Dr. Jeffrey Singer wrote this piece for Reason Magazine this week. His article explains why the number of Canadians fleeing to the United States for surgery may have peaked and might indeed be falling. As the Canadian system continues its death spiral, private health clinics and mini-hospitals operating on a cash basis are springing up all over the country, this new trend due to the heroic efforts of one physician, Dr. Jacques Chaouilli, profiled in Dr. Singer’s article.
Dr. Singer also clubs the U.S. system on the head and mentions the wave of private clinics and hospitals (The Surgery Center of Oklahoma amongst them) that are rising to meet demand and provide affordable and rationally priced care. He very appropriately lays the blame for the mess in the U.S. at the feet of the federal government and their corporate health cronies. Even the disastrous practice of hospitals employing physicians receives this article’s barbs.
It is very unusual for me to encounter an article like this where I agree with every single point the author makes. I do agree with Dr. Singer on all but one point and I would look forward to discussing this with him at some point…and here it is.
If the movement toward rational and transparent healthcare pricing continues, the resulting price war will bring prices down to a level where even those of modest means will be able to afford care, without government and even without insurance (catastrophic insurance will still have a place, I think).
Call me an optimist, but in the pricing trenches, I like what I am seeing so far. If the “state” intervenes, however, the dismal future of medicine Dr. Singer predicts where only the wealthy and connected will have access is likely, however. Let’s hope my optimism isn’t proven naive.
G. Keith Smith, M.D.
The law requires large employers offering health insurance to include part-time employees working 30 hours a week or more. But rather than provide healthcare to more workers, a growing number of employers are cutting back employee hours instead.
The result: Not only will these workers earn less money, but they’ll also miss out on health insurance at work.
As Don Boudreaux notes: “Wow. What a surprise. I’m shocked. Shocked, I tell you. Just shocked. It’s simply astonishing that employers don’t just pay these higher mandated costs out of their ubiquitous pots’o’gold.”
Libertarians often speak about what Bastiat called “the seen and the unseen” or the danger of what Sowell refers to as “not thinking beyond Stage 1.” These are the inevitable unintended consequences we warned of: diminished access and quality coupled with increased prices and other negative economic effects.
Naturally, the same economically-illiterate statists who caused this mess will blame “the market” and present us with a solution that is more of the same.
1). It is expensive to provide health care.
It actually is not that expensive. What most hospitals charge for healthcare is another matter altogether. Even the supply costs are not that expensive and as a health care facility owner/manager I can speak from experience. Understand that medical facilities are not economically unlike utility companies that incur high fixed costs at startup, but once they are up and running, the additional cost of adding another consumer/patient approaches “zero.” In other words, hospital overhead doesn’t significantly increase with the addition of more patients.
2). Big city hospital emergency rooms are a big money loser.
See #1. Also, if this were true why is there a crane in front of almost everyone of them, building on? This hospital department represents the portal to some of the most lucrative activities a hospital encompasses with imaging, laboratory and surgery. One hospital system in Oklahoma is building free standing emergency rooms! Enough said.
3). Cost shifting is necessary for hospitals to stay afloat.
I’d say they have overdone this a bit, as plenty of money is available for the sponsorship of sports franchises, hostile takeovers of physician practices (particularly those in rural communities), subsequent hostile takeovers of rural hospitals, building and advertising campaigns….I could go on. Also keep in mind that when hospitals admit to shifting costs to those who pay from those who don’t, they are admitting that they provide no indigent care, after all. All they are doing is fronting the money to one they are going to take from another, while complaining that they have “lost” money.
4). Not for profit means not make a profit.
It actually means, “don’t pay tax.” How would you like this deal? Charging giant sums and “writing down the balances” allows these entities to maintain the fiction of their “not for profit” status. As I’ve said before, “the one thing these not for profit hospitals are good at is making money.” Over sixty percent of personal bankruptcies are due to the medical bills that these “charitable” hospitals create.
5). Physicians referring their patients to the facilities they own represents a conflict of interest, while doctors employed by a hospital referring to their mother ship does not.
Doctors who over-utilize, doctors who do unnecessary surgery are out there. They typically work for corporate hospitals, though, as fellow physicians don’t want to be co-owners with these idiots due to the increased liability involved. Seriously, why is it not ok for physicians to own hospitals but it is ok for hospitals to own physicians? Hospitals lean on their employed doctors to order more MRI’s and lab and do more surgeries all the time, so that they will “earn their keep.” Exaggerating the complexity of daily hospital visits by hospital-employed physicians, using “cut and paste” electronic medical record technology, is also widely encouraged.
