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How much for an ACL repair, Doc? An Oklahoma City facility can answer

Filed by KOSU News in Feature.
January 14, 2013

Hospitals were once the only option for surgeries. But as procedures have become less complicated and more predictable, the Surgery Center of Oklahoma opened its doors. In 1998, it started taking patients for everything from ACL tears to cochlear implants. And soon, people from all over flocked to the center…

Walking in, nothing jumps out at the Surgery Center, right off Broadway Extension in north Oklahoma City. Waiting room, patients filling out forms, machines buzzing.

But that’s the point. It’s a familiar place. What’s different is the pricing…it’s public. Go ahead, Google it and you’ll find exactly how much you’ll pay for that ACL repair – $6,990.

“So we put our prices online to basically expose what we saw going on as some sort of thing behind the veil. And we thought it might bring patients to us that saw the prices too.”

Dr. Keith Smith is one of the co-founders of the Surgery Center.

“Rather than question what are we up to, I think now, people are asking why have I been charged ten times more than what this place is charging?”

Smith maintains these prices are thousands lower than what you might find at a hospital like Integris, St. Anthony, or others. They’re extraordinarily focused, with the head nurse also helping take care of the property, and minimal office staff. Paul Kammerocher is a surgeon there.

“I figured they’re skimping somewhere. And it turned out, none of that was so. Great care, super efficient.”

But they also benefit from a unique arrangement. Patients must pay upfront, whether through insurance or cash, and the center doesn’t take Medicare or Medicaid. Devon Harrick is a health care economist at the National Center for Policy Analysis, the free market think tank.

“A hospital is not necessarily the most efficient to provide day surgery. That can be done more cheaply elsewhere. But there are certain things that hospitals can do, and can do very well. That really needs to be their market niche.”

That’s at the heart of the success for the Surgery Center. As Eric Wadsworth details, they only do a select number of procedures.

“The upper right hand quadrant where you have high volume and good reimbursement. If you cherry pick those DRGs, you can always make money in health care.”

Wadsworth is a professor at the Dartmouth Institute for Health Policy and Clinical Practice. He’s describing a graph that plots procedures – also known as Diagnostic Related Groups –  based on how easy and quickly they can be completed.

“If you end up seeing cases in the other three quadrants, it becomes much more difficult. Let’s say pediatric head trauma, where you can almost never make money on it, and it’s very low volume. You’re always going to lose money.”

That doesn’t mean he has a problem with the Surgery Center. He credits them, and others like them, for forcing change in the health care system, comparing the move to what Southwest did to airline travel or IBM to computing.

“We need price competition, we need to publish prices, we need to be able to compete on price. So I would argue what the Surgery Center is doing is disruptive and has value.”

But what does this all mean for hospitals? Higher prices on the less complicated surgeries help pay for the complex surgeries, the ones where it’s almost always a losing proposition. They’re the individual, special, cases, requiring careful planning with a group of doctors.

“Then the hospitals are left with a customer base that is the low paying customer base and just forces them to shift more of the charges to the insured patients that they’re serving.”

Paul Gardent works alongside Eric at Dartmouth. He’s studied the effects of facilities that replicate the Surgery Center’s model. And he’s concerned that even if hospitals reduced inefficiencies and got rid of the highly profitable surgeries, their fixed costs wouldn’t be much lower.

“Can the hospital then relieve itself of costs? Can it get rid of standby imaging? Or the number of procedure rooms? And often times, they can’t.”

Dr. Keith Smart says those questions shouldn’t slow down facilities like the Surgery Center.

“It’s gotta start somewhere. If our facility does it, I don’t think just because the entire picture isn’t satisfied with an explanation, you can denigrate a small effort.”

But medical care isn’t something that we can sit and wait on, according to Eric Wadsworth.

“Somebody has to ask the question what is that going to do to delivery of care for the Oklahoma City area? And will we still have an infrastructure that can deliver what we want? Or maybe we shouldn’t.”

Those answers will have to come from the Oklahoma City community, not a single facility. Until they do, the Surgery Center will continue operating on patients at lower costs than most.

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Would you be willing to pay higher prices for more complex surgeries if it meant lower prices for less complicated surgeries?

2 Responses to “How much for an ACL repair, Doc? An Oklahoma City facility can answer”

  1. homebuilding says:

    This model works only:

    –when 100% have some arrangement for pre-payment
    (rememberr that far, far less than 100% have health insurance that will pay for surgery that has an elective element)

    –when patients have, on their own, educated themselves regarding less complicated interventions and are aware of potential risks and iatrogenesis (and many choose NOT to pursue surgery)

    –when patients are well above average in income and education

    –when patients have an absolute minimum of complicating medical factors–minimal number of obese patients; diabetic patients; hepatic or renal compromise; orthopedic complications; minimal numbers of complicating pharmaceuticals

    –when patients have an absolute minimum of complicating social factors
    (minimal family/social support for post surgery care/follow up at home)

    Overall, this approach is suitable for an ever smaller percentage of the population.

    However, it is good from the standpoint that many patients are taking control–and that means also considering NOT to have surgical intervention.

  2. homebuilding says:

    …..forgot to mention above that:

    –USA medicine performs dramatically MORE surgical interventions than are performed in Europe and Japan (and they DO have, decade after decade, longer life expectancy and lower infant mortality rates)

    –ditto, the rates of pharmaceutical usage rates

    Absolutely, a goodly number of surgeries and medications are simply optional and other alternatives might be better. And absolutely, there are many deaths that come immediately after surgery or from taking too many medicines or ones that have iatrogenic effects

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