Episode #271: Interview with Dr. Keith Smith, Co-Founder, The Surgery Center of Oklahoma

This was an unbelievable show with eye-opening insight into medical pricing practices!

Dr. G. Keith Smith is a board certified anesthesiologist in private practice since 1990. In 1997, he co-founded The Surgery Center of Oklahoma (SCO), an outpatient surgery center in Oklahoma City. SCO is owned by over 50 of the top physicians and surgeons in central Oklahoma. Dr. Smith serves as the medical director, CEO, and managing partner while maintaining an active anesthesia practice.

The free-market focus of the Surgery Center, the innovator of this free market model in the U.S., has gained the endorsement of policymakers and legislators. Dr. Smith hopes as many facilities as possible will adopt a transparent pricing model, a move he believes will lower costs for all and improve the quality of care. Dr. Smith is also the co-founder of the Free Market Medical Association. The association provides a platform where buyers, both individuals, and employers, who are seeking high quality, affordable healthcare can find free-market minded sellers, both physicians, and facilities.

Dr. G. Keith Smith is a board-certified anesthesiologist in private practice since 1990. The Surgery Center of Oklahoma is owned by over 50 of the top physicians and surgeons in central Oklahoma. Dr. Smith serves as the medical director, CEO and managing partner while maintaining an active anesthesia practice.

Here are Ed’s questions from the show:

• Share the origin story of The Surgery Center of Oklahoma.

• You mentioned in your podcast with Russ Roberts that you have about 300 companies that engage with you with self-insurance. Are they small or large companies?

• Do you fear that government intervention might come along someday and make what you do illegal, or a full-on single payer system?

• Do Americans really pay the most for healthcare, or is it all these shadow prices that appear on the Explanation of Benefits form?

• Do you think your model could be Uberized, an app that could connect people who need surgeries with physicians? [Yes, check out the Free Market Medical Association, FMMA.org, shop health tab].

Here are Ron’s questions from the show:

• In 1977, the Bates case was decided by the Supreme Court, based on a law firm that published prices, [which opened up advertising for professional firms]. I’ve got to imagine that you’ve drawn arrows because prices are published front-and-center on your website?

  • [The only organization that copied Dr. Smith’s website, without permission, is UCLA].

• Your Website shows a Hip replacement = $15,499 (Hernia = $3060), and it’s all in, isn’t it?

  • Dr. Smith mentioned two clearing houses for medical prices Atlas Billing Company and the other is the Free Market Medical Association [FMMA.org, shop health tab].

• How can you do it so cheaply, or a better question, why are others charging so much?

• You haven’t raised base prices in 20 years, is that right?

• And the fascinating thing is your Surgeons make more than any other facility?

• You can’t just compete on price, but also quality. Because your prices are so low, quality is even more salient? How do you convey your quality? With metrics: infections (yours was 0% in a prior year), readmissions, etc.?

• You said in the EconTalk episode: “If something doesn’t go well, we don’t make more money?” Explain how you handle surgeon errors.

• You gave another example of a guy who had a Hernia operation, the guy goes back to work and lifts, destroys repair, and you waived price and had him just pay the costs of supplies.

• You also reduce the surgeon’s fee when they mis-diagnose a patient?

• What about the poor who can’t even afford your low prices. As you say, at current prices, we’re all poor!

Here are a few additional resources that we touched on during the show:

• Dr. Keith Smith’s interview with Russ Roberts on EconTalk.

• Russ Robert’s article, “Health Care Without (much) Government,” November 21, 2019.

• Russ Robert’s post-mortem on his interview with Dr. Keith Smith.

Bonus Content is Available As Well

Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.

For this bonus show we were fortunate enough to continue our conversation with Dr. Keith Smith. Click the “FANATIC” image to learn more about pricing and member benefits. 

Episode #270: Communist Humor

Karl Marx wrote that “The final phase of a historic political system is comedy.”

Did the telling of jokes tumble the old Soviet system?

