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Cash-Only Physician Practices Could Save You A Bundle

When most people think of “cash-only” medical practices, plastic surgery and dermatology procedures are top of mind. But there is a small contingent of primary care physicians who offer low-cost “pay-as-you-go” services. Yearly physicals, well-child visits, screening tests, vaccinations, and chronic disease management are all part of comprehensive primary care options available. And this costs the average patient only $300 a year.

It is estimated that 75% of Americans require an average of 3.5 office visits per year to receive all the medical care they need. If the average office visit is 15-20 minutes in length, then that averages out to 1 hour of a physician’s time each year. How much should that cost? Dr. Alan Dappen (founder of Doctokr Family Medicine, a cash-only primary care practice in Vienna, Virginia) says, “$300.” But insurance premiums are often closer to $300 per month for these Americans, and that doesn’t include co-pays for provider visits.

So why aren’t people buying high deductible insurance plans, saving thousands on premiums per year, and flocking to cash-only primary care practices?  Dr. Dappen says it’s a simple matter of mindset – “People have been conditioned to believe that if they pay their insurance premiums, then healthcare is ‘free.’ In reality, their employers are taking out $3600 or more per year from their paychecks for this ‘free’ care. But since employees don’t see that money, they don’t miss it as much.”

A high deductible health insurance plan (where insurance doesn’t kick in until you’ve paid at least $3000 out of pocket in a given year) costs about $110/month for the generally healthy 75% of Americans (you can check rates at eHealthInsurance.com). That’s a savings of at least $2280/year for those who switch from a regular deductible plan to a high deductible plan.

What are the odds that the average, reasonably healthy American will outspend $2280/year? I asked Alan Dappen how many of his 1500 patients spent more than $2000 on his services per year. The answer? Three.

“Most Americans who buy-in to low deductible plans pay a lot more in premiums than they’ll ever use. They’re essentially betting against the casino, and we all know who wins on those bets.”

So I asked Alan Dappen if “the casino” was making most of its money on the “healthy” 75% of its enrollees to subsidize the cost of the sick 25%.

“Sure they are. And I suppose if enough people saw the light and switched to high deductible plans with cash-only physicians, it might force change in the health insurance industry.  Perhaps the government would use our taxes to help subsidize the sicker patients.

The bottom line is that at this very moment, 75% of Americans could be saving thousands of dollars per year on their healthcare costs – and have their very own cash-only primary care physician available to them 24-7 by phone, email, home visit, or office visit. The cash-only doc can afford to offer these conveniences because they are paid by the hour to do whatever the patient needs done, without forcing the relationship to conform to insurance billing codes. In fact, the physician saves a bundle on coding and billing fees – and can pass that on to the patients.”

I wondered about the outrageous costs of laboratory fees and radiology charges for people who don’t qualify for the insurance company negotiated rate. Dappen explained:

“My practice has negotiated similar rates with local labs and radiology groups. Screening tests and x-rays are very reasonable.”

I asked Dr. Dappen who uses his services.

“I see both ends of the spectrum. The high-powered executives who don’t have the time to wait in a doctor’s office and enjoy the convenience of handling things with me via phone or house call. For them, time is money, and by losing half a day or more traveling to a doctor’s office and waiting for their 15 minute slot, they might lose $5000 in billable work time. On the other end I see patients with no insurance or high deductible plans. They enjoy the same conveniences, and end up paying an average of $300/year for their healthcare. This is high quality care that they can afford.”

I guess the only thing preventing this model of healthcare from taking off is the courage of individuals to try something new. I myself have switched to a cash-only practice with a high deductible health insurance plan, and have saved myself thousands a year in the process. I love the convenience of knowing that my doctor has all my records in his EMR, I have his cell phone number, and he can renew my prescriptions with a simple email request. I can’t imagine why more people aren’t doing this.

Alan Dappen says, “They just have to wake up out of the Matrix.”

**For more in-depth coverage of the rising trend in cash-only practices, check out MedPage Today’s special report.**

Sneaky Things That Doctors Do To Survive Financially – Introduction

Dr. Val’s note: My friend and co-blogger Alan Dappen is going to prepare a series of posts to expose the convoluted billing and procedural tactics that primary care physicians adopt to survive the ever decreasing reimbursements that would otherwise put them out of business. Below is his introductory post – others will follow each Wednesday morning here at Better Health. Enjoy!

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The Doctor’s Huddle

By Alan Dappen, M.D.

On the great gridiron of healthcare, the team of primary care providers is leaning inward, supportively embracing one another.  They have huddled together for 15 years, calling plays against their opponent, the Insurance Team.  The two-minute warning has sounded and the Physician Team is losing. The Physician’s play book pieces together strategies culled from cocktail party conversations, doctor conventions, office staff meetings, back hallways of hospitals, online blogs, and a plethora of practice management magazines; routinely circulated offering grand strategies to teaching doctors how to tackle the Insurance Team. The rising mantra is “Hit them again! Harder! HARDER!”

This game began in the 1980s, when concerns that rapidly inflating healthcare costs would consume all the U.S. gross national product within the foreseeable future unless something was done.  Insurance companies lobbied regulators and advertised to the public not to socialize healthcare. Most people sighed relief when laws were passed granting insurance companies broad powers to regulate the price of care.  Little did these politicians realize that they inadvertently were “socializing” care by handing the keys to the health care gold mine to Team Insurance’s privatized, for-profit model.

