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Okay, let's get into the interview
Well, Keith welcome to the human action podcast
Thanks for having me. It's always fun to talk to you
Yeah, likewise
So I think so on these episodes
Keith dr. Smith on these on this episode
We don't do or this podcast I should say we don't do a pre-record introduction
So I I'm not going to be able to give the listeners who don't know who you are
An explanation of who you are other surgery center of Oklahoma
And especially because it's so relevant
To what we're going to be talking about
Can you just explain and don't be shy like go ahead and you know
Feel free to take some time just to explain
What it is that you guys do, you know, what your your particular specialty is
And also maybe just give some real world examples
So people understand like when you are able to deliver
Procedures at a lower price like what kind of savings we're talking about
Sure. Um, so I'm I'm Keith Smith. I'm an anesthesiologist. I have a full-time anesthesia practice
Uh, I started my private practice in 1990
Um here in Oklahoma City and it did not take long
For me to realize that
That the medical practice that I'd hoped for was not
Not really uh coming coming to fruition
It became very clear
That it was extremely difficult
Uh to to do to take care of patients without the interference of
Many outside factors government included it also became very clear
That hospitals were not my friend
They weren't any physicians friend and that the physicians really
Were pretty disenfranchised
um
In 1992
George Bush the elder
Uh decided to inflict
A tool on the industry called the resource-based relative value scale, which really unmasked
Uh the complete uh control over the industry
For which the government had lusted for so long
But essentially in collusion with some economists at Harvard they decided they could place a price
On every single service provided by a physician
Um and the rumors of this you know obvious to the audience on your show
So they got them all wrong. Uh, they got a lot of them. Um
There were too too high
And so there was a proliferation of
In abundance of availability of procedures for which medicare decided to overpay
And likewise, um, no mystery. There was a shortage
Of a lot of procedures that were underpaid
An anesthesia of cardiac anesthesia in particular my specialty being one of them
so
physician fees felt drastically at this time
Just to give an example
As a cardiac anesthesiologist
I was paid $1,100 for the service I provided for an open heart surgery
From 1990 until 92
In 92 with resource-based relative value scale
Infliction number one that that was cut in half
So I was paid $550
After that not satisfied
That the cuts had been drastic enough
The government
And I believe this was under the clinton regime
inflicted part two
So the last open heart surgery for which I provided anesthesia service
I was paid less than $300
The last medicare beneficiary I provided anesthesia to for knee replacement
I was paid $78
And I'd become familiar with the mesis institute and
You know romp all and had done enough reading about economics at that time to realize
That this was not personal
These are prices, you know, these are signals in the marketplace and they were
These signals were telling me what they thought I was worth and I thought it was
um, it was only
Rational of me to respond with a signal of my own
So I quit
And I didn't quit taking care of medicare patients. I just quit filing claims
Uh, I didn't want to legitimize that
That system
Which I come to believe by that time was a Ponzi scheme
but I also
Realized the government didn't have any money and I was the you know, the recipient of stolen property if I did
accept that money
so
I I began ideologically really to mature
And and my thinking about you know, the world and economics was being radically
challenged by not being paid for complicated services that I was providing
Um, but simultaneously I saw the administrative staff of the hospitals where I work balloon
Uh, they were building on to the hospital. There were many more very expensive suits in the hall
um
They were buying out
hospitals
That were their competitors. They were buying physician practices
They were sponsoring sports franchises
College and professional there were billboards going up everywhere
And simultaneously
The so-called not-for-profit hospitals were complaining that they were going broke that the poor malving continues to this day
So
It was clear they were making wild amounts of money
physicians were being short changed
And then in the old days, you know
A physician could go to the medical records department and look at a chart
And on the right side of the paper chart where all that was all the clinical information on the left side was all the financial information
So it became very clear that patients
I was anesthetizing for routine procedures tonsillectomy carpal tunnel gallbladder
Those patients were being bankrupted
By these hospitals with the bills that they were being sent
For very routine procedures and it I I began to feel like an accessory to the crime
