There's a growing movement of surgery centers and specialists that list their prices and don't take insurance

Courtesy Surgery Center of Oklahoma

When Cheryl Millican found out she needed surgery, her Dallas-based doctor told her it would cost roughly $38,000 out of pocket. 

Millican, who doesn't have insurance, needed a hysterectomy, a procedure that removes all or part of the uterus. It wasn't an emergency situation, so when a friend told her about a place in Oklahoma that could perform the surgery for $8,000, she decided to look into it. That included the cost of the procedure itself, an overnight stay, a follow-up appointment, and any other meetings ahead of time. 

In August 2016, Millican drove the three hours to the Surgery Center of Oklahoma in Oklahoma City to get the procedure for $30,000 less than she might have paid. 

In March, Business Insider reported on a new movement happening with primary care doctors. It's called direct primary care, and it works like this: Instead of accepting insurance for routine visits and drugs, these practices charge a monthly membership fee that covers most of what the average patient needs, including visits and drugs at much lower prices.

It's happening at a time when high-deductible health plans are on the rise — a survey in September found that 51% of workers had a plan that required them to pay up to $1,000 out of pocket for healthcare until insurance picks up most of the rest.

And it's not just happening in primary care. A number of specialists — oncologists, physical therapists, and even some hospitals — are jumping on board as well. 

It works a little different from primary care, where there's a monthly fee. Instead, these practices are based solely off services they provide with transparent pricing. For example, if you needed a knee replacement, you could go on the provider's website and find out just how much you'd be expected to pay. 

The other services tend to "snowball" in locations where a doctor has started a direct primary care provider, so that by the end of the year there might be five providers that offer cash prices, Meg Freedman, the executive director of the Free Market Medical Association told Business Insider. FMMA tracks organizations that sell and buy healthcare services as part of this "free market" model.

The history of cash-priced procedures

AP Photo/Nam Y. HuhDr. Keith Smith founded the Surgery Center of Oklahoma in 1997, and at the time he wasn't exactly setting out to ditch insurance. Before the 1990s, the prices for different procedures were allowed to be shared with patients, Smith said. But then something changed.

The center would file claims, but insurance companies weren't keen on working with the center because the center was being open about the prices it was charging, he said. After a while, the center and the insurance companies parted ways. 

"Insurance companies hate us," he said.

There are some key differences between how direct primary care works, and how cash-pay providers like the Surgery Center work. For one, a monthly membership isn't necessary, since you won't necessarily be using a cash-pay health center more than once. And many — unlike the Surgery Center — will still work with insurance companies in addition to providing cash prices. 

"The similarity is that they are honest and predictable about what they charge everybody who's involved," Smith said. 

Surgery Center lists the prices for more than 200 outpatient procedures on its website, covering everything from plastic surgery to a hip replacement. The site also discloses information about its infection rates, and relies heavily on reviews. "Our reputation is everything," Smith said.

And they're not the only ones. The FMMA lists 67 providers that disclose their prices, including other surgery centers, imaging centers, and a handful of physical therapy practices among specialties. And Freedman said she adds about 9 to 10 new providers every month to the FMMA's search tool.

Turning a profit

Smith said the Surgery Center has had people fly in from as far away as Turkey and Ethiopia for procedures. 

"We are unapologetically for-profit," Smith said. "I'm not in this business to lose money."

Because the Surgery Center's price for a hysterectomy was so much lower than what Millican had been quoted at a Dallas hospital, she asked her doctor why he chose to do the procedure at a lower price. He told her frankly that it was profitable for him. When he performs the procedure using insurance, he is paid $500, she recalled him telling her. For her procedure, he told her, he got paid five times that. 

When she thought about how little $500 was in the grand scheme of how much she might have paid for her surgery, she found it frustrating. 

"The doctor was the cheapest part," she said.

To be sure, the prices for certain surgical procedures are still out of reach for many. And in an emergency situation, taking the time to shop around for the lowest price might not be an option. 

But cash-pay providers are gaining traction with self-insured employers, who see it as more cost-effective than paying through traditional insurance. Freedman recalled an instance where a woman with breast cancer flew to Oklahoma for a mastectomy, chemotherapy, and reconstructive surgery, all paid for by her employer using cash prices because it was the cheapest option. 

Where the movement's heading

In general, healthcare providers that don't take insurance are still in the minority in the US. Still, the movement appears to be growing. At the Surgery Center, Smith said he's observed it lately getting busier by the week, though he didn't give a reason why. The center now performs 7-8,000 surgeries in a year. 

It's sparking other specialists to chime in, too. Dr. Virigina Harbour, a physical therapist in Oklahoma City. began working with Smith and the Surgery Center about a year ago to provide her services as part of the flat fee the Surgery Center charges for joint replacements. Though she still accepts insurance at her practice, she prefers the cash-only model, where patients who need physical therapy pay a set price for a bundle of sessions over the few weeks they need the care.

Harbour's one of the only physical therapists she knows that's working with this model, though she's built out a network of other clinics she works with when patients who come to get surgery in Oklahoma head back home.

"We're in the infancy of it," Harbour said. 

It remains to be seen if more providers start to list cash prices, but as more people face high deductibles that leave them on the hook for hefty medical expenses, and employers look for cheaper ways to fund medical care, the movement may continue to grow. 

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