By Kelly McCutchen
The customer with cash is often rewarded with a discount, but try paying cash for your next doctor’s visit and you most likely will pay up to twice as much as everyone else.
It’s not that doctors don’t like cash. They are simply caught up in the crazy Rube Goldberg machine that we call our modern health care system. When managed care organizations establish their provider networks, they are often able to negotiate steep discounts from the providers’ standard rates. By setting their standard rates higher, doctors and hospitals are able to increase their discounted payments from managed care organizations. These standard rates, inflated far above the actual cost of service, are the prices that everyone outside the network must pay.
The victims are middle- and low-income Georgians who face a health care double whammy: Rising costs force them to drop their health insurance and they find out that paying for their health care themselves costs them a whole lot more.
Also hit by this unfair system are self-employed individuals who can often only afford insurance policies with high deductibles. Paying a premium price every time they utilize the health care system uses up their deductible far faster than it should. Paying out of pocket essentially means that you are rapidly out of money.
Research clearly shows that these inequities in the system result in higher than necessary expenses and sicker patients. All too often, these individuals over-utilize the most expensive health care venue – the local hospital’s emergency room. In other cases, people simply put off primary care, but often wind up hospitalized for a condition that could have easily been treated earlier and at less expense.
This problem greatly concerned Dr. David C. MacDonald. He was working in his primary care practice in Renton, Washington, when he and a colleague came up with a solution to help the uninsured population in his community. He called it SimpleCare.
Dr. MacDonald persuaded nearly every physician in town to charge uninsured patients a “fair” price. His argument was simple: When patients pay cash for routine medical care at the time of service they are saving the doctor’s office a tremendous amount of paperwork. By spending less time on paperwork, physicians can reduce administrative and billing expenses, charge patients less, earn more and devote more attention to their patients.
For example, assume a doctor charges $79 for a 10-minute office visit and receives $43 in reimbursement from the patient’s health insurance company. After factoring in administrative expenses of $20 and overhead of $30, his practice experiences a $7 net loss. With SimpleCare, the patient’s bill could be reduced to $35. Because there are no forms to file and no claims to be processed, administrative expenses are virtually eliminated. Without the administrative expense of $20 per patient, the practice now has a net profit of $5.
This commonsense solution has resulted in average cost reductions of 30-50 percent in the 38 states where it has been implemented. The best news is that no new legislation is needed. It is purely a voluntary decision by each health care provider to join the SimpleCare network and to set his or her own “fair” fees.
Dr. Ryan Thomas, a Cartersville pediatrician with a 6-month-old pediatric practice, is one of the nearly two dozen Georgia SimpleCare providers. Although he’s marketing a new practice in a field in which almost everyone has some kind of insurance (from private to PeachCare), Dr. Thomas already boasts 10 SimpleCare patients. Most of them are small business owners with high deductibles.
The pediatrician is so certain that SimpleCare is the future of health care that he’s moving to a cash-only practice.
“The SimpleCare patients are out there,” he says. “Some people are being priced out of insurance.”
Communities throughout Georgia, particularly those without low-cost community health centers, could immediately start their own network of SimpleCare providers to enhance access to primary care for the uninsured. This would also provide an opportunity for community leaders to develop other innovative ideas.
One example of such innovation is “Cares For America,” an idea that grew out of the SimpleCare concept. “Cares For America” provides indigent and low-income individuals with a way to earn health care “dollars” by volunteering their time to local nonprofit organizations.
It works like this: SimpleCare health care providers volunteer to accept a minimal number of patients each month, typically five or fewer, who are unable to pay for their services of health care. A charge is generated and stored in the computer and the patient is asked to volunteer time over the next 90 days at a local charitable organization that is in need of volunteers. The patient is paid for their time at $10 per hour of health care “dollars,” thereby paying off their bill. This process provides access to health care for indigent patients, but allows them to retain their dignity. It also helps strengthen the community at the same time.
SimpleCare is not a solution to all of our health care problems, but it is one positive step forward to making sense of the current mess. It is also another tool to help communities cope with the increasing number of uninsured citizens. Finally, leveling the playing field for patients paying for their own health care will pave the way for more substantive reforms down the road.
You can find more information about SimpleCare at www.simplecare.com.
Kelly McCutchen is executive vice president of the Georgia Public Policy Foundation, an independent think tank that proposes practical, market-oriented approaches to public policy to improve the lives of Georgians. Nothing written here is to be construed as necessarily reflecting the views of the Georgia Public Policy Foundation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature.
© Georgia Public Policy Foundation (April 15, 2003). Permission to reprint in whole or in part is hereby granted, provided the author and his affiliations are cited.