LinkedIn conversation…transparency discussion SCO (Surgery Center of Oklahoma)

OKLAHOMA CITY – An Oklahoma City surgery center is offering a new kind of price transparency, posting guaranteed all-inclusive surgery…

9 days ago

You, Robyn GrayTim Foley and 34 others like this

73 comments • Jump to most recent comments

Robert Bonds • Excellent piece and having worked for two of the hospital systems mentioned in the story that are both not for profits, they are extremely revenue oriented. What is of interest is the fact that the surgery center does not participate in any federal programs and that is why the surgery center can keep its costs to patients affordable. The cost accounting required by Medicare is a tremendous financial overhead for any healthcare to bear. What most healthcare consumers do not know is that Medicare/Medicaid reimbursement to surgery centers is 40-60% below what is paid to hospitals for the same outpatient surgery procedures. Surgery centers represent a very viable alternative for elective surgery.

8 days ago• Like1

Nick Yaqub, MD, MPHE, JD • Basic commerce idea that is extremely overdue in medical services. Consumers should support this and refuse to pay unpublished prices that are usually charged after the facts. This paradigm change will force hospital to concentrate on internal cost of their products.

8 days ago• Like3

Don Jarrell • Robert makes an excellent point which I’d like to extend. The notion that the cost of administrative/clerical overhead for CMS dealings is incremental, significant and does not contribute to either real operation or its essential economics is obvious. Similar creative response is growing in the face of ICD-10 implementation where costs for increased staff, increased training, new/enhanced software tools etc are coupled with probable increased costs in staff time to work denials, financial wrangling to accommodate more delayed reimbursement, more legal fees etc, etc.

As such, several providers with whom we’ve talked have discussed voluntary (“prophylactic”) down-coding, based on the fairly sound (IMO) theory that the decreased reimbursement across the board would be less than the costs of the enormous and continual fight with CMS over reimbursement dollars. This is not a political point but strictly a business/economic point.

8 days ago• Like1
Brian Gregory, MD, MBA

Brian Gregory, MD, MBA • I’m glad to see this transparent competition in pricing.

Unfortunately, as in many product/service purchases, significant quality will be ignored (or not seen) and people will choose based on price alone. Maybe I’m wrong…Thoughts?

@Don I think that downcoding might be a bad move in that the 3rd party payor may just use that as an excuse to claim that others are coding too high. It will also screw up any trends in disease or trauma analysis along with morbidity and mortality associated with those cases. Any thoughts on the significance of this, or possible alternative deals/discussions with the 3rd party payors?

Transparent price competition might encourage the use of concierge physicians (medical care) knowledgeable about the facilities and clinicians who can weigh and explain the expertise-risk-price trade-offs for the patient.

Medical tourism is already involved with these same problems and some have developed more sophisticated quality measurements than those used by JCAHO. It seems that some convergence is beginning (which usually means that we’re actually getting somewhere).

In any event, those of us who make the process more efficient/productive should see an increased interest in our products and capabilities.

8 days ago

Don Jarrell • Dr. Gregory, you’re absolutely right that as provider-shopping becomes more based on price transparency, some providers may over-torque the dynamics as previously seen in other markets tending toward commoditization. But, I’m sure we agree, there is a big difference in discovering the price/quality boundary in solar landscape lighting versus a CBAG.

The conflict between coding-for-research and coding-for-reimbursement is inherent, huge and not the doing of the providers or private payors (even if the latter learned to exploit it). Exercising such options for many may become more about survival than greed with the ultimate net effect being that, as you say, volunteer down-coders will be *pitted against* those who choose (and can afford) to spend a lot of money fighting denials on higher, (hypothetically correct) codes. (Just observing, as we have no dog in that fight.)

Finally, because of our business, we have an interesting view of what things HCOs *want* to measure. With a growing library of 1100+ expertly-defined “official” Performance Measures on the entire spectrum of clinical care performance, we are still adding (quite easily) additional measures that customers and prospects request. Even with a predominant focus on universal/eternal measures of outcomes and clinical practices, we still get a lot of requests for measures related strictly to performance against administrative or “program” mandates from regulators. Of course, everyone who runs any kind of HCO is familiar with such pressures that are not *really* about quality of care. Interestingly the conversations we have with international prospects make clear they appreciate our primary focus as a real *quality* related *management* tool for delivering best patient care efficiently.

8 days ago• Like1
Brian Gregory, MD, MBA

Brian Gregory, MD, MBA • Don, what I like about your system (if I’m interpreting correctly) is that you can quickly modify and tailor it for a specific type of medical care and facility. The research and practical benefits, for those who understand how and why to modify the measures, are enormous: a rapid simulation and learning platform in the right hands, and a way to ‘game’ the system in the wrong hands.

Powerful, and prescient– if Surgery Center of Oklahoma becomes the norm (which seems to be the case from the article). They’re engaging in medical tourism. The medical tourism systems I’ve heard about before are more rigid and would be expensive and slow to adapt or tailor for rapid competitive purposes, and it looks as the competition is increasing.

I’m also glad that SCO is empowering its employees knowledge and input—tough competition to beat!

8 days ago1
Brian Gregory, MD, MBA

Brian Gregory, MD, MBA • As an aside, 15 years ago I tried to get the hospital where I worked to do this. They (as well as some of the comments in the Oklahoma City hospital article) said they’d never do it and listed a plethora of reasons. Validation is sweet.

8 days ago2

Jeffrey Thompson • Don and Brian,

I really enjoyed reading your comments. To add to discussion, I think it will be essential for healthcare providers to truly understand and separate out which conditions/procedures can be either fully or partially commoditized and which conditions/patients are more complex. As Clayton Christensen discusses in the Innovator’s Prescription, a value added process can be empirically driven and paid on fee for episode (bundled payment) while the complex condition should still paid on fee for service.

