Surgery Center of OK: Saving taxpayers real money, in real time
Published: April 4th, 2014
OKLAHOMA CITY — In mid-February, members of the Oklahoma County Budget Board approved, and then signed, a contract with Surgery Center of Oklahoma.
In the long run, that one move may be regarded as among the most significant steps in county history to save taxpayers real money, in real time.
At their Feb. 20 meeting, the budget board approved a “provider services agreement” between the Surgery Center and the county.
County Clerk Carolynn Caudill, a Republican, requested approval.
The accord’s legality was approved by an assistant district attorney, who works for District Attorney David Prater, a Democrat.
The county commissioners — two Republicans and one Democrat — joined Caudill and Treasurer Forrest “Butch” Freeman, another Republican, to ink the pact with Dr. Keith Smith, founder and lead physician at the Surgery Center.
Sounds kind of technical. What’s the big deal?
Relieving taxpayers and consumers from some of the accelerating costs of the Affordable Care Act should be applauded.
Oklahoma County’s health care plan for its employees is a self-financed plan, making county officials price-sensitive.
The contract with the Surgery Center includes a lengthy list of the procedures its physicians perform, and what the charge for those services would be.
As has been reported here at Watchdog.org, in Perspective Magazine, on Reason.tv, The Wall Street Journal, and many other news or “think tank” stories — the typical price at the Surgery Center runs from one-sixth to one- tenth of what it costs at mega-hospitals, including even those who include charity as part of their raison d’etre.
Based on direct evidence, I project more than a quarter of a million dollars in cost savings for Oklahoma County taxpayers, in just the first quarter. I base this on what’s happened in just the first month of the county-Surgery Center hook-up.
In late March, Caudill’s director of human resources, Jon Wilkerson, told me: “Oklahoma County has experienced tremendous results in only the first month of having a direct contract with the Surgery Center (started in March). We added this as an optional benefit for covered employees, retirees, and eligible dependents on our self-insured health plan, and waived any out-of-pocket costs if they choose to have their surgery at the Surgery Center. To date, there have been 10 surgeries scheduled. The total cost for these 10 surgeries will be $58,565.00. The combined cost of these surgeries at other facilities would have been well over $200,000.”
The story gets even better — if keeping employees happy, healthy, and with more money in their pockets is one of the objectives of public-sector management.
Wilkerson told me: “These 10 employees would also had to pay out-of- pocket costs averaging $3,000 each. We have received very positive feed- back from employees regarding the quality of care and the cost.”
Wilkerson shows direct savings or more than $140,000 for needed procedures.
To drive the point home, here’s Wilkerson’s succinct summary (short enough for a billboard, in fact) of this story: “These savings will directly impact our self-funded health plan and ultimately the taxpayers of Oklahoma County. Quality care at a transparent price.”
Dr. Smith and his partner, Dr. Steve Lantier, established the Surgery Center in 1997. They have long attracted patients — health care consumers — with price transparency and quality. (One of the interesting things about the Surgery Center is that many of its cooperating physicians also perform procedures, at much higher prices, in the city area’s big hospitals.)
It was only in 2009 that Smith and his colleagues focused on the astonishing power of up-front pricing in diverse areas of practice, including orthopedics, ear/nose/throat, general surgery, urology and reconstructive plastics.
The Surgery Center has emerged as arguably the best-known practitioner of market-oriented billing that explicitly avoids entanglement with government regulators — whether through ACA, Medicare, or Medicaid — as well as the Big Hospitals and their allies in Big Insurance.
The Surgery Center works with self-insured companies, and now even with a local government, on a contract basis in which both parties retain independence. Agreements are voluntary and mutually beneficial.
In provision of frequently provided procedures, a variety of incentives are built into government regulated “private” care that drive up prices. These include mark-ups on material and prescriptions, duplicative practices, government price-setting of “floors,” and consumer ignorance of pricing.
Information, not ignorance, is the name of the game at the Surgery Center. The future will have at least some hope if more actors in the market — individuals and companies, governments, and insurers — choose to act in ways that are sensitive to market discipline, not market concentration.
When I first wrote about the Surgery Center two years ago, I praised Dr. Smith and his colleagues for choosing to “light a candle, rather than curse the darkness.”
Every month Dr. Smith and his colleagues still draw scores of patients from abroad and from across the United States. Copy- cats have opened along the Canadian border, so the Surgery Center doesn’t see as many Canadian medical tourists as it did two or three years ago.
Time to light more candles.
This essay is adapted from Perspective Magazine (April 2014), monthly publication of the Oklahoma Council of Public Affairs. You may contact Pat at firstname.lastname@example.org .