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Thanks to Obamacare, For-Profit Surgery Centers are on the Rise

Thanks to Obamacare, For-Profit Surgery Centers are on the Rise

“We are unapologetically for-profit. I’m not in this business to lose money.”

Though Obamacare was designed to force the American health insurance system into a single payer model, the free market has found a workaround.

A growing number of practices are working directly with uninsured patients or with patients forgoing insurance benefits for a better price tag. Health insurance premium hikes, ridiculously high deductibles, and scant coverage make for-profit specialist shops all the more attractive.

Business Insider reports:

Smith said the Surgery Center has had people fly in from as far away as Turkey and Ethiopia for procedures.

“We are unapologetically for-profit,” Smith said. “I’m not in this business to lose money.”

Because the Surgery Center’s price for a hysterectomy was so much lower than what Millican had been quoted at a Dallas hospital, she asked her doctor why he chose to do the procedure at a lower price. He told her frankly that it was profitable for him. When he performs the procedure using insurance, he is paid $500, she recalled him telling her. For her procedure, he told her, he got paid five times that.

When she thought about how little $500 was in the grand scheme of how much she might have paid for her surgery, she found it frustrating.

“The doctor was the cheapest part,” she said.

To be sure, the prices for certain surgical procedures are still out of reach for many. And in an emergency situation, taking the time to shop around for the lowest price might not be an option.

But cash-pay providers are gaining traction with self-insured employers, who see it as more cost-effective than paying through traditional insurance. Freedman recalled an instance where a woman with breast cancer flew to Oklahoma for a mastectomy, chemotherapy, and reconstructive surgery, all paid for by her employer using cash prices because it was the cheapest option.

In general, healthcare providers that don’t take insurance are still in the minority in the US. Still, the movement appears to be growing. At the Surgery Center, Smith said he’s observed it lately getting busier by the week, though he didn’t give a reason why. The center now performs 7-8,000 surgeries in a year.

A similar movement is happening in the primary care industry. Hospitals and clinics are offering their own version of basic care insurance where consumers pay monthly fees in exchange for basic medical care services.

It’s called direct primary care, and it works like this: Instead of accepting insurance for routine visits and drugs, these practices charge a monthly membership fee that covers most of what the average patient needs, including visits and drugs at much lower prices.

It’s happening at a time when high-deductible health plans are on the rise — a survey in September found that 51% of workers had a plan that required them to pay up to $1,000 out of pocket for healthcare until insurance picks up most of the rest.

While President Trump and Congress continue negotions on the best Obamacare repeal course, the free market is doing what it always does best — filling a basic need.

Follow Kemberlee on Twitter @kemberleekaye


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Invisible hand serving a market need. What a concept.

    Liz in reply to Andy. | April 14, 2017 at 7:18 pm

    Buyer Beware.

    When the center first started, they were unique. Now there are more doctors involved, a different pricing set up and even this disclaimer….

    “Pricing Disclaimer

    NOTE: If you are scheduled for surgery at our facility and we are filing insurance for you, the prices listed on this website do not apply to you.”

    So they went from accepting No insurance to accepting it, but forget the pricing. And there are more docs involved in the hospital and they have gotten more famous. And…there are other disclaimers.

    I still might go to this place for surgery, but, I’ll be checking out my other options in the community.

    Disclosure – I live in the OKC area so I’ve known about this group for a long time but there are a lot of other options in the area. A real cost/benefit analysis will occur before my knee is replaced!

It works every time it’s tried.

It even works if you push it underground.

    Close The Fed in reply to Ragspierre. | April 14, 2017 at 6:01 pm

    I wouldn’t go that far. We dodged a bullet with Hillarycare, as her plan would have made it illegal for physicians to accept payment outside of her government plan.

The time-honored way for government to nip this pernicious activity is to tighten up licensing requirements. No license > no medical practice > no competition for GovernmentCare.

    Close The Fed in reply to tom swift. | April 14, 2017 at 6:06 pm

    They are making it harder. There is a movement afoot for medical license reciprocity, a “model” bill, called the Interstate Medical Licensure Compact, to tie physicians’ licenses to “Maintenance of Certification.”

    States already require continuing ed for docs; this is to maintain your specialty certificate. It continuing ed on steroids. Very very demanding of time and money, on an almost constant basis.

    If your state is considering such a compact, you should be opposed to it.

The hospital where I work has record profits over the last few years.

    Liz in reply to Roux. | April 14, 2017 at 7:07 pm

    Which hospital was it – a for profit, a not for profit, gov’t?

