Cash only medicine

[me454555]

Just got finished having a convo w/one my friends. He's a very well off person with enough money to afford most treatments. He was telling me that he doesn't bother going through insurance and that he only see's docs who run cash only. His reasons were that

1) These guys were better than the insurance guys
2) B/c they get paid well for each patient, you don't get rushed out quickly 3) No wait time in the office, just get your appointment and see the doc w/in 5 minutes of arriving
4) referrals to other cash only guys get scheduled that day or the next day so you don't have to wait around to get treated.

Seems like a pretty good gig to go cash only b/c you're getting back to spending real time with people and treating them the way you'd want to be treated as opposed to the way it is now where its like an assembly line. Any of you attendings run a practice like this? What have your experiences been with it? How did you get into this and start it up?

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[Dr JPH]

I dont think that docs who dont take insurance are "better" than those who dont.

I have worked with docs that have had this type of practice before.

 

[PediBoneDoc]

this is a very difficult practice to start. it caters to the upper crust of people who feel they should receive special treatment. we have a few physicians around here that work that way, one spine surgeon who is the partner of a good friend of mine. surgically he is nothing special, but advertisement and referrals are everything. over 10-15 years, he established that lawyer, workers comp, rich referral base, and can charge his $10,000 for the single level fusion and lami.

if you have a high end business, the number of patients you need to see to make ends meet are less. you will cater to them and spend more time. the perception is that they are better physicians, the truth is that they are probably better salesmen. some are kind of slimy car salesmen and others are polished 90210 plastic surgeons. most patients don't know who is good or not, it is word of mouth. have a nice web site or advertisement, or say i am good enough to go cash only, these are ways of having the appearance excellence to the lay person.

if this is a practice you desire, you need to first establish yourself in an area and develop referral patterns before you can go cash only. unless you are independently wealthy and can withstand a few very lean years. the most common practices that are cash only are cosmetic surgery practices.

 

[me454555]

I dont think that docs who dont take insurance are "better" than those who dont.

I have worked with docs that have had this type of practice before.

I didn't make the comment, my friend did. I was just paraphrasing, although it would seem based on economic theory that if you weren't @ the top of your game, you'd go broke pretty quickly as its kinda tough to sell a service for full price when its the same one you can get at discount by finding someone who does take insurance. What type of medicine did that doc practice? How did he get his practice up and running? Did he start out w/a large group of pts and then cut down by saying he only takes insurance now or did he start from day 1 like that and build it up that way?

 

[3dtp]

Well, consider this: Aetna execs (based on the 2005/6 SEC 10K filing) made around $80,000,000, with John Rowe making $22.2M alone. When you add another $20-25M in deferred compensation/stock options and the like the top officers (6 people) made around $100,000,000. My favorite quote from the late Senator Proxmire of Wisconsin is "a billion here, a billion there and pretty soon, we're talking real money."

I suspect that other insurance companies are offering execs "competitive" salaries and compensation packages as well. This amounts to for Rowe alone, assuming a standard work year, around $11k/hour.

Now, the typical insurance policy costs something like $4000-6000/year/covered life, I think. I don't have recent numbers on this.

Looking at typical insurance co=pays, these days of between $30-50/visit, and if you eliminate the overhead associated with insurance, eyeballing the numbers gives you something like this: 3 patients/hour @ $50/return visit patient (99213-99214 CPT codes), 8 hours a day 11 months of clinic a year 5 days a week yields $240,000. Subtract rent, malpractice, a clerk to answer the phone and make appointment and collect the cash and you are left with around $150k/year. (rent $24k, clerk fully burdened cost of $45k, med-mal $25k, risk insurance, etc). You draw your own blood and take your own vitals, or you add a nurse at $60k and make $90k.

It is absolutely true that while you build your practice and reputation you will have some very lean years, hence the attraction for the ready made panel of patients available from the insurance contracts. But their ain't no such thing as a free lunch (TANSTAAFL), and the price for this will be paid over and over again.

Or you work a little harder and see on the average 4 patient an hour and your annual gross goes up to $350,000 less overheads yields around $262,000 or if you have the nurse, $200k/year.

