Your mention of the shared common storefront approach in PHX explains why there are always long lines of happy patients in wheelchairs waiting to depart on Southwest flights at Sky Harbor Airport. Domestic medical tourism is the new reality because it delivers lower costs, better outcomes and happier patients. Hospital geographical proximity and 100% physician directed admission are being replaced by patients & physicians sharing in the admit decision based on where the optimal outcome can be obtained at the most reasonable cost. In many cases, I also see the availability of superior patient/family amenities at a remote location being a deciding factor in the admit decision.

Instead of private surgical clinics competing with hospitals for lucrative outpatient procedures and margins, why don’t hospital CEOs reach out to the relevant physicians in open practice scenarios and build the state-of-the art outpatient surgical centers that have comparable economics for the physicians and endorse practices that deliver better outcomes for the patients? Otherwise, we’re just encouraging another Medical Arms Race, albeit with less expensive equipment in many cases. (Disclosure: Sure, I chose a private surgical clinic for a typical over-50 male elective procedure for all the reasons you mentioned. The heated blankets were a nice touch I’ll always remember.)

Thanks for your very helpful comments. You must work or consult for a hospital feeling threatened by some of these perverse incentives?

The “Medical Arms Race” that you describe is an artifact of unenlightened hospitals fawning to the patients perception of quality – the latest, greatest, and most expensive. Instead of touting the latest technology, they should be touting their surgical infection rates, quality outcomes for various procedures, and the systematic improvements they increase value that have built into the patient experience. It is analogous to the situation with car rentals – you have been to places where all the car rental shops have different locations, different lots, different sizes, etc? Well what happens (liken in PHX) when they build one common place where everybodies “storefront” is the same size and all those variations are removed? Quality goes way up, costs go way down, and everyone has to compete not just on price but on value. That is my message – have hospitals compete on value (outcome/price). This requires some re-education of the consumer (tall order I know!).

In terms of the speciality surgical centers eating away at hospitals business – I am ALL for it. If they can do the procedures cost effectively with higher outcomes then they should do it. Big hospitals with conflated business plans are in real trouble . . . but that is a topic for another post.

Keep commenting!

The reality is that until the status quo breaks down, people rarely change. Unfortunately, without the pain there will be no gain.

In the end, the most effective markets entail increasingly educated consumers motivated by their own self interests to freely choose from a number of alternate competitive suppliers in a transparent marketplace. As you are aware, most protectors of the status quo stand at the gate armed to keep the fore mentioned at bay because failing that they might have to consider that a Honda does a much better job for the money than their Ferrari.