 On behalf of everyone at the Surgery Center of Oklahoma and the Free Market Medical Association, I'd like to thank you for the opportunity to address you today. Just over 24 years ago, the operation of the Surgery Center of Oklahoma began with a simple mission. Deliver the highest quality of care to reasonable and disclosed price. We fancied ourselves free marketeers not aware of how far we had yet to go to accurately claim this title. Our mission was the opposite mission of the hospitals where we had previously worked. Then as now, hospitals are focused almost exclusively on revenue, many times inflicting surprise and bankrupting bills on their victims. As physicians working in these hospital systems, we were unwitting accessories to these crimes. We intended to operate our facility differently, intending to serve as both medical and financial advocates for our patients. The Surgery Center of Oklahoma is now viewed as a model of medical services delivered free market style partly because of this simple mission, but more recently due to posting all inclusive pricing online and the effects this move has imposed on the medical and surgical market. There's our facility. That's the home page and click on any one of those dots and this is what you see. I'd like to begin by describing the state of the industry at the time we decided to walk away from it. I'd become convinced by the early 1990s that government had no money and had not first stolen and to accept government payment was to receive stolen property. In 1993, three years after I'd started my anesthesia practice, I therefore stopped accepting government money and stopped filing Medicare claims. I treated Medicare patients outside of the Medicare scheme and usually free of charge. When I began practicing in 1990, Medicare paid me about $1,100 for the anesthesia services required for an open heart surgery. In 1992, this payment was cut in half. A year later, that amount was cut in half. The last two payments I received from Medicare were as follows. $285 for a six hour cardiac anesthetic and $78 for the anesthesia services required for a knee replacement. These fees had been imposed through a mechanism referred to as the resource-based relative value scale, more appropriately referred to, I believe, as the Rosemary's baby of healthcare. According to the folks down the road at Harvard who gave birth to this creature, every physician's service had a price and they knew what those prices were. I'd read enough about economics by this time to know that this imposed pricing was not personal, as punching as it seemed. Prices are signals after all and Medicare was sending me a signal regarding what they thought the service I provided was worth or they meant to intentionally cull the ranks. I felt obligated to respond with a rational signal of my own and as I've mentioned, I quit participating in their scheme. I still had much to learn about pricing, but I did notice that under-priced services became scarce and over-priced services became abundant. Private insurance carriers seized on the fear created by this deep slashing of physician fees drastically reducing the amounts they paid to physicians as well. Hospitals not about to allow crisis to go to waste cashed in on their opportunity to cheaply purchase physician practices. To legitimize their bold strategy, hospitals cranked up their propaganda machine, proclaiming loudly then as they do now that they were going broke. Hospitals fleshed with cash even laid off critical nursing staff to justify this narrative. I've always found it interesting that hospital emergency rooms, the supposed primary source of their financial woes always seem to have a building crane out front. Who builds onto their loss leader? And yet the lack of paying patients in the emergency room was part of the poor mouthing narrative in the early 90s, just as it was during the debates leading up to the Unfortable Care Act. To further bolster this bankrupt hospital narrative, physicians and surgeons were told there was no money to buy the equipment and supplies that they needed. It was becoming increasingly obvious that it was time to get out. I had no desire to be controlled by the rising administrator class. The only choice for me was to find a way to practice outside of the hospital environment, no longer an accessory to the hospital's financial crimes against patients. The golden rule and the concept of mutually beneficial exchange is a large part of what drove me to become a physician. While the vast majority of physicians embrace honest and mutually beneficial exchange, it turns out that the vast majority of hospitals do not. Hospital commerce is the equivalent of a financial draw by shooting, particularly commerce conducted by the not-for-profit systems. I believe then, as I do now, that a facility owned and controlled by the physicians who worked there was the model most likely to ensure that patients were not financially brutalized. My great-uncle was the only physician at a small Oklahoma town for many years living in the top floor of his house, the bottom floor serving as clinic and the town's hospital. He was completely accountable for the entirety of what his patients were charged. He could do everything about what they were