6). Upfront and transparent pricing is impossible in health care.
We have done it. Enough said. Hospitals can’t do this. Hospitals are doing this. Ok. I said more than I should have.
7). Free market principles don’t apply to health care.
Free market principles always apply, in spite of all attempts by the state to thwart them. Acting in concert and consistent with free market principles allows for the most rational and fair and least wasteful and most moral allocation of resources. Acting in concert with the free market and its characteristic open competition causes quality to soar and prices to plummet. Every time, no exceptions. Patients from all over the country are using our online pricing to leverage better deals in their local medical markets, as our facility and others embracing transparent pricing are only a short plane ride away! As hard as many hospitals are trying to avoid it, they are in a competitive marketplace whether they like it or not. Those in the medical industrial complex who say that free market principles don’t apply to their industry are typically those who benefit from avoiding competition at all costs.
8). Patients have no idea how to shop for quality health care.
I have found just the opposite. Most patients are adept at spotting a charlatan doctor or a poor quality facility. The first thing many notice is the “treated like a number” feeling. Patients tend to trust the doctors that will take time to talk with them and explain their condition and options, not force feed them some canned speech. Contrast this with patients going to see corporate hospital employee doctors, having no idea that these doctors are sending them to specialists and surgeons they are told to patronize, not specialists who are any good. I think that patients are better off shopping for quality themselves, rather than leaving this to the “network” of employed doctors. These doctor-employees are too conflicted and compromised.
9). The more you pay for healthcare the better it must be.
Actually the less you pay for health care the more likely it will be of higher quality! This is counterintuitive but let me explain. A new participant in the medical marketplace must compete in order to draw patients. Price is one way to compete. High quality is another. Medical entrepreneurs risking their own capital are like any others in that they compete on price and quality to mitigate the risk of losing their shirt. On the flip side, corporate medicine (most hospitals) has taken steps over the years to insulate their facilities from competitors (licensing requirements, certificates of need, etc.) and feeling less need to compete, don’t risk nearly as much by ignoring quality in their institutions. When someone recently said to a large hospital CEO,” ..shouldn’t it bother you that your hospital is the worst value, highest priced player in the market,” the CEO said, ”No. We have leverage.”
10). Obamacare was promoted by people who care about our health care.
The stock prices of corporate health care soared after Justice Robert’s ruling. These are the true beneficiaries and the reason this legislation was pushed. Rather than serve customers and profit from this market action, these corporate hospital players will extract their loot from the taxpayers, the quality of their product or service divorced from any quality or value perception by the patient. Poor patient care in hospitals will now be treated the same as poor outcomes in public schools. More money will be thrown at them. This model of rewarding incompetence will insure that the health care bureaucrats, those who promoted this “law,” will thrive.
- G. Keith Smith, M.D.
There’s mounting evidence that come fall, the health plans sold through the Obamacare exchanges will be bare bones affairs - with narrow networks of providers to select from, and heavy co-insurance once patients go “out of network.”
In many ways these plans will be a throwback to insurance schemes of the late 1990s, when managed care was dominant and restrictive networks standard fare.
With one difference: The Obamacare plans won’t be cheap.
A small peek at the real Cuban health care system - that is, the health care that is available for the Cuban people themselves and not tourists and the politically-connected.
Starting next year, the IRS will assume responsibility for telling Americans just what kind of health insurance they must buy in order to … well, breathe free air, or something. Taxpayers will have to submit proof of health-insurance coverage along with their W-2s, and that health insurance has to meet minimum guidelines, which are classified by the IRS as “bronze,” the lowest of four tiers identified for tax purposes. And the average cost of a bronze plan for a family of four? Such a family will have to fork out twenty thousand dollars in health insurance
Obama, sticking it to the middle class like the corporate shill he is.
Insurance companies are big bad scary corporations so you have to pay them at least twenty thousand dollars a year in order to not be fined by the government. Makes perfect sense.
Dr. G. Keith Smith adds: “Individuals wouldn’t buy this on their own in a free marketplace, so corporate healthcare “persuaded” enough in D.C. to make people buy what many saw as unnecessary. Ho hum.”
