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How One Oklahoma Hospital Is Driving Down The Cost Of Health Care By Thousands Of Dollars

By Tara Culp-Ressler on July 10, 2013 at 5:15 pm

"How One Oklahoma Hospital Is Driving Down The Cost Of Health Care By Thousands Of Dollars"

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Surgery Center of Oklahoma guarantees all-inclusive online prices for all of their procedures. (Credit: surgerycenterok.com)

In Oklahoma City, one surgical center is successfully reducing the price tag for their procedures by thousands of dollars — and encouraging nearby hospitals to follow suit.

What’s the secret?

The two doctors who started the Surgery Center of Oklahoma, Dr. Keith Smith and Dr. Steven Lantier, are committed to charging fair prices, and they founded their hospital with the goal of price transparency. “What we’ve discovered is health care really doesn’t cost that much,” Dr. Smith told KFOR-TV. “What people are being charged for is another matter altogether.”

They have been posting all of their prices online for the past several years, and they charge significantly less than other hospitals in the area.

“When we first started we thought we were about half the price of the hospitals,” Dr. Lantier said. “Then we found out we’re less than half price. Then we find out we’re a sixth to an eighth of what their prices are. I can’t believe the average person can afford health care at these prices.”

After comparing the Surgery Center’s prices with the bills for the same surgical procedures at other Oklahoma City hospitals, KFOR-TV confirmed just how wide that gulf is. For example, a $3,500 breast biopsy at Surgery Center of Oklahoma will cost $16,244 at nearby Mercy Hospital. A hysterectomy jumps from $8,000 at Surgery Center to $37,174 at Integris Baptist Hospital. And the OU Medical Center consistently charges about $15,000 more than what the Surgery Center does for common procedures like open fracture repairs and gall bladder removal.

The two doctors started somewhat of a medical bidding war after they started publicizing their pricing options. People began traveling from out town and even from out of state to take advantage of the much lower bills at the Surgery Center — and other hospitals took notice. At least five other Oklahoma City-area medical facilities started posting their own prices online, and some of them are even beginning to lower their bills as their patients push for price-matching.

“Hospitals are having to match our prices because patients are printing their prices and holding that in one hand and holding a ticket to Oklahoma City in the other hand and asking that hospital to step up,” Dr. Smith pointed out.

There are some caveats accompanying the Surgery Center of Oklahoma’s business model. What works for surgery centers may not necessarily work for larger hospitals, since surgery centers tend to focus on elective procedures that are a bit more predictable than the range of care needed in an emergency department. And, since the federal Medicare program doesn’t currently support this type of online pricing for their beneficiaries, the Surgery Center can’t accept any patients with Medicare or Medicaid plans. Only those with private insurance, or those who lack insurance altogether, may patronize the facility. Some critics say that allows the Surgery Center to cherry-pick the healthiest or highest-income patients.

But on a broader scale, more price transparency in the health care sector is sorely needed. New government data has confirmed that hospital pricing is often completely random, with the most expensive hospital in the country charging about four times more than average for no apparent reason. When it’s not clear what health services cost, doctors are more likely to recommend — and patients are more likely to agree to — expensive and unnecessary tests and procedures. And most patients can’t easily shop around to make the most informed decisions about where they want to get their care.

Provisions under Obamacare will attempt to spur more transparency in this area to both equip Americans with more information about their health care and convince hospitals to make their prices more competitive. Some private hospitals, like the handful in Oklahoma City, are already taking it upon themselves to get started.

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