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Transparent Pricing Model Boosts Surgery Center's Business

Posted in The Top Line | Jun 2015 | Comments (0)

Tags: surgeon ownershipsorthopaedic surgery center managementmedical practice revenue enhancementcash-based medical practiceeconomyprivate practicepatient volumebundled paymentepisode of care

Transparent healthcare pricing models stand to prevail as companies and individuals become wiser consumers, seeking alternatives to the rising costs experienced by many under Obamacare. Orthopaedic surgery centers aligned with this market-based principle have already experienced the benefits.

After a transparent pricing model was employed by The Surgery Center of Oklahoma (SCO) six years ago, volume increased by 30 percent and profit has almost doubled, according to Keith Smith, M.D., co-founder and Medical Director at SCO.

Keith Smith_M.D._edit
“Our business is booming due to the appeal our pricing has gained with individuals paying themselves, and with self-funded companies that also have the sticker shock of irrational hospital pricing,” says Smith.

By providing a complete list of services offered with a price tag on its website, SCO attracts patients and companies who want to pay for quality care at a lower price point. SCO accepts self-paying patients and private insurance, but not Medicare or Medicaid. SCO proclaims that it’s able to maintain its pricing and quality care because it is completely physician-owned and managed.

Orthopaedic procedures comprise about 40 percent of SCO’s business, according to Smith.

ORTHOPRENEUR® spoke with Smith about how SCO started its model.

ORTHOPRENEUR: How has this model helped your business?

Dr. Smith: The truth is that I have been so busy as a result of putting our prices online that I have had little time to deal with anything else lately.

I would like to see everyone adopt our transparent pricing model. We have formed the national Free Market Medical Association, to help those interested navigate to our way of doing business. This association also connects those who provide honest pricing to those who want to purchase healthcare services at these prices, primarily self-funded businesses and their representative third-party administrators. Now that a significant number of people in this industry are aware that not only is transparent and guaranteed, upfront pricing possible, but that this is the best model for the physicians and those paying for care, those who do not adapt to this way of doing business are in for a hard time. The savings that companies with whom we are dealing have realized is so significant that they will never turn back to the old way, and they are quick to relay this information to anyone and everyone. This is bad news for those committed to seeing what they can still get away with when pricing their medical services.

ORTHOPRENEUR: Can you quantify the savings that these companies experience?

Smith: Self-funded companies with 1,500 employees experience health plan savings of about $1 million per year compared to their Preferred Provider Organization allowable amounts. Our prices are typically 1/6th to 1/10th that of the big box hospitals for the same procedures.
Surgery Center_of_Oklahoma_Website_Picture_2_copy_copy_copy_copy

ORTHOPRENEUR: What in included in the listed price on your website?

Dr. Smith: All charges (including pathology). Any pre-diagnostic studies are not included, however, as none of these are under my control.

ORTHOPRENEUR: Does the price of a procedure include the implant cost?

Dr. Smith: The price does not include implants, although I provide these at cost. I will typically collect an estimated (worst case scenario) implant charge, then refund the patient the unused portion before she leaves the facility.

ORTHOPRENEUR: What if there are complications?

Dr. Smith: Complications are not treated gratis. We had considered this, but realized that we would have to charge more for this guarantee and seldom find justification for this. If the patient saves $15,000 to $20,000 on an average procedure, even if he has a complication, he is way ahead when you think about it. Our complication rate is so minimal that this has been a non-issue.

ORTHOPRENEUR: How do you handle changes in pricing, in general?

Dr. Smith: I have only changed our pricing, and only individual prices, twice since we put them online six years ago. As more competitors enter this space, I imagine I will change them at times to respond to competitive pressures—just like any other business.

ORTHOPRENEUR: How do you deal with fluctuations in implant pricing?

Smith: Our implant pricing has remained stable, as multiple vendors always competing for our business has been a better strategy than choosing an exclusive arrangement. Physicians who routinely choose the most expensive implants are at a competitive disadvantage in our model, even within this facility.

ORTHOPRENEUR: Does business come to you from all over? Beyond your marketing reach/locality?

Smith: We have treated patients from all fifty states except Hawaii, and many patients from Canada, where everyone has “coverage,” but many find that this does not mean that they have access to healthcare.

Related articles:

A Quest to Find a Fair Price for Surgery
Will a Cash Pay Structure Work for Your Practice?
Calling All Consumers: There's Promise in Market-Based Medicine 

Hannah Corcoran is Editorial & Media Assistant at ORTHOWORLD. She can be reached by This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Photo Credit: Surgery Center of Oklahoma


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