and so
A like-minded anesthesiologist and I walked away
um in 1997 just sick of being part of this
And knowing really in our hearts that we could do things cheaper and better
Uh, we walked away and we bought a burnout surgery center that was about to fail
And we actually bought it on a hunting trip
and
And we opened up in may of 1997
With the mission of providing
You know the best care possible
At a reasonable price. We also pledged we've never accepted dog money from the government
And that patients would always know prior to arrival
What they were going to pay us
The the most awful part of all of this prior to our departure was that these poor malignant hospitals in order to legitimize their narrative
They began denying
Physicians surgeons in particular the tools that were required to take care of patients
So it was time to get out
And we did in 1997
Uh, I'm not a businessman
Our performer was
You know, if if they're charging 30 000 for a carpal tunnel release, we think we can do it for less than that and maybe better
Um, and we had no idea how correct we were
So we started quoting prices, uh over the phone
The first week we were open to patients who called
With no concept of how radical that was
We weren't just quoting prices for the surgery center. We were quoting all inclusive prices, which included
anesthesia and the surgeon
And we were only to discover as time went by that these prices we were quoting which were which were profitable prices
Uh were one-tenth
Or less than that, uh of the so-called not-for-profit hospitals
Um, we were attacked as you know, uh just mercilessly
By the hospitals who we embarrassed with these, you know
very
Very affordable prices
We were attacked by the insurance industry, which we didn't understand at the time
Because we we were out of network with all insurance plants. They all hated us
Um, we were attacked by the state health department here in oklahoma
And all of these attacks backfired
That legislators particularly the democrats
Saw us in oklahoma as an underdog
And the republicans were all bought off by the big hospitals
And they were the ones really that were attacking us
But the the democrat saw us as the champion of the poor
You know the affordable prices and you know, I'd walk into their office and tell them I didn't want their money
I didn't want to think from them. I just wanted to be left alone
Uh and that message I resounded with them. They really liked it. So our first defenders from the vicious attacks were
Were people you would say were on the left
Um, the republicans came on later when waving the free market flags seemed like a popular thing to do
Sonya things went along great. Um, we built the huge facility we now occupy
in 2003
um and
And then the insurance commissioner and the carriers in the hospital stumbled
On a way to hurt us
They stacked deductibles
And what that means now we were out of network with everyone and we were filing out of network claims
for patients as a courtesy
But what they did is they disallowed any insurance benefit for a patient who came to our facility
Out of network unless they had already met their in network deductible
So they stacked these deductibles on top of each other which put us out of financial reach for many of the patients that
Prior to that time, uh, would come to our facility. So our waiting room emptied
Uh, little rockwells laughed at me that there is such a thing as a waiting room. I think that's fun
but
It emptied and I mean we almost went out of business and I
I remember thinking at the time, you know, we're cheaper. We're better
In a free market
There should be a line around the block. I mean, we should be as busy as anybody
And so in 2009, um, almost in a last act of defiance, I posted
All of the prices we'd quoted over the phone up into that time on a website
Also not with no clue really at the time
How radical that was
And what the effects would be I did have three goals in mind though when I did that one
was to make
Make us more visible
To patients who had sticker shot, you know, they had a high deductible or no insurance
member of a self-funded health plan a member of a cost-sharing ministry
Um, I also wanted to start a price war because I was mad
Uh, this was too this too hard being a doctor. It's too hard taking care of patients and
You know, just trying to run us out of business constantly and and I was pissed
So I thought, you know, these so-called not-for-profit hospitals
That are charging 10x what I'm charging have got some explaining to do
And and I want someone who lives in isla or main or california
To print my price and walk in to the hospital and say match this or I'm traveling no coma city
We really wanted to start that
And the last thing is I wanted to understand or better understand some of the scams at play
That kept the market from functioning as it should and I would argue all of those
Goals have been achieved. So that's kind of our story and how I did it and why I did it
And it's just been a wild success
Okay, so just to make so people understand so by you doing that then is that what solved your problem?
