Following is a summary of Dr. Keith Smith’s keynote address at the first annual Free Market Medical Association (FMMA) Conference, by Kristy Hawley, BRI Student leader — George Washington University, who attended the FMMA conference on a BRI Scholarship.
Dr. Keith Smith, co-founder of both the Free Market Medical Association (FMMA) and The Surgery Center of Oklahoma delivered the keynote address at the first annual FMMA Conference. Dr. Smith’s speech highlighted the importance of focusing on reducing healthcare costs — rather than coverage — because “coverage is an afterthought, after all, if the prices are reasonable and affordable.” Articles as recent as Time magazine’s April 2013 piece, “Bitter Pill: Why Medical Bills are Killing Us” make this clear: hospitals often simply do not know prices of healthcare services because true free market forces are absent. While hospitals assert that advance pricing is often impossible due to the unique and unpredictable nature of healthcare services, the speakers and attendees at the FMMA Annual Conference have proven otherwise. This was made quite clear in presentations by national leaders in price transparency, such as Atlas MD, The Surgery Center of Oklahoma, Epiphany Health, Healthcare Bluebook, MediBid, and countless others.
“It is the ethical and moral obligation of the healthcare services seller to provide the prospective buyer a price in advance of the provision of the service.” ~Dr. Keith Smith, The Surgery Center of Oklahoma
Too often, medical students get uncomfortable when thinking about healthcare in the context of a free market and a profit-making industry. However, the reality is that by 2021 when most of us will be practicing attending physicians, healthcare spending will reach 20% of the U.S. economy. These are dollars that will be taken away from public education funding, welfare programs, pensions and national defense. Healthcare is a major part of our economy, and as physicians we should accept it as such. Many people are profiting in this current system. Unfortunately, it is not the physicians or patients who are deriving the greatest benefit from this massive spend.
Most medical students go into this profession because they want to help patients. While a nice salary and job security are perks, I would argue that the majority of medical students join this profession because they want to provide care to everyone, regardless of their ability to pay. When students hear about hard-working Americans being denied care or going bankrupt because of prohibitively expensive medical bills, it’s often students’ initial, gut reaction to think that a free market approach is “unfair” or hurts patient access. However, this is far from the truth. The FMMA leaders of this free market driven approach to medical care have successfully demonstrated that connecting patients directly to their physicians and leaving out the middle men – such as large “not-for-profit” hospitals and insurance companies – can actually drive up quality, transparency and most importantly access by decreasing costs. As Dr. Smith pointed out, when sellers of healthcare do not make prices transparent this compromises patients’ access to care. Dr. Smith’s friend, Steve Kelley once told him that “good things happen when healthcare buyers and sellers are in the same room.”
As a future healthcare services provider, I really appreciated Dr. Smith’s perspective that it is the “ethical and moral obligation of the healthcare services seller to provide the prospective buyer a price in advance of the provision of the service.” By posting prices and increasing transparency, practices such as The Surgery Center of Oklahoma have decreased prices to such a level that care is now accessible to his community. Dr. Smith notes that “price-revealing actions have allowed people to purchase care they previously assumed was otherwise unaffordable, people who had neglected their health entirely, based on a lack of visible pricing.” Dr. Smith even gave an example of how listing his price online for a surgery at his center allowed a patient in Georgia to successfully negotiate a surgical price from $40,000 to $4,000. This free market movement is growing and gaining momentum and has the ability to impact positive reform and break from the unfortunate status quo on a national level.
Dr. Smith also astutely pointed out that the insurance companies are not supportive of the free market model and want to continue to support today’s broken system because they profit under the current model. This system is profitable for them because a significant portion of their revenue comes from charging for the discounts they can achieve on fictitious medical bills. Insurance companies actually benefit from high medical bills because they have more opportunity for a larger commission on the discount. If instead the price is displayed upfront, there is no longer an opportunity to benefit from the re-pricing revenue. For example, an insurance company can reduce a bill from $50,000 to $5,000 and collect a percentage of these false savings, leading insurance carriers to seek out the highest bills they can find rather than search for more affordably priced services.
The hospital systems also stand to benefit by the large medical bills. According to Dr. Smith, the payment system is so complex and the process of discounting is not transparent, so the hospitals are able to show “fictitious losses,” which “form the basis for their uncompensated care kickbacks from the taxpayers.” As was made clear in Time’s “Bitter Pill” article, often hospitals’ charge-master prices are obscene, such as $100 for an aspirin. However, as the hospital will only collect a small portion of that charge it allows them to claim a loss and maintain ”not-for-profit” status.
Dr. Keith Smith’s speech at the inaugural Free Market Medical Association Conference gave all of the medical students who attended hope for meaningful reform in our system. Whether you want to go into fields as diverse as primary care, anesthesia, or surgery, successful models have proven that a system that connects doctors directly with patients can drive quality and decrease costs. We desperately need a system that provides greater value to its deserving patients. I for one was inspired to meet these physicians who have a high level of job satisfaction, have great pride in the care they provide, and who have the entrepreneurial acumen to continue to make improvements in all aspects of their business. These trailblazers adopt new technologies and make patient care, satisfaction, and quality central to all of their business decision-making. Healthcare is a service industry and these doctors are living proof that we can do better for our patients who truly do deserve the best care that we have to offer. I look forward to staying involved in FMMA, which Dr. Smith explains “will serve as the meeting place for the buyers and sellers to interact, without the intermediaries who bring nothing of value to the table.”
(This is Part 2 of a seven part series of reports on the 1st annual meeting of the Free Market Medical Association held Sept. 26-27, 2014 in Oklahoma City. Seven BRI student leaders received BRI scholarships to attend. Previously posted reports can be found here: Part 1 Ralph Weber – Co-founder MediBid by Morgan Kohls; Part 3 How the Free Market Works – Panel Discussion by John Grimsley. Part 4 Doug Nunamaker, MD of AtlasMD by Jared Rhoads. Additionally, FMMA is in the process of posting full video recordings of the conference presentations here.)