I think we will find that we have more conditions that can be commoditized over time as we reduce the artificial variation in healthcare.. This can and is being done in pockets across the country but requires a well-designed and flexible delivery model combined with significant culture change at all levels.

(The views expressed are my own and do not reflect the views of my employer.)

7 days ago• Like
Brian Gregory, MD, MBA

Brian Gregory, MD, MBA • Jeffrey, you said:
“I think it will be essential for healthcare providers to truly understand and separate out which conditions/procedures can be either fully or partially commoditized and which conditions/patients are more complex.”

::grin:: That’s the fun part —nothing like a tough puzzle for a good team with some depth.

I know that the Mayo Clinic is quite good at the non-commoditized part, and ‘The Innovator’s Prescription’ [Don and friends turned me onto it earlier this year] would have categorized Mayo as a fee for service facility. If you are at liberty to say, how far has Mayo delved into commoditizing? I’ll leave that as a simple open ended question even though I have some very specific-detailed ones.

7 days ago

Jeffrey Thompson • Hi Brian,

There are many efforts across the institution looking at practice redesign and it definitely will be a journey for Mayo Clinic as well as other institutions as our country deals with healthcare reform. As for specifics, we are publishing multiple publications of our work in cardiac surgery which will be out there over the next year.

7 days ago• Like

Rick Baker • Our medical brokerage organization, has been triaging clients to Dr. Keith Smith’s facility in Oklahoma City for the last eight years. All of our clients who have had surgery at this facility, give it rave reviews.

Healthcare is the one industry, more than any other, where there is no relationship between the cost of the service and the quality of the service in most cases. We use an online hospital rating service to vet the hospitals to which we send our clients.It is fascinating to note that several world famous American hospitals will get a one star rating for spinal fusion, for example, whereas hospitals we routinely use, in nearby states, and which get no national publicity, get a five star rating.
Yet the hospitals we use, charge our clients a small fraction of what they would otherwise have paid at world famous hospitals.

7 days ago• Unlike2

Joanne Rohde • The State of Colorado is doing an excellent job on price transparency, posting charges and efficacy of the physicians. All the insurance companies have come to gether to force this transparency, and they have the added ability with the State’s help to publish the docs and hospitals data. I’d keep an eye on what’s happening there. It won’t be perfect at first, but great is the enemy of the good.

6 days ago• Like
Brian Gregory, MD, MBA

Brian Gregory, MD, MBA • Joanne: Are they posting charges and collections? Is there enough raw data to discover liens on people’s property? I know it’s early, but how about 1,2,3 year follow-ups? Inexpensive, but also unneeded tests, procedures, or referrals? A start is good….

My gist is that I don’t know what type of data Colorado is collecting . Putting data into the public arena is great, and I hope that it’s comprehensive enough that it can’t be gamed. There should be the possibility for people to recognize tradeoffs that might exist, also. Pros should be able to adequately and confidently analyze the data for those who can’t.

Florida (yeah, I know…Florida) had a simple system for listing malpractice suits that could be assessed by the public. From personal experience, and those of others, we saw bad information: wrong docs, no information on many dismissals or settlements, few details, impossible to correct. Lots of Catch 22’s and bad administration. Gamed by some less than ideal docs who knew how to triage their mistakes elsewhere.

What Colorado is doing is good for the general public. However, physicians and facilities wanting to decrease their costs by increases in efficiency and productivity (while decreasing risk) require different data and different outside information. That ‘private’ information will then help them score better on Colorado’s ‘public’ information ratings, which is feedback (but not solutions) for the processes.

Ideally, results and process are analyzed together. That would be difficult for the state to do, but easy for the physicians and facilities. That’s also why Colorado should be very careful about the data it collects—gaming the system.

6 days ago

Christopher Hawley • So if you click the link for the pricing in the article all the prices come with an asterisk that refers to a “Pricing Disclaimer”. If you click the disclaimer it takes you the disclaimer page that states:

“NOTE: If you are scheduled for surgery at our facility and we are filing insurance for you, the prices listed on this website do not apply to you.”

The pricing disclaimer also goes on to point out that any hardware or implants are not included in the quoted price. Overnight stays are additional charges. Expenses or fees resulting from complication are also not included.

When you really look at what they are doing it isn’t anything really different than hospitals with regards to transparency. Self-pay patients are still paying different then insured patients and the prices are nothing more than quotes.

6 days ago• Like
Brian Gregory, MD, MBA

Brian Gregory, MD, MBA • When buying a car, you can get upgrades, change the tires, etc….But you know the price before you sign on the line. If I understand correctly, you can get the final inclusive price for SCO before you sign on line; or if the hardware has to be changed after the operation starts, you can have knowledge of how much that change will be and also the maximum potential price.

When going to most hospitals…it’s a big surprise for the patient at the end of the day.

When going through most insurers…it’s a surprise for the doctors and facilities at the end of the day. I’m not surprised that they don’t quote for third party payors.

6 days ago

Greg Grambor • As a layman, to me this is all so superficial. If I am going to have surgery, I seek the most competent doctor I can find, and hang the cost! And I am very far from being a wealthy person. Even if I have to take a loan to pay a horrendous co-pay, I would do it. When anyone in my family needs a procedure, the research machine goes into high gear, and the responsible adults in the family start making a blizzard of phone calls seeking referrals to the most highly regarded expert in that type of surgery. You have a duty to yourself and those who depend on you to make sure the person cutting you open is the most skilled you can locate. Let the money take care of itself over time. Just a view from the other side of the scalpel………….

