How A Bitcoin Standard Fixes Healthcare
This is an opinion editorial by RootCause MD, a practicing doctor who favors a holistic, full-stack approach to fixing health.
RootCause MD has no affiliation whatsoever to the Oklahoma Surgery Center.
The U.S. healthcare system is a dumpster fire. Per capita, the U.S. spends the most in the world on healthcare, almost double the amount of similarly developed nations such as France, Sweden or the U.K. At the same time, the U.S. has health outcomes that lag significantly below these nations in metrics such as healthcare access and quality (HAQ), disease burden (disability-adjusted life years, or DALYs) and pregnancy-related deaths.
What is driving such a disparity between healthcare spending and health outcomes? That’s a complex question. Part of the reason lies in the atrocious diet and lifestyle creating obesity and chronic disease in the American people at unprecedented rates, but much of the blame lies in a broken healthcare system that is failing to deliver value to patients.
Many books can and have been written on this complex topic. In my opinion, the fundamental problem is government intervention, which has reduced free-market competition with crippling consequences.
If a plumber or accountant presents an unreasonably large quote or provides poor service, they will simply fail to win ongoing business. Not so in healthcare, where cartels of insurance companies and hospitals collude to fix prices and maximize profit.
Overregulation and market intervention by government has provided fertile ground for regulatory capture and the consequent proliferation of an entire class of profiteers, grifters and freeloaders who make money standing between patient and physician. This rent-seeking “Medical Industrial Complex” includes the medical insurance industry, corporate hospital groups (including “not-for-profit” hospitals) and the pharmaceutical industry, all of which have benefited enormously from censorship of the free market, the buy-out of physician-run practices and the wholesale centralization and corporatization of medical care.
This has resulted in a horrendously misaligned set of incentives and quite frequently, a principal-agent problem between physician and patient.
For physicians, it leads to unnecessary pharmaceutical use, unnecessary surgical intervention and ignorance of best-practice lifestyle medicine that could address and reverse chronic disease at its root cause. It also means loss of autonomy as physicians are often forced to seek approval from insurance companies prior to initiating care.
For patients, this means obscenely large healthcare bills, sporadic quality and bankruptcy of “insured” patients when insurance companies refuse to pay for medical bills.
How did this occur? For scholars of the Austrian school of economics, such inefficient market dynamics were the inevitable consequence of the divorce from a sound money standard with Nixon’s closing of the gold window in 1971.
Fiat money begot fiat medicine and distorted incentives have prioritized revenue over quality, delivering a healthcare system that is failing patients while increasingly leading physicians further away from their Hippocratic Oath to “first, do no harm.”
As Marcellus said in Shakespeare’s “Hamlet,” “Something is rotten in the state of Denmark.”
Dr. Keith Smith, an anesthesiologist and student of Austrian economics, saw declining healthcare quality and increasing costs in the early 1990s. He felt ethically compelled to not participate in a system that often leaves patients bankrupt on receipt of inappropriately large medical bills.
“I’d become convinced by the early 1990s that Government had no money it had not first stolen and to accept Government payment was to receive stolen property.” — Dr. Keith Smith
He opened the Surgery Center Of Oklahoma in 1997 with fellow anesthesiologist, Dr. Steven Lantier, with the goal to provide the highest-quality elective surgical care while providing transparent pricing and receiving no funding from government or insurance companies.
The Surgery Center Of Oklahoma is a highly unique operation for a number of reasons:
- They post prices of all surgeries, inclusive of surgeon fees, anesthesiologist fees, consumables and facility fees, in full public view on their website.
- More than half of their customers come from out of state, including people who lack insurance coverage and who would otherwise be unable to afford surgery under an existing insurance plan or have long wait times for elective surgery in their home country.
- They publicly post their rates of post-surgical infection, an important metric of quality that most institutions and surgeons make a point of not parading.
- They are completely owned and operated by physicians.
- Most importantly, they operate on a purely fee-for-service basis, taking payment directly from patients (including in bitcoin) and refusing to transact with third-party payers.
The results of the surgical center speak for themselves. All-inclusive prices for elective surgeries are often one-tenth the cost of the local hospital. In some cases, patients have their entire surgery performed for less than the cost of the insurance deductible at a corporate-owned hospital. Most prices have not risen in nominal terms since 1997, despite two and a half decades of inflation. Many prices have decreased, or minimally increased but with more value in the form of larger care bundles, e.g., post-surgical physical therapy.
