Surgery Center of Oklahoma: Proving Free Market Medicine Works

July 16, 2014

The New American recently profiled the Surgery Center of Oklahoma (SCO), a health care facility that has challenged and debunked the claim that free markets and health care do not mix. Founded 17 years ago by two anesthesiologists, Keith Smith and Steven Lantier, the facility does something remarkable in today's health care market: it provides transparent, up-front, all-inclusive pricing for its services.

SCO's founders were frustrated by the fact that pricing and quality in the American health care system were not the product of free competition but the product of deals between hospitals and insurance companies. Five years ago, SCO decided to post their prices online -- a stark illustration of just how much most consumers overpay in health care costs:

  • The national average cost of a mastectomy is between $9,000 and $50,000. But SCO offers a mastectomy for $5,005, saving consumers between $3,995 and $44,995.
  • A spinal fusion costs an average of $50,000 to $150,000. But at SCO, the procedure costs just $16,500.
  • Similarly, a hip replacement runs $40,000 at most hospitals. At SCO, the procedure costs $19,400.

Dr. Smith said of the pricing practice, "What we're doing here should not be that remarkable. What we're doing is what every other industry in the United States does that operates fairly. We say, 'Here's what we do and here's how much it is.' We identify our costs, build in a marginal profit, and then display those prices. That's how every other industry works, and it promotes healthy competition and keeps quality high and prices low."

Americans in need of medical care have been flocking to SCO in Oklahoma City for a better deal. Some businesses are even paying the entirety of their employees' hospitals bills when their employees go to SCO, because the facility saves them so much money. When Oklahoma County put SCO services on its public employee health plan, the county saved hundreds of thousands of dollars in the first month alone.

On top of this, SCO boasts a near-zero infection rate -- a rate which ranges between 4 percent and 10 percent at other hospitals across the United States.

Dr. Smith told the New American that he thinks that the high prices of Obamacare may inadvertently create a new consumer market that will transform the American health care system back to an affordable system "where insurance wasn't even necessary for the most part."

Source: William F. Jasper, "Healthcare's Free Market Alternative," New American, June 24, 2014.

 

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