$200k not enough for you? Well, how about working an extra hour a day. Say, 9 hours instead of 8. Now, assuming you fill your clinic panel, you are in the $400k gross range and it'll probably net you $300k or you can raise your fee to $64 (or around the cost of a tank of gas these days.) and make a little more. I charge $64 for a DoT physical and I'm the low guy in town. The big group down the road charges $155 and its a cash basis. They have more overhead than I do, but I could easily charge more and not lose any patients.

You don't pay a billing/coding clerk, you don't spend hours (also a cost of insurance not included in the 10K report), you don't have uncollectables since you collect the cash/credit card at the time of the visit, you don't lose the time value of money waiting for six months of insurance delays and denials and downcodings. It also gives you the luxury of using your judgement to decide the best plan of care for your patient and the perk of deciding which patients you have a personal relationship with and you know cannot afford the fee, you will donate your time to.

Regarding the oft slung term, reimbursement. It ain't reimbursement, folks. Webster defines reimbursement as "to pay back someone" or "to make restitution or payment of an equivalent to." There is nothing equivalent about what insurance companies are doing, and personally, I charge a fee which Webster defines as "a fixed charge" or "a sum paid or charged for a service."

Now, if one insurance company alone is taking $100M out of the system for 5 or 6 execs, and it's a sure bet they have many execs, that money has to come from somewhere. It's coming out of the premium dollars, to be sure, but it is also coming out of your pockets in many more ways than one. It comes out of your pocket when you "negotiate" the take it or leave it contract with them to accept $0.30/dollar billed. It's coming out of your pocket when you spend 3 hours on hold waiting to find out why they denied payment on an E&M modifier. It's coming out of your pocket when you or your group has to hire a $50k/year coder/insurance analyst to decipher the billing codes. It's coming out of your pocket when you wait six months to get paid for your services. It's coming out of your pocket when your insurance company announces that it negotiated a contract with the local company and it is unilaterally modifying your contract without your permission, even though you do not see those patients.

Want to make a lot of money in medicine? Become a senior insurance company exec, and convince doctors to work for nearly free. They'll gladly do it so they can get a ready panel of patients and not get their hands dirty by asking to be paid for their investment in knowledge and time.

Or we can provide an excellent and needed service for a very reasonable fee, and reduce the cost of health care by cutting out the middlemen, spend the time otherwise spent arguing with insurance companies to read the latest advances in our fields. Think about this. The execs of one insurance company alone consumed the typical premiums of 25,000 people.

 

[PediBoneDoc]

3dtp,

well put. i think it is easier for people in the non-procedural specialties to have a cash only business. it is easier to part with the <$100, than to cough up more money than you spent on you first car. any you are exactly right, your overhead significantly decreases when removing the insurance billing/coding people.

 

[Dr JPH]

Do a search online for "boutique medicine" or "boutique medical practice"

The guy I knew was IMED

 

[Faebinder]

Well, consider this: Aetna execs (based on the 2005/6 SEC 10K filing) made around $80,000,000, with John Rowe making $22.2M alone. When you add another $20-25M in deferred compensation/stock options and the like the top officers (6 people) made around $100,000,000. My favorite quote from the late Senator Proxmire of Wisconsin is "a billion here, a billion there and pretty soon, we're talking real money."

I suspect that other insurance companies are offering execs "competitive" salaries and compensation packages as well. This amounts to for Rowe alone, assuming a standard work year, around $11k/hour.

Now, the typical insurance policy costs something like $4000-6000/year/covered life, I think. I don't have recent numbers on this.

Looking at typical insurance co=pays, these days of between $30-50/visit, and if you eliminate the overhead associated with insurance, eyeballing the numbers gives you something like this: 3 patients/hour @ $50/return visit patient (99213-99214 CPT codes), 8 hours a day 11 months of clinic a year 5 days a week yields $240,000. Subtract rent, malpractice, a clerk to answer the phone and make appointment and collect the cash and you are left with around $150k/year. (rent $24k, clerk fully burdened cost of $45k, med-mal $25k, risk insurance, etc). You draw your own blood and take your own vitals, or you add a nurse at $60k and make $90k.