And you guys flourished because now you had people literally flying in and getting
Operations there once you you went public with your pricing. That's right
So post the prices and the first patients to take advantage of it were canadiens
You know, and that was instructive in itself. You know, these are people that have
Coverage whatever that means
They just don't have access to the care many of them require we have two canadiens this week
Be having surgery at our place. So yeah, uninsured patients traveled from
out of state and then
I became acquainted with people in the self funded
Industry some employers in all 50 states will fly their employees to Oklahoma City
Pay all their travel expense them and a companion
Lodging incidentals pay all the surgery expense a wave all out of pocket
And they still save just vast sums
Yeah, I remember you explaining like a typical case where it would make sense for someone to you know
Fly like you say bring a companion and then recover like in a local hotel for a week
Before they you know should travel again
Move wherever they got a hip surgery or something and still that was just a lot cheaper
Than what they're they would pay even though they had quote good health coverage
Like just what they would be on the hook for let alone
You know what this official price was that their local hospital was charging the insurance company
Yeah, that that's exactly right. You know, we we've seen someone needed a carpal tunnel release
That's a very minor surgery and they would fly to see us from Idaho
Because they were going to have to pay
10 or $12,000 for this procedure and I think my price on the website is $2,950 for everything
And so yeah, they could afford to fly to see us
The latest
Trend which I can say is a trend because we've seen this more and more are the denials
That patients are facing those that have what they thought, you know
It was good insurance even people with Medicare. They're just being denied the care that they obviously require
We had a
very well-to-do
developer
Who had you know a blue cross plan that he just thought was wonderful
Well, he had a torn meniscus and a locked knee. I mean he couldn't walk
And they said they needed three weeks
To review all of his medical records before they could provide payment authorization
He just came it paid our cash price, which I think was 4,000 certain facility anesthesia
And got his procedure done the next day
And he had a bucket handle tear of his meniscus and a locked knee
So we're seeing more and more patients that have insurance
But I've just thrown up their hands in frustration because they they can't get the care they need
Okay. Well, so thank you for that
Quick summary and so now that the listeners have more of a context of you know, who you are and and why I wanted you for this episode
Let's just review. So of course
the you know, shocking events of the last few weeks the
apparent assassination of brian thompson the
CEO of united health and
Luigi Mangione has been arrested and is the alleged suspect and he
Has this manifesto and one of the the things early on in this is this
claim that
Hey, the u.s
Spends the most in the world on health care per capita
And yet its life expectancy is like 40 second
And so this was taken as
proof among you know progressive
Fans of of the shooter
But whether it's luigi or not. I know that that's a controversy online right now
Um to say yeah, this guy's a hero standing up at these these health insurance companies are
Basically murderers and this is just a guy fighting back and just basically
Hey, look around the world you idiot americans
can't you see
Capitalism does not work when it comes to
Medical care like a lot of them probably don't think capitalism works for anything
But they say particularly it's crazy that you know, it's obviously it's the profit motive that is making health care
So expensive in the u.s. And we don't even get anything for it. It's not like we have better health care than
The europeans do so a lot there. I realize but I think you know, you're the perfect person just help us walk through this and understand
You know, there's obviously some element of you can understand why people have that reaction given the horror stories that you've seen
And that many of us have experienced but yet
Presumably you don't think that yet. That's right. That's basically capitalism is the problem here
Yeah, the problem is not
The free market the problem is the absence of the free market
The problem is there's there's not enough competition
And that's why the prices are what they are
The other problem is there's so many variables and moving parts that are not considered by those who make these claims
You know, if you take car wrecks and homicides out of the out of the number
Then the death rate changes drastically and you know, there are a lot of places a lot of countries where people drive cars
Like they do right, you know in texas and california and all over the united states
the other thing is
You know
Hey, hey, Keith. Let me just stop because that's that's a critical point
I just want to make sure people didn't miss that so you're saying
Yeah, like one leg of that one-two punch critique is to say look at how much the u.s
Spends and what do we have to show for it? Yeah, life expectancy is like 40 seconds something like that and among, you know
OECD nations it's not very good the inter and but your point is
A lot of what's driving those headline figures is that many americans die in automobile accidents
And from gunshot wounds. So, you know, we can talk
So a separate conversation about what you know, why are there so many shootings?