6 days ago• Like

Christopher Hawley • Buying a car is the purchasing a finished product, of course you can be given a final price. A better analogy would be going to the mechanic. He can give you an estimate based on his initial assessment of the problem, but until he gets in there and sees what’s actually wrong and fixes it he can’t give you a final price. And just like at a hospital the bill can be a big surprise at the end of the day.

This surgery center is using a business model like Jiffy Lube. Jiffy Lube provides standard pricing for the low level maintenance services: oil change, air filters, fluid changes, etc. However they aren’t going to replace your mechanic or provide standard pricing for any sort of complicated repairs. This business model works because the services can be standardized with regards to cost. It’s a good business model for what they do, but their services are limited and Jiffy Lube cannot replace your mechanic.

When going through insurers it’s a surprise for doctors and facilities? While reimbursement rates differ from insurer to insurer the actual reimbursement rate it’s never a surprise.

6 days ago• Like

Robert Bonds • There was one comment regarding the quality of the surgeons which is very common in the surgery center world. Having been a surgery center administrator years ago I had to deal with this comment. Those surgeons who have privileges at the surgery center have to be credentialed before doing any procedures, just the same as the hospital. Many if not all surgeons who operate at a surgery center are also those who are on staff at the local hospitals, ergo there is no difference in the physician. The scope of care provided at a surgery center is regulated by each state to ensure the safety of the patients, so that surgeons are not performing cases which are beyond the capabilities of the center.

As to the comment about this business model, while I have not investigated what the Surgery Center of Oklahoma has posted on their website vis-a-vis pricing; I am sure there is some sort of disclaimer to take into account a complication that arises during the procedure. Why does Jiffy Lube do more oil changes and other minor car maintenance than the local car dealer or independent mechanic; quite simple they are extremely efficient and proficient. Ergo this also applies to services provided by a surgery center, which based on information from FASA, the surgery center trade organization and personal experience, the efficiency of the surgery center is far superior to the outpatient surgery department of the local hospital. Let’s not forget that the “outpatient surgery department” of the hospital is not truly a separate department with its own set of operating rooms. In reality all that exists is a separate reception/waiting area and possibly a separate pre-op area. Those patients coming through the hospital “outpatient surgery department” are having their procedures in the same operating rooms that those patients that were admitted directly into the hospital. It is typical for those hospital surgeries to be complicated, delaying those elective surgeries coming through the “outpatient surgery department.”

At the end of the day, in my opinion, elective surgery patients can be better served by having their procedure done at a freestanding surgery center where efficiency is priority and where the insurers do not take a beating at the hands of the hospital.

6 days ago• Like
Brian Gregory, MD, MBA

Brian Gregory, MD, MBA • Christopher and Robert,
Having been personally involved in 20+ years of surgeries as an anesthesiologist, I can guarantee you that there can be a tremendous difference among board certified surgeons both in time it takes to perform a surgery and the quality of the surgery.

Some surgeons would not be asked to be part of an efficient free-standing surgery center due to the operational cost (overhead) of their slowness and complication rate, potential lawsuits, and frictional personalities. Ask anyone who actually works in a hospital OR. I could say the same about some anesthesiologists, CRNAs, and nurses not making the cut. The integration as a team is important, too.

As for third-party payors, the cost for collecting from specific payors who deny claims or drag their feet have caused some friends (surgeons, OB-Gyns) to quit accepting those patients having their policies. Again…not conjecture but routine that every surgeon’s collection ‘people’ have to deal with.

Anesthesiologists (particularly when and where multiple groups or individuals would work with same surgeons in the same hospitals) would try to surreptitiously see who was the primary payor for a patient before having a ‘busy’ excuse for not being able to do a specific case the next day.

Hospital administrators know this because part of the contract with an anesthesia group often depends on a guaranteed minimum for the independent anesthesia group due to a ‘bad’ insurance mix with regards to paying for anesthesia.

Ask any plastic surgeon whether they’d take cash over insurance.

As for the arcane accounting practices of many hospitals versus free-standing surgery centers…Well, that’s a major cause of the mis-pricing of surgery. It’s amazing that inappropriate accounting concepts and systems can make an otherwise viable in-house outpatient surgery center not competitive.

So…
* Difference in surgeons

* Difference in anesthesia

* Difference in nurses

* Difference in payors

* Difference in accounting and complexity

That’s before I have to think hard about it and get into problems with referral patterns or non-necessary consults, non- necessary tests, incredibly inefficient scheduling of surgeons cases during a specific day…

This may be why there’s such effort by hospitals to prohibit free standing surgery centers (often funded and run by surgeons and anesthesiologists) by legislation.

Those with more knowledge, experience, and funds at stake who actually play in the game usually end up competing better.

6 days ago2

Rick Baker • The Surgery Center of Oklahoma,whose pricing strategy started this whole conversation, is a physician owned facility. Only the brightest, most capable, and most efficient surgeons are invited to join their group. And certainly, no surgeons with any malpractice issues, would get an invitation.

Based on the positive outcomes which all of our clients have had with their surgeries at this facility over the last 10 years, I would have no hesitation in scheduling surgery for any of my own family, at this center.

6 days ago• Like2

Ralph Weber AEP, CFP, CLU, ChFC, GBA, REBC • Keith Smith and his Oklahoma Surgery Center has single handedly started which no amount of legislation could ever do…He has begun to restore a free market in medical care. The PPOs with their opacity operate like a cartel and prevent competition, so the only way to reduce costs is to step outside of that model.
The Oklahoma Surgery Center is one of our best facilities on MediBid.com, and they have stood by their quoted pricing even when minor complications arose.
More and more employers are embracing competitive models, as we design health plans which encourage that

5 days ago• Like1

Jonas P Littman • Does anyone know if such down-pricing and transparency has had the effect of Insurance Companies asking to renegotiate their negotiated rates lower? I am trying to get my local hospital to change its entire charge-master, but one argument is that it would open them up to such re-negotiation.

