A Market-Based Path to Healthcare Reform: Lessons from Oklahoma and the Return to Direct-Pay Medicine

Reimagining Healthcare: Building a System That Serves All, Not Just Business Interests

The idea for this article came from our earlier piece on the Texas Medicaid fight. It was not so long ago that insurance was used only in the darkest times and most extreme emergencies and like the path to Hell, it was paved with good intentions.

Below is an alternate take on health insurance and a couple of thoughts for you to consider when talking about the "high cost of health" and where did it come from.

"The best thing we can do for our patients is to tell them what the best behavior is and then negotiate something they can live with."

For decades, the American healthcare system has wrestled with skyrocketing costs, bureaucratic red tape, and increasingly impersonal care. In the midst of this institutional chaos, one facility in Oklahoma City has drawn national attention for challenging the prevailing model and offering an alternative that is simple, transparent, and strikingly effective in its scope: the Surgery Center of Oklahoma (SCO). This cash-pay facility, founded in 1997, serves as both a model and a metaphor—a tangible example of what a free-market healthcare system could look like, and a philosophical return to how medicine once operated in the United States.

Yet even this model has its limits. To understand what a truly reformed healthcare system could entail, we must examine the strengths and weaknesses of Oklahoma’s approach and outline the fundamental reforms necessary to transition the U.S. back to a pay-as-you-go model, supported by catastrophic insurance—a system that once defined American medicine and may still hold the key to its revitalization.

II. The Oklahoma Model: Cash-Pay Simplicity

A. The Origins of the Surgery Center of Oklahoma

Founded by Dr. Keith Smith and Dr. Steven Lantier, SCO was established as a direct response to the mounting inefficiencies and inflated costs caused by third-party payers—namely, insurance companies and government reimbursements. The center provides elective outpatient surgical procedures at publicly listed, all-inclusive cash prices, often for a fraction of the cost of traditional hospitals.

Prices are transparent, payment is collected up front, and administrative overhead is minimal. SCO avoids insurance altogether and instead caters to:

• Uninsured patients seeking affordable care

• Employers looking to contract surgeries for employees

• Medical tourism clients from other states or abroad

B. Strengths of the Oklahoma Approach

1. Transparency: Every procedure has a posted price. There are no surprise bills or mysterious line items.

2. Efficiency: The absence of third-party billing and coding departments allows physicians to focus on care, not paperwork.

3. Affordability: Procedures cost 60–80% less than at traditional hospitals because administrative bloat is eliminated.

4. Patient Empowerment: Consumers can shop for procedures as they would any other service, encouraging competition and quality.

5. Doctor Autonomy: Physicians are stakeholders in the center and are incentivized to provide good outcomes without overutilizing services.

C. Limitations and Gaps

1. Limited Scope: SCO does not handle emergency, inpatient, or chronic care. It focuses exclusively on elective, outpatient surgery.

2. Requires Upfront Payment: While prices are lower, they still may be unaffordable for the working poor without financing mechanisms.

3. No Safety Net: SCO does not accommodate indigent patients or provide charity care on a structured basis.

4. Not Scalable for National Needs Alone: It cannot, in isolation, replace hospitals, trauma centers, or long-term care institutions.

III. Historical Context: Healthcare Before the Insurance Boom

For most of American history—up to the 1940s—healthcare was largely direct-pay and community-based. Patients paid their physicians directly, often in cash, sometimes via barter. Hospitals were primarily charitable institutions, often operated by churches or civic organizations. Care for the poor was managed locally, and the doctor-patient relationship was personal, ongoing, and independent of bureaucratic intermediaries.

Insurance existed, but it was limited in scope—typically covering catastrophic events like accidents or unexpected hospitalizations. Routine doctor visits, childbirth, minor surgeries, and prescription medications were paid out-of-pocket.

This system worked because:

• Costs were transparent and modest

• Care was decentralized and localized

• Doctors were both caregivers and small business owners

The rise of employer-sponsored insurance (due to World War II wage controls and post-war tax policies), followed by Medicare and Medicaid in the 1960s, began the transition toward third-party payer dominance. The results: rising costs, opaque billing, and a bureaucratic healthcare economy that no longer serves patients efficiently or compassionately.

IV. Rebuilding a Rational System: Pay-As-You-Go + Catastrophic Coverage

The solution is not to eliminate insurance entirely—but to return it to its original purpose: protecting against rare, expensive, and catastrophic events, rather than covering every aspirin and stethoscope.

A. Structural Components of Reform

1. Catastrophic Insurance Mandate

   • Make high-deductible catastrophic plans the national norm for working-age adults.

   • Premiums would be low, and coverage would trigger only in severe medical events.

   • Supplement with fully tax-sheltered Health Savings Accounts (HSAs) for routine care.

2. Expansion of Direct Primary Care (DPC)

   • Encourage doctors to adopt subscription-based DPC models with transparent pricing and longer visit times.

   • This model restores the doctor-patient relationship and reduces dependence on insurance billing.

3. Health Savings Accounts (HSAs) for All

   • Remove restrictions on who can open and contribute to HSAs.

   • Allow HSAs to accumulate year over year and be used for any out-of-pocket medical expenses, including preventive care, labs, and prescriptions.

4. Transparent Pricing Requirements

   • Require all healthcare providers—hospitals, imaging centers, specialists—to publicly post bundled cash prices for services.

   • Create a national registry for price comparison, similar to travel booking sites.

5. State and Local Subsidy Pools for the Needy

   • Instead of blanket entitlement programs, establish state-managed assistance pools that subsidize care for the truly poor or disabled.

   • Keep programs nimble, fraud-resistant, and accountable to local governments and taxpayers.

V. Caring for the Poor: Then vs. Now

In the past, care for the poor was localized, compassionate, and morally grounded. Doctors donated time, hospitals offered charity beds, and the community ensured that no one was entirely left out. It was not a perfect system, but it was personal, accountable, and scalable to local need.

Today’s Medicaid system, while expansive, is also:

• Overwhelmed by bureaucracy

• Rife with mismanagement and delays

• Detached from individual responsibility

• Structurally unable to differentiate between truly needy patients and routine low-income users

Rebuilding local charity networks, subsidized clinics, and regional “care co-ops” would allow targeted, cost-effective care for the poor, while restoring dignity to the act of both giving and receiving medical assistance.

VI. Conclusion: Freedom, Responsibility, and Practical Reform

The Surgery Center of Oklahoma is not a complete healthcare system—but it is a beacon. It demonstrates that affordable, transparent, and high-quality care is possible without third-party intervention. It calls back to a time when patients and doctors had mutual respect, shared responsibility, and financial clarity.

To get there nationally, the United States must:

• Redefine insurance as a safety net, not a subscription

• Empower patients to price shop and pay directly

• Reinvest in community care, charity networks, and localized support for the indigent

The poor have always been with us. The challenge isn’t how to eliminate that reality, but how to meet it with wisdom, courage, and practical compassion—not endless bureaucracy.

If the goal is healthcare that is affordable, dignified, and sustainable, then the Oklahoma model offers not a full map—but a compass.