But clearly it's not the fault of the health care system
If more americans tend to get in car accidents then europeans do like that's clearly not the fault of you know
Our operating rooms or something
Yeah, and and you know the other point that
Underbinds that argument is the overall health
of people in the united states people people in the united states are
More affluent and they eat more
so
And they probably don't eat as healthy as is due in some country. So and that's not the fault
Of the health care system. That's that's not now
Is is that a reason that more is spent? Yes
But the other thing you have to keep in mind is the extent to which
Our culture in this country
Is geared toward making sure people don't perish
When they might survive with a care intervention
And many of those interventions are just simply not available
In countries and they don't really count those against the mortality
There's an extremely aggressive euthanasia movement in canada
And in the uk
You get diagnosed with a chronic disease at a certain age
You're that's problematic there for your survival. They don't count those against mortality
statistics at all or newborns
You know, they're premature
They're they're heroic efforts in the united states and there are all over the world, but particularly here
To ensure that those that those little babies survive
In a lot of countries they don't count
They don't count those in the denominator. So, you know that you you take all of those things into account
I'm not a
Mathematician or statistician that I know those variables move the needle
Way off of 40 second in the in the world
Okay, so I I guess big picture
Is it
Is it true that like a very wealthy person
Who's got something that requires very expert care?
Are they necessarily come in the united states or is it like no you could count?
There's 10 countries or maybe if you're saying you you're not sure
I mean, obviously
I don't I'm not expecting you to be an expert on the world's healthcare systems
No, I I know for a fact I I I would say I do have my finger on the pulse
Of what is called medical tourism
Uh people traveled Oklahoma city from all over the world. We we have uh two patients coming from cameroon
Next month
So they come from all over the world. They've come from uk france, germany, africa
canada
Just all over the place to secure care at my facility
There are places that have names
Like indy anderson cleveland clinic slone kettering mayo
hopkins
For for pediatric cardiac procedure stanford
Are there people traveled from all over the world boston children's uh to go to these
To go to these medical centers to secure care because it's the best in the world
I mean as some of these
You know, if you need uh pancreas surgery, then you're at slone kettering indy anderson or you're at johns hopkins
Those are the best places in the world to to get that care
So, you know that the quality of the care I would argue is sporadic
But the best care I think that you can receive
Is is in the united states the reason
The quality is sporadic and the prices are as high as they are though is the absence of market competition
And that's the government's fault by far far away
They're driving the getaway car every single time someone gets ripped off in this system
So the idea of throwing the keys to them and letting them take it all over
Is is insane
Okay, well, thank you for that. Um again, I didn't want to put words in your mouth, but I'm glad
It's interesting to hear you say that um, so
Can you just help us to understand? I mean, so you I think you kind of alluded to it
early on when you were just giving your initial answer to my my
introductory question
That somebody might think that the insurers would love you like, oh, yeah
We're we're covering people and if they can get care from
You know, uh, the surgery center of oklahoma, then we don't have to make as high pre like
You know, then we could charge lower premiums and you know, we should encourage all of our patients
They should be in network
We should try to funnel everybody to you guys as much as possible
One might have thought that would be what would happen
But that's not what's going on
So can you explain that because that's kind of a mystery
prima facia
Yeah, I was terribly confused by this
And when all the pieces came together
Thanks to
My education by some of the people in the industry
Um, I actually made a video called the $100 aspirin
To explain it in case after my explanation now anybody wants to review
essentially
The answer is
That insurance companies don't just make money by
collecting premiums
paying claims and pocketing the difference
They also make money
by
Charging for the discounts that they can achieve
So if a hospital
Sends a hundred thousand dollar bill
To an insurance company the insurance company pays them. Let's say 20,000
The insurance company then claims
That they saved the employer plan
$80,000 and they charge a commission
To the extent that those savings are achieved
So and it's usually 20 25 percent
So if you think through that
The insurance company actually wants
A 200,000 dollar bill
And then except 20,000 and then they can claim that they saved the employer plan 180,000
So the incentives are completely wrong
You know and that explains why the insurance companies hate me because if I say
A knee arthroscopy at surgery center of Oklahoma is $3,740
There is no that's a missed opportunity for them. I mean they have no
