Comment: Why is it that free markets invariably drive down the cost of everything from cars to electronics, but not medical care? Because free markets don’t work without the free flow of information, especially price information. If you don’t know what things cost, you can’t shop for the best price. If people shopped, the cost of medical care would drop substantially. But, right now in America, almost no one has any incentive to reduce costs or find the best price. How do we make medical care cost less? Tell Americans how much it costs, and let them shop, just like they do for everything else. They’ll do the rest.
“Three years ago, Dr. Keith Smith, co-founder and managing partner of the Surgery Center of Oklahoma, took an initiative that would only be considered radical in the health care industry: He posted online a list of prices for 112 common surgical procedures.”
“The major cause of exploding U.S. heath care costs is the third-party payer system, a text-book concept in which A buys goods or services from B that are paid for by C. Because private insurance companies or the government generally pick up most of the tab for medical services, patients don’t have the normal incentive to seek out value.”
“Because bills charged by Integris are paid primarily by insurance companies or the government, the hospital gets away with gouging for its services. Reason obtained a bill for a procedure that Dr. Sigmon performed at Integris in October 2010 called a “complex bilateral sinus procedure,” which helps patients with chronic nasal infections. The bill, which is strictly for the hospital itself and doesn’t include Sigmon’s or the anesthesiologist’s fees, totaled $33,505. When Sigmon performs the same procedure at the Surgery Center, the all-inclusive price is $5,885.”
“Except for the clerical staff, every employee at the Surgery Center is directly involved in patient care. For example, both human resources and building maintenance are the responsibility of the head nurse. “One reason our prices are so low,” says Smith, “is that we don’t have administrators running around in their four or five thousand dollar suits.””