5 days ago• Like1
Brian Gregory, MD, MBA

Brian Gregory, MD, MBA • Jonas: ::grin:: There’s a limit as to how many cases OSC can do in a day…so far. However, the pressure is on. If not careful, the insurance companies will price themselves out of the market as a middleman. Their options will be value added services, more legislation, or integration with these efficient places.

Ascension Healthcare (a hospital behemoth) is taking the later route by investing in the 2 billion dollar cardiovascular hospital on Grand Cayman that is being spearheaded by the best known cardiovascular surgeon from India (sorry, forgot his name). It’s a guess as to how Ascension is going to take advantage of this. In any event, short sell your CV surgery units now while there’s still time! 🙂

5 days ago

Alen T. • I looked at several of their prices and are very close to 80/20 reimbursement plans.

5 days ago• Like

Jonas P Littman • But 80/20 of what? I am seeing the situation where an uninsured person (or someone with insurance but where the procedure isn’t covered) gets charged the “charge-master” price which is ofter a very very significant multiple of the typical negotiated rate. So a $10,000 surgery can have a charge master of $50,000. This is why I want to get them to change this truly fundamental pricing number across the board.

5 days ago• Like1
Brian Gregory, MD, MBA

Brian Gregory, MD, MBA • (hopefully someone can better explain or correct the following)

Jonas: If I understand you correctly, you’re asking why the hospital charges the maximum amount for non-covered items?

Apparently, it’s a bizarre numbers game between the hospitals and 3rd party payors.

Third party payors (government or private) tend to take an average, quartile, minimum or some other statistically calculated amount from all the charges for that category of care (how they group care activities into categories is sometimes a mystery unto itself). That calculated amount (within their accepted categorization) is what they will pay without going through a very expensive collection effort by the healthcare provider. The categorization can also depend on where the care was given.

I suppose 3rd party payors could also take a statistical calculation of the amount actually paid out (without taking into account the cost of collection by the provider) and come up with a price for specific care that way. As usual, people seem to accept statistical reasons for doing things whether that actually makes sense or not, so any type of calculation might be invented.

So… The hospitals will therefore charge an ‘unrealistic’ maximum so that they keep that statistical calculation high (whatever the statistical calculation is).

Sometimes the hospitals say that they have to ‘overcharge’ on some items because they aren’t paid enough for other items. A lot of normal people have trouble believing this argument based on common sense. A lot of people in non-hospital finance and non-hospital management have trouble believing this (loss leader?) argument based on economic, finance, and management theories and experience in other, competitive industries (payment inefficiencies inhibiting appropriate charging for specific services and focus for improvement or alternative care).

i.e.,
* The hospitals are more accustomed to making money by charging more (like the government collecting taxes) than by becoming more efficient or productive (like the computer industry and some others), they’re under financial pressure, and…

* there are no usury or other laws effectively prohibiting many of these high charges whether the charges were known by the patient or came as a surprise later.

Which leads to the demand for transparency, competition, and/or universal healthcare… which leads to SCO being formed, medical tourism on the uprise, the beginning of serious efforts in efficiency and productivity, etc.

5 days ago

Ralph Weber AEP, CFP, CLU, ChFC, GBA, REBC • Jonas,
Changing chargemaster might do that, but there are better ways

5 days ago• Like

Ralph Weber AEP, CFP, CLU, ChFC, GBA, REBC • Brian, Third party payers also have a built in “hidden fee”. If you google “Blue Cross Hidden fees case” you will see what I mean. That’s why they like the chargemaster, so they can re-price the procedure to “allowable”, but then reimburse the facility at a rate even lower than that.

5 days ago• Like
Brian Gregory, MD, MBA

Brian Gregory, MD, MBA • Ralph, How does that play out in court?

(reminds me of the time I was charged for napkins and pats of butter in a restaurant in Italy)

5 days ago

Richard Beery, MBA • Another thing to take into consideration is that, for in-patient care, the advent of the DRG reimbursement mode spelled the death knell for cost related accounting for hospitals. It used to be, pre-DRG, that the various departments (radiology, lab, respiratory etc.) were termed “revenue centers” since the hospital was paid on a “time and materials” type basis. Since DRG the only revenue center is the coding department of Medical Records and there is no way of assessing the reimbursement amount which should go to covering the cost of physical therapy treatments following a knee replacement.

5 days ago• Like

Jonas P Littman • Interesting comments all. thanks.
I need to do some more reading. The weird thing on the very specific issue of charging the full charge-master rate to the uninsured is that this appears to be a very small part of the bottom line when I look at the Hospital’s last tax return (2011). So it is hard to imagine that even if every charge-master price was 10x the average negotiated rate, that it would move the meter much in the somewhat obtuse calculation you mention (Brian) that the insurer’s make.

There is no doubt some of this is just a historic artifact and since it almost only impacts a small un-empowered population there is little incentive to change it. In fact most people I’ve spoken with don;t even understand that this is an issue. The reaction is “it doesn’t matter. THOSE people just don’t pay.” And in fact collection rates are low. But a) maybe they would pay the $1000 an insurance co would negotiate but not the $10,000 they are being billed. And b) the debt and credit issue will haunt them for years. So there are many people out there who desperately want to pay but simple can’t afford the outrageous amount they are asking. “Usury” is a good analogy.

Ralph I am very interested in another easy to implement way to go after this than changing the charge-master.

