| July 12, 2013

Competition Is Benefiting Oklahoma Health-Care Consumers

In a recent hearing of the U.S. House Committee on Oversight and Government Reform, Congressman James Lankford (R-Okla.) lauded the Surgery Center of Oklahoma, a multispecialty facility in Oklahoma City, as a place where “competition has driven up quality and driven down price.”

He’s right. Just ask Jerome Longacre, a fitness trainer at Colaw Fitness in Bartlesville. Mr. Longacre recently tore his anterior cruciate ligament (ACL). He told me that at the Jane Phillips hospital in Bartlesville (which is sponsored by the St. John Health System, which operates St. John Medical Center in Tulsa), an ACL repair was going to cost him roughly $25,000, though if he paid cash it would be closer to $15,000. This was better than $25,000, but it was still a daunting prospect.

That’s when a friend told him about the Surgery Center of Oklahoma, which is owned by some of the top surgeons and anesthesiologists in central Oklahoma. (Many physicians, including the current and past chairmen of the ear, nose, and throat department at one of the largest hospitals in Oklahoma City, prefer to operate at the Surgery Center.) The Surgery Center actually posts its prices online, so Mr. Longacre visited and discovered that an anterior cruciate ligament repair is $6,990. That price includes the initial consultation with the surgeon, the surgeon’s fee, the anesthesiologist’s fee, the facility fee, and uncomplicated-follow-up care.

Upon learning this, Mr. Longacre called the Bartlesville hospital to inform them of the Surgery Center’s price and to ask if they would match it. To their great credit, they did so.

Mr. Longacre will have the surgery in Bartlesville.

So a procedure that once looked to be around $25,000—or at least $15,000—turns out to be closer to $7,000. Mr. Longacre is delighted. He can now have the surgery at the lower price without having to travel out of town for it.

Given Bartlesville’s entrepreneurial history, perhaps we shouldn’t be surprised at the Jane Phillips hospital’s responsiveness and flexibility. The hospital administration should be applauded. As it happens, my two eldest children were born there, so I have some wonderful memories associated with that hospital and with Bartlesville, where my family has lived since before statehood. (When my mother was born in Bartlesville in 1942, Jane Phillips herself telegrammed from New York to offer congratulations.)

Are the folks at the Surgery Center upset that they didn’t get the business? Not at all. One of the facility’s owners, Dr. Keith Smith, told me: “I am pleased to welcome Jane Phillips Hospital and their parent St. John Hospital to the new competitive medical marketplace. Reducing their charge of $15,000 to match our online price indicates that they realize that it is time to embrace price and quality competition and that they are willing to do so in order to keep Bartlesville patients from traveling to Oklahoma City.

“While we never had an opportunity to meet this patient,” Dr. Smith said, “we are gratified to have saved him and his family $8,000.”

The economist Thomas Sowell has written that “if someone else somewhere else has a better product or a lower price for the same product, that fact gets conveyed and acted upon through prices.” And with various medical facilities starting to post their prices for the entire world to see, it’s starting to happen more and more in health care—to the great benefit of health-care consumers.

As this trend continues to become better known—Dr. Smith has appeared on the John Stossel program and on CNBC-Asia in the last couple of months alone—consumers will benefit all the more.

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