Price to discount. They have no way to
Reprice the claim. That's what that's the terminology used
I call it skimming
But it's ticket scalping
Of my apologies to ticket scalpers because that's actually more honest work than what they're doing
It's it is uh, it's they call it claims repricing
and someone
Runs a hundred thousand dollar bill through a shredder and there's 20,000 on the other side
And they claim that they saved an employer plan 80,000 now keep in mind
The hospital receives 20,000 dollars and claim they're going broke
Because after all they have rendered
A hundred thousand dollars of care and did not receive payment
For 80 percent of it
Well, the 20,000 dollars they receive
Is eight to ten times what I would receive at the surgery center for the same service
So our online prices are one eighth to one tenth
Of what the hospitals actually receive even after that discount
Now the hospitals are happy to say they lost 80,000 because they need all the red ink
That they can find to justify
They're not for profit status and not for profit doesn't mean they're not making a profit
It just means don't pay tax. So they're just trying to justify
They're no tax
status with all of this red ink
And then the federal government pays
Not for profit hospitals a kickback every year to the extent that they make these outrageous claims
So they put all of these lost claims in a bucket
And kick it off to dc and then they get a
Disproportionate share hospital payment
To the extent that they claim these losses
So the insurance companies are incentivized to seek out the highest price they can find
And the hospitals
Are happy
More than happy to give it to them
And and that explains why they hate me because there's no
You know, the insurance companies missed opportunity with me
Hospitals hate me because now the jig is up, you know, the prices are online
And the you know, why can't you do this for
You know one tenth and you know, they're doing it for a tenth
And and they're making a profit. How do you charge in 10 times and not making a profit? So
That that's the scam
Okay, and so then I guess
Kind of going along with that too. I think that
Both all the big players in this system like
The individual feeling as if
Oh, just on my own with my own, you know
Savings that I have have swirled away over the years
If I get hit with a catastrophic illness or some kind of surgery that I need
I'm wiped out. I'm I'm personally bankrupt. That's why I absolutely need
That's right
My health insurance because otherwise I'm dead in the water
And so and and I'm you know, the big players like the blue classes where they they let want people thinking that that
Oh, yeah, you totally need us and even like you're saying they even the major employers
You know need, you know, that the health insurance company comes in and say, oh, wow
It's a good thing
We outsource this to you know, those big insurance health insurance companies because they're out there
You know going to bat force looking how much they talk down these crazy hospital bills. That's right. The fear
definitely
Helps the system continue the good news
Is that their nightmare has begun?
It's actually well underway
You know, we call
blue united signal and we call these networks or ppo's
And people are beginning to figure out that if they contract directly
With somebody like me
They can shove that network aside and all of the network access fees all of the repricing and skimming
And they can pay me directly and just save huge sums
So the nightmare for the carriers has actually begun and it has been delivered
By the free market not by government not by anybody else, but
You know enterprising individuals have just gone to giant employers and I'm one of them and you said, you know, here is
Here is what I do
And here is what I charge for it
Do you want to just shove all the middlemen to the curb and pay me directly?
And save 80 or more percent?
And so then the nightmare for the carriers really has begun these networks are not able
to instill the fear
in the buyers that they have
Traditionally and so you'll see reference-based pricing rbp
And that's where an employer health plan says, you know, we'll pay 140 percent of Medicare to a hospital
That's all you're going to get and they're not going to we're not going to pay you anymore
And we don't need a network
We don't need blue united signal and humanity to adjudicate this for us
Just that's just what we're going to pay
And there is no network and and that nightmare really has begun for the carriers. I don't I don't know how they're going to respond to it
Yeah, I mean
I want to say at this point you I could have said it earlier too, but
The trump card that I play whenever, you know
In this latest controversy and came up when this hit the news cycle again
Is looked at what I'm going to say isn't going to prove what the solution is
But for people to say, oh, yeah, this is free market capitalism for you. I don't say
Can you imagine if in the car market, you know, you needed a new car or used one wherever you go to the dealership
You pick the thing you say, yeah, let's go. Yes. Yeah, it's got the size I want or whatever. Okay
I'm gonna have some kids. Yeah, okay, sure
And then it wasn't until you signed the deal
And it was your car and now you owed them money for it
And then the dealership would tell you how much the vehicle cost
Can you possibly imagine how much more expensive vehicles would be in that setting and yet for most people?
