Are Cash-Only Healthcare Providers in Our Future?

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Written by Richard Console Cash-Only Healthcare: Is There a Concierge in the House? Not too long ago, a cash-only doctor sounded like a scam – t...

Written by Richard Console


Cash-Only Healthcare: Is There a Concierge in the House?

Not too long ago, a cash-only doctor sounded like a scam – think of the faux plastic surgeons caught using rubber cement and Fix-a-Flat for implants. You might have imagined unlicensed “doctors” performing procedures with kitchen utensils or toolbox implements in back rooms, like a real-life game of Operation.

But with medical costs and insurance premiums soaring, a number of legitimate physicians are transitioning into cash-only practices. There are no butcher knife surgeries or rubber cement wound closures. These are real, licensed, board-certified physicians using appropriate medical tools and devices and practicing good medicine. They work out of their own private practices or rent medical facilities as needed.

It might sound like a crazy idea if you’re not used to it. But cash-only providers make a big difference to patients, especially those who have been dismissed and disenfranchised by a system run by big insurance. Some of these patients are simply uninsured. Others, underinsured, with an unmanageably high deductible or copay. In our law firm, many of our medically uninsured clients who get hurt in car accidents exhaust their automobile insurance coverage quickly – sometimes with a single procedure in certain hospitals with a reputation for inflated prices. Even health insurance isn’t a guarantee of financial protection, as the critical care required for treating acute injuries can quickly surpass health insurance coverage benefit limits, too. When auto insurance, health insurance, or both fail to provide adequate coverage, these individuals are left on the outside of a profitable but fragmented healthcare industry that, unfortunately, often puts more emphasis on industry than on healthcare. For patients like our clients, cash-only doctors may be the answer to getting excellent care without the steep cost.

Cutting Costs without Sacrificing Care

“I hate to say my practice is concierge, but that’s what people understand,” said Dr. Kevin Lutz of his Denver, Colorado-based practice The Center for Internal Medicine. He transitioned his internal medicine practice to this no-insurance, cash-only model of providing healthcare in April 2009, terminating his insurance contracts and instead collecting an annual membership fee from patients in exchange for convenient and unlimited consultations through after-hours phone calls and emails as well as traditional office visits. “My patients would agree it’s the best thing I’ve ever done with my career,” he said.

Dr. Doug Nunamaker of Atlas MD transitioned from a traditional family practice to a concierge practice in 2010. His patients pay a monthly fee – $10 per child and $50 to $100 per adult, depending on age – and in return receive an unlimited number of visits. Every procedure done in the office is free – and no, this isn’t one of those mirage-like promises in which the office does not actually perform any procedures.

Dr. Nunamaker assured me that these services are free, with no fine print or runaround. “If I can’t make people see the value of a membership, they’ll leave,” he said. He’s not out to get patients but instead, in it to keep them.

Atlas MD offers discounted labs for services that must be done outside of the office, sometimes managing to charge as little as a few dollars for a test that insurance may bill as much as $90. Even in the case of more expensive testing, like MRIs, Dr. Nunamaker has a strategy to save patients money. “I buy idle time from MRI companies,” he said. These companies would rather sell unfilled appointments to use the machines for discounted rates than make no money in between appointments. Dr. Nunamaker likened it to travel Websites like Orbitz.

Getting Surgery Costs Back Under Control

Dr. Kevin Petersen of Las Vegas-based No Insurance Surgery has been a cash-only surgeon since 2005. Before switching over, he was working 100 hours a week, with payments from insurance companies constantly going down and the overhead costs of maintaining the practice constantly going up. It was simply not sustainable.

“When I was taking insurance, I had three full-time employees, two of which worked almost full-time” just handling insurance, he said – which meant he was paying more for the privilege of collecting ever-decreasing payments from an entity that was a hassle to work with even at the best of times. Over a period of seven years, he let his contracts with private and government insurers expire, weaning his practice off of insurance payments. For three years, Dr. Petersen has not accepted a single insurance policy. By renting out operating rooms for outpatient procedures and paying anesthesiologists by the minute, he can shave as much as 70 percent off the cost of many hospital prices.

Now, he has only two full-time employees, and everyone in the practice actually takes care of the patients. Though he still works significantly more than the standard 40-hour-workweek observed by industries outside the healthcare field, he’s happier. “Work is now 100 percent focused on patients,” he said, and “job satisfaction has increased 1,000 percent.”

A Tough Question: What Is Insurance For?

Though Atlas MD doesn’t accept insurance payments, Dr. Nunamaker urges those patients who can afford it to maintain at least a high-deductible plan that will kick in if the patient suffers a catastrophic injury or acute illness. Not every problem can or should be solved by primary care physicians. If you suffer a brain injury, you still need to see a neurologist. If you’re hurt in an accident, an orthopedic specialist who has the proper equipment and training to find even subtle problems should be the one to diagnose your injuries.