5 days ago• Like

Richard Beery, MBA • Jonas – You are quite correct that the Charge Master has little to do with overall reimbursement. And, charging the full price to those least able to pay makes no sense at all. When I was working in a hospital, way back when, it was a common practice to mark up products and services 300 to 500 percent of the cost on the Charge Master. I have no knowledge as to whether or not that still holds true, but I would guess that it does, if not more.

5 days ago• Like

Ralph Weber AEP, CFP, CLU, ChFC, GBA, REBC • Jonas there was a precedence set in Florida about charge master and the uninsured. Also repricers, ppos and medical debt collectors benefit from high chargemaster rates

5 days ago• Like

Jennifer Misajet • So much to read here-
I just had to give a nod and smile to Brian’s description of anesthesia wanting to know the payor before the procedure. In my past we fondly called that the “wallet biopsy” and the on-call person got defaulted what was assumed to be low pay or no pay work on that day (-:
We could spend hours on the chargemaster/item master alone-
first it can be a mess with duplicates of the same item (sometimes with different prices) which makes any kind of analytics more difficult.
second- when the annual increase is calculated- you have to go back and take a look at the cost of particularly low dollar items comparing charge to purchase price- that work does not routinely happen with lower ticket items. Even if you use some type of matrix based on type of item and dollar range, across the board increases need close scrutiny. The price the hospital is paying for the item is frequently not current in the system- so anything based on cost can also actually be charged at less than what you are paying for it (true). Don’t forget all those other thousands of supplies that are in the item master but are not “chargeable” so have a zero $ value in the chargemaster.
We do know that people “choose” to be uninsured when accessing healthcare services…
I will stop there on that subject.
Last but certainly not least- one thing no one has mentioned that contributes significantly to the cost of medical care anywhere – Salaries and benefits. This can vary greatly based on geographic region, skill mix etc. but can’t be ignored. Free-standing surgery centers have gotten closer to acute care in wage and benefits and frequently use bonus pay and other incentives as part of the total compensation.
Interesting times

4 days ago• Like

Gerald Rogan • When I practiced primary care, I advised a private pay patient to pick the cheapest surgery center and I would find a surgeon to operate. I gave him the CPT code for his operation.
One of my uninsured friends negotiated an all inclusive cash hospital fee for his wife’s delivery at Medi-Cal rates.
Another friend made so much money owning 10 surgery centers with his surgeon partners that he retired at age 38.
As a self-pay patient in 2012, I visited a specialty doc at his office located in an office building near the hospital. Two months later the university hospital charged me $329 for use of his office for one hour. The existence of the facility fee and its amount was not disclosed in advance. The hospital refused to waive its non-compliant bill, so I was forced to pay it and file a complaint with the State of California department of licensing and certification field office. The investigator found the hospital system was not compliant with current California law and required a corrective action plan. Now I must follow-up to determine whether the hospital is compliant so I know whether to file another complaint. What goes around comes around!

4 days ago• Like

Prakash Singh • I think this is good news for all to improve transparency and I hope other hospitals also follow the trend.

4 days ago• Like1
Brian Gregory, MD, MBA

Brian Gregory, MD, MBA • Does anyone else recognize the irony that this discussion thread is about price transparency for the CUSTOMER, but price (cost of operations) transparency for the SELLER is a major problem, too (reference to Jennifer’s comment)? It’s difficult to have competition leading to improvements if both sides are guessing.

I’d like to know how Surgery Center of Oklahoma handles their accounting system (theory, computer program, and practice implementation). I assume they have a positive cash flow, but even that would need to take into account the owners’ net from professional fees and the surgicenter together. And, who knows what the requirements of the passive investors (if they exist) are?

4 days ago

Jonas P Littman • Brian, that is true. But it is true in any complex business that figuring out the cost of one action depends on the allocation of the cost of a variety of support functions. How much of food services should go into a patient’s bill for getting stitches in the ER? At least I assume that is what you are talking about.

Jennifer. I am interested to hear more about “We do know that people “choose” to be uninsured when accessing healthcare services.” I know some people choose to not pay for health insurance. but do you mean they will pretend to be uninsured when accessing services?

4 days ago• Like

Christopher Hawley • I just don’t see how this surgery center is being actually”transparent with pricing”. The prices listed are only applicable to uninsured patients, and there is a potential for a multitude of additional costs not listed in that price. Did any of you notice their preferred payment method is cash and there are additional charges for any other forms of payment?

This is probably a much more effective marketing tool for them than functional business model. How many uninsured patients do you know with cash available to afford one of these procedures? I’m sure they get the occasional patient from Canada or California, but I bet the majority of their patients are still insured patients. With their advertised pricing then can now make claims like; “an ankle arthroscopy at OU Medical Center will be $23,934 while it’s only $3,740 here.” There are lots of insured patients who will hear this and choose the Surgery Center because they think they are being cost conscious consumers. Except neither of those prices are actually applicable to an insured patient. Both places have negotiated reimbursement rates, which neither are disclosing. The insured patient has now gone there thinking the prices are lower, when in fact the insurance negotiated reimbursement could potential be higher at the Surgery Center.

4 days ago• Like
Brian Gregory, MD, MBA

Brian Gregory, MD, MBA • Jonas, I was referring to the problem that Jennifer had with simple direct costing due to ‘simple’ problems with updating the cost sheets.

At OSC it should be easier to keep up with the direct costs, and there’s much less indirect cost. That’s a major advantage free standing surgery centers have since they will not as likely misapply as much costs (and subsequent strategy changes, purchases, etc) compared to a hospital with a lot more overhead.

