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As a generally left-leaning person from a country with universal healthcare, I found this episode (as Russ put it) "exhilarating". Since moving to the US, we've found the quality of US healthcare to be excellent. But, the administrative overhead and costs are so obviously broken. I particularly resent the time I've spent on hold with insurance and hospital billing. The system not only creates ridiculously high, completely opaque, out of pocket costs for patients, they do so whilst ramming tinny upbeat Vivaldi on a tight rotation into our ears down the phone.

The devil seems to be in the gray areas. SCO (Keith Smith's hospital) seems to focus on mainstream procedures - which is fine, I'm sure the vast bulk of surgeries performed are predictable and routine. But, what about experimental treatments? What about patients with complex co-morbid conditions?

And, what about general practice and chronic conditions? This model seems to work for targeted (surgical) interventions, but can you apply this same thinking to treating diabetes, slow progressing cancer, autism or mental health generally?

Healthcare follows a power law distribution; for an individual, you get 80% of the benefit from the first 20% you spend. Increasing your spend 5x will only marginally improve outcomes above and beyond that.

So therefore you can either spend all of your money on 20% of the population, and have 20% of the population getting 100% healthcare while 80% of the population gets no care, or you can spend the same amount split between everyone and have the entire population getting 80% healthcare (pretty good, humane care). If there ever was a case of declining marginal utility, this is it, and hence why socialized healthcare works well.

That’s how China works actually.. funny many Chinese I meet abroad start to think China has the better medical care value. (More bang for the buck).

Also funny that in China, almost everyone wants to transition into a state sponsored healthcare like the west.

So like, Direct primary care? Aren't there any Anesthesiologists on the DPC map already?

https://mapper.dpcfrontier.com/

Woah

The part about EMTALA being a tax dodge that made hospitals lots of money is a real head scratcher. If emergency rooms were really so effective at soaking the federal government through disproportionate share hospital payments, I doubt so many hospitals would be closing them for being so hideously expensive.

Entrepreneur and Anesthesiologist Keith Smith of the Surgery Center of Oklahoma talks with host Russ Roberts about what it's like to run a surgery center that posts prices on the internet and that does not take insurance. Along the way, he discusses the distortions in the market for health care and how a real market for health care might function if government took a smaller role.

Econtalk is an excellent podcast. Can’t recommend highly enough.

The host flat out says he is not an ancap, and thinks some regulations have been beneficial, but also concedes that markets will eventually sort things out.

Thought provoking.

I wonder though, that given the suggested system, if there's an alternative to charity for the poor. If I was poor I wouldn't want to have to break out a sob story every time I had healthcare.

Maybe something like welfare where you just get a credit-card for groceries, but instead of groceries it's healthcare...?

I'm not a big podcast guy but I'm sure others here are (the total length is 1 hr 23 min). Here's a highlight:

In 1997, Steve Lantier and I, both anesthesiologists, walked away. And we walked away from very successful anesthesia practices and opened the Surgery Center of Oklahoma with the idea that we would always tell patients how much their procedure was going to cost, and that we would provide only the best care. That's really how we started. Within a week of opening, our dream came true. The phone rang and a patient said she needed a breast mass removed and wanted to know how much it was going to cost. I was so happy to get this phone call, but then I realized I did not know the answer to her question. I asked if she'd mind if I put her hold; and I called the surgeon and I asked him, 'How much is your fee?' He had no idea. So, I said, 'Will you suggest a fee or I'll have to answer for you.'

By then, many doctors were already tiring of someone else telling them what they were worth and declaring their worth. So, this particular surgeon, he's a really nice guy, and he said, '$500.' And I thought that was cheap, but I said, "Okay." And, I knew this procedure, a breast biopsy, was going to take about 20 or 30 minutes. Anesthesiologists basically bill for our time, so I added in what I thought that amount of time mine was worth and what I knew the minimal operating room supplies required would cost. And then I was about to take her off hold, when I realized that--

Russ Roberts: Got to keep the lights on.

Keith Smith: that she would want to know--she was going to want to know: Is this cancer? So, I called a pathologist friend and asked him, 'How much do you want to examine this specimen?' and, of course, he didn't know. He thought about it for a little bit, and he wanted $28. So, I added all this up and took her off hold. The whole thing took five minutes. I told her $1900 is our all-in price. She said 'That's interesting. The so-called not-for-profit hospital down the street wants $19,000 and that's just for the facility.'

And, I tell that story so people know that how we come up with our prices. It happened the first week were opened. We knew we were onto something. After we crunched our numbers on our end, we realized we were profitable at that number. To this day, that's still our price. The prices on our website are the same prices we quoted over the phone in 1997 with a handful of exceptions, all of which are lower than the prices that we quoted in 1997.

So, we really did want to interact directly with patients. We wanted not just to be their medical, but their financial advocate and we thought if we owned and controlled our own facility that we certainly had that opportunity and now we take that responsibility very seriously.

I loved this one! Great challenge to the idea that government health care being the best and free market health care being exploitative

"Entrepreneur and Anesthesiologist Keith Smith of the Surgery Center of Oklahoma talks with host Russ Roberts about what it's like to run a surgery center that posts prices on the internet and that does not take insurance. Along the way, he discusses the distortions in the market for health care and how a real market for health care might function if government took a smaller role."