These serious problems, in Dr. Nunamaker’s opinion, are what health insurance is really for – notprimary care. “Insurance is paying for a lot of what you’re not using,” he said. “Fundamental care is inexpensive. Cancer drugs are not.” Atlas MD can refer patients to insurance sales personnel who offer cheaper, “stripped-down” policies that don’t cover primary care but will kick in to cover the cost of cancer drugs or the exceptionally high price to treat acute, even life-threatening injuries. Patients can use the money they save to pay for their care out-of-pocket or purchase memberships with practices like Atlas MD.

“If car insurance worked like health insurance, it would pay for your gas, oil changes, and tires,” Dr. Nunamaker said. “The insurance company would tell you where to buy gas and what grade to buy, and you’d have to preapprove all trips out of town.”

Insurance control isn’t only frustrating for the patients. “Insurance companies really take over your practice,” Dr. Petersen said. “You really have no time to take care of anybody.” For Dr. Lutz, time was precisely the problem. Doctors’ fees are set by the insurance companies that pay them, but their costs certainly aren’t fixed. “The only way doctors can charge more is by seeing more patients – turning up the speed of the conveyer belt,” Dr. Lutz said. And patients, he said, have become so used to this treatment – waiting weeks for schedules to open up and then hours to actually see the doctor for only about seven minutes – that “they’re not even looking for alternatives.” They just think this wasteful system is the way healthcare has to be.

Is Cash-Only a Cure, or Just a Band-Aid?

“I don’t think there’s anything wrong with doctors charging patients cash in elective care,” Dr. Petersen said, noting that the key word is elective. “I tell my patients what I charge.” Those patients are free to look elsewhere and shop around, so to speak, because their condition – however painful or unpleasant it may be – doesn’t require an immediate decision. In emergency care, it’s a different story, Dr. Petersen said.

Fair enough. With cash-only medicine, healthcare becomes more of a free market. Don’t like the benefits you get for the cost? Take your business elsewhere. For doctors, the desire to stay in business will drive competition in aspects of both pricing and quality.

But that’s not the only problem. What about the cash-only physicians who shed hundreds or even thousands of patients when they stop accepting insurance and, in the case of concierge services, start seeking payment upfront? If the doctor shortage is already a problem, couldn’t radical acts like this further strain the already overburdened physicians still spending nearly one-quarter of their day dealing with paperwork and paying five to seven billing personnel to handle the influx of insurance claims?

For doctors like Nunamaker and Lutz, the scenario seems like a win-win. Patients get as much time with their doctors as necessary, and physicians get the satisfaction of getting to help patients without rushing. “We changed the system here in Wichita,” Dr. Nunamaker told me. And for those 400 to 600 patients in Wichita that he treats, that change is for the better.

But what happens to those patients who can’t afford the membership fees? The ones who already have insurance and can’t or don’t want to pay hundreds or thousands of dollars a year in addition to their premiums?

Primary care doctors are hard to come by. The extensive and expensive education and training required to become a doctor reduces the talent pool. A shortage of slots in medical schools and residency programs keeps even the training for the occupation highly competitive. When they are finally ready to start practicing medicine, the high overhead costs of running a practice and low insurance reimbursement payments make these students’ dream careers a financial nightmare. Now few aspiring doctors want to go into primary care, where physicians feel the financial squeeze most, and instead enter more profitable specialties. If more doctors go the cash-only route, more displaced patients will seek new doctors. Won’t the scarcity get worse, not better?

For Dr. Lutz, deciding that his current model of doing business (and attempting to provide patient care in seven minutes or less) was unsustainable was the easy part. Letting patients know about the transition? Not so much. Dr. Lutz admitted that he was nervous about telling patients. He called the experience “emotionally really tough. I had to stop seeing patients I really cared about.” But those patients understood that the motivation was to provide better quality care. For the patients who couldn’t or chose not to start a membership, Dr. Lutz ensured that they transitioned into other practices as smoothly as possible, going so far as to personally call doctors about individual patients and make sure patient files were hand-delivered. “No one was ‘dumped,’” he said.

That careful transition is hugely important. So far, there’s been no national cash-only movement, just individual doctors like Lutz, Nunamaker, and Petersen who have made the transition. “I think concierge medicine has a focused audience of people who can afford it,” said Dr. Georges Benjamin, Executive Director of the American Public Health Association. “It will probably have little effect on the broader primary care debate.”