It is absolutely true that while you build your practice and reputation you will have some very lean years, hence the attraction for the ready made panel of patients available from the insurance contracts. But their ain't no such thing as a free lunch (TANSTAAFL), and the price for this will be paid over and over again.

Or you work a little harder and see on the average 4 patient an hour and your annual gross goes up to $350,000 less overheads yields around $262,000 or if you have the nurse, $200k/year.

$200k not enough for you? Well, how about working an extra hour a day. Say, 9 hours instead of 8. Now, assuming you fill your clinic panel, you are in the $400k gross range and it'll probably net you $300k or you can raise your fee to $64 (or around the cost of a tank of gas these days.) and make a little more. I charge $64 for a DoT physical and I'm the low guy in town. The big group down the road charges $155 and its a cash basis. They have more overhead than I do, but I could easily charge more and not lose any patients.

You don't pay a billing/coding clerk, you don't spend hours (also a cost of insurance not included in the 10K report), you don't have uncollectables since you collect the cash/credit card at the time of the visit, you don't lose the time value of money waiting for six months of insurance delays and denials and downcodings. It also gives you the luxury of using your judgement to decide the best plan of care for your patient and the perk of deciding which patients you have a personal relationship with and you know cannot afford the fee, you will donate your time to.

Regarding the oft slung term, reimbursement. It ain't reimbursement, folks. Webster defines reimbursement as "to pay back someone" or "to make restitution or payment of an equivalent to." There is nothing equivalent about what insurance companies are doing, and personally, I charge a fee which Webster defines as "a fixed charge" or "a sum paid or charged for a service."

Now, if one insurance company alone is taking $100M out of the system for 5 or 6 execs, and it's a sure bet they have many execs, that money has to come from somewhere. It's coming out of the premium dollars, to be sure, but it is also coming out of your pockets in many more ways than one. It comes out of your pocket when you "negotiate" the take it or leave it contract with them to accept $0.30/dollar billed. It's coming out of your pocket when you spend 3 hours on hold waiting to find out why they denied payment on an E&M modifier. It's coming out of your pocket when you or your group has to hire a $50k/year coder/insurance analyst to decipher the billing codes. It's coming out of your pocket when you wait six months to get paid for your services. It's coming out of your pocket when your insurance company announces that it negotiated a contract with the local company and it is unilaterally modifying your contract without your permission, even though you do not see those patients.

Want to make a lot of money in medicine? Become a senior insurance company exec, and convince doctors to work for nearly free. They'll gladly do it so they can get a ready panel of patients and not get their hands dirty by asking to be paid for their investment in knowledge and time.

Or we can provide an excellent and needed service for a very reasonable fee, and reduce the cost of health care by cutting out the middlemen, spend the time otherwise spent arguing with insurance companies to read the latest advances in our fields. Think about this. The execs of one insurance company alone consumed the typical premiums of 25,000 people.

 

[3dtp]

From the Florida State Medical Association:

On May 31 the US District Court for the Southern District of Florida conditionally approved a settlement in Love v. BCBSA, a physician initiated class action lawsuit that alleged that Blue Cross plans had, among other things:
- Misrepresented and/or failed to disclose the use of edits to unilaterally 'bundle' 'downcode' and/or reject claims for medically necessary covered services.
- Failed to pay for medically necessary services.
- Concealed and/or misrepresented the use of improper guidelines and criteria to deny, delay, hinder and/or reduce payment for medically necessary services.
- Misrepresented and/or refused to disclose applicable fee schedules.

In addition to creating a settlement fund, Blue Cross and other Blues plans have agreed to make changes in their business practices to wit:

- Basing medical necessity determinations on generally accepted standards of medical practice and clinical practice guidelines that are based on credible scientific evidence published in peer reviewed medical literature.
- Subjecting medical necessity review determinations to an external review process
- Funding initiatives to reduce the number of resubmitted claims.
- Making fee schedules available for review.

This month affected physicians will receive by mail a "Notice of Class Action Proposed Settlement" and claim form.

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Isolated incident????

