Results 1 to 7 of 7

Thread: Free Market Healthcare

  1. #1
    Professor
    aociswundumho's Avatar
    Join Date
    Aug 2019
    Last Seen
    Today @ 02:33 PM
    Lean
    Undisclosed
    Posts
    1,363

    Free Market Healthcare

    Below is a link to an amazing podcast (with transcript) about the Surgery Center of Oklahoma. They take no insurance, no medicare, no medicaid. The founder is an anesthesiologist named Keith Smith.

    Keith Smith on Free Market Health Care - Econlib

    Here's a taste, but the whole thing is great:

    On the prices they charge:

    Russ Roberts:It's a terrible, terrible system right now. But you've cut through all those Gordian knots as best you could. You've set a set of prices given that existing universe out there of fake prices--and they're fake in many ways that we'll be talking about. But, you're serious? You haven't raised them in 22 years?

    Keith Smith: Yeah. Yeah, so much for the spiraling cost of healthcare. And, I'd like to point out that some of the prices on our website may actually look higher than when we first started. And the reason for that is that the actual bundle of services that we are providing that initially maybe were not inside of the bundle of care, are.
    Patients from Canada:

    Russ Roberts: Those early patients that came from Canada, they were coming, I assume, because they were in a hurry and you could do that surgery quickly.

    Keith Smith: Well, you can define 'in a hurry.' The most common Canadian story we still see is a woman that has painful or dysfunctional uterine bleeding and needs a hysterectomy. And they're in a three year waiting line to see a gynecologist. And they're tired of receiving transfusions or just feeling downright awful. So, for $8,000--that covers surgery and anesthesia, facility, pathology and their overnight stay--they're more than happy to pay that, many of them. So, I don't know that three years is 'in a hurry.'
    Why being forced to treat emergency room patients regardless of their ability to pay (EMTALA) is extremely profitable for hospitals:

    Keith Smith: Yeah; and before we get to feeling too sorry for the hospitals, all of the ones I know of claiming to go broke have a crane in front of them building onto their Emergency Room.

    Understand, too, that this situation is not a situation that was inflicted on the hospitals. There was an arrangement, and the arrangement was a quid pro quo. It was a mutually beneficial exchange where the government had this EMTALA [Emergency Medical Treatment and Labor Act] idea--I believe it was under Reagan--that said that the hospitals have to take care of someone who comes in the Emergency Room, regardless of ability to pay. They also can't just send them down the road to another facility that's a competitor.

    But the hospitals' part of this was they didn't have to pay tax.

    So, ya'll--you think about your life without tax. So, the hospitals basically doubled their net profit with this move in the institutionalization of this 'you have to take care of people regardless of their ability to pay.'

    Russ Roberts: Are you serious? Keith, there's too many moments in this episode so far, our conversation, where I'm thinking are you serious?

    Keith Smith: Yes.

    Russ Roberts: You're saying that before that requirement of treating Emergency Room patients regardless of ability to pay, that hospitals had to pay income tax, taxes on their revenue, on their profit?

    Keith Smith: Yes. That was part of the arrangement. So, if you do this, then you don't pay tax. I think before people feel like the hospitals have been just terribly victimized, just imagine your own life without property tax, without paying any income tax. All of a sudden, your balance sheet looks a whole lot healthier.
    Smith also explains why hospitals charge huge sums and then drastically reduce them for insurance companies, something I've been wondering about for years. If you're interested in healthcare, then you need to listen to this podcast or read the transcript, because it is fascinating.


    Here's another article from 2013 about how the Surgery Center of Oklahoma's online pricing is affecting other nearby hospitals:

    Oklahoma City hospital posts surgery prices online; creates bidding war | KFOR.com

  2. #2
    Sage
    Greenbeard's Avatar
    Join Date
    Aug 2013
    Location
    Cambridge, MA
    Last Seen
    Today @ 02:13 PM
    Gender
    Lean
    Slightly Liberal
    Posts
    9,706

    Re: Free Market Healthcare

    Bad history on tax-exemptions for hospitals.

    Tax exemption for institutions dedicated to the pursuit of “charitable purposes” has been part of the United States’ income tax structure since income taxation began in the 1890s. Charity care by hospitals was first regulated federally under the Hill-Burton Act in 1946. In exchange for grants funding hospital construction, grantee facilities were obligated to provide free or discounted care. In 1975, enforcement mechanisms were established; in 1979, required levels of charity care were defined under Hill-Burton.

    Charity care was first introduced as a requirement for nonprofit hospitals’ federal tax exemption in 1956. That year, the Internal Revenue Service (IRS) issued a ruling requiring nonprofit hospitals, as a condition of federal tax exemption, to provide as much charity care as they could afford.

    In response to the enactment of Medicare and Medicaid in 1965, the IRS shifted the activity that would qualify a nonprofit hospital for federal tax exemption from charity care to “community benefits.” The new ruling broadened the scope to include activities that benefit the community as a whole.
    EMTALA's stabilization requirements are a condition of Medicare participation, and tax-paying for-profit hospitals are certainly subject to them. May want to take whatever else this guy is saying with a grain of salt.

