Wednesday, April 23, 2014

Physicians:  Regulation  by Insurers,  Or Direct Pay Competition?**

The use of traveling is to regulate imagination by reality, and instead of thinking how things may be, to see things as they are.

Samuel Johnson (1709-1785), Boswell

I’ve been traveling around the country by phone,  interviewing physicians to see how things are, rather than what  they might be.

The traditional thinking among  federal  officials it that government  and insurers can lower costs through regulation by:
  • making physicians comply with federal mandates;
  • paying them through  approved codes; 
  • compelling them to follow practice guidelines;
  • using  middlemen to restrict procedures and tests that can be done;
  • judging their performance  and paying them accordingly  using evidence-based data.
This is logical if your desire is to control  and lower costs,  or the “bend the cost curve down, ” and if you believe in the power of government to dictate events at the market level.

The problem  is that physicians are a cantankerous bunch who insist on exercising their own autonomy and clinical judgment.   They are not,  nor do they choose to be, indentured servants of the U.S. government or the insurance industry.

Switch from Dependence to Independence

So something big is going on out there. Doctors are switching their business model from insurance-dependence pay to independent-direct-pay.  This switch  goes by various names,   “free market health care.” direct pay independent practice, “   “cash-only medicine,”  “transparent medicine,” or “concierge medicine.”    

As the movement matures,  physician leaders  have grown to  dislike the term “concierge” because the concierge stereotype  implies  direct-pay care is only for the affluent.    

This has not proven to be the case.   For various reasons – high premiums and deductibles secondary to ObamaCare,  long waiting lines,  unpredictable  and mounting costs,  rushed doctor visits,   lack of privacy and confidentiality,  patient desire for access to a private physician who has time for them,  complexities of enrolling in health exchanges -  ordinary citizens of all income levels, the insured and uninsured,  primary care practitioners and specialists, and self-funded corporations   are finding direct-case medicine as an attractive alternative .    Not only is the care more direct and convenient,  but it may lower individual and overall government cost and minimize bureaucracy.

Furthermore,  it  has generated a growing group of patients who are choosing to remain uninsured (Abby Goodnough, “Looking at Costs and Risk, Many Skip Insurance, “ New York Times,  April 21, 2014). And, according to the Medscape 2014 Compensation Survey,  100,000 physicians out of America’s 900,000 physicians are participating in  direct pay independent/concierge practices  and  in other forms of cash-only practices.

The magnitude of this return to free market principles and  physician competition as a means of reducing costs and fostering convenience and satisfaction is unknown at this point.  Nor, for that matter, on the other side of the government-market equation,  is the number  of Americans known who will eventually enroll in ObamaCare exchange plans to obtain subsidized federally-approved health plans or to avoid financial penalties called for the health care law.    

There’s a wild card in all this as well.   It is possible that the direct pay,  3rd party avoidance movement,  could be rendered irrelevant by state or federal laws making care for Medicare, Medicaid, or other federal agencies a condition for practicing. 
**(If you wish to comment or need more information,  email me at, or call me at 1-860-395-1501.  I am available for writing columns or articles  and for speaking engagements.   I would be happy to publish your comments on my blog, which is currently getting 4000 to 6000 page views each day.)

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