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Price pioneers

Science | A surgical center in Oklahoma City brings healthy competition to healthcare

Issue: "Back to School," Sept. 7, 2013

Rotator cuff repair: $6,260. Hammertoe repair: $2,860. Cochlear implant: $8,800. Gallbladder removal: $5,865. Hysterectomy: $8,000.

Those aren’t average or estimated surgery prices. They’re actual ones, several among dozens advertised online by the Surgery Center of Oklahoma. The physician-owned surgical center in Oklahoma City is doing the unheard-of in healthcare: It’s competing. The center has sparked a local price battle that is attracting national attention, and may be on the cusp of a broad movement toward healthcare price transparency.

In July KFOR-TV in Oklahoma City reported a state university hospital had charged $21,556 for gallbladder removal—more than three times as much as the Surgery Center of Oklahoma charges. Another local hospital charged $37,174 for a hysterectomy (nearly five times as much).

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“Healthcare needs some healthy competition,” says Dr. G. Keith Smith, the co-founder of the surgical center. Smith and his colleagues have been quoting prices over the phone since 1997. When they launched their website in 2009, they listed prices there. Other local clinics and hospitals subsequently began quoting prices over the phone, online, or through third party websites.

The prices advertised by the Surgery Center of Oklahoma apply only to self-paying patients who provide money up front. The center also doesn’t accept Medicare or Medicaid patients—although Smith claims its prices are less than what Medicaid reimburses local hospitals.

“We turn a profit on every case. The prices I have listed online are between a sixth and a 10th of what the so-called not-for-profit hospitals charge for the same procedures.”

Business is booming, with patients coming from as far away as Canada, Nigeria, and Israel. “I get emails every day from people that are asking me, ‘How did you do this? We want to do this at our hospital or surgery center.’” Smith says not every hospital is eager to post prices, though, “because this price opacity gives them cover for all the money they are making.”

U.S. patients and employers are realizing how wildly unpredictable medical bills can be. A few years ago the supermarket chain Safeway found providers in San Francisco were billing between $848 and $5,984 for the same procedure—a colonoscopy.

The reasons for price disparities are complex: Because a hospital often writes off unpaid bills, for example, it may charge more than a surgical center. Yet, some competition is creeping in, if clumsily. The website offers medical procedure price comparisons for providers in various U.S. cities. It notes in a disclaimer that its prices are computed from an algorithm and are “not 100 percent accurate.”

Delayed consent

Henrietta Lacks
Lacks Family via The Henrietta Lacks Foundation/AP
Henrietta Lacks

Sixty-two years late, scientists have finally asked for permission to study cells copped from Henrietta Lacks, a poor, uneducated African-American woman who died of cervical cancer in 1951. As documented in the 2010 bestseller The Immortal Life of Henrietta Lacks, neither Lacks nor her family gave consent for researchers to culture and experiment with her tumor cells, but they’ve used them in 74,000 studies anyway. Under a new agreement with the woman’s descendants that took effect in August, the Lacks family will have some say-so in how scientists use genetic information from the quaintly named HeLa cell line. —D.J.D.

Daniel James Devine
Daniel James Devine

Daniel is managing editor of WORLD Magazine and lives in Indiana. Follow Daniel on Twitter @DanJamDevine.


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