    Please give us more information about this hospital… I am really interested in learning how it makes such a profit.

      mrtomsr in reply to Liz. | April 14, 2017 at 8:53 pm

      The 325 bed nonprofit hospital I worked for through the 90s was always in the black while everyone else was losing money. Because it is in a geographically challenged area, there was little competition to it. They had throughout the 90s the busiest ER in the Commonwealth of Massachusetts.

      Because it was in an economically depressed area with sky high Massachusetts costs, the reimbursement rate from Medicare and Medicaid were at the highest allowed. This coupled with the outpatient volume of around 80k ER visits per year was one of the reasons it was always investing in new capital purchases to offset what would have been profits.

      Don’t know much more about their situation now, but from 1988 to 2003 it was a great place to work.

    snopercod in reply to Roux. | April 14, 2017 at 7:25 pm

    Our little hospital was losing $2 million per year and was bought out by a big-hospital chain in order to survive. The problem was that half of their patients were indigent or on Medicaid, and another third on Medicare. How can a hospital stay in business when only half the people actually pay?

      They can’t – the “retail” price is adjusted so that the self pays and the smaller insurance companies make up the difference since Medicare, Medicaid and the larger insurance companies strong-arm the hospitals for the big discounts.

      The larger chains then buy out the rural hospitals to be the feeders into the urban places. It was happening when I was in the healthcare business in the 80’s, so I imagine that the smaller hospital is now just a big clinic that takes care of the very easy cases and everything gets moved up to the cities.

Call any imaging facility and get a cash-on-hand quote for an MRI. Most places it’s about $200-300, at least around here. Ask what they bill your insurance provider, and it’ll be about 10 times that.

The reasons are plenty, but two of the big ones are:
– Insurance pays the provider about 3-4 months in arrears. Get the scan/procedure in December, and they might be paid by tax time.
– Insurance companies impose a lot of paperwork, sign-offs, referrals, limits, requirements, etc. — it’s almost as if the payer doesn’t want to pay, or something! Most of the extra cost billed to insurers goes to cover all that processing and red tape.

It’s often worth the lower price to just not have to deal with the hassle and the waiting. And since fewer parties are demanding their “cut”, the provider’s share is usually larger even with the lower overall bill.

Before Obamacare was passed, my employer at the time moved to HDHPs (high-deductible health plans — what the ACA would call a bronze or catastrophic plans; we’d have to pay $2,000 out of pocket before insurance would kick in, and then we’d “only” pay 20%) AND our rates doubled. We started paying cash for as many procedures and visits as we could and found we could often find better prices and services and get all the care we needed without ever hitting the annual deductible. When we asked how that was possible, the above is the explanation we got.

Cash-for-care can be quite affordable, depending on what you need, and quite profitable for providers.

Free market: 14,503,669 (or something; I lost count)
Centrally-controlled economy: 0

    Liz in reply to Archer. | April 14, 2017 at 7:29 pm

    A few years ago, I had a big red hot bump on my leg. The Doctor’s office wanted me to have a ultrasound ASAP, fearing a blood clot. The local hospital couldn’t take me, the local radiology clinic couldn’t take me. I found another clinic, asked them what the insurance would pay them and I said I would pay cash for the test, no paperwork involved.

    The doctor’s wife (the nurse) looked at my leg, said it was just a reaction to a bug bite. The ultrasound confirmed it.

    I wonder what the ER cost would have been.

Most of my life I had no medical insurance, I negotiated for cash and paid less than 1/2 the list price for procedures. I was healthy, no chronic illness, and my medical expense was 20% of what I would have paid for insurance plus deductible. Now retired, Kaiser medicaid takes care of me for $100 a month but most years I only need the annual checkup.

This always sounds good. But, you really have to dig deeper.

A facility which accepts insurance agrees to limit their fee to the patient’s co-payment/deductible and a percentage of the charge for the service. So, they end up charging around 6-10 times what they finally accept. A hospital [just the hospital] generally charges at least $50,000 for heart surgery. If they receive $1000 from the patient, the insurance company will usually pay $10,000 – $15,000. So, if you have insurance you pay somewhere between $0 and $5000 dollars [or only the $1000 mentioned above]. Without insurance you would pay $10,000 – $20,000, if the hospital would, or could, accept the same amount from an uninsured patient as it would from the insurance company. In some states, medical practitioners, including clinics and hospitals, are required to charge the same for a given service, whether it is an insurance company or an uninsured person, but they are not allowed to accept the lesser amount, from a private party, that they accept from an insurance company, if they accept insurance.

So, not having insurance seems like a good deal, until you have that heart attack and are looking at bills in excess of $100,000. Sometimes far in excess of that amount. And doctors and medical facilities do not want to wait for 10 or 20 years for you to pay off your bill. So, do you own a home? And, if so, how much equity do you have in it? Cause your going to need every bit of it, if you have a serious medical problem.