Red Herrings in White Coats

When we hear about the healthcare spending crisis in America, it seems obvious that medical care simply costs too much. As patients, we feel that the burden is constantly increasing, with consistent insurance premium spikes, ever-rising copays, and deductibles as high as a few thousand dollars before that expensive insurance policy even begins to pay out. At the same time, we’re spending only about seven minutes per appointment with our doctors. It’s easy, maybe, to complain that doctors don’t care about their patients or that they make too much money for the scant amount of services they provide in those seven minutes.

But the reality is that doctors suffer the financial squeeze as much as, or even more than, patients. They’re not just healers of the sick and caretakers of the injured – they’re also business owners. Every year their overhead goes up, as inflation raises the cost of renting facilities, purchasing supplies and equipment, paying for utilities, hiring and retaining staff, maintaining medical malpractice insurance and continuing their education. At the same time, their income – paid through government programs like Medicare and Medicaid and private insurance companies – has been steadily decreasing. So what are we really paying for?

Despite making no direct contributions to patients’ health, “CEOs of insurance companies make dramatically more than doctors,” observed Dr. Lutz. Top health insurance executives earn multi-million dollar salaries each year and their companies pay out less and less to the doctors doing the actual work. Hospitals like the ones Stephen Brill indicted in his TIME magazine exposé Bitter Pill charge astronomical, and sometimes redundant, prices. They’ll charge you for the room, the bed in the room, the straps on the bed – but what the general public comes away believing is that those greedy doctors just make too much money.

But we’re pinning the guilt on the wrong people. The doctors I talked to are anything but greedy.

Making Cash-Only Care a Bargain?

“We tried to design a clinic as affordable and applicable to as many people as possible,” Dr. Nunamaker said. “We’re trying to change the perception that cash-only physicians are in it just for the money or that they’re only for the wealthy.”

He’s not the only doctor in concierge medicine to challenge that assumption. “I expected a particular demographic and age group, but that’s not it at all,” Dr. Lutz said of his patient population. “A lot of people think it’s very exclusive, but it’s not.”

The membership model eliminates the financial incentives to over-test, over-treat, and over-prescribe that will always exist in a fee-for-service model. While upscale concierge medicine facilities charge as much as $7,400 per a family of four, the new wave of concierge doctors seeks to make medicine more affordable. Dr. Lutz charges $3,000 for adults (and treats patients’ children ages 16 to 21 at no cost). A membership for a family of four at Atlas MD costs around $1,400 per year.

Keeping the costs down for patients is tough. “I have bills at my clinic, too,” Dr. Nunamaker said, noting that he, “can’t pay them in well-wishes.” The logistical nightmare that doctors face as a result of health insurance means enough ever-increasing financial pressure that business bankruptcy becomes a looming threat – and that’s not healthy for anyone. For doctors like Lutz, Nunamaker, and Petersen, transitioning to a cash-only business model was a risk that, fortunately, paid off for both patients and providers.

“I’ve always accepted patients that didn’t have insurance and tried to give them the most affordable options,” Dr. Petersen said. At one time, that meant letting them negotiate with hospitals and anesthesiologists themselves. Shockingly, many of his patients ended up shelling out $18,000 for their surgeries – for which the surgeon who actually performed the work only received about 10 percent of the pay. Now, by offering the surgery as a package, the average cost is a much more affordable $5,000.

It’s telling that Dr. Petersen sees patients from across the country. Even people on the East Coast find it cheaper to fly to Nevada and stay in Vegas for at least two or three nights (pre-op, surgery, and post-op appointments) – all with a companion – and pay Petersen’s discounted rates than to get the $10,000 to $20,000 surgery done at their local hospital. Dr. Petersen’s patients often say to him, “I know I just paid you, but I still feel like I owe you.”

Just because Dr. Lutz doesn’t work with insurance companies himself doesn’t mean that the insured can’t benefit from his practice, or that their benefits are wasted. Some of his patients get reimbursed at least partially for their membership fee from out-of-network insurance coverage. “I’d like to think that if enough doctors did this and more patients demanded it as a benefit,” insurance companies might be more inclined to add out-of-network coverage, flex dollars, and health savings accounts that could be used to reimburse patients for treatment by cash-only doctors, he said. It would be a move backward, but in a good way – similar to an era when paying for healthcare was less unsustainable.

For concierge offices like Atlas MD, some patients can only afford a couple months of membership – but if that’s all it takes to treat them as effectively as they might be treated in a hospital but for a fraction of the price, it’s worth it. “I have patients that spent more at ‘free’ clinics than they do here,” Dr. Nunamaker said.

How’s that for affordable care?

About the Author 

Richard P. Console Jr. is the founding and managing partner of Console and Hollawell, one of the most highly regarded personal injury law firms in New Jersey and Pennsylvania. Since 1994, he has dedicated his professional life to protecting the rights of individuals that have been injured in motor vehicle accidents, medical malpractice, wrongful death, and other serious injury claims.


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