Ludwig von Mises Institute

Private healthcare

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This page lists some examples of privately run hospitals and other forms of private healthcare.

United States[edit]

In the US, entrepreneurs are finding ways to bring innovative, consumer-oriented health care to market—simplifying medical decisions, reinvigorating primary care, and lowering health-care costs. From health insurance to DNA-driven medicine, American health care is experiencing a revolution from below that promises to improve quality, lower costs, and empower people to control their own health care.

Dozens of websites, such as WebMD, Revolution Health, and eHealthInsurance, now offer consumers up-to-the-minute information on medical conditions, drugs, and insurance options, as well as basic quality information on doctors and hospitals. Internet-savvy patients can walk into their doctors’ offices knowing more about the latest treatments than their physicians do.

Critics counter that health care is more complicated than hotels. Without someone to help manage complex information, they point out, patients may find themselves overwhelmed by options, fall prey to snake-oil salesmen, or fail to see that they have received incorrect diagnoses or poor treatment plans. But where critics see a problem, entrepreneurs see an opportunity. Companies are finding ways to make even the most complicated medical decisions simpler for patients.

There is the Boston-based firm Best Doctors, founded in 1989 by Harvard Medical School professors. Best Doctors uses peer evaluations of physicians—polling 50,000 doctors worldwide in 400 medical specialties—to identify leading medical experts and then makes them available to 10 million patients in 30 countries. Normally, insurance companies limit patients’ access to specialists by requiring prior authorization for referrals, limiting access to preferred networks, or asking patients to pay more out of pocket. Patients whose employers offer Best Doctors, on the other hand, can go directly to the firm without prior authorization whenever they have serious medical problems and need help making decisions.

In 2004, in Reston, Virginia, Kelleher and Mark Vasiliadis founded Executive Healthcare Services, where clients receive a full range of preventive, primary-care, and acute treatments for a flat monthly fee of $150 to $450, depending on the size of their families. There are no contracts; if EHS clients don’t feel that they’re getting value for their money, they can leave. Kelleher says that EHS’s patient-retention rate is about 98 percent.

This out-of-pocket payment model counters some of the system’s perverse incentives. "We can very frequently just discuss problems on the phone with patients, since 90 percent of the diagnosis traditionally comes from their history," Kelleher points out. "If someone calls with elbow pain, I can spend 15 minutes on the phone with them. I don’t have a financial impetus to get them into my office."

In October, 2007, one West Virginia doctor made national news when the Wall Street Journal chronicled his prepaid primary-care plan. Vic Wood offers the 100 or so patients in his plan unlimited primary and urgent care, basic diagnostic tests, and many generic drugs for a monthly fee ranging from $83 for an individual to $125 for a family.

Wal-Mart is quickly becoming the Henry Ford of health care. It took a bold stride into health-care markets in 2006, rolling out a Florida pilot program offering dozens of generic drugs at just $4 for a month’s supply. The program quickly spread to other states and added many new generics, including medicines for glaucoma, attention deficit disorder, fungal infections, and acne. As of May 2008, Wal-Mart estimates, the program has saved consumers over $1 billion in prescription drug costs. Competitors like Target and Kroger have rushed to match its offerings.

Another low-price, low-tech step toward shrinking health-care costs is the emergence of convenient-care clinics like RediClinic and MinuteClinic, which are housed in larger retail stores like Wal-Mart, Target, and CVS. The first convenient-care clinic, QuickMedx (later renamed MinuteClinic), opened in Minneapolis–Saint Paul in 2000 after its founder, Rick Krieger, couldn’t find a doctor on short notice to administer a strep-throat test to his son. Wasn’t there a better way, he wondered, to get fast, convenient care for simple illnesses? "We are not talking about diabetes, cancer, or heart disease," he told Harvard Business School researchers in 2002. "We are talking about colds, throat and ear infections."

The convenient-care clinics all use a similar model: offer a list of simple, low-cost health-care services for the consumer who can’t see his regular physician or doesn’t have one. The clinics keep prices down by offering care from a skilled nurse practitioner under the oversight of a licensed physician. Instead of skipping care or going to an emergency room, patients strapped for time or money can just head for a local store. As of November 2007, some 800 convenient-care clinics were operating across the U.S., up from 62 in 2006, with hundreds more planned.[1] As of 2013, there were more than 1,400 CCCs throughout the United States.[2]


The Mayo Clinic is another example of excellent medical care.[3]


In Oklahoma, Dr. Keith Smith, founder of the Surgery Center of Oklahoma (SCO) in Oklahoma City, started a price war by posting his prices online. As a consequence, Canadians began flying down to the SCO for treatment. In addition to targeting the uninsured and Canadians, Smith has also had success in appealing to people with high deductibles and mid-sized companies in Oklahoma and North Texas. Many companies have moved their health plans to the SCO, offering to eliminate employee copayments for treatment on the condition that surgeries are performed at the SCO.

