South Carolina, Vegas, and elsewhere. The self-funded community knows surgery
centers are a step forward, and there
see no excuse for not establishing them
and sending them patients. The demand is going to grow beyond what
anybody can now imagine. Even without government endorsement, this movement is
to Surgery Centers
Q: In some states,
state legislators have forbidden or discouraged physician-owned surgery
centers. Isn’t that true?
A: In some states, Certificates
of Need exist. You have to make your case before a panel, usually composed of
people who don’t want these centers. You can imagine how fast those
applications go in the trash can. It’s simply cronyism in many of these Certificate of Need states. There are also states who have laws about how
income can be distributed. These laws
make it difficult for physicians to own and operate their own facilities.
The Unaffordable Care Act has a clause which forbid
physician-owned hospitals that accept federal money.
There is no doubt these barriers have the fingerprint of big
hospitals. When hospitals have
difficulties competing, they just get their checkbook and run to their state
capitols to make their competitors’ lives miserable.
Q: What impact, if any,
has ObamaCare had upon your business?
A: We will celebrate
the full implementation of the Unaffordable Care Act as a non-event. It will have
a positive effect on us. We do not accept federal money. So we do not
have to abide by ObamaCare’s electronic health
record insanity. We will not accept patients who sign up for these exchange
If anything, the Unaffordable Care Act has helped us. The government never gets its right. By allowing their insurance pals to generate
these giant premiums and giant deductibles, they have channeled patients our way.
Now we have a whole segment of the population who prefers to
buy their health care and pay or it out-of-pocket. It’s easier. It’s cheaper. It’s more convenient.
Inadvertently, the federal
government has created a consumer market. People who spend their own money want to know
how much things cost in advance, and they want it guaranteed and they want it in writing. The Unaffordable Care Act is
directing more patients our way.
Q: Funny you say
that. I’ve been interviewing direct cash,
no 3rd party doctors across the country, and they all independently say ObamaCare is their
best salesperson, and navigators are their top sales force.
A: That’s the good news.
It was never the government’s intention to create a consumer
market. They wanted to crash and trash
the market so they could usher in the sequel. It’s crazy. The rest of the world with single payer
systems is going the other way. Intense privatization efforts are going on in
Canada, Sweden, and France. French
public television is going to do a documentary on our facility.
Q: What is your yearly growth rate?
A: I don’t know off hand. But I know this. A year ago, 3% of the cases we were
doing came to us because of our web pricing.
Now it’s up to 25%. We have seen
a huge growth in that segment of our business. Another rapidly growing part of
our business is people who have insurance. But they ask us to treat them as if
they didn’t have insurance. Their co-pays and deductibles cost them more
out-of-pocket than if they paid our website fee. They don’t even want to show us their insurance
card. They say, “Yes, I have coverage, but don’t worry about it.”
Q: I will conclude
this interview with this question: Are you optimistic about the future, and
if so why?
A: I’m extremely
optimistic. The more government and its
associated cartels try to tighten the noose, the more liberty-loving people
slip through their fingers. Once people get a taste of freedom in a consumer free
health market, it becomes more and more difficult to go any other direction.
This is especially true among the young people. They have thumbed their nose at
government because they regard it as a Ponzi scheme. They are tired of being ripped off, stolen
from, paying Medicare and Social Security taxes, and they see the Unaffordable Care Act and health exchange plans a Ponzi scheme.
Q: When you say the Unaffordable Care Act, surely you mean the Affordable Care Act, don’t you?
A: I never call it the
Affordable Care Act, or by its official name, the Patient Protection and
Affordable Care Act. It does not protect
patients. It is not affordable, and it
has nothing to do with care. It is not
even law, because it originated in the Senate, and Congress makes the laws. It’s a tax, as Chief Justice John Roberts
Q: Thank you.
Tweet: Dr. Keith Smith, Surgery Center of Oklahoma director, believes transparent
bundled bills for surgical procedures listed online represent the free market
at work and is a wave of the future.
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