Up until this point, the healthcare system had experienced 40 years of run-away costs. Patients with insurance hadn’t worried about the costs of care. Inside of this cash rich environment, many important innovations occurred but employers, who subsidized most of the cost, questioned the sustainability of paying for it.  All the while, physicians, hospitals, pharmaceutical companies, and medical suppliers eagerly reassured the patients:  “Since you aren’t worried about the price, then no one else should worry about it either. We’ll pass the bill to the insurance company–they pay what we ask.”

This modus operandi came to a screeching halt in the late ‘80s, when the aforementioned game began, and Team Insurance was allowed to fix prices via preferred provider contracts. Insurance providers understood that the key to these contracts was not to change the rules for patients, who needed to perceive their care as virtually free so that they would continue to seek care.

Instead, Team Insurance spelled out new game rules in contracts for physicians, where the physicians “negotiated” to accept roughly 50% of their customary rate in order to be listed in the insurance company’s Preferred Provider Directories. These rules were never acceptable to physicians. Docs refusing to sign contracts rudely were awakened by the new world order when 95% of their trusted clients refused to return until they could say, “Yes we are preferred providers.” And, “Yes, all you have to pay us is your co-pay.”

Patient expectations remained unchanged. Quality of service, patience, time to explain oneself, attention to wellness, review of multiple issues, meaningful personal relationships, prescriptions, detailed explanations of risks and benefits of treatments, reviews of other possible ideas in a differential diagnosis,  labs, call backs with results, and introductions to specialists were never connected to a price for patients before. After all, haven’t physicians had spent 40 years reassuring patients, “Don’t worry your silly little head about the price.” This time the boomerang came right back at physicians who suddenly were demanded to deliver all the same service for half the price.

The power of “owning” the patient for a $20 co-pay is not lost upon the insurance team.  Every year, as they hand out new contracts, these insurance companies congratulate their preferred doctor players for their work, quality, and dedication and try to not rub in the following truth, “We own the doctor and we own the patient. Any doctor who dares not sign our next annual contract for less money will find themselves without patients. Remember, for the patient the big thing that counts is that you can say yes to the $20.00 co pay. Now sign on the dotted line.”

Every “negotiated” dollar saved from paying Team Physician means smiles all around for Team Insurance and their fans (shareholders.)  Price fixing initially did control costs, but only for about five years.  The U.S. now is back on the trajectory of health care pricing doubling every 7-10 years.

So what’s going on in those primary care huddles? The game plays are called out: “More work, less money, patient demands, protection from malpractice, keep smiling … Somehow we’re going to make somebody cough up our money …Hit them again harder!  Let’s do it!  On one, break.”

Up next, I’ll show you some of the plays physicians have put into place to survive. And why you the patient might feel like the football. Play along, with us. Hup one, Hup two, hike!

Until next time, I remain yours in primary care,

Alan Dappen, M.D.

The Gordian Knot: Ensnaring Today’s Healthcare System

http://www.cs.berkeley.edu/~sequin/SCULPTS/CHS_miniSculpts/TangledKnots/PentafoilTangle4.JPGBy Steve Simmons, M.D.

Gordian Knot: 1: an intricate problem ; especially : a problem insoluble in its own terms —often used in the phrase cut the Gordian knot 2: a knot tied by Gordius, king of Phrygia, held to be capable of being untied only by the future ruler of Asia, and cut by Alexander the Great with his sword

Generations ago, the American Medical Association’s (AMA) Code of Ethics stipulated that allowing a third party to profit from a physician’s labor was unethical.  This tenet resides in a time when house calls were common place; when trust and respect helped forge an immutable bond between doctor and patient; and when it would have been unthinkable to allow anyone other than the doctor, family, or patient to have a role within the doctor-patient relationship.

The landscape of today’s healthcare system and its delivery methods make the authors of the AMA’s forgotten code look prescient.  Insurance companies, controlling the purse strings, have become an unwelcome partner within the doctor-patient relationship, frequently dictating what can and can’t be done, and are reaping a healthy profit from their oversight. Obscene salaries and large bonuses are awarded to the CEOs   of these companies for keeping as much money as they can from those providing health services, with the CEO United Healthcare being reported as receiving a $324 million paycheck during a five year period.  Thus, short-term business strategies are given priority, often at the expense of patients’ long-term medical goals, creating a Gordian knot so entwined that no one – patients, doctors, insurance providers, or government regulators – can see a way to unravel it.

A result of so much money being skimmed off the top is that no one seems to be getting what they need, let alone want.  Patients long for more time to discuss problems with their doctor and wish it were easier to get an appointment.  Yet physicians are unable to receive adequate reimbursement from insurance companies for their services, and if they do get reimbursement, it’s after months of waiting and often at the high expense of having a posse of back office staff needed to negotiate these payments. These physicians therefore are forced to overload their schedule and rapidly move patients through their office if they are to earn their typical $150,000 per year, pay off medical school debt, and afford the salaries of their office employees.  Finally, government agencies, looking for the elusive loop to tug on, ultimately burden physicians further with a myriad of onerous rules and regulations.

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