charged, including charge of nothing, and he did this regularly. Dr. Walter Bayes was a hero in the town of Chickashay and very well-to-do. Ownership of the facility or institution by doctors was the rule until government intervention in the 1950s and 60s made this model much more difficult. The explosion of hospital charges in the 1990s at the same time they claimed they were going broke created an opportunity for physicians to once again own facilities and demonstrate the superiority of this model. This disintermediated model was superior as it allowed for the elimination of the greediest profit seeker from the equation, the not-for-profit hospital. In April of 1997, Dr. Steve Launtier and I walked away from our hospital anesthesia practices and opened the facility 30 days later with 10 surgeons with whom we had a good working relationship. We had no idea if we would break even, make money, or go broke trying. We had no performer. We had no business experience. All we knew was that hospitals were awful and inefficient places charging patients gigantic prices. The opportunity seemed obvious. Our faith in this dream and in the idea that if you are cheaper and better you will beat the competition, form the basis of our business plan. We also decided that we would never accept a dime of government money in this day and never have. The first week we were open we received a call from a patient who had a breast mass she would like removed and she wanted to know how much we would charge her as she had no insurance. This was the call we had all hoped for, the reason we had opened. And yet I had no idea how to answer her question. I placed her on hold and called our general surgeon and asked him how much he wanted for his fee. He had no idea. I told him to pick a fee or like a Harvard professor I'd pick one for him. He said $500. I thought this was very reasonable so I hung up on him before he had a chance to reconsider. As an anesthesiologist I basically billed for my time and I knew this surgery would take 20 or 30 minutes. The facility's supplies were minimal. I was about to take her off hold when I realized she would want to know if she had cancer. I called a pathologist friend and asked him how much he wanted to examine the specimen. He had no idea. I pressed for an answer $28 for the pathology. I informed the patient who was miraculously had not hung up that our price was not this all took five minutes. I told her our price was $1,900 for what she asked for everything. She said that's funny the hospital down the street from you wanted $19,000 for the facility fee alone. I knew we were on the right track when after this case and the supply cost was tallied we'd made profit. Had the pathology fees that apply to the examination of breast mass is not increased since then 1997. Our price would be the same now as it was then but now it's $2,365. The only or only three other fees have increased since we began quoting them over the phone in 1997. Word spread and many uninsured patients came to our facility along with patients with high deductible health plans and health savings accounts. Most of the division one athletes had their surgery at our facility and our reputation in the community grew more solid every day. Dr. Lawnty and I were both trained in pediatric anesthesia and particularly enjoyed this part of our practice. Nothing better builds the practice of an anesthesiologist than the careful anesthetic treatment of someone's child. The area hospitals hated us because patients could buy their surgeries at our facility for less than their insurance deductible at the hospitals. Paradoxically no insurance companies would work with us. We would not understand any of this until much later when our posted prices clarified this. We were very busy and very successful early on. Within six months I was distributing sizable profits to the partners monthly while usually charging one-tenth what the hospitals were charging for the very same services. We added to our quote over the phone price list every week so patients could have an answer to their price questions immediately. It was no surprise to us that the hospitals were the first to attack us. They attacked us directly by attempting to ban physician ownership of facilities in the state of Oklahoma. This was done under the banner of trauma care. The hospitals falsely claiming that if surgeons owned their own facilities they would not treat trauma patients. No one knew including me that when the state legislature created the state trauma task force that the underlying mission was to close physician-owned facilities. A Democrat legislator who saw us as an underdog, a champion of the poor, told me with a wink and an odd that I needed to be on this task force, a business saving favor he and I have since acknowledged. Our facility and another that had copied our model were the obvious targets of this task force and surprisingly there was no plan in place if representatives of either one of our facilities argued our case in person. Our unexpected invitation and inclusion in this wannabe star chamber derailed their plans to ban our existence. It is worth noting that in our early days, Oklahoma Democrat legislators saw us as underdogs. I asked legislators to just leave us alone and