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. 
Tweet:   A contest testing the viability and reliability  of government-insured care versus free market care direct-pay care is emerging.

Tuesday, April 22, 2014

Interview with Daniel Goldberg,  Founder of Free Market Health Group

Daniel Goldberg,  a 29 year old entrepreneur who has worked in the health care field for 6 years,  believes the time has come in which self-funded corporations,  ordinary citizens, and physicians are seeking a  transparent and affordable alternative to government and insurer  care.

Q:  What is your position?

A: I am founder and president of the Free Market Health Group.  I am an outspoken advocate  of free market principles and transparency.  We also serve as consultants for physicians who are  entering cash-based practices in a free market system. We deal mostly with specialists – orthopedists, spine surgeons, and other  specialists who perform procedures not requiring hospital care.

Q:  What motivated you to form this group?

A:  With the new regulations with ObamaCare,  we started to see a lot of physicians becoming disenchanted with the current medical system and further disenchanted with  ObamaCare regulations.   Many of them, primary care doctors and specialists alike,  have  expressed a desire to leave the insurance-based system and to enter a more fee-for-service or cash-based practices .  They just weren’t sure how to make this a viable business model, after having been in the insurance system for 20 or 30 years. 

Q: What prepares you to provide this vision of how this might be done?

A: Our vision is  that the more physicians leave  the system, the better we could   serve the people in the market for cash-based surgery,  the uninsured, and those  who did not want to use their insurance network.  

We realize a lot of patients, despite the ObamaCare enrollment numbers, are still uninsured and  need to be served,  as well as those with high deductibles plans.  

Also there is a  proliferating trend towards direct pay  by  employers who self-fund  medical claims of their employees. Typically,  these employers are used to paying hospital-based managed care fees. With physicians entering the free market and competing on price and quality, self-funded  employers want  contracts with high quality  physicians  at significantly reduced rates.

Q: Do you think  there’s a significant hunger among self-funded employers for this new model?

A: Absolutely.  What  we saw that made us sure this new model was viable was when  Walmart and GE, who together have one and a half million employees,   created direct global fee contracts for hip and knee replacements  with four hospitals across the country.  Walmart and GE  told their employees if they chose to go to one of these pre-determined centers, the employer would absorb the entire cost.  For employers, the rates were low even with the employer paying the full amount.

Q: And this was outside the realm of current 3rd party reimbursement?

A: Right, this was a direct contract between employers and  medical providers.   This skirted the insurers.  Employers  were funding the claims directly themselves. This did not necessitate insurer  involvement.  There was no need for the insurance bureaucracy.

Q:   There are a couple of slogans or buzz phrases you use repeatedly.  One of them is you are creating “A transparent system of medicine.”  Amplify on that please.

A:  In America, everybody shops for everything from cars, computers, toasters, and housing based on price and quality. You cannot judge price and quality in a heavily guarded, secretive  health care  pre-arranged system based on a price system between insurers and larger hospital systems.  

Both sides don’t want patients to know what medical care actually costs.  When the patient sees a  bill saying the hospital charged you $25,000 for a knee replacement, but you only paid them $8000, people say,”Oh, Thank God, I have insurance because I could never have afforded that.”  

The reality is that rate was agreed upon well before you entered the operating room and well before you were even a patient.   The  financial system you  see in medicine as the average patient isn’t real if you want to know what the insurance system’s role or the costs actually are. And you  cannot predict beforehand what  costs will eventually be.

Q:  Another phrase you use is “ A physician mass exodus.” Explain please.

A:  The policy of  Association of American Physicians and Surgeons (AAPS), that patients should  pay directly when care is provided,  is a perfect example.  In the last decade, many  AAPS-affiliated primary care physicians have left the insurance-based system  to form concierge practices.  Primary care physician have spearheaded this movement.  It’s been a very successful model.   

Specialists took that mindset.  When patients need surgery,  specialists have  created a  global fee-for-service model.   With that in mind and with  fee-for-service reimbursement going down,  specialists are leaving the insurance system and entering the free market, and not allowing themselves to be paid less.   They are choosing to opt out or disassociate themselves from insurance, and that’s become a trend with the best physicians in the country. 

Eventually, patients are going to walk into the physician’s office, and the doctor is going to say, “I don’t take your insurance.  This is my cash-rate for medical care.” 

Our job is drive down that cash-rate  by making the physicians compete against each other.

Q: There are models out there showing this does work.  The Surgery Center in Oklahoma, now in existence for 17 years,  is a prime example.

A: Yes, Doctor Keith Smith, founder of that center, is a pioneer in this field.

Q;  One of the things I ran across in doing interviews with direct pay physicians was that they are contracting with specialists for direct-pay discounts, and that is bringing their mutual interests together.  This is a powerful incentive in bringing specialists into the free market.
A:  Absolutely.  For primary care direct pay physicians, certain things are going to be outside their scope of practice, like rotator cuff surgery.   Typically, the only alternative was to go to a hospital.  If the primary care physician affiliate with specialists,  it gives their patients a larger care path and another option.  That’s a great thing.  Direct-pay care is no longer relegated to primary care.  Now both primary care and specialists are operating under the same model.

Q: Do you think this transition to free market care is concentrated in certain affluent markets, like New York City?

A: No, the traditional mindset was always that if you’re going to charge a cash-fee, only 1% to 2% of people could  afford that fee, and that can only occur in places with a high concentration of the wealthy. That has proven to be untrue, because as the price goes down more and more people can afford cash care. This  includes  those who are uninsured, either electively or because of financial circumstances.   Those people are in  all parts of the country. 
Opening up cash-only facilities is not  something that needs to be demographically targeted. 