 

[Phishfood]

This is kind of tangential but it is related and seems to me to be easily answerable.

Is the patient able to deal with an insurance company themselves to get a treatment paid for?

What I mean is, suppose I set up a practice and, rather than billing and waiting for insurance company 'reimbursements' myself, I only accept up-front payments and tell the patient that they can deal with their own insurance company if they want. Is this viable? Can the patient take my bill to them and try to negotiate a refund from their own insurer? Because it seems to me that if that were possible it would open up a whole new demographic to target in 'cash only' practices, because it still leaves the patient an out to reclaim their money, and only excuses me of the hassle of trying to get it myself.

 

[yadayadadude]

Suppose I set up a practice and, rather than billing and waiting for insurance company 'reimbursements' myself, I only accept up-front payments and tell the patient that they can deal with their own insurance company if they want.

There are definitely docs who do this. I'm currently a patient at just such a practice. I kinda hate filing my own insurance claims, and haggling with them over coverage, but it's worth it to me to be cared for by my doc.

To make this work, I think you have to 1) be in a field where it's "standard" (like infertility) or 2) be such an incredible doctor that the extra hassle is really worth it to your patients. FYI, it's a _considerable_ hassle. And I don't think it really "opens up a whole new demographic" because coverage tends to be more limited at "out of network" providers and it takes seriously forever to get reimbursed, so your patients would have to be able to cover the cost themselves for months at a stretch.

Plus, the truth is, most insured patients have this crazy entitlement about healthcare where they think everything should be *free*. Other kinds of professional services, they're willing to pay for (financial planning, personal training, legal advice, etc.), but the thought of paying to see their doc is a foreign concept.

 

[Llenroc]

From an Econ 101 perspective, it would seem that buying insurance would make you lose money overall, since the healthcare costs amongst buyers are just averaged out plus the fees needed to run the insurance company. In this model, insurance is means to eliminate risk, not to save money.

However reality is more complicated than that. Most insurance companies have a fee schedule. There is some fixed amount (often times a multiple of whatever Medicare pays e.g. 125%) that they are willing to pay for a procedure - or less, if that's what the doctor charges.

Most physicians offices set their fees for procedures therefore as some multiple of whatever Medicare charges (like 2.5 times what Medicare charges). This is so that they can bill the full amount that various insurance companies are willing to pay.

Few doctors expect to collect 100% of what they are officially charging.

If you don't buy health insurance, and pay cash instead, you actually get screwed because you are the lone chump whose paying the exorbitant amount that physicians offices charge. You don't have the benefit of an insurance company negotiated price for services.

 

[t33sg1rl]

Many docs doing this also call it "Executive Health".

If I knew a bunch of stinking rich people, I would totally practice this way... I think I'd eventually make bank, because I actually really enjoy talking to patients at length about their petty problems. I firmly believe that these rich folk are not paying for "better" primary care-they're getting exactly what they'd get in any office in town-they're paying for the doc to spend extra time with them and actually care about them.

Look at it this way-if you can find 100 people who'll each pay you $5,000 every year, you should have a pretty good income even after overhead.

 

[josh503887320]

I dont know if this will help but in a atempt to get more people involved in understanding how hospital are using nonprofit status, but running themselves like for profits and helping doctors in areas starting out to evaluate jobs, go to guidestar.org you can look at any nonprofit orgs tax returns listing top 5 earning employes, great way to see how well an employed md is realy paid, if would recommend going to small hospital with the hopital gross as a way to evalute pay.. As well as how well execs do very interesting.

 

[yadayadadude]

I firmly believe that these rich folk are not paying for "better" primary care.

Obviously, you are free to firmly believe whatever you want, but this has not been my experience, either with cash-only primary care or with cash-only speciality care. In my experience, my doctors in both settings were extraordinary, and definitely superior in terms of their clinical knowledge and skills to other docs I've met. Plus, in a very real sense, having more time with your doctor (as well as increased access to her, via same day appointments, phone access, email contact) probably does improve primary care. How could it not?