to dismiss efforts to hamstring our operation. The Republicans, early champions of their crony hospital pals, now champion our approach, an approach that now receives the bipartisan neglect that we saw it. In another direct attack, big hospitals attempted to pass what became known as the 30% law. If passed, a facility had to receive at least 30% of its revenue from Medicare, Medicaid, or uncompensated care. Non-compliance was punished by payment of a penalty calculated to equal the degree of failure to comply. Obviously the state government would be combing through our financial records and assessing a penalty equal to 30% of our gross income since we accepted no government funds. This was aimed squarely at our facility. Once again, a Democrat representative Fred Stanley used his muscle to ensure that this legislation went nowhere. This law was debated in public forums to some of which I was invited to speak. In one heated exchange, a normally tight-lipped hospital executive asked me how much of our surgery center's revenue was uncompensated care. I was confused by his question, meant by him to be a devastating rebuttal to my remarks, but haunted by the insanity of this question, I began to wonder if he had misspoken. Was uncompensated care a revenue item? Most people would think that uncompensated care is care delivered for which no compensation is received. Not true, it turns out. In another attack, the state health department was weaponized by the big hospitals in an attempt to secure the medical records of all of the patients treated at our facility in the year 2000. After they attempted to invalidate our operating law since for failure to comply, we sued them only to discover they lacked the statutory authority to seize these records. Their surrender is framed on the wall of my office. Because patients could pay the entirety of the cost of their care for less than a deductible in co-pay at the in-network area hospitals, the insurance companies paying us out of network received intense pressure from the area hospitals for this lost business. Likely threatened with retaliation in the form of higher prices billed to the insurance companies by these hospitals, the insurance groups began stacking deductibles. A process where patients going out of network had to meet their in-network deductible then start again at zero in order to accumulate any out-of-network benefit. This deductible stacking put our facility out of financial reach of most patients who were insured who would otherwise pay us directly. Our waiting room emptied and we faced closure. Up until this point, we had grown so rapidly that we had built a large facility that we now occupy and fortunately paid for its construction without debt. This brand new facility was now without patients. The timing of this deductible stacking could not have been worse. Keep in mind that our reputation was unsurpassed. We were cheaper and we were better than any other venue. In an unfettered market, there should have been a line around the block. Why had the insurance companies been complicit in this savage attack? Wouldn't they benefit from higher quality and lower prices? I decided to post our prices online. We had our list of over-the-phone prices after all. It was a matter of launching a website, ensuring the surgeons were satisfied with their fees and posting the prices. All of our prices were determined using the following method. I asked the surgeon how much they wanted. Then added a price for the anesthesia service based primarily on time. The facility portion was priced as time in materials. The rest is addition, not algebra, for those who say this can't be done. I've increased only three prices since we began quoting them over the phone in 1997 and have lowered many more. I posted these prices in 2009 with three goals in mind. Make ourselves more known to those with sticker shock, start a price war, and better understand the scams at work that had emptied our waiting room. We've accomplished these goals, I would argue, and many more. The first patients to arrive after we posted prices were Canadians. This was instructive as these patients had so-called insurance coverage. There was no access, however, to the care that many of them required. The most common story then is now for the Canadians we saw was a patient waiting two years to see a gynecologist for a hysterectomy to stop their bleeding. Bleeding usually so severe that intermittent transfusions were required. For $8,000, which covers facility, surgeon, anesthesia, pathology, and an overnight stay at our facility, Canadians could end their nightmare. The first question a Canadian asks when they call us is how long they'll have to wait. Our answer that there is no waiting time is met with disbelief. A Canadian friend of mine has told me the old joke that no Canadian is truly content unless standing in line. You should know that there are Harriet Tubman-like brokers who help Canadians cross the border. Finding for them affordable medical solutions is essentially unavailable in Canada. The Canadian system is working proof that bureaucratic rationing is a murderous disaster. Whatever flaws market naysayers can conjure up about the market allocation of resources. Millions of Canadians have discovered the