That's how healthcare works. You literally don't know what it's going to be until afterward
And you're not in a very good bargaining position because you're you know in agony or something
Yeah, and as my friend Jay Kempton says the steering wheel and the tires you find out after the purchase are not included
Yeah, all these bills start raining in after you've purchased it. So it's insane. No, there's nothing
There is nothing that resembles the market in the traditional industry
And keep in mind there are two economic models at play one the traditional model
Is how do I maximize revenue?
They're all I get emails every day from people
Trying to coach me
And you know, this is how you can make more money how you can get more blood out of the turnip
You know how you maximize your profit from hand surgery. I saw that in a new magazine today
the other model
Is how do I deliver maximum value?
And value in the eyes of the buyer that you know true subjective value
And that's the model that I champion
And it is very creepy for the folks who are trying to generate maximum profit
Because if the buyer has sticker shock, they're not competitive when they're just trying to rip people off at every turn
Okay, so can you
Give us an idea. So for example, I you had the the free market medical association
I was a speaker at one of those events and it was I was very glad to see
It's not just that you know, you're a voice in the wilderness that you you know, you're attracting
You're building a movement and you know, you and your your
Colleagues and so forth and other people are getting involved but yet still
It seems like why how come there aren't 50
Surgery centers modeled after you like after, you know, your story's been around for a while. Is there some, you know, what am I missing?
Well, there are two answers to that the first one is
You really have to acknowledge the headwinds
That the traditional industry and the government provide
It's very difficult to start a facility
to get the capital for it and to
Heard a bunch of doctors, you know surgeons and you know to standing behind a single idea
It's very risky
They you know, you know, you're going to be attacked and maybe slaughtered
So the headwinds are very very strong
The good news is there are a lot of people like me
Now i'm a little bit of a unicorn not entirely i'm proud to say because I don't have any carrier contracts
We don't work with blue united signet and the humana. We don't work with any of them and
We've never accepted a dime of federal money. So and all my prices are online
So that makes us a little bit of a unicorn
But not entirely renovo health in wisconsin well bridge surgery center in indianapolis
Veritas surgery center in moscow, Idaho
There's a facility in st. George, uton. They are texas free market surgery center. They all have prices online
What's really interesting is there are a lot of facilities
Like mine that just don't post their prices
But if you call them on the phone, they'll tell you how much the service is
And the reason for that is they are still accepting payments from blue united signet etna
and they're afraid
Of blue united signet etna
They're afraid of those contracts. We're going to get canceled if they post prices online
And the carriers have threatened
facilities like mine that if you're going to post prices then you know
You may have a problem with your contract with us and then they lose access to all these patients
so
You know that there are degrees
But there are hospitals that are responding to my pricing
I'm I'm happy to say the market is putting pressure on a lot of hospitals
Who are not just nefarious?
As satans, they they would like to help patients for a reasonable price. They just don't know how to do it
I actually run a billing clearing house that is helping
Uh, price hospitals that would otherwise price gouge people
Into oblivion and we're helping them create and implement
Bundled prices for affordable high quality care
So this movement is alive and well, but there are a lot most of the people are still in the closet
Because they're fearful
Of the blowback that that would come at them from through the industry
Okay, can you give us a sense to like is that just going to grow and eventually solve the problem?
