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So Kempton and Smith came up with a cost-saving arrangement: If their employees agreed to be treated at the Surgery Center instead of a traditional hospital, they would be spared the cost of all co-pays and deductibles.
Almost immediately, Kempton was approached by other surgical centers and hospitals. There are now four health care facilities participating in his flat-fee consortium, and more are on the verge of coming onboard.
June Wietzikoski is a typical patient benefiting from this alternative health care market. She works as a loan officer for a community bank in Groesbeck, Texas, which is a client of the Kempton Group. She had carpal tunnel release procedure done at the Surgery Center for the all-inclusive price of $2,775, which was covered by her employer. Had she gone to a traditional hospital run by Integris the discounted bill would have come to about $7,452 and she would have been personally responsible for the first $5,299, since she hadn’t met her deductible.
"It makes me mad that people are bankrupted by our current health care system when many times the costs are completely unjustified," says Smith.
Is Kempton's model replicable in other places? There are obstacles. Oklahoma has an unusually entrepreneurial health care sector, which stems from a 1989 decision to roll back the state's Certificate of Need (CON) laws. CON laws, which are still on the books in 35 states, require all medical facilities to get permission from a planning board before opening, which in practice provides a way for traditional hospitals to use political influence to keep new entrants out of the market.
A new provision buried in Obamacare effectively prohibits doctors from starting their own hospitals or expanding the hospitals they already own, which has been widely interpreted as a give-away to the American Hospital Association.
The Surgery Center is exempt from this statue, since it's technically not a hospital and it doesn't accept Medicaid or Medicare. So Smith and Lantier are considering expanding to accommodate their growing clientele.
Smith believes that despite the obstacles, market-driven facilities like his will thrive and proliferate as consumers catch on to costly collusion between big government and big health care.
Says Smith: "Everyone can see what the prices are at the Surgery Center, and that affordable health care is possible. So the jig is up.”
Video produced, shot, edited, and narrated by Jim Epstein.
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