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Industry        Surgeon

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Calling All Consumers: There’s Promise in Market-based Medicine

Posted in Health Reform Watch | May 2015 | Comments (2)

Tags: Editor's Choicepatient protection and affordable care acthealthcare costsobama carehealthcare reform

People ask me how to get into market-based medicine. They ask how to build a practice on value and price. We talk about value-based purchasing and creating efficiencies. Then I tell them that they can build the best product out there, but they still need a consumer.

We aren’t there yet.

Medicine has been bastardized into such a dysfunctional economic concept that no basic free market principles matter. Yet.

In almost every other marketplace, the consumer decides their purchase based upon value and price. Your only concern when buying an iPhone 6 is the fact that the iPhone 7 is about to come out, and it’s going to be cheaper and better.

Medicine has placed the consumer so far away from the actual price paid and, frankly, from the assessment of value that decisions are often made by bureaucrats and industry executives. Patients present a card (government-issued or third-party payor/PPO) to doctors’ offices and expect to be treated with little consequence for their decision. Pharmaceutical and device companies realize this and push more expensive therapies with higher profit margins. Doctors compete in this arena as well, attracting patients to their clinics with these unproven therapies. This started with the PPO and World War II (wage freezes and benefit write downs), and continued with the advent of Medicare and Medicaid. Obamacare will only exacerbate this practice, although we are going to get to know rationing through clinical practice guidelines (CPGs) and best practice methodologies.

The market-based system will only happen when we develop a consumer. I wish this would occur by healthcare insurance evolving into what insurance should and does provide in other fields:: protection from catastrophic loss. We walk into a doctor’s office and hand over our insurance cards, expecting this to cover any treatment required. You don’t walk into the gas station, hand them your auto insurance card and tell them, “Fill it up and bill State Farm.”

Obamacare exacerbates this problem. Care that the consumer can easily pay for, such as preventive medicine and contraceptives, are supposed to be free under Obamacare. These are areas that the free market has already addressed (CVS Minute Clinics and $4 prescriptions). Instead, we get $6,500 deductibles to pay when we need major procedures, which we thought we had insurance for (catastrophic loss). Don’t worry; the CPG will make sure that you never get this treatment, anyways.

If we put the patient closer to the actual transaction, the patient will become a consumer. I have no problem with a $6,500 deductible. The problem is that we are paying higher premiums while our deductibles are raised. To top it off, the average middle income citizen is making $5,000 less per year than he did eight years ago. Higher deductibles should result in lower premiums. Individuals should have the ability to buy individual insurance of their choice, not a government-constructed policy full of things they don’t need (maternity care for a single male). Also, the tax benefit of premium deductions from income should be eliminated for employers or extended to the individual. I spend $2,000/month for premiums with the luxury of having a $5,000–per-person deductible. This places my yearly exposure at $24,000 before my insurance company has to start doing its job, protecting me from catastrophic loss. Put that money into my pocket, and I can become a pretty efficient consumer.

The problem is that we are all paralyzed by perceived medical costs. We see the headlines, “Total Knee Replacement: $150,000,” “Heart surgery: $125,000.” We all hear of the bankruptcies due to medical bills. If the free market took over, we would see price transparency and competition. What’s a fair price for a total knee? I don’t know. Let the market decide. It will be a lot lower than what the self-pay patient and third-party insured patient are paying right now (but higher than Medicaid and Medicare).

We are all in for a rough ride with the creation of more centralized healthcare. Bureaucrats are going to ration our access under the cover of clinical practice algorithms to attempt to limit exploding healthcare costs. Big companies will continue their crony capitalist methods to command top dollars for unproven and often unneeded treatments. And the consumer will sit under the table, awaiting the scraps that are left over in the form of rationed, politicized treatment.

Blair Rhode, M.D., is a fellowship trained sports medicine doctor who owns his surgery center. He has uniquely positioned himself to be able to offer an “all-in” single fee for outpatient surgical procedures. He participates in, a website that offers single fee care. He also founded RōG Sports Medicine, a value-based shoulder implant manufacturer ( He can be reached by This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

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BRhode 05/07/2015 12:00 PM
Angela, Herein lies the crux. The physician must be aligned with the desired outcome. As a surgeon, I have no desire to make my hospital more money. They are busy building $500 million additions and treating me like crap with more beaurocracy (read: EMRs). Alignment is achieved by allowing the surgeon to gain a piece of the net savings. Bundled payment is an easy was to achieve this alignment. Tie the surgeon's reimbursement to the choices they make and have control over (implants and other intra- peri-operative choices).
Check out these examples of solutions:
Angela 05/07/2015 11:37 AM
Dr. Rhode, I enjoyed your article. I am an administrator at a surgery center. How do we get physicians to buy into cost containment? We would love to become part of this market but fear the surgeons would derail the process.