At the end of 2012, like the end of many prior years, physicians faced the draconian Medicare cuts, the threat of which has served to be one of the most effective fund raisers for politicians in history. SGR. Sustainable Growth Rate. Calculation of what this cut might have been involves a complex series of factors, affecting some doctors more than others. Some specialists were anticipating cuts of as much as 23% in pay. Alas, the “Doctor Fix,” although temporary, arrived just in the nick of time, as sufficient contributions to the D.C. extortionists rolled in.
“Either we cut the doctor pay by up to 23% or the country might go broke!” ”Cuts are inevitable.” ”We will have to face this one of these days.” “There is simply no other way.”
Those of you who follow this blog know my thoughts on Medicare, indeed on any government involvement in health care at all. However…..
Keep in mind several things. Medicare pays the “not for profit” hospitals twice what is listed on our website for the same operations. Hmmm. How did this happen? Medicare pays the local teaching hospital twice what it pays the physician-owned hospital for a joint replacement. Hmmm. Now my favorite. Medicare pays hospitals for the services provided by their physician employees 40% more than for the same services provided by non-hospital employee doctors. Hmmm.
I see not only a potential for savings, but a pattern. This is without a doubt an assault on the private practice of medicine by the government, an attempt to drive physicians to be hospital employees, at once lining the pockets of the health cartel lobby and annihilating the remnant of doctors who take the patient-doctor relationship seriously, those doctors who are pushing back on further medical intrusion by Uncle Sam. The buy-electronic-health-record-systems-or-else policy by Medicare is yet another move that has cut the net pay to physicians in private practice and a move that has brought many doctors to “throw in the towel.”
What the feds and the cartel didn’t anticipate was the form which this “throw in the towel” would take. Large numbers of doctors aren’t quitting their private practice to become hospital employees. They are quitting altogether. An alarming number aren’t quitting, just opting out of Medicare, Medicaid and many are opting out of third party relationships completely.
Next time you hear that Medicare and Medicaid are going broke, remember the real purpose of these entitlement programs is to make sure that your tax money makes its way to those who have bribed their way to the trough, the players in corporate health care.
G. Keith Smith, M.D.
Technically speaking, it’s more like fascism. Socialism is where the government owns the means of production. In fascism, the government doesn’t own the means of production, but they do control it — and that’s what’s happening with our health care programs and these reforms.
Later, he clarified:
“Well, I think that was a bad choice of words on my part … that word [fascism] has an association with of course dictatorships in the 20th century like Germany and Spain, and Italy. What I know is that we no longer have free enterprise capitalism in health care, it’s not a system any longer where people are able to innovate, it’s not based on voluntary exchange. The government is directing it. So we need a new word for it. I don’t know what the right word is.”
The more appropriate term he’s looking for is probably corporatism or crony capitalism. But the thing is: he’s not wrong calling it fascism, particularly as differentiated from socialism. As I’ve previously noted: “Crony capitalism (aka ‘state capitalism’ or ‘corporatism’)… is the economic framework of fascism. Free market capitalism, on the other hand, is the economic framework of liberty.”
It’s not that so many folks lack health insurance. It’s that corporate medicine charges so much for healthcare that insurance seems more necessary than it is. Ironically, it’s the presence of insurance that renders these high prices. … It is the appearance of a third party paying for healthcare, whether [government] or corporate insurance, that represents the beginning of a price increase. …
It’s not that so many folks lack health insurance. It’s that corporate medicine charges so much for healthcare that insurance seems more necessary than it is. Ironically, it’s the presence of insurance that renders these high prices. …
It is the appearance of a third party paying for healthcare, whether [government] or corporate insurance, that represents the beginning of a price increase. …
Oklahoma Doctors vs. Obamacare
Find Dr. G. Keith Smith’s tumblr for the Surgery Center of Oklahoma here.
I hate this industry.
Officially pushing government propaganda (as opposed to unofficially pushing it, which is its modus operandi) right before an election.