only single payer upon which they can truly realize themselves. Uninsured Americans responded to the website shortly after the Canadians, many traveling from far away places like Wisconsin and Alaska. While there are many examples of money-saved uninsured individuals, one that sticks out is the patient from Georgia who required a urologic procedure and who had received a quote of $40,000 just for the facility charge. A friend had told him about our facility and after he confirmed that our all-inclusive price was $4,000, he informed his urologist he was traveling to Oklahoma City. Having lost another patient to us the previous month, the urologist contacted the hospital and told them something had to be done as their price quotes were causing him to lose patience. The hospital matched our price and the patient stayed in Georgia. The patient later told me that we had saved him $36,000 and we hadn't even performed his surgery. I like to think about what patients do with the money they didn't unnecessarily spend on an overpriced surgery. Self-funded companies, about which I'll have more to say here in a little bit, discovered our facility and fast-forwarding to today about 300 employers from all 50 states now pay 100% of the employees' bill and travel expense to undergo surgery at our facility. Business will slow however after first launching the website in 2009. Why didn't everyone want to buy cheaper and better? Why wouldn't insurance companies want to buy from us? What was this business about uncompensated care? The answers to these questions were revealed following my introduction to Jay Kimpton, the first to refer his self-funded clients to us and who later suggested we launch the Free Market Medical Association. If uncompensated care was a revenue item, how was this calculated? It turns out hospitals need all the red ink that they can find to justify the fiction of their not-for-profit status. If a hospital charges $100,000 and only collects $20,000, their books show that they lost $80,000. This fictitious loss performs two functions. First, it helps maintain their not-for-profit fiction, providing the justification needed to eliminate their tax burden. Second, this loss number forms the basis for a kickback the hospitals are paid by Uncle Sam to the extent that they claim these losses. To be clear, hospitals receive federal payments based on the charge amounts they claim to not collect. Whereas I like to say hospitals are paid even when they aren't paid. This is the revenue of uncompensated care also known as disproportionate share hospital payments. The more they charge and don't collect, the more they make. This is why there is a crane building onto every emergency room in the country. This also explains how hospitals can claim they are going broke on paper while purchasing television ads during the Super Bowl and buying out their competitors and many, many physician practices. Why would insurance companies go along with this? Why would an insurance company play along discounting bills from $100,000 to $20,000? Insurance companies sell access to their networks based on the strength of their ability to apply discounts. The larger the discount, the more marketable selling access to the discounting network becomes. The Rissa Lawyer Corey Cook frequently poses the following question. If I tell you I'll sell you my house for 50% off, what should be your next question? Everywhere but in the medical industry the answer is obviously 50% off of what? We give bigger discounts. Is the phrase commonly used by brokers peddling whatever insurance plan is paying them the highest commissions? There is another reason the insurance companies love the high initial charge from the hospital and play along. Claims repricing is the phrase frequently used in the industry to describe this discounting of hospital charges. Think of insurance companies as claims repricers who charge for this service. It is standard for an insurance company to charge an employer health plan a percentage of the discount they achieve on a hospital bill. It's not hard to see that the higher the initial hospital charge, the more the insurance company makes repricing the claim. Unknown to most employers is the fact that hospital pricing and discounts are pre-negotiated so no discount actually exists. I've been told it's not uncommon for an insurance company representative to ask a hospital to charge more for a service so the repricing commission paid to the insurance company is maximized. Claims repricing represents an opportunity foregone when prices are posted for all to see. Another reason the insurance companies wanted nothing to do with my facility. While big hospitals and insurance companies and big pharma and many others deserve all the thumping they get, it is important to acknowledge none of their theft is possible without the favors auctioned to them in Washington and that Uncle Sam always drives the getaway car. High prices and sporadic quality have been the result not of the failure of the free market but due to the absence of the free market. To quote Hans Hoppe, excuse me, markets deliver goods and governments deliver bads. Nowhere is this more evident than in the medical industry. Everything people in this country hate about the medical