Surgeons operating at the surgical center have among the lowest rates of post-operative infection and it is not uncommon that patients are turned away from surgery on initial review, having been overdiagnosed by an external surgeon.
Revenue for operating surgeons is higher than for other institutions despite the center charging patients drastically lower prices. This may occur because the center runs on minimal profit, diverting what is usually institutional profit onto surgeon and staff revenue. Sometimes, surgeons and anesthetists waive their fees for extenuating circumstances on a case-by-case basis.
During the past 25 years of operation, the Surgery Center of Oklahoma has shown that a free-market care model can drastically reduce healthcare costs while delivering consistently high-quality care. The astonishing results can be attributed to true free-market competition and the elegant alignment of incentives that emerge when all middlemen are removed from the healthcare transaction, a medical practice is physician-owned and physician-operated, and patients pay directly in a fee-for-service arrangement.
This setup ensures there are no conflicts of interest, profit-driven key performance indicators or other financial allegiances to the insurance, hospital or any other industry that might bias toward overdiagnosis or overtreatment. Incompetent or unethical surgeons are simply not offered ongoing operating rights.
The Surgery Center of Oklahoma can simply be viewed as the physical infrastructure that facilitates voluntary, free-market exchange of services between a patient and their surgeon. An in-person “Silk Road” for surgical care. A proof-of-concept for a sustainable, high-quality healthcare system for a post-fiat era.
Despite its success, there are many critics of the free-market approach to healthcare. Most commonly decried is the potential loss of access to healthcare for disadvantaged and low-income earners. This argument mirrors similar arguments about a social safety net on a bitcoin standard. It ignores the more pressing fact that a growing proportion of the population can no longer afford to participate in the current system as it presently exists, and the majority would be financially better off on the other side of a sound money standard of greater total societal wealth and increasing purchasing power.
More relevant is the question of how to apply the fee-for-service model beyond elective surgery. Longer hospital admissions, intensive care, frequent procedures or repeated follow-up outpatient care all represent future challenges to be addressed with regard to the implementation of free-market healthcare.
Many of these problems are currently being solved. Companies like CrowdHealth are using direct-payer operations like the Surgery Center of Oklahoma and negotiating on members’ behalf to provide healthcare safety nets while bypassing the inefficient insurance industry.
Whether or not Dr. Smith and Dr. Lantier know it, their operation is providing a blueprint for a disintermediated healthcare system on a bitcoin standard. With fiat currencies rapidly inflating, the healthcare costs under the broken fiat medical system continuing to rise, and governments’ ability to continue effectively fund socialized healthcare diminishing, the push towards direct-payer healthcare becomes a matter of economic inevitability.
As bitcoin separates money from state, so will it assist in separating healthcare from state. With the decentralizing, deregulating force of Bitcoin acting on a societal level, healthcare on a bitcoin standard is likely to look very different to today.
The dissolution of fiat incentives should see the bloated Medical Industrial Complex shrink as the hordes of bureaucrats, hospital administrators, pharmaceutical reps and paper-pushing backroom staffers become obsoleted by the highly efficient free market that is delivering high-value care at a fraction of the cost.
I predict consumers who are directly liable for the cost of care (paid in bitcoin) will seek a much higher bar for value. Many will seek those physicians who prescribe effective dietary and lifestyle advice that prevents them from needing surgery or expensive lifelong prescriptions in the first place. The destitute will be the recipients of direct philanthropy in the form of waived or crowdfunded physician fees.
In the long term, the system should morph from one based on pharmaceutical management of chronic disease and surgical intervention after pathology has already manifested and into a holistic, integrated approach based on prevention.
As the Surgery Center Of Oklahoma has demonstrated, free-market healthcare has the potential to drive massive reductions in cost and increases in quality of care. It is dizzying to think how abundant, accessible and cheap healthcare could become in the deregulated world of a bitcoin standard.
This is the promise of a healthcare system uncorrupted by conflicting economic incentives and financial conflicts of interests. A healthcare system that enables physicians to deliver the highest-quality, highest-value, lowest-cost care with the patient once again front and center of the clinical relationship.
Keith Smith interview about free-market healthcare with Russ Roberts of Econtalk. https://www.econtalk.org/keith-smith-on-free-market-health-care/
“Health Care Lessons From Dr. Keith Smith” by Russ Roberts https://russroberts.medium.com/health-care-lessons-from-dr-keith-smith-aa29baefbecc
This is a guest post by RootCause MD. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.
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