When large established companies attempt disruptive innovation, it’s usually recommended they create an entirely separated division that does not deal in any way with the existing structure—-not culture, and not accounting. The culture piece is more obvious, the accounting piece is not so obvious but involves bad strategy from misapplication of decisions based on overhead from the rest of the company to the new venture. [Certain accounting systems can more easily handle the problem without separating the new venture.]

When dealing with non-direct costs, you’re getting into a big debate on whether to use throughput accounting, marginal accounting, TDABC, standard costing, etc. That’s a massive debate unto itself and the choice can make or break a facility.

4 days ago

Jonas P Littman • Brian – Sorry to be dense: does “cost sheets” = charge-master?

Christopher – As guess as a subset of your point, why won’t the insurance companies come back to re-negotiate basis these published prices? My understanding is that most contracts between ins.co’s and hospitals have some sort of most favorite nation clause that they can’t sell the service at a price below their negotiated rate.

4 days ago• Like
Brian Gregory, MD, MBA

Brian Gregory, MD, MBA • Jonas – No, they’re not the same– item master would be closer. Jennifer touched on this in her comment. When dealing with some accounting systems (like TDABC), you’d be involved with other units as well.

4 days ago

Stephen Jackson • Transparency is great.
On rates insurance companies should get lower rates as they are driving business.

4 days ago• Like

Ralph Weber AEP, CFP, CLU, ChFC, GBA, REBC • Christopher
I’m pretty sure they don’t have contact with insurance company

4 days ago• Like

Christopher Hawley • Ralph, they have a “Pricing Disclaimer”http://www.surgerycenterok.com/pricing-disclaimer/ that clearly states:

NOTE: If you are scheduled for surgery at our facility and we are filing insurance for you, the prices listed on this website do not apply to you.

4 days ago• Like

Jonas P Littman • Thanks for clarifying that Christopher. But are the negotiated rates with insurers lower (as is the norm)? If they are higher, how does that work as I have seen some of these “most favored nation” clauses in contracts that do not allow the hospital I looked at to charge less than they do to the ins co?

4 days ago• Like

Christopher Hawley • Jonas, I’m not trying to say their insured rates are necessarily higher than their advertised pricing. They don’t advertise their insured rates and which is why I question their level of actual transparency. They advertise dramatically lower “prices” than the hospitals, but without knowing their insurance reimbursement rates we don’t know if they are actually cheaper.

4 days ago• Like1

Tracy Bevington • I am a Canadian citizen living in Canada experiencing the fall of the Canadian health care sytem. I have through my business helped many Canadians seek and receive help from The US health care system. More importantly than the today issues of each health care system is the economic outlook for the future of both countries. It is my opinion and that of several colleauges on both sides of the border that health care benefits will be the sole concern of the individual. In other words we will all be responsible to pay for our own healthcare. Similar to buying any other commodity;who has the best products/services for the best prices. This has already begun to affect Canadians and it could be in the relatively near future fo the US as well.
So, back to the question; it is my thought that todays decision to advertise health care services and prices may be the way both countries decide where to go for their health care needs, especially surgeries.
…. My humble opinion…….

3 days ago• Like
Brian Gregory, MD, MBA

Brian Gregory, MD, MBA • Tracy,
The point remains that transparency (and the ability to act on it) is a requirement whether healthcare is considered infrastructure provided by the government or a commodity purchased individually or in groups.

One could debate in which form (and at what rate) it would be easier to force transparency and change. Also, I doubt that a government by itself would come up with destructive changes (individual companies find it very difficult within themselves) that tend to create some of the most significant improvements.

On the other hand, it would be beneficial for those risking their own finances, time, and futures in other potential industries to have a fall back healthcare system. Many creative people will risk a standard of life, but not their own lives or those of their children in the pursuit of wealth, fame, etc.. Healthcare worries take up a lot of energy that could be going elsewhere.

A mixed system (with transparency) could permit both. There are existing countries that seem to strike a balance. Canada is having political problems with its attempt to mimic the US in some industries. It might not be the best instructional example of failed social healthcare.

3 days ago
Brian Gregory, MD, MBA

Brian Gregory, MD, MBA • Transparency….The US government has not been doing well with that. It’s surprising and scary ‘they’ are not cognizant of the ramifications of ‘their’ actions when the citizenry consider letting the government get involved in other industries (like healthcare).

If they are aware… hmmm, that’s even more scary. Ignorance, malice, greed, or power? I’d prefer a situation where any of those could be recognized and dealt with. Transparency would help.

3 days ago

Tracy Bevington • Well Doctor Gregory, we really could debate the weaknesses and strenghts of our governments involvements passed, present and future in health care. Our socialistic appraoch has certainly become antiquated, how ever it apperas that many healthcare providers in the US are very unhappy with the rates of pay for insured health care users and that is having tremendous negative impact on the econmomical sustainace of the US system as we know it. As for Canada imitating the US in many areas I think your president’s decision to insured health care is poretty close to Canad’s and it is failing.

However, I must agree that in the pursuit of a proper business model, and as I had said earlier that the future looks like health care shoppingll be the new approach, certainly transparency would help.
I also believe that mixed approach could help Canada and the US, as the US could use the cash paymnets from Canadian’s in need, Canada could appreciate the technology advancenent the US has in the health care industry over Canada (approx. 15 years worth), we still wait for surgeries weeks and months and eve years, talk about “DO NO HARM” just the waiting can kill you.

Thank you Doctor, this is interesting.

3 days ago• Like
Brian Gregory, MD, MBA

Brian Gregory, MD, MBA • ::grin:: So we agree transparency is good for whoever ‘they’ are.

3 days ago

Tracy Bevington • Yes Doc! Even more, it should be mandated.

3 days ago• Like

Gerald Rogan • An functional marketplace requires that buyers and sellers know the price and the nature of the item or service transacted. What we have now is an institutionalized failure to communicate.