Or is it more that like you guys are great for
I don't know if low-hanging fruit is the right word
But do you understand like is it a kind of thing where oh, yeah kind of routine somebody comes in and outpatient care
You guys are great for that. But yeah, like if you got to get
Double bypass surgery or something you you have to suck it up and go to these big
Hospitals and you know, you need your standard insurance coverage
So right after I posted the website in 2009, um, I met a canadian broker
Uh, who essentially helps canadians cross the border into the united states to secure care unavailable to them
And he called me one day and he said he's not a clinician. He's not a physician
He said how much for a triple bypass?
And I said, well, I I run it outpatient surgery center. But let me make a call
So I called a friend of mine who runs
A cardiac hospital
That is physician run
And I said I asked him how much for a triple bypass
And he said damn it. I knew you were going to call me after you posted this site
And I don't have don't have an answer for you. Give me an hour
So he called me back in an hour and said 32,000 and I said for what he said for everything
So I called this canadian broker back and said it's 32,000 and he said man, we're going to get him on the way
There's a waiting list obviously in canada
For that and so that patient came down now 32,000 is a lot of money
But when you think about somebody paying 1500 a month for insurance premiums with a $10,000 deductible
That's two years of premiums
Um, so somebody banks two years of premiums. They can buy open heart surgery out of pocket
And same with colon cancer same with brain tumors
My clearing house
Is helping people secure
This very complicated inpatient care
For reasonable pricing and people are willing to grant
Reasonable pricing because they're going to be paid. You're going to be paid quickly and without all the hassles
And in really threats of non-payment they they encounter when they deal with traditional insurance
Okay, well, so that's that's encouraging. We'll have to hear that this next one
I don't know how you want to take this and maybe it's not going to be clear what I'm trying to get across here, but
Depending on who you're reading. It's it's like, oh, yeah
There's just outright villains and there's all these greedy people that knowingly are just skimming off the top and you know
Just bringing everybody dry
Whereas other people it's more of a just you know
Hey, it's not that there's some
central
Malevolent force here. It's just kind of you know, there's there's not a lot of people that are all getting rich off this
It's not that the doctors are overpaid
There's a lot of staff and then yeah, there's way too much, you know bureaucracy
But those people all you know, given the way the system works
You need somebody to push the paper around and you got to have a whole team of people
Tracking down patients because they don't pay because the bills are so outrageous
It's kind of like a you know a self-fulfilling prophecy
Where the you know the bills are so big that no one's like I'm not paying that and then that's you know partly why
The bills have to be so big because people know yet. We're not going to get paid for three years on this procedure
We're doing so can you just give us a sense?
Do you understand the question I'm trying to get it like
Is it just a crazy system that everyone just finds themselves in or is it like no
There's really a hundred decision makers and they could turn this
Ship around if they wanted to and they just don't want to because they like, you know bilking everybody
You know the the insurance companies the hospitals the price gouging hospitals big pharma
They they deserve all of the thumping that they get
But it's so important. I think for everyone to remember who the true
culprit is
That's the federal government
This system everyone hates
Is downstream of an auction in dc
That if the auctioneers have sold all of these favors to the highest industry bidders
So all of the big industry players have paid dearly
For the ability to fleece essentially
The the american public a lot of the revenue
That these insurance carriers and hospitals receive comes from the federal government
They're directly plugged into the trough
In addition to fleecing americans directly they fleece everyone indirectly
So it's it's the game. I mean it is it is what it is. It's it's working exactly
As it was designed by these people who have cobbled it all together
And I don't think it's fixable
I think it is it is completely unfixable
I think it can be destroyed
But the only way it'll be destroyed is if there's a market alternative
And that's what I focused on
You know it's you know have market discipline regulate
This industry not the corrupt feds and regulators. They they're all completely
Bought into this system. That's a disaster
So I don't think it's fixable
But there are a lot of people who do not provide direct patient care
There are a lot of people that are not
Providing value of any any kind
They're getting rich
And I'm here to tell you
Physicians are not generally in that group. The doctors are not getting rich
The doctors pay has been stagnant or dropping
For years
But if you if you walk outside, you don't have to walk very far
Before you see a gigantic crane
Building on to a not-for-profit hospital or putting up a new billboard
Or you go to a professional
sports game
Some kind and you know, there's all the advertising that is so expensive
And and so you can follow that money, you know, are these people inherently evil?
