Disruption of the Healthcare Syndicate

By: G. Keith Smith, M.D

My introduction to the practice of medicine began before I went to medical school. Dr. Don Garrett and Dr. Richard Allgood, both thoracic surgeons, allowed me to spend enough time with them to absorb countless lessons, many of which remain with me to this day. While both of these talented surgeons are now retired, their dedication to their patients and the precision and intensity with which they approached patient care are legendary even now.

Their surgical practices were huge, by any measure. They performed more surgical procedures in a week than most surgeons did in a month. The hospital in which they worked owed its success largely to these two men. They let the hospital administration know what they wanted and what they needed. And they got it. The administration could hardly afford to consider the alternative. But the administrators’ resentment grew, and they bided their time, eager for the day when they could turn the tables and call the shots.

Enter the HMOs and PPOs. The Health Maintenance Organization concept was so poorly received that a different three-letter combination was needed, although the Preferred Provider Organization concept was basically the same. PPOs provided the infrastructure for the syndication (cartelization) of the healthcare industry, the opening that power-hungry administrative types had been waiting for. Indeed, this was the beginning of “steerage” of patients to hospital systems that had made deals with their insurance pals—deals from which everyone but the patient benefited.

This coercive, anticompetitive system has survived to this day, under government protection, resulting in the runaway costs and obscene corporate profits you would expect. This syndicate generates gigantic hospital bills, and the extent to which these bills remain uncollected provides the basis for the taxpayer subsidization known as the uncompensated care system, or disproportionate share hospital (DSH) payments.

The hospital charges $100 for an aspirin, collects $5, and claims to have “lost” $95. Such false losses maintain the fiction of the hospitals’ “not for profit” status. Often, insurance companies sell their “discounting” services. For example, they may reduce a bill from $100,000 to $20,000 and collect a percentage of the false “savings.” This is the “repricing” scam. This setup perversely inclines the insurance carriers to seek out the highest bills they can find, assiduously avoiding better priced alternatives.


About Concierge Medicine Journal

Concierge Medicine Journal (CMJ) curates breaking concierge medicine news, and editorial opinion on a wide variety of topics relevant to the practice of Concierge Medicine.

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