Bringing the Free Market to Dallas Healthcare

At the Free Market Medical Association conference earlier this spring, Johns Hopkins surgeon Dr. Martin Makary showed the crowd a chart about how prices for different items has changed since 1998. Housing, childcare, and wages were up significantly, while cars and clothing had remained mostly static. Toys, televisions, and cell phone service were much lower than 20 years ago. But the items with the largest jumps, around 200 percent more expensive than 20 years ago, are hospital services and college tuition.

Makary, best-selling author of The Price We Pay about how employers and families can lower healthcare costs, went on to explain that these items are allowed to increase because of the lack of clarity between sticker prices and what people actually pay. Grants, loans, and scholarships make college tuition prices as meaningless as the chargemaster at a hospital, where insurance discounts obfuscate the price.

Because hospitals know they aren’t going to get the price on the chargemaster, they have no incentive for that number to reflect the actual cost of the procedure or test, Makary went on to explain. Insurance companies can tout their discounts to patients, but if the discount is on an arbitrary (and rapidly rising) price, does it mean anything?

Makary is part of a movement of medical professionals who want healthcare to reflect the free market, with transparent pricing and clear information on quality, allowing patients to decide which entities succeed and fail, rather than the insurance companies. “Nobody goes into healthcare with diabolical goals,” he said. “We have just created such a huge system, and it is harming people.”

The Dallas chapter of the FMMA is trying to get the word out about the movement as well, hoping to unite patients and payers willing to pay cash with doctors and other facilities willing to list their prices. Because of the influence of insurance discounts, facilities are able to make money and patients are able to save by moving toward cash pay for certain procedures.

At The Surgery Center of Oklahoma, patients can go online and select a specific surgery and know the price they will be charged right away. The center helps finance the procedures, but such transparency would be unthinkable at most health systems. Patients are saving money, as the cash pay prices are often much cheaper than what facilities charge insurance companies because there are no discounts and there is a simpler path to payment, without prior authorization, claims, and extra paperwork. After deductibles and co-insurance are calculated for what hospitals charge insurance companies, cash pay is often cheaper.

With 21 chapters nationwide, FMMA has an online pricing tool where patients can find prices and quality information for cash pay physicians. Earlier this year, the Dallas chapter hosted a lunch with Dr. Chris Crow, founder of Catalyst Health Network. He talked about the network’s goal of maintaining the independence of physicians, and how the network has made deals with government and private employers for direct contracts, without an insurer in the room.

Both Crow and Makary described how this country has too much healthcare. Makary noted that 20 percent of knee replacements were unnecessary, while Crow described the proliferation of hospitals and the purchasing of physician practices in North Texas as evidence of why prices are going up while quality remains stagnant.

“The healthcare system works perfectly for how it is designed,” Crow says. “It is just not designed for those who receive care.”