I'm inclined and many of my friends will be disappointed for me to say this
I'm inclined to agree for the most part with my friend Marty McCary
that these are
oftentimes
initially
Well-intentioned people well-intentioned
people who
Who get into this industry for the right reasons and then they're consumed by it
and
And you know in fairness the headwinds to change anything are so
So vicious and all of the resistance to change comes from dc
And I I think it's important for people to remember this because
The government is responsible for every part of this health care system people hate
That they are the ultimate culprit. So
You know, we have
My friend Jim Epstein from Reason magazine told me one time the way he finds a great story is he looks for industry
Consolidation and that's the business of government is to crush competition. So we have consolidation
Not a huge number of new
Upstart competitors trying to get into the game
You know after obama care there were four insurance companies basically before then there were a whole bunch
So what do you expect is going to happen the pricing? Well, that was just a huge favor
To the industry and the industry lobbied for it
And everyone everyone was bought off the AMA was bought off in the early 90s
Big pharma was bought off
during obama care when
When they promised them to make imported
Biologic drugs illegal for 20 years
And
Systematic the hospitals were bought off by obama care when they promised to make
physician ownership of hospitals illegal
And all of these favors are passed out that protect them from competition and
You know, are there people seeking these favors to the disadvantage of their competitors? Absolutely
But I mean that's been going on in every industry in this country forever
Okay, well, I guess the last question I have for you is uh, and this this is an
interesting moment in history here because not just me personally but lots of people who are going to hear this interview
May have inroads into, you know a way to run things up that the vaguerama swami or ylan musk is going to be able to get a hold of
so if
Trump's team were to ask you
Well, yeah, we we listen to this we totally we're on board. We got a lot of
Entrepreneurs who are involved in the transition team. What what can we do that?
You know and again, you can couch in terms of politically possible or not
You know, however you want to answer the question, but what can we do to make this better?
There are some things that could help
um
A little bit, but again the system that's cobbled together
Is designed to work the way it works. So fixing it means dismantling it
Dismantling it begins with removing price controls for instance
Physicians are only allowed to charge medicare patients
a certain amount
And that has that price control has caused real access issues
For medicare beneficiaries. So they need to remove price controls
And then begin to completely dismantle the medicare regulatory machine, which essentially calls all of the shots
um, you know
We need more insurance
Companies we act, you know, these big companies they need competitors
They don't have competitors out there because of this minimum loss ratio
You know, this giant companies can stand
This 30% minimum loss ratio, but the little ones can't and that's why that's why that was part of obama care
Can you explain what that is?
so
You know, this sounds great and it's just it's horrible
But an insurance company was not allowed to keep
More than 30 of its revenue as administrative overhead
Well, if you're a trillion dollar company
Then that's a lot of money for administrative overhead
But if you're a small insurance company 30 year in year out may not be enough
So that was that's the reason we have four insurance companies. There were only four
That could endure
That this minimum loss ratio
so
That's that needs to go away, you know, I I tell people
That the way to fix it is to not not pass any new laws, but to repeal
All the ones that have been passed up to this point that apply to the industry
and high tech
A high tech that required basically the use of electronic
electronic medical records when it was not clear at all that there was a market for them
And instead what we ended up with is this electronic medical record
In which it's almost impossible to find any pertinent information whatsoever
So there there's a lot that needs to be undone
Before anything innovative should even be considered and then all of the sandbagging and roadblocks
That stand in the way of entrepreneurs
Rising up and starting
You know facilities that are willing like mine, you know, they're willing to endure the discipline of the market
That's really what will make the the horrible system that's been called together
change
Okay, well, that's a I guess good spot to end this discussion on
Uh
Folks, my guess has been dr. Keith Smith at the surgery center of oklahoma key
Thanks so much for what you've been doing and taking the time to come help us understand it
Thank you, bob. Thanks for having me
Thank you everybody for tuning in. We'll see you next time
Check back next week for a new episode of the human action podcast in the meantime
You can find more content like this on leases.org