  3. #3
    Professor
    aociswundumho's Avatar
    Join Date
    Aug 2019
    Last Seen
    Today @ 02:33 PM
    Lean
    Undisclosed
    Posts
    1,363

    Re: Free Market Healthcare

    Quote Originally Posted by Greenbeard View Post
    Bad history on tax-exemptions for hospitals.
    EMTALA's stabilization requirements are a condition of Medicare participation, and tax-paying for-profit hospitals are certainly subject to them. May want to take whatever else this guy is saying with a grain of salt.
    I can't even figure out what a non-profit hospital is. Consider this article, which states:

    Seven of the 10 most-profitable hospitals in the United States are nonprofit hospitals,
    Then I found this guy, who says:

    At a time when tax reform is at the top of legislative priorities, it is easy to forget that most of the richest and most profitable hospital systems in the United States enjoy tax-exempt status. They were given this in exchange for providing benefits to their local communities, like charity care and medical outreach.
    Which corroborates what Keith Smith said in the podcast. Perhaps he was referring to non-profits that make substantial profits? Idk.

  4. #4
    Sage

    Join Date
    Jun 2013
    Last Seen
    Today @ 02:03 PM
    Lean
    Conservative
    Posts
    25,319

    Re: Free Market Healthcare

    Quote Originally Posted by aociswundumho View Post
    Below is a link to an amazing podcast (with transcript) about the Surgery Center of Oklahoma. They take no insurance, no medicare, no medicaid. The founder is an anesthesiologist named Keith Smith.

    Keith Smith on Free Market Health Care - Econlib

    Here's a taste, but the whole thing is great:

    On the prices they charge:



    Patients from Canada:



    Why being forced to treat emergency room patients regardless of their ability to pay (EMTALA) is extremely profitable for hospitals:



    Smith also explains why hospitals charge huge sums and then drastically reduce them for insurance companies, something I've been wondering about for years. If you're interested in healthcare, then you need to listen to this podcast or read the transcript, because it is fascinating.


    Here's another article from 2013 about how the Surgery Center of Oklahoma's online pricing is affecting other nearby hospitals:

    Oklahoma City hospital posts surgery prices online; creates bidding war | KFOR.com
    BS on the tax exemption malarkey. Non profit hospitals were not subject to tax back since the income tax began.

  5. #5
    Sage

    Join Date
    Jun 2013
    Last Seen
    Today @ 02:03 PM
    Lean
    Conservative
    Posts
    25,319

    Re: Free Market Healthcare

    Quote Originally Posted by aociswundumho View Post
    I can't even figure out what a non-profit hospital is. Consider this article, which states:



    Then I found this guy, who says:



    Which corroborates what Keith Smith said in the podcast. Perhaps he was referring to non-profits that make substantial profits? Idk.
    the problem here is I think the study doesn't consider cost and profit shifting in a big system.

    In one area.. its possible that a big hospital system in an urban area makes a profit. but that profit then ends up going to a rural hospital in the same system to buttress the fact that its losing money.

  6. #6
    Professor
    aociswundumho's Avatar
    Join Date
    Aug 2019
    Last Seen
    Today @ 02:33 PM
    Lean
    Undisclosed
    Posts
    1,363

    Re: Free Market Healthcare

    Quote Originally Posted by jaeger19 View Post
    the problem here is I think the study doesn't consider cost and profit shifting in a big system.

    In one area.. its possible that a big hospital system in an urban area makes a profit. but that profit then ends up going to a rural hospital in the same system to buttress the fact that its losing money.
    So hospitals give each other money? This makes it even more confusing.

  7. #7
    Sage

    Join Date
    Jun 2013
    Last Seen
    Today @ 02:03 PM
    Lean
    Conservative
    Posts
    25,319

    Re: Free Market Healthcare

    Quote Originally Posted by aociswundumho View Post
    So hospitals give each other money? This makes it even more confusing.
    Well yes. For example..my competitors are mostly non profit hospital systems.. So..one hospital system has a very large hospital in a major metropolitan center.

    They have another hospital in a pretty large metropolitan center...

    They also have 6 other dramatically smaller hospitals in rural areas roughly 70 to 200 miles from those two larger hospitals. NOW..if you studied the profitability of those two large metropolitan hospital centers... they are EXTREMELY profitable.

    However, if you studied the other 6 rural hospitals in the SAME SYSTEM.. at least two of them are definite money losers.. and the other 4 probably barely break even. So.. how do those other 2 rural hospitals in the SAME SYSTEM.. survive at a loss? "Profit".. from the two larger metropolitan hospitals in the same system.. is funneled to these other rural hospitals.

    That's how while the HOSPITALS in the city.. might be profitable.. the hospital system maintains its non profit charitable status by shifting its profit to other non profitable centers that usually serve underserved populations.

    I don't believe your article would pick up on that.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •