Sunday, November 18, 2012
Oklahoma Doctors vs. Obamacare
Surgery center provides free-market medicine
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 51-year-old Smith, a self-described libertarian, and his business partner, Dr. Steve Lantier, founded the Surgery Center 15 years ago, after they became disillusioned with the way patients were treated at St. Anthony Hospital in Oklahoma City, where the two men worked as anesthesiologists. In 1997, Smith and Lantier bought the shell of a former surgical center with the aim of creating a for-profit facility that could deliver first-rate care at a fraction of what traditional hospitals charge.
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.
The Surgery Center’s consumer-driven model could become increasingly common as Americans look for alternatives to the traditional health care market—an unintended consequence of Obamacare. Patients may have no choice but to look outside the traditional health care industry in the face of higher costs and reduced access to doctors and hospitals.
"It's always been interesting to me,” says Dr. Jason Sigmon, “that in any other industry, tons of attention is devoted to making systems more efficient, but in health care that's just completely lost." Sigmon, an ear, nose, and throat surgeon, regularly performs procedures at both the Surgery Center and at Oklahoma City's Integris Baptist Medical Center, which is the epitome of a traditional hospital. It's run by a not-for-profit called Integris Health, which is the largest health care provider in Oklahoma serving over 700,000 patients a year.
Sigmon says he can perform twice as many surgeries in a single day at the Surgery Center than at Integris. At the latter institution, he spends half his time waiting around while the staff struggles with the basic logistics of moving patients from preoperative care into the operating room. When the patient arrives, Sigmon will sometimes wait even longer for the equipment he needs.
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."
In 2010, the top 18 administrative employees at Integris Health received an average of $413,000 in compensation, according to the not-for-profits' 990 tax form. There are no administrative employees at the Surgery Center.
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.
The Integris bill for the same nasal procedure went to Blue Cross of Oklahoma, so the patient had no compelling reason to question its outrageous markups. They included a $360 charge for a steroid called dexamethasone, which can be purchased wholesale for just 75 cents. Or the three charges totaling $630 for a painkiller called fentanyl citrate, which all together cost the hospital about $1.50.
While patients and their insurance companies rarely pay the full price on a hospital bill, the bigger the bill, the more the hospital gets. Uninsured patients at Integris generally get a 50 percent discount, while private insurance companies pay closer to 60 percent of the full bill, which is still greater by orders of magnitude than what the Surgery Center collects.
Integris Health declined to make a spokesperson available to be interviewed for this story. But in a statement, the company defended its outrageous bills on the grounds that it needs a way to cover losses on services offered free. Whatever the merits of that argument, Integris must also cover overhead costs and bureaucratic inefficiencies that the Surgery Center has managed to abolish.
The rising cost of health insurance has been driving companies to look for ways to cope with the third-party payer system. Health maintenance organizations, or HMOs, have been one approach. Today, a growing number of firms are dumping their health insurance providers and becoming “self-funded,” meaning they pay their employees' health care costs directly out of their revenues. This model was virtually nonexistent 30 years ago, and today an estimated 60 percent of Americans work for “self-funded” companies.
Self-funded companies, like individual patients, can negotiate directly with hospitals for lower prices. Recently a handful of self-funded Fortune 500 companies struck deals directly with major hospitals to care for their patients for a negotiated fee.
In Oklahoma City, there’s an alternative health care market taking shape in which hospitals offers competitive flat fee prices to self-funded companies. And it’s all modeled after the Surgery Center.
This was the brainchild of Jay Kempton, who is the president of The Kempton Group, which administers health care plans for self-funded companies. When Kempton met Keith Smith, he had been looking for a way to help his clients deal with their exploding health care costs. "Cutting edge procedures are justifiably expensive," Kempton concedes. "But what we also see are soaring increases in relatively garden-variety procedures, like a knee resurfacing or a carpal tunnel release. Those things should not be experiencing 10 or 15 percent inflation every year."
So Kempton and Smith came up with a cost-saving arrangement: If their employees agreed to be treated at the Surgery Center instead of a traditional hospital, they would be spared the cost of all co-pays and deductibles.
Almost immediately, Kempton was approached by other surgical centers and hospitals. There are now four health care facilities participating in his flat-fee consortium, and more are on the verge of coming onboard.