George Orwell wrote that “Every joke is a tiny revolution.” Jokes were the communist system’s jazz, the music of the oppressed. Jokes eased psychological pain; helped forge trust between contemporaries; helped make sense of their lives. Join Ed and Ron for a rollicking look at Communist Humor, and some of the better jokes that were told during its reign.

Listen now by using the audio link above!

Episode #269 — The Subscription Model in Medicine

What happens when a smart doctor recognizes that there is a better way?

Is it possible for family physician to operate under a subscription-based business model, priced below what you pay for your mobile phone service? What about services not covered by the subscription? Could those be priced with full certainty and transparency?

For episode 269, we had the pleasure of interviewing Dr. Paul Thomas, founder of Plum Health DPC. Dr. Paul Thomas is a board-certified family medicine physician practicing in Corktown, Detroit. His practice is Plum Health DPC, a Direct Primary Care service that is the first of its kind in Detroit and Wayne County. His mission is to deliver affordable, accessible health care services in Detroit and beyond. He has been featured on WDIV-TV Channel 4, WXYZ Channel 7, Crain's Detroit Business and CBS Radio. He has been a speaker at TEDxDetroit. He is a graduate of Wayne State University School of Medicine and now a Clinical Assistant Professor. Finally, he is an author of the book Direct Primary Care: The Cure for Our Broken Healthcare System.

Below are show notes and questions we asked our guest. Use these to help guide you along when listening to the podcast (embedded above).

Ed’s Questions

• What is Direct Primary Care?

• Based on an interview I saw you do, there’s no wait time for patients?

• Why did you go this route—Direct Primary Care?

• You were burned out in your residency. What was the moment that you said I can’t do what most people are signing up to do?

• Most time patients do get with their doctors is spent with the doctor typing and facing a screen.

• What are some of things that are covered in your clinic?

• What you are capable of doing in your practice is probably 80-90% of what a healthy patient would need in a given year?

• It would cost me personally about $840 in your practice. If you’re so cheap, why is healthcare so expensive?

• It’s said America pays more than the average OECD country, but there’s no price transparency in the system, which inflates those prices, correct?

• What are some of the barriers you see that are still in the way of physicians getting into DPC and patients being able to access DPC?

• When you did start, did you consider other pricing models? Yours is based on age, but did you consider, for example, response times, or different services you would include and exclude?

• Do you have any jumpers, and by that I mean people who pay for a month and then leave, then come back six months later?

• You’re now also offering rates to small businesses in your area?

• And the companies pay your membership as part of the employees benefit package?

• You believe that patients should also have a catastrophic health insurance plan?

• We don’t expect our auto insurance to pay for gasoline but we do expect our health insurance to pay for a blood test. It’s absurd?

• I was struck that in your TedX talk you used the phrase “living my truth,” take us through that, what does that phrase mean to you? 

Ron’s Questions

• In your book, Direct Primary Care: The Cure for Our Broken Healthcare System, you cite a 2016 study performed by Medscape found 51% of physicians experience burnout. Burnout is defined as a loss of enthusiasm for work, feelings of cynicism, and a low sense of personal accomplishment. You felt this in your residency. How long did it take you to work up to 500 patients?

• How did you market your practice, was it social media, word-of-mouth, press. I know you did a Tedx talk.

• I know DPC is in the same family of Concierge Medicine, which has the reputation of being just for the elite, which isn’t true. But the DPC prices are usually less than a mobile phone bill.

• On the cover of your book there’s a picture of you trying to catch sand through your hands. Can you explain that analogy?

• You talk about technology and how there’s too much borrowing from Henry Ford’s assembly line, treating customers like commodities rather than human interaction. It’s not very efficient to sit and listen to your patient read you poetry. It is, however, highly effective. Would you agree with that?

• You also talk how the average of GP doctors have 2,400 patients. Do you think this DPC model will alleviate this GP doctor shortage?

• You talk about the growth of urgent care centers in the US is a symptom of a failed primary care system.

