Competitive Medicine Works

Some years ago, a British filmmaker was visiting us, and we started talking about health care. He acknowledged that the National Health Service is pretty bad, but said that he favors socialized medicine because health care is so important. That’s right, I responded, and because health care is so important, it is vital that we use our best system on it. Our best system is free enterprise. The worst system ever devised is socialism, and it should never be used; or if used, only for things that are utterly trivial.

One of the problems with American health care is that we aren’t using our best system to provide it. Third parties pay the overwhelming majority of medical bills, so competition is inefficient at best. Yet whenever free enterprise manages to come into play, the result is better care at a remarkably lower cost. As in this instance, from Oklahoma City:

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. …

[Dr. Jason 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. …

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.

We all know that competition works. Industries like automobiles and electronics crank out better and better products at lower and lower prices. The same could be true in health care. Public policy should focus, not on further socializing an already sclerotic industry, but on freeing and enabling competition among health care providers for the patient’s dollar. Because, whether they understand it or not, the patients are paying the bills.

Image courtesy of Shutterstock.