The effects have been felt throughout the region. The Oklahoma Heart Hospital and the nearby McBride Orthopedic Hospital have both followed the SCO’s lead in publishing their prices in an effort to attract consumers. Worried that they were losing heart patients to the Oklahoma Heart Hospital, Galichia Heart Hospital in nearby Wichita has also published its rates, creating the first semblance of the price war Smith has been trying to start.

As a result, Oklahoma and Kansas boast some of the cheapest open-heart surgery rates in the nation, at around $30,000. The procedure costs $106,000 at the Cleveland Clinic in Ohio. "In Oklahoma City," Smith says, "we’re dragging people along because there is work out there for them if they adopt this strategy." Even outside the region, the SCO is helping people save on their medical bills; patients from around the country are demanding that their hospitals match the SCO’s prices. Many relent.[4]

Charities and voluntary work[edit]

Volunteers in Medicine (VIM) Clinic is an all-volunteer medical clinic, taking care of the uninsured or underinsured who live or work on Hilton Head or Daufuskie islands. The clinic was the brainchild of Jack B. McConnell, MD, a retired physician and medical researcher who made a name for himself directing the programs that led to the development of Tylenol and the Tine test for diagnosing tuberculosis. In 1992, after he had retired to Hilton Head Island, he got the idea of starting a free clinic for the medically underserved on the island, one that would rely on free labor from the many physicians who had retired to the golf and beach resort community. Although Hilton Head is an affluent community, the clinic founders found that more than 8,000 people who work at the hotels, restaurants and golf courses—plus the farmers and long-time residents—had little or no access to medical care outside of the Hilton Head Hospital emergency room.

To get the clinic going, Dr. McConnell lobbied the South Carolina General Assembly to pass legislation creating a special volunteer license that retired doctors could easily get and afford. He also negotiated a special deal with the state's largest malpractice carrier enabling doctors to volunteer at the clinic without having to buy expensive, individual malpractice insurance. He then worked with the town of Hilton Head to lease a 1.1 acre building site for $1 a year and raised $500,000 in private money to build a 7,000-square-foot clinic, which opened debt-free in June 1994. Dr. McConnell's dream was to have a clinic that does not accept any government money. To date, the clinic has been able to do just that.

The clinic is attractive to retired physicians, Dr. Beatty said, because it allows them to remember why they became doctors in the first place. "We didn't go in to make money. It's a way of making a living, but it's not the goal, and we would like to continue to serve," she said. "This is a wonderful opportunity to not be working full-time, not be worrying about insurance forms and all that business, to just practice good old-fashioned medicine like we were trained to do. It's been a wonderful experience."[5]


Remote Area Medical (RAM) is a Tennessee-based charity that is completely privately funded. Originally founded to do expeditions in South America, the group has shifted its focus homeward because of the need in the United States. At a typical event, over a thousand patients arrive in the wee hours of the night to make sure they get a spot in line. Many drive for hours and sleep in their cars.

In addition to providing general medical care, RAM specializes in dental and vision work because diseases in these areas, although serious, can be permanently resolved in a few hours. Since 1992 RAM has organized over 700 events and seen over half a million patients in Tennessee, Illinois, California, Virginia, Texas, and other states.

But rather than welcome the organization, which operates at no cost to taxpayers, most state governments actively impede its efforts. Few states allow health workers licensed in other states to see patients—even when they are working for free. And the majority of RAM’s network of volunteers crosses state lines for events. “It’s a question of mathematics,” says RAM founder Stan Brock. More volunteers mean the group can see more patients.

"The frequent comment that I get from would-be volunteers," says Brock, "is that they throw up their hands and say, ‘Gosh, it’s easier for me to volunteer my time in Guatemala than it is in my own country.’"[6]

There are also Christian nonprofit, voluntary cost-sharing organizations through which participating Christians meet each other’s medical bills. In the last 20 years, members of the Christian Healthcare Ministries have shared more than $1 billion in medical bills.[7]

Private doctors[edit]

In 2012 there were 4,400 concierge doctors in the U.S., 30 percent more than there were the year before, according to the American Academy of Private Physicians, their professional association.

A growing number of physicians are opting out of the traditional insurance-driven model. They see their older peers at traditional practices struggling to keep afloat at a time when administrative costs are rising and insurance payments have basically stayed flat. Many of these rebel doctors charge high fees and target the wealthy—visiting them at their homes, accompanying them to specialist visits, and offering them what they market as physicals fit for a CEO.