Are there some exceptional doctors working for HMOs, accepting insurance and staffing free clinics out there? Of course there are. But I still think the average concierge doc probably offers better than average care ... or else they'd be out of business. Middle-aged rich people tend to be pretty savvy consumers.

 

[ny skindoc]

Suppose I set up a practice and, rather than billing and waiting for insurance company 'reimbursements' myself, I only accept up-front payments and tell the patient that they can deal with their own insurance company if they want.

There are definitely docs who do this. I'm currently a patient at just such a practice. I kinda hate filing my own insurance claims, and haggling with them over coverage, but it's worth it to me to be cared for by my doc.

To make this work, I think you have to 1) be in a field where it's "standard" (like infertility) or 2) be such an incredible doctor that the extra hassle is really worth it to your patients. FYI, it's a _considerable_ hassle. And I don't think it really "opens up a whole new demographic" because coverage tends to be more limited at "out of network" providers and it takes seriously forever to get reimbursed, so your patients would have to be able to cover the cost themselves for months at a stretch.

Plus, the truth is, most insured patients have this crazy entitlement about healthcare where they think everything should be *free*. Other kinds of professional services, they're willing to pay for (financial planning, personal training, legal advice, etc.), but the thought of paying to see their doc is a foreign concept.

There is no doubt as payments to physicians are cut and inflation starts up more physicians will go this way.
As stated it can work in some specialties more than others,works well in physican shortage areas where few of the available docs take insurance.
and in upper income locations. People who are fed up with rushed visits in crowded offices will pay for their care.Many now pay big $$ for eating out,concert tickets,vacations, they will pay for quality service if thats what it takes.

 

[joseppi]

these consierge docs -atleast the ones I have seen in primary care- charge an annual flat rate for having "direct" acess the medical care. Now that also means, getting call at any time, going to the hospital to meet your patient, even go to other specialty appointments as a sort of knowledgable consultant go between with the other physician. Sound great if you are able to gather these patients and have enough to suffice and be available any moment for your patient.

 

[deleted77919]

I disagree that concierge docs provide better care than a regular practice. In VIP medicine customer satisfaction is key. Consumers are not the best judges if quality of care (imagine the example of the pt who is upset because the physician refuses to prescribe abx for a viral URI). They simply don't have the education to understand how to assess quality of care.

 

[AML]

Personally my household runs on cash-only payments to doctors. We don't own a credit card, and the checking account doesn't exactly have a few thousand extra in it on a regular basis. I appreciate knowing that to go see my primary doctor about something will be $70, straight up. I appreciate knowing that to go see the rheumatologist will be $150 plus the cost of the gas to get there.

The funny thing is, when I first contact the office to set up the appointment and find this out, and ask about cost, the people are fuzzy and unsure. I know I'm not the first patient ever to ask how much it will cost. As it was, the rheumatologist's billing service tried to double-bill me. Is insurance so ubiquitous that they don't know how much certain basic things cost til the insurance tells them? Sheesh.

But I think insurance companies are evil anyway, so there you have it.

 

[8744]

My dentist charges the whole amount up front. And he does not cater to the "upper crust." His staff does file paperwork for insurance for his patients but only with a few insurance companies as a courtesy. He also arranges payment plans for patients who can't afford the whole amount. (A crown costs 900 bucks, for example).

You could start your own practice in primary care, take no insurance whatsoever, and probably do extremely well because most people who need to see a doctor would be willing to pay 100 bucks for twenty minutes of your time. And this would not be just rich people but anybody who can see the value of good medical care. You can refer your patients to open imaging centers for studies and amortize a few pieces of equipment for simple lab tests (or send them to outpatient labs).

As an additional benefit, since you are not "documenting for payment" but only for medical purposes your charting would be a lot simpler as well as most of your other paperwork.

The problem is that patients are so conditioned to expensive, comprehensive insurance that the thought of actually paying their doctor out of their disposable income is somewhat avant garde.

Most people would probably come out ahead having a relatively inexpensive major medical policy and paying for routine or non-emergency care out of pocket.

Not taking insurance would not keep you from getting privileges at your local hospitals so you could either admit your own patients or use hospitalists like everybody else. Your patients don't invalidate their own insurance by paying you.