June Wietzikoski is a typical patient benefiting from this alternative health care market. She works as a loan officer for a community bank in Groesbeck, Texas, which is a client of the Kempton Group. She had carpal tunnel release procedure done at the Surgery Center for the all-inclusive price of $2,775, which was covered by her employer. Had she gone to a traditional hospital run by Integris the discounted bill would have come to about $7,452 and she would have been personally responsible for the first $5,299, since she hadn’t met her deductible.
"It makes me mad that people are bankrupted by our current health care system when many times the costs are completely unjustified," says Smith.
Is Kempton's model replicable in other places? There are obstacles. Oklahoma has an unusually entrepreneurial health care sector, which stems from a 1989 decision to roll back the state's Certificate of Need (CON) laws. CON laws, which are still on the books in 35 states, require all medical facilities to get permission from a planning board before opening, which in practice provides a way for traditional hospitals to use political influence to keep new entrants out of the market.
A new provision buried in Obamacare effectively prohibits doctors from starting their own hospitals or expanding the hospitals they already own, which has been widely interpreted as a give-away to the American Hospital Association.
The Surgery Center is exempt from this statute, since it's technically not a hospital and it doesn't accept Medicaid or Medicare. So Smith and Lantier are considering expanding to accommodate their growing clientele.
Smith believes that despite the obstacles, market-driven facilities like his will thrive and proliferate as consumers catch on to costly collusion between big government and big health care.
Says Smith: "Everyone can see what the prices are at the Surgery Center, and that affordable health care is possible. So the jig is up.”
ObamaCare Mandate To Cut Worker Hours, Leaving The Poor Worse Off
In Barack Obama’s first term the U.S. labor force shrank to a 30-year low. Job growth lagged behind population growth as millions gave up their search for gainful employment. Income levels receded, productivity sputtered and deficits soared — all in the name of “recovery.”
So what does Obama have planned for an encore? How does he intend to further “stimulate” the economy during his second term?
In his victory speech, Obama pledged he would continue pursuing “the kind of bold, persistent experimentation that Franklin Roosevelt pursued during the only crisis worse than this one.”
That’s a truly frightening thought. In fact if left unchecked, Obama’s “bold, persistent experimentation” could very well wind up making this crisis every bit as bad as that one. For example, atop Obama’s second term “to do” list is the full implementation of his signature first term accomplishment: ObamaCare.
Having secured another four years in the White House, Obama can now block any effort to overturn his socialized medicine law — although states can (thankfully) still stop much of its new spending if they reject ObamaCare’s “exchanges” and refuse its Medicaid enrollment expansions. For the sake of our future deficits, let’s hope they do so en masse.
One provision of ObamaCare that can no longer be stopped, however, is its “employer mandate.” While nowhere near as infamous as the “individual mandate” compelling citizen participation in the health insurance market, ObamaCare’s requirement that companies provide coverage to all employees working more than 30 hours a week will be a job killer nonetheless.
Not only will this mandate prevent job growth among small businesses, it will also result in fewer hours and less income for workers at larger companies. These are people struggling to make ends meet on limited income — people who cannot afford to lose these hours.
Last month Darden Restaurants — which employs 185,000 people at nearly 2,000 Olive Garden, Longhorn Steakhouse and Red Lobster restaurants — revealed that it was scaling back many of its employees’ workweeks to 28 hours. Ordinarily such a move would result in high turnover and an influx of less-competent employees — but not in Obama’s economy.
This month Kroger — the grocer that employs 350,000 people — announced that existing part-time workers and new hires would be limited to working 28 hours per week.
“Kroger is doing this to avoid paying for full-time health care for employees who currently only receive part-time benefits,” one employee explains. ”And (so) they will not get hit with the $3,000 penalty.”
Darden and Kroger won’t be the only employers limiting hours in anticipation of ObamaCare’s crippling new levies. Millions across the country are likely to be affected by the mandate — and the vast majority of these will be lower middle class people who desperately need that extra income to make ends meet.
In other words ObamaCare’s “employer mandate” will wind up hurting the very people Obama claims to be fighting for — reducing their take-home pay at a time when loose monetary policy is already whittling away at the value of every dollar they earn.
The impact of all this lost income on our consumer economy — and on our soaring taxpayer tab — isn’t hard to predict. When people make less money, they spend less money — slowing economic activity. They also become more dependent on government handouts — further inflating a welfare tab that exceeded $1 trillion during the last fiscal year.