• Do you feel that people who are not licensed could do some of the work now being done by physicians? What’s your view of occupational licensing and how it folds into this model/

• You mentioned to Ed that insurance companies try to get as many dollars passing through the hands. They don’t seem to like the concierge or DPC models, not because they compete with actuarial based insurance but because they compete with pre-paid medical care. Did Michigan pass a law that made it clear that DPC is not an insurance product?

• Just seems to be like insurance companies would like to block this model. Is that a fair statement?

• There’s obviously some education going on with doctors with respect to DPC, but we also need to re-educate patients to see you even when they are healthy, not just when they are sick. Has that been an educational process to get patients to see you even when they don’t have an issue?

• We talk a lot about the market share myth, that growth for the sake of the growth is the ideology of the cancer cell, not a sustainable, profitable business. You phrase it in your book as “Value over volume.” You must be asked a lot that healthcare is different than any other product or service we buy, how do you explain to people that it can be priced like other things we buy

• Your model is restoring the sacred relationship between the patient and doctor. You’re bringing this back to the days of Marcus Welby.

• I’ve read that most calls (82%) are received during normal business hours, that patients don’t abuse your time off. Has that been your experience unless there’s been an emergency?

• Tell us about your new venture, www.startupdpc.com.

• If you could wave a magic wand to reform healthcare, what would you do? [Price transparency and quality scores was Dr. Paul’s answer].

Bonus Content is Available As Well

Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.

Here are some links from our bonus show this week. The bonus show, all bonus links, and additional bonus material are available to our Patreon subscribers. Click the “FANATIC” image to learn more about pricing and member benefits. 

So what did we discuss during the most recent bonus show?

• www.carbar.com.au

• https://catalyst.independent.org/2019/11/25/what-south-park-gets-right-about-government-regulation/

• https://fee.org/articles/the-epic-failure-of-the-government-gas-can/

• https://boingboing.net/2019/11/22/sabotage-by-warranty.html

Episode Reprise — Scroogenomics: Why You Shouldn’t Buy Presents for the Holidays

[Editor’s Note: Some things are just too good not to share again. While our most ardent listeners are familiar with Episode #22, Scroogenomics, many may not be familiar with this specific show. This past Friday was Black Friday in the United States which means it’s time - once again - to talk about why you shouldn’t buy presents. Bah, humbug!!!]

Today, on Black Friday, and right before Cyber Monday—the biggest shopping days of the year—Ed and I thought it would be fun to discuss the interesting, funny, and thought-provoking book by Joel Waldfogel: Scroogenomics: Why You Shouldn’t Buy Presents for the Holidays.

The author makes the case that the deadweight loss to the economy from gift giving, in 2007, totaled $12 billion, out of approximately $66.5 Billion spent (about 12%). Citizens Against Government Waste would classify Christmas as a wasteful government program.

Gift giving severs link between buying decision and item’s value to its user—the transaction actually destroys value. To add insult to injury, we are obliged to pretend to be grateful!

His complaint is not the level of spending or the consumption, but the waste.

We discussed the four ways you can spend money in the economy:

Former Congressman Dick Armey pointed out how difficult spending is in Category II (Gift), let alone Category IV (Government):

Every year, I worry and fret select the right birthday gift for my wife, Susan. Every year, try as I might, I manage to choose the wrong thing. If I can’t figure the needs and desires of the one person who is closest to me in the world and who I deeply love and care for, how can we expect the government to do a better job?

Three groups spend other people’s money: children, thieves, politicians. All three need parental supervision.

Hierarchy of value of gift giving

• Aunts & uncles & grandparents = 75%

• Parents = 97%

• Friends =91%

• Siblings =99%

• Significant others = 102%

Further, we spend approximately 2.8 billion hours shopping in December. To put that number in context, the old USSR—before it imploded—spent 35 billion hours annually standing in line for everyday products and services.

Infographic from Deloitte’s 2018 annual holiday survey

Economist Ian Ayres said this about Waldfogel’s book:

Joel Waldfogel is one of the smartest and funniest economists on the planet. I think of him every time I start to unwrap a present. Buy Scroogenomics for your friends and family. It makes the perfect Christmas gift.