The multispecialty ASC has been in operation since 1997, and today it is co-owned by more than 40 physician partners practicing a variety of specialties including orthopedics, ENT, ophthalmology and anesthesiology. Approximately four months ago, the ASC made public an online pricing guide via its Web site, which allows users to view the total costs to them for various procedures performed at the ASC. The quoted prices include nearly all costs associated with each procedure including the facility, physician and anesthesiology fee. This transparent, direct package pricing means that the patient knows exactly what the cost of the service will be upfront.
According to Keith Smith, MD, co-founder and medical director of The Surgery Center of Oklahoma, the idea to display prices came about due to frequent interactions between the center’s surgeons and patients responsible for their own healthcare costs.
“We have been doing deals with uninsured patients for some time and began to realize that we are so much cheaper than our competitors and still profitable, and we began to realize that there might be a market for serving these patients,” Dr. Smith says.
Additionally, news coverage of medical tourism caught his attention.
“I read several article about a broker who helped connect Canadians on waiting lists with facilities in the United States to get surgeries and noticed that the prices that were included in the articles were more than what we were charging here, so I reached out to him,” says Dr. Smith.
Leaders at the ASC determined the prices by looking at the various costs for each procedure and came up with a fee that would provide a fair and acceptable profit. The ASC is able to earn a profit on all the prices it displays, even though they are, in some instances, less than five times the amount charged by competing facilities, according to Dr. Smith. “We’re still making money, so if someone has the need to charge five times more for a procedure, then they have efficiency issues,” he says.
Although the prices on display do not apply to insured patients, the ASC is able to provide savings to all patients, including those who pay for their own healthcare, by keeping its facility fee to a minimum. Facility fees make up the largest portion of healthcare spending, so facilities that are able to control costs and run efficiently should succeed in attracting patients and gaining support from proponents of healthcare reform.
Although providers with high-quality care at the lowest price should prevail in a free market, making those that display their prices the most successful, Dr. Smith says that healthcare providers traditionally have not published pricing because doing so could threaten the various agreements they have with insurers.
“I am a big believer in the free market, but for some reason the presence of insurance and government in the practice of medicine and provision of surgical services has been immune from market pressures,” he says. “For services where the consumer pays, such as LASIK or plastics, pricing is very competitive. The quality is very high and the costs are very low.”
Dr. Smith hopes that displaying the prices at his ASC will help promote a free-market mentality for surgical services, but he is not optimistic that other providers will jump on the bandwagon right away.
“There will definitely be resistance to show prices, especially for ASC that are joint ventures with hospitals,” says Dr. Smith. For most providers, it is in their best interest not to make prices transparent because doing so would almost certainly reduce their profits, he says.
So far, The Surgery Center of Oklahoma has been successful in attracting new patients as a result of its transparent pricing. Dr. Smith reports that although most new patients have come from Texas, the ASC has treated patients across the United States and from as far away as Canada and Turkey. The patients from the United States typically have high deductible plans with deductibles as much as $10,000 or more coupled with health savings accounts. Patients outside the United States are seeking quality medical care in a timely fashion and are impressed with how low the prices of the ASC are compared to other providers, he says.
Dr. Smith says that displaying prices and embracing a free-market mentality allows his ASC to be part of the solution to healthcare spending that has gotten out of control. “People who see our facility are scratching their heads as to why other care is so expensive,” he says.
Visit The Surgery Center of Oklahoma at www.surgerycenterok.com.
Contact Lindsey Dunn at lindsey@beckersasc.com