industry are the bads that government has delivered. Some bads are those which under the banner of patient safety or consumer protection regulate the smaller innovators out of business, usually in the form of requirements or conditions which only the most gigantic cronies can endure. The medical loss ratio part of the Unaffordable Care Act is an example. While a requirement that no more than 30% of an insurance company's revenue can be spent on administrative duties is a requirement with which the giant insurance companies could comply, the smaller companies were annihilated. It is no mistake that there are now just four or five medical insurance carriers. There are many more examples of federal bads. The Unaffordable Care Act gained the endorsement of the American Hospital Association only after they secured a ban on the construction or expansion of physician-owned hospitals. There are more bads that you may not know. Medicare pays hospitals multiples of what they pay for the very same service rendered in a surgery center. Medicare pays more for physician services when the physician is employed by a hospital. This discrimination against physicians in private practice has driven many physicians into the arms of hospitals happy to gobble up their practices. In addition, the American Medical Association, to which I do not belong, is paid by Uncle Sam to inflict the most indecipherable payment codes on physicians and doctors unsupported by large staff of decoders are placed at an obvious disadvantage. You can now see why hospitals insurance companies are resistant to price transparency. Uncle Sam has played along to maintain the number of crony favors in inventory. You know now why I laugh when I'm asked, why isn't this free market movement in your industry more widespread? It's astonishing that it exists at all. Its growth is even more remarkable. If you have no insurance, think of yourself as self-funded. You should know that entire companies self-fund for the medical needs of their employees paying their bills out of operational revenue. They serve as proxy buyers for their employees, as my friend Marty McCary has said. They are responsible for 80% of medical bills not paid by government and are therefore large enough in size to make demands that even the dysfunctional cartel cannot ignore. The free market movement's growth can be attributed largely to the increasing number of the self-funded buyers expecting market discipline from organizations like mine. Cost-sharing ministries are another large buyer, also expecting market-based services. Direct conversations between these buyers and sellers has opened the eyes of many doctors to more sound economic thinking. One of the goals of the Free Market Medical Association has been to promote sound economic thinking as we believe that flawed thinking, many times by well-intentioned individuals, has led the industry down failed paths. I believe the Surgery Center of Oklahoma is open only because of our economic grounding. Our dedication to the principal property rights has kept government money out of our facility. We have no contracts with the insurance cronies and display our all-inclusive pricing. For the exchange to be mutually beneficial for us to earn an honest buck, we've had to deliver a service that consumers with a choice valued. The idea that value determination is completely consumer and patient-generated has been very helpful to our organization. It has, for instance, cleansed our partnership of the notion prevalent in medicine that one should be paid according to their effort, a clear outgrowth of the flawed labor theory value. Our partnership agreement is an application of time preference, preventing aging partners from embracing the short-sightedness destructive to the firm. Our dedication to a pure Free Market model, a journey that is still underway, has been our mission and goal as we knew that maximum consumer and patient benefit would be the result. Other members of the Free Market Medical Association have gained insights critical to the success of their practices by matching their strategies with sound economic principles for which we have the Mises Institute to thank. Uninsured patients, excuse me, have found visible pricing. A price war has begun. I'm going to show you this next slide. UCLA copied my website word for word and not because I think they embrace Free Market ideas. Remember, this is my homepage. Word for word. The cronies and their government pals are increasingly exposed. As the co-founder of the Free Market Medical Association, I am filled with optimism, watching the growth and acceptance of market discipline in this industry. Our theme at the Free Market Medical Association this year is Are You Ready for the Red Pill? A message designed to awaken those comatose self-funded buyers who continue to unnecessarily do business with the cartel. As growth in the number of these sticker-shock buyers continues, entrepreneurs aware that the industry is finally prepared to reward the more efficient will work even harder to satisfy demand in this new and honest fashion. The transformation to a more market-based environment has begun and is flourishing in spite of decades of efforts by the state to prevent this from happening. Thank you.