What can be done to stop these terrible outcomes? That’s what’s so depressing: Absolutely nothing — at least not over the course of the next four years. In fact, this is just the beginning of the “bold, persistent experimentation” that Americans are going to see from Obama during his second term. Just ask him.
Union bosses shaft their members -- 18,000 of them
Hey Obama! What about a handout?
Hostess Brands Inc., the bankrupt maker of Wonder bread and Twinkies, said it will fire more than 18,000 workers and liquidate after a nationwide strike by bakery workers crippled operations.
“Companies in bankruptcy don’t have any margin for error,” Chief Executive Officer Gregory F. Rayburn said today in an interview with Betty Liu on “In the Loop” on Bloomberg Television. “We just didn’t have enough workers crossing the picket line.”
The 82-year-old maker of Hostess CupCakes, Ding Dongs and Ho Hos was undone by the strike after changes in American diets led to years of declining sales while ingredient costs and labor expenses climbed. The decision to liquidate capped a weeklong standoff between the company, once the largest U.S. wholesale baker, and a union that called its proposed labor contract “horrendous.”
Rayburn said Hostess will dismiss most of its 18,500 employees and focus on selling assets. Shipments of bread, snack cakes and other products will continue until supplies run out, he said. While Hostess has fielded interest in pieces of the business, its labor contracts and pension obligations have deterred any bids for the whole company, Rayburn said.
“A lot of people say it’s the management. I can’t say whose fault it is,” said Misty Williams, 40, who worked at the company for 14 years. “I wish they were able to come to an agreement,” Williams, who just bought a house in Pennsylvania, said. “They were just too stubborn, I guess; the union and the management.”
Twinkies and other Hostess brands will probably disappear from the marketplace, said Tim Ramey, a Lake Oswego, Oregon- based analyst for D.A. Davidson & Co. Any buyer would need a distribution system, he said.
“Without your own distribution, it’s pretty problematic,” Ramey said today by telephone. “Twinkies has been on a slow death spiral for a long time. Somebody might decide they want something to do with it, but it’s not likely.”
Obama's Hostile and Evasive Presser
Obama's first post-election press conference, if you could call it that, tells us a great deal about his attitude and the approach he intends to pursue in his second term, which is the same failed policy mix on steroids.
Obama's words and body language indicate he intends to be quite aggressive in his second term and more dictatorial. It was as if he regards his election as a coronation to kingship. His responses and deflections even to softball press questions and his hostile attitude toward elected GOP officials in the co-equal legislative branch make that abundantly clear.
In his first response, Obama repeated the mantra that this economy still suffers because of events that preceded his first term anointment. He offered the tautology that a growing economy depends on a thriving middle class. Yes, prosperity depends on people being prosperous, but the question is: How do we get there?
According to Obama, we do it through economic protectionism, rebuilding those roads and bridges he believes are responsible for creating the businesses that American entrepreneurs didn't build themselves, throwing more federal money at education, and, for good measure, reducing our deficit in a "balanced" way, which means his way (only on "the rich"). He expressed his openness to "compromise" and "new ideas" and then demonstrated in his remaining answers how insincere that bipartisan gesture was.
In Obama-speak, "balance" means weighted against the rich. It makes no economic sense to increase tax rates on the highest income producers when many small businesses responsible for most American jobs fall into that category. It will further retard economic growth and yield insufficient revenues to make a dent in our deficits or debt.
After making it emphatically clear that it would be his way or the highway, Obama said, yet again, that the American people just want the parties to work together. On the most important issue facing us, spending, especially on entitlements, he didn't even bother to pretend to have a plan.
In his first term, Obama routinely abused his authority and paid no price for his usurpations. If there were any doubt before the election that Obama intended to unilaterally impose his will and avoid accountability for it in his second term, he has now eviscerated it.
For more blog postings from me, see TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCH, POLITICAL CORRECTNESS WATCH, FOOD & HEALTH SKEPTIC, AUSTRALIAN POLITICS, IMMIGRATION WATCH INTERNATIONAL, EYE ON BRITAIN and Paralipomena . GUN WATCH is now put together by Dean Weingarten.
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The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)
Posted by JR at 1:44 AM