3 days ago• Like

Jonas P Littman • It is the ability to have transparency which can be tricky. For a personal example – I used to go to a certain well respected out-of-network doctor for my annual skin/melanoma check. $400 (friend of doctor rate – seriously). Over time I decided it was too expensive for me. So I tried an in-network dermatologist whom my physician recommended. $80.

However, the out-of-net doc would spend 30-45 minutes with a large magnifier going over every remotely accessible inch of my body. The in-network doc came into the examining room, looked at my for about 5 minutes (not an exaggeration) and asked if I noticed any changes recently – then sent me away.

What sort of transparency would give me the ability to make the choice between doctors without prior knowledge of the difference? They are both well regarded. And even having made the comparison now, which doctor should I go to next year (assuming money means something)?

3 days ago• Like
Brian Gregory, MD, MBA

Brian Gregory, MD, MBA • Jonas- Perfect transparency? Good question.

Yep, you’d have the ability to decide your own tradeoffs—your own utility functions as complicated as you want to make them. Can you handle it?

Need help with locating and analyzing all the possible combinations? You’ve just created an industry—medical tourism on steroids, and I bet there’d even be a medical consumer’s report and medical travel agents who could quote you the complication rates, readmit rates, room with a view rates… and opinions on all of them.

Suppose ‘Stage 1 – Transparency’ is accomplished.
What now? What’s ‘Stage 2’?
What are the possibilities?
How has the game changed?

Time to sit back and enjoy the input. 🙂

3 days ago

Gerald Rogan • “Fool me once, shame on you. Fool me twice, shame on me”

3 days ago• Like

Debra Wilson • Silos and computers! Where have our human factors gone? We send emails to the office next door. Forget there are other subsystems within the megacosmos not just the world revolving within our own small sphere. We have built walls and barriers within our systems which prevents communication… the real face to face interaction.

2 days ago• Like

Jennifer Misajet • There are so many responses I had to scroll back and read to catch up. The dialog generated from this article has been for lack of a better word “healthy”
For the colleague asking about people “choosing” not to be insured- what I mean specifically is people who have coverage and choose not to provide that information when obtaining service. This is not unusual, I have seen it when people have lifetime caps, having procedures they don’t want part of their insurance record.
@ Jonas- for your dermatology example I had a couple of thoughts, first this seems to be significant in your health history and as such you as the patient would let this network doc know that you are used to a much more thorough exam. It is also a specialty where telehealth has made great advances and the computer is a most useful diagnostic and treatment tool.
As I keep reading about transparency and “healthcare shopping”- I am struck by the notion that people want to purchase healthcare at “cost” or wholesale. Healthcare needs to operate at least at “break-even” to continue to provide anything
When one purchases car repair you get a breakdown of parts/labor to do one job for one person. When legal, accounting type services are purchased you get a bill for what is essentially “labor”.
In healthcare, outside of the professional fees, the bill includes the cost of the “parts” with the labor built into that cost as well as the cost to maintain the support infrastructure. In the Oklahoma model, the infrastructure cost is significantly less than in a multi-service acute care setting. Even medicare understands this and reimburses differently for ambulatory surgery.

2 days ago• Like

John B. • This news will shake up the inpatient and outpatient surgery sectors of the Healthcare industry.
Most US patients really don’t know about the tremendously cost-saving surgery done overseas. Boob jobs are much cheaper in Colombia, done by good surgeons. Indian cardiovascular surgeons, who are tops, doing coronary bypass at one fifth the cost.
But most are hesitant to go overseas. This news may change things.
Watch for updates on http://www.InternetMedicine.com

1 day ago• Like1

Jeffrey Thompson • The biggger threat is when surgeons such as Dr. Devi Shetty from India bring care model to regions such as Caymen Islands that are closer to the United States. Models like his will eventually disrupt healthcare in the United States.

Agree with Jennifer’s comment below

“In healthcare, outside of the professional fees, the bill includes the cost of the “parts” with the labor built into that cost as well as the cost to maintain the support infrastructure. In the Oklahoma model, the infrastructure cost is significantly less than in a multi-service acute care setting. Even medicare understands this and reimburses differently for ambulatory surgery.”

Healthcare providers will need to separate complex care from value added care or intermediate care. Tke key to provided the highest value is the ability to develop reliable delivery models sepated out based on complexity of care while still having an integrated approach for delivering care in the most appropriate setting. (Best outcome with lowest cost)

We have ways to go in healthcare, but discussions like this thread are a step in the right direction.

The views expressed are my own and do not reflect the views of my employer.

1 day ago• Like1

Keith Smith • Rick Baker just pointed out to me all of the comments in this group. Just like other social media sites, it is easy to tell who finds our approach refreshing and those who are threatened by it. This pricing is having a deflationary effect on pricing here in OKC and many patients far from here are using our pricing to leverage a reasonable deal from their local medical market. Tough news for these poor mouthing hospitals that are building everywhere and buying out physician practices, exposed for charging many multiples what we have listed online, all the while claiming to not make a profit.

1 day ago• Like

Jonas P Littman • Jennifer: Not a personal issue. Just one of my personal experiences in how challenging it can be to try being a savvy shopper in health care.
I do agree on your other point that healthcare needs to be at a minimum a break even business. And there is no doubt that minimizing the administrative aspects of the business and changing tort law could do much to lower the overall cost of healthcare while not negatively impacting physicians and other providers.

