What you don’t know about American healthcare industry’s current status will surprise — if not shock you. Below are analyses and proposed solutions by leaders in the free market medical care movement, founders of FMMA.
The Current Healthcare Insurance Market: Vastly inefficient and redundant, causing high healthcare costs
- Pricing and cost are very opaque to both patients and physicians. Some insurance carriers will even contractually forbid third parties from using any data received for purposes of transparency analysis. Lack of transparency creates an environment without price competition, which allows physicians to knowingly charge excessive prices and still get business.
- Insurance brokers also add to cost, as some do not always advocate for their clients. Simply, they don’t want to upset insurance carriers, because they “need them” for future business.
- Insurance carriers are no more than pricing brokers that work to get a specific price at a healthcare facility, which they then advertise as “discounted.” However, this “discount” is off a price that is obscenely inflated to begin with, resulting in an excessively high bill relative to the true cost of delivering care.
- Healthcare facilities have multiple built-in cost layers that do not contribute to patient care nor outcomes, which they attempt to finance via unreasonably high billing rates.
There isn’t much incentive to change the current system, at least not on the part of the facilities/hospitals and insurance carriers, both of which benefit the most from the current market structure. Worse yet, everyone – patients, doctors and employers – just accepts the current state of high cost and continued price inflation in the healthcare system. In an effort to provide affordable healthcare, the market must change. This is what Dr. Keith Smith and the rest of the FMMA are attempting to accomplish.
Free Market Solutions
The Surgery Center of Oklahoma, a physician-owned healthcare facility co-founded by Dr. Keith Smith, offers transparent pricing by posting online the cost of all procedures they offer. Initially, the goal was to attract individuals with high deductible plans or those without insurance.
The transparent, affordable pricing structure offered at The Surgery Center of Oklahoma is possible due to:
- Eliminating inefficiencies and unnecessary staffing (administrators).
- Third Party Administrators (TPA) help self-insuring businesses to pay claims and obtain a stop-loss insurance policy. This cuts out many cost layers and gives both the employer and patient skin in the game. Therefore, they seek overall value – low price and high quality – when looking for medical care.
- Brokers can also help with reducing cost and providing transparent services. To this end, Jim Millaway advises that brokers should always be paid a flat fee or rate, rather than on commission. This aligns the broker’s incentive structure with that of patients, employers and physicians, resulting in transparent services that do not contribute to price inflation in healthcare.
The current inefficient business models driving up healthcare cost should not be the financial responsibility of the patient. Jim Millaway, channeling Jeff Bezos stated, “I will never make my customers pay for our inefficiency.”
Keep it Simple
In the effort to grow free market medicine, patients, physicians, brokers and TPAs must understand the novel business model utilized by the Surgery Center of Oklahoma and the TPAs they work with. In fact, Dr. Smith highlighted that “as more and more physicians begin to understand the benefit of not dealing with insurance carriers the movement will grow.” To bring in more patients, employers and brokers, these solutions need to be explained in a simple, easy to understand way. Making things simple is of the utmost importance. Creating a healthcare market that is transparently priced, affordable and patient-physician centered is totally possible. As Jay Kempton stated, “Where there is a will there is a way.”
(This is Part 3 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 2 Dr. Keith Smith’s keynote address by Kristy Hawley; 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.)