In New York City, there a lot of concierge physicians and a lot of concierge surgeons, but that’s true of all markets.

Q: What I found in my interviews with direct-pay independent physicians,  is that they were surprised, even stunned, by the mix of patients availing themselves of their services. It turns out direct-pay medicine isn’t just for the affluent.  Direct pay doctors are receiving  calls from the uninsured, who are looking for rapid uncomplicated unbureaucratic access  and  the insured, who are motivated by the fact their new premiums and deductibles are not out of reach.

A;  Yes,  candidates for cash-only care are people who want a high quality of care and who don’t want to be directed based on insurance.  The greatest insurance policy  in the world is not worth it if your doctor are not  spending enough time with you, or are not answering all your questions,  or is not available when you need them.   

 These people are seeking out direct/concierge physicians who have the time and resources and  who have enough time to spend with them to answer their  questions and who know them  as persons and not just  numbers in line, with  transparent pricing up front.   People want a high level of care are not restricted to those with high incomes   People want to be treated as best as possible by  a physician who knows them and who spends  time with them.

Tweet:   Free market health care in the form of direct-pay independent primary and specialty care is growing rapidly in the United States.

Health Reform: Gloom for Improvement

He flung himself from the room, flung himself on his horse, and rode madly off in all directions.

Stephen Leacock (1869-1944),  Canadian teacher,  political scientist, and humorist

In the next 3 weeks I am giving talks before a group of hospital chaplains and an association of conservative physicians.  These are 2  divergent audiences,  with different views of the world.

In these talks, I hope to show there is always gloom for improvement – room for puns, poems, apps, prose and cons – on health reform.  In a pluralistic, multicultural, vast, far-flung, continental nation like the U.S.,  there is always room for differences.   One size does not fit all. It never will, despite pressures for homogenization. standardization, and  collectivization.

People with a need for care, especially politicians and those with resources, will always find ways to get that care,  there will always be a need for a social safety net, and there will always be differences on how to provide that net.

We are a resilient, resolute, compassionate  nation, and we will work things out for most of the people most of the time.  We will realize you cannot fool all of the people all of the time, and you cannot please all of the people all of the time. Somewhere there is always a middle ground, for the upper, middle, and lower classes.  We just have not found it yet.

Perhaps with health reform,  we never will. Across the blog,  all health delivery systems  have multiple tiers.  As the U.S. drifts left with ObamaCare,  other developed nations with aging populations are moving right - frenetically introducing private insurance and cash-only schemes to cope with unsustainable expense of  centralized national systems.  These systems are a drag on their economies  and produce long waiting lines, rationing,   and unhappy citizens looking for timely access to personalized  care and more  time spent with physicians.

In the U.S., we are just coming to grips with the realization that increased coverage does not necessarily constitute better and more accessible care.  What good is more coverage without doctors to deal with rapidly expanding demand?   

A primary care physician shortage in the neighborhood of 50,000 doctors  exists, and it grows by the day.   It is exaggerated by the fact that some 100,000 of American’s 900,000 doctors are exiting private practice to work shorter hours in hospitals, to retire early,  to see fewer patients in overloaded offices, and to enter direct pay independent/concierge/cash-only practices where they practice what they have been trained to do and spend more time with patients rather than wrestling with government and 3rd party paperwork and complying with government mandates.

Tweet:   The U.S. and its citizens and physicians are exploring ways to cope with greater demands for care in an aging,  doctor-short environment.

Monday, April 21, 2014

Doctor Diplopia and Decoupling from 3rd Party Payers

Doctors have one eye on the patient and one eye on the clock.

David J. Rothman, who studies history of Medicine at Columbia University of Physicians and Surgeons

Four  articles caught my eye today.
1)                  Leslie Kane, Carol Peckham,  Medscape Physician Compensation Report,  April 15, 2014

2)                 Greg Freeman, “Medicare Op-Outs a Viable Physician Strategy , “ Health Leaders Media, April 17, 2014
3)                  Roni Coryn Rabin, “ 15 Minute Visits Take a Toll on on the Doctor-Patient Relationships, “ Kaiser Health News, April 21, 2014

5)                 Jacqueline  Fellows,  “Reform Puts Vice Grip on Physician Groups , “Health Leaders Media, April 20, 2014 
The first article from Medscape was particularly startling.  It contains the news of a survey of 24,000 physicians in 25 specialties  by the American Academy of Private Physicians.   The news is that 27,000 doctors are now in direct independent/concierge practices and 81,000 are participating in cash-only practices.   The usual figure reported is 5000 in concierge practices with no mention of cash-only practices.

This would indicate a mass exodus from 3rd party payments.   

This, in turn,  as reflected in the other 3 articles,  may cause these new realities.·        
  •  Doctors are opting out of Medicare and Medicaid in significant  numbers. 
  • Many  doctors cannot afford to  accept new ObamaCare health exchange plan patients which  carry with them low reimbursements.   
  • Physician groups  are caught in the ICD-10 , regulatory,  reform vise.   
  •  Neither doctors  or patients like the “hamster wheel” environment in which patients must be seen at the rate of 15 minutes or less for doctors to meet their bottom-line,  pay their overhead, pay their staff, and keep their doors open.
Hence, the doctor diplopia phenomena in which doctors must keep one eye on the patient and one eye on the patient.    It may even require a third eye,  with the other eye on the computer screen,  and a third hand (the first two are needed for examining the patient) on the computer keyboard.

Tweet:   Pressures on doctors to see more patients at less pay  are causing a physician exodus from  3rd party practice to  direct independent  cash-only  practices.