1 day ago• Like

John B. • The Cayman Islands? Yes, that is a significant turn of events, as far as going overseas.
Leave it to the Caymans, which, as everyone knows, is a tax-haven for the people with extra loot, to be the Caribbean country to open these clinics.
Can you blame the patients? After all, they are customers of a business, save emergencies. Why wouldn’t they go to a sunny Caribbean Island, if they were assured of the competency of the doctor. And, as most doctors know, Indians are known for having some fantastic surgeons, many of whom occupy top spots in the best surgical hospitals in the country, and I bet there are few at Mayo Clinic.

1 day ago• Like

Rick Baker • Periodically, our company gets contacted by hospitals in the Caribbean, seeking to have us triage our clients to their facilities. A recent contact was from a cardiac facility in Barbados. At present, we send our clients to cardiac specialty hospitals in Oklahoma and Arizona. When we explained to the hospital in the Barbados, what pricing we are getting from the hospitals in the US, they replied that they could not touch the prices we are already getting.They did not contact us again.

So my question is, why would anybody go to the Barbados or the Caymans for cardiac surgery which costs more than the patient would pay within the US ?

1 day ago• Like1

Jeffrey Thompson • Obviously, they wouldn’t go to the Caribbean for surgery which costs more than a patient would pay in the US. From my limited research on Dr. Devi Shetty, he is looking to offer heart surgery for less than providers in the US.

Here is a link on his vision for the health city. There are additional embedded links which provide more detail.

http://www.evolutionshift.com/blog/2013/05/06/health-city-and-dr-devi-shetty/

The views expressed are my own and do not reflect the views of my employer.

1 day ago• Like

Rick Baker • What Dr. Shetty will discover,is that he and his facility will need to charge enough to recover :
-their fixed costs(nurses, non-medical staff, electricity, telephone etc.)
-their variable costs(surgeon, anesthesia, surgical supplies etc)
-profit
US based hospitals do not have to collect their fixed costs from medical tourists, because these costs are already being paid by patients from their immediate catchment area.
Hospitals in such locations as Barbados and the Caymans, do not have sufficient numbers of resident patients in their local area, to cover their fixed costs. Hence they must recover them from medical tourists.
This is why I am dubious that Dr. Shetty will be able to attract medical tourists from the US.I wish him luck, however..

1 day ago• Like

Tracy Bevington • Jeff, knowing health care shopping as I do, I would not cancel out the fact of travelling far away for economical choices for health care options to purchase.
As examples mnay people pay and have been for some time to go to Portugal for back surgeries, Itakly fo MS counselling and treatments, Mexico for Cancer treatments, Vancouver-Canada for joint replacement surgeries.
Many people fly from all over the world to centres in the US for minimally invasive spine surgery.

1 day ago• Like

Rick Baker • Tracy, anyone traveling to Vancouver, Canada, for joint replacement surgery, will be sorely disappointedupon their arrival. Firstly, Canadian surgeons are not insured to operate on non-residents of Canada. Equally important, joint replacement surgery must take place in an in- inpatient setting, While there are private outpatient surgical facilities in Vancouver, there are no private hospitals in all of Canada, including Vancouver.

We send our Canadian clients seeking joint replacements to any of four hospitals in our US network, where we have negotiated deeply discounted pricing. Our clients who are resident in Vancouver, commonly go to Phoenix for their joint replacement procedures.

1 day ago• Like

Scott Bork • Rick: You are correct, Vancouver is not a destination for joint surgery by the very nature of the Canadian system which it certainly has not received accolades for it’s health care. Medical tourism is largely based on cost with overseas hospitals deeply discounting compared to US rates. Most is due to the much higher cost of the physician services and operations. We explored a clinic in Central America where our physician cost was about $1200/mo! Also, almost every hospital offering international services to travelers are doing just as the Oklahoma hospital is doing–they openly share their costs up front. Regardless of their cost-accounting system, how they arrived at their pricing, or whether their contractual arrangements are different, the point is they offer a cash price and they market it! Excellent way to show what it costs for a certain procedure. I recently payed $2K for a CT scan. I could have shopped and gotten the scan for about $350. I don’t care how they do the accounting or how they get the price, I just want the best deal and Oklahoma is resorting to a great market plan, and will surely be successful. Hopefully it should also lower costs in the area as well as any free market approach will do. Excellent approach versus government regulation and control. Need far more of it.

13 hours ago• Like

Jonas P Littman • Rick – would a Canadian get any reimbursement for the US-done procedure?

9 hours ago• Like

Rick Baker • we once received a referral from a British Columbian vascular surgeon who had a patient with a life-threatening arterial blockage. We sent her to Washington state for an emergency stenting. Upon her return to BC, she was unable to obtain any refund from the Ministry of Health
the province of Alberta is the only jurisdiction in Canada which helps out with any refund for out of country surgery. They typically refund about 15% of the total cost..

Ralph Weber AEP, CFP, CLU, ChFC, GBA, REBC • @John B,
Overseas facilities generally market their prices against US Chargemaster prices. They count on people actually believing that the uninsured actually pay $50,000 for a knee replacement, or that Blue Cross actually pays $29,000. The fact is that a knee replacement in most parts of the US goes for between $10,000 and $19,000, and hip replacements are a little more. Most overseas facilities are about the same price, except a few of them that come in at about $7,000 for a knee, and $7,500 for a hip.
The key to medical tourism, whether domestic, or international is shopping the procedure every time, and having many choices. Our healthcare system has proven time and time again that pre-negotiated pricing does not work, it simply increases costs

2 hours ago• Like 

About Brian D Gregory MD, MBA

Board Certified Anesthesiologist for 30 years. TOC design and implement for 30 years. MBA from U of Georgia '90: Finance, Data Management, Risk Management. Practiced in multiple US states and Saudi Arabia at KFSH&RC and KFMC Taught residents in two locations. Worked with CRNAs for 20 years.
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