As long as you don't accept medicare or medicaid you can charge these patients whatever you want as you are not caught in the trap.

 

[Trifling Jester]

Not taking insurance would not keep you from getting privileges at your local hospitals so you could either admit your own patients or use hospitalists like everybody else. Your patients don't invalidate their own insurance by paying you.

As long as you don't accept medicare or medicaid you can charge these patients whatever you want as you are not caught in the trap.

All this is true, and I don't see why more physicians wouldn't start operating their practices in this exact manner. You have less paperwork because you don't have to bill for insurance. You self-select for patients who actually give a damn about their health because noncompliant patients won't pay out of pocket for their care. You don't have to follow any cookie-cutter guidelines for care, or have some high school educated person trying to tell you what tests you can or cannot order.

One excellent site: The Association of American Physicians and Surgeons shows you how to opt out of medicare/medicaid here -
http://www.aapsonline.org/medicare/optout.htm
I wish more physicians had the balls to sign up with this group as opposed to the AMA.

-The Trifling Jester

 

[8744]

All this is true, and I don't see why more physicians wouldn't start operating their practices in this exact manner. You have less paperwork because you don't have to bill for insurance. You self-select for patients who actually give a damn about their health because noncompliant patients won't pay out of pocket for their care. You don't have to follow any cookie-cutter guidelines for care, or have some high school educated person trying to tell you what tests you can or cannot order.

One excellent site: The Association of American Physicians and Surgeons shows you how to opt out of medicare/medicaid here -
http://www.aapsonline.org/medicare/optout.htm
I wish more physicians had the balls to sign up with this group as opposed to the AMA.

-The Trifling Jester

However, you have to be a lot more mindful of the patient's costs if you only accept private patients. They might not be so gung ho for the "shotgun" approach to medical diagnostics if they are paying out of pocket for every test. It may be that their own insurance won't pay for tests not ordered by a doctor in their network.

Another thing to do is to protect your assets from civil litigation and then opt out of buying malpractice insurance. Generally, lawyers will not sue if there is no money to be made. This can be done but I'm not sure of the exact details. There is no law that you have to carry malpractice insurance (although in some states you have to inform your patients of this).

On the other hand, you may not get privileges at hospitals if you don't have coverage so you have to weigh the pro's and the con's.

 

[longaadoc]

I think cash only medicine is good from physician point of view but it can be hard for patients who might end up paying out of pocket for chronic "high maintenance" conditions or life threatening events like major trauma or cancer in the long run. An average middle class person can loose lifetime of saving trying to pay for such medical conditions out of the pocket.

 

[Trifling Jester]

I think cash only medicine is good from physician point of view but it can be hard for patients who might end up paying out of pocket for chronic "high maintenance" conditions or life threatening events like major trauma or cancer in the long run. An average middle class person can loose lifetime of saving trying to pay for such medical conditions out of the pocket.

Cash only doesn't mean the patient can't have insurance. It just means the patient has to pay you in cash. You can always let them duke it out with the insurance companies if they want reinbursement. If everyone did that the public would demand changes quick, fast, and in a hurry.

BTW - you can accept some insurance and not others. Or all insurance except Medicaid. Or only accept Medicaid part A. It's a free country. You can run your practice any way you like.

-The Trifling Jester

 

[Trifling Jester]

On the other hand, you may not get privileges at hospitals if you don't have coverage so you have to weigh the pro's and the con's.

If I was running an outpatient practice I wouldn't want priviledges. Send 'em to the hospitalist. Why run back and forth?

-The Trifling Jester

 

[BlackSails]

Another thing to do is to protect your assets from civil litigation and then opt out of buying malpractice insurance. Generally, lawyers will not sue if there is no money to be made. This can be done but I'm not sure of the exact details. There is no law that you have to carry malpractice insurance (although in some states you have to inform your patients of this).

You can do this through some games with incorporation. Espically if you segment your assets. Ie, PandaBearNursing is a contractor that employees your nurses, PandaBearRads is the company that owns your x-ray machine, and so on. Consult a lawyer who specializes in this kind of trickery for the best results.

 

[Dunce]

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