Government propaganda has reached a new extreme. Soon couch potatoes will be inundated with propaganda about centrally planned healthcare. ... The evil bastards at Accenture have a contract to build the evil government healthcare destruction enrollment site. It’s Big Consultants supporting Big Pharma and Big Insurance:Abby Goodnough of The New York Times is reporting as the California state government is setting up its ObamaCare exchange, the exchange has hired a PR firm (with federal government money).“Realizing that much of the battle will be in the public relations realm, the exchange has poured significant resources into a detailed marketing plan — developed not by state health bureaucrats but by the global marketing powerhouse Ogilvy Public Relations Worldwide, which has an initial $900,000 contract with the exchange,” she wrote. Ogilvy’s plan is to tap major network TV shows like “Grey’s Anatomy” and “Modern Family” to sell Americans on the health care law:Hollywood, an industry whose major players have been supportive of President Obama and his agenda, will be tapped. Plans are being discussed to pitch a reality television show about “the trials and tribulations of families living without medical coverage,” according to the Ogilvy plan. The exchange will also seek to have prime-time television shows, like “Modern Family,” “Grey’s Anatomy” and Univision telenovelas, weave the health care law into their plots.
“I’d like to see 10 of the major TV shows, or telenovelas, have people talking about ‘that health insurance thing,’ ” said Peter V. Lee, the exchange’s executive director. “There are good story lines here.”Although the exchange will not start advertising until next year, the California Endowment, a foundation that has spent $15 million promoting the law, is running newspaper and television ads, including one in which the television personality Dr. Mehmet Oz exhorts viewers to “get educated, get engaged, get enrolled.” That campaign has targeted Hispanics, who make up more than half of the state’s uninsured population.Goodnough added “The exchange itself has so far been financed by three grants, worth $237 million, from the federal government. Most of the money is committed to consultants, including Accenture, which has a $327 million contract to build and support the initial operation of the enrollment portal.”
Health care reformers say they have two objectives: to enable the uninsured and under-insured to consume more medical services than they consume now, and to keep the prices of those services from rising, as they have been, faster than the prices of other goods and services. Unfortunately, Economics 101 tells us that to accomplish those two things directly—increased consumption by one group and lower prices—the government would have to take a third step: rationing. The reformers are disingenuous about this last step, and for good reason. People don’t like rationing, especially of medical care.
But some defenders of government control acknowledge that rationing is the logical consequence of their ambition. They parry objections by saying in effect: “So we’ll have to ration. Big deal. We already have rationing—by the market.” …
The market does not ration or allocate. The market does not do anything. It has no purposes or objectives. It is simply a legal framework in which people do things with their justly acquired property and their time in order to pursue their own purposes. …
The market was never set up by people to achieve a purpose. It is not a device or an invention aimed at satisfying an intention. “Market mechanism” is a metaphor. The market — as a set of continuing relations among people — emerged, unplanned and unintended, from exchanges, initially barter, in which the parties intended only to improve their respective situations. …
We do not face a choice between methods of rationing medical services. We face a choice between rationing according to a bureaucratic plan and being freed to engage in mutually beneficial exchanges.
The fundamental problem with health care costs in America is that the doctor-patient relationship has been profoundly altered by third party interference. Third parties, either government agencies themselves or nominally private insurance companies virtually forced upon us by government policies, have not only destroyed doctor-patient confidentiality, [t]hey also inescapably drive up costs because basic market disciplines — supply and demand, price sensitivity, and profit signals — are destroyed.
Obamacare, via its insurance mandate, is more of the same misdiagnosis.
Gabriel Vidal, chief operating officer of a U.S. hospital system, sees this problem squarely in his daily work. As he explains, Obamacare will only make matters worse because it fails to recognize that “costs are out of control because they do not reflect prices created by the voluntary exchange between patients and providers… like every well-functioning industry.”
Instead, “health costs reflect the distortions that government regulators have introduced through reimbursement mechanisms created by command-and-control bureaucracies at federal and state levels,” he continues. “But it is theoretically and practically impossible for a bureaucrat — no matter how accurate the cost data, how well-intentioned and how sophisticated his computer program — to come up with the correct and just price. The (doctor-patient) relationship… has been corrupted by the intrusion of government and its intermediaries (HMOs, for example) to such an extent that we can no longer speak of a relationship that can produce meaningful pricing information.”
Absent such pricing information, our system increasingly resembles socialist systems with centralized price setting, shortages, rationing, apathy, and declining quality of care. As the situation deteriorates, fewer bright young people want to practice medicine and fewer foreign doctors seek to immigrate. …
In a free market, most Americans would pay cash for basic services and maintain inexpensive high-deductible insurance for catastrophic injury or illnesses only. Health insurance would be decoupled from employment, which would unleash entrepreneurs who now fear quitting their jobs and losing their health insurance. Costs would plummet due to real competition among doctors, price sensitivity among patients, and elimination of enormous paperwork costs. Doctors would be happier, spending their time treating patients rather than managing their practices.