Practices offering cheaper models sprang up as well. The largest is MDVIP, headquartered in Boca Raton, Fla., and founded in 2000. Each MDVIP doctor can have 600 patients. "Six hundred is really the maximum that you could have to provide that annual exam and follow up," says MDVIP President Mark Murrison. MDVIP charges an average annual fee of $1,650. It also bills insurance companies for procedures. It has 580 doctors in 40 states and 200,000 patients.

Some doctors had a more egalitarian vision for concierge medicine. A self-described liberal in medical school who didn’t care about business, Garrison Bliss sat down with his spreadsheets and came up with a different model for Seattle Medical Associates, which he founded in 1981 and reopened in 1997. The new practice didn’t take insurance. Instead, the highest price he and his partner, Mitchell Karton, charged was $65 a month. Each doctor could see 800 patients.

In 2007, Bliss started Qliance, a concierge medicine provider with five offices in Washington State. Qliance, which has since raised $17 million in venture capital, still charges most patients $65 a month. Its 5,000 clients include truck drivers, grocery store clerks, and other blue-collar workers. They can contact their doctor at any hour. When they visit an office, they are guaranteed at least half an hour with their doctor. Like wealthy patients at a pricier concierge practice, Qliance’s patrons often have insurance, but are willing to pay extra for convenience.

Proponents of concierge medicine insist that more time with each patient allows them to provide holistic care that can prevent diseases such as diabetes that are major drivers of health-care costs in America and keep people out of hospital emergency rooms. Garrison Bliss estimates that if everybody in the nation went to one of his doctors, the country would save $268 billion annually. In 2010, Qliance says, its clients visited emergency rooms 65 percent less than similar patients. Thirty-five percent fewer of them needed to be hospitalized. They required 66 percent fewer specialist visits.

Meanwhile, in Wichita, Atlas MD began collecting $50 a month for most patients in 2010. Its two physicians, Josh Umbehr and Doug Nunamaker, don’t accept insurance. Instead, they charge most of their adult patients $50 a month for unlimited visits. They also offer free EKGs and biopsies and cut-rate prices on prescription drugs. Two-thirds of their patients have insurance but feel the fee is well worth it for personalized service, including house calls, the doctor’s cell-phone number, and quick responses to e-mails and Twitter messages. The rest of Umbehr and Nunamaker’s clientele are uninsured. For those patients, Atlas is the only way of seeing a family doctor regularly.[8]

Canada[edit]

Private for-profit clinics are a booming business in Canada -- a country often touted as a successful example of a universal health system. Canada spends $3,600 per capita on health care -- almost half of what is spent in the U.S.

Facing long waits and substandard care, private clinics are proving that Canadians are willing to pay for treatment. The Canadian system is not without its problems. Critics lament the shortage of doctors as patients flood the system, resulting in long waits for some treatment. Health care delivery in Canada falls largely under provincial jurisdiction, complicating matters.

Private for-profit clinics are permitted in some provinces and not allowed in others. Under the Canada Health Act, privately run facilities cannot charge citizens for services covered by government insurance. But a 2005 Supreme Court ruling in Quebec opened the door for patients facing unreasonable wait times to pay-out-of-pocket for private treatment.

"I think there is a fundamental shift in different parts of the country that's beginning to happen. I think people are beginning to realize that they should have a choice," says Luc Boulay, a partner at St. Joseph MRI, a private clinic in Quebec.

Yet advocates looking to preserve fairness claim that private clinics undermine the very foundation of the country's healthcare system. "Private clinics don't produce one new doctor, nurse, or specialist. All they do it take the existing ones out of the public system, make wait times longer for everybody else while people who can pay more and more and more money jump the queue for health care services," said Natalie Mehra, member of the Ontario Health Coalition.[9]

References[edit]

  1. Paul Howard. "Health Care’s New Entrepreneurs", City Journal, Summer 2008, vol. 18, No. 3. Referenced 2013-02-21.
  2. "About CCA", Convenient Care Association. Note: number is undated and may be out of date! Referenced 2013-02-21.
  3. Michel Accad. "The Mayo Clinic and the Free Market", Mises Daily. Referenced 2013-02-22.
  4. Jordan Bruneau. "Can This Man Save Healthcare?", The Freeman. Referenced 2013-10-25.
  5. Deborah Gesensway. "On a resort island, volunteerism makes a difference", ACP Observer, December 1997, referenced 2013-02-22.
  6. John Ross. "Bureaucrats Against Healthcare Access", The Freeman. Referenced 2013-11-08.
  7. "About Christian Healthcare Ministries", Christian Healthcare Ministries, referenced 2013-10-06.
  8. Devin Leonard. "Is Concierge Medicine the Future of Health Care?", Bloomberg Business Week, November 29, 2012, referenced 2013-10-06.
  9. Molly Line. "Canada Sees Boom in Private Health Care Business", FoxNews.com, June 30, 2009. Referenced 2013-02-19.

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