Are Cash-Only Healthcare Providers in Our Future?
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
COVID-19 "causing mass trauma among world’s nurses"
Healthcare providers are facing ongoing nursing shortages, and hospitals are reporting high rates of staff turnover and burnout as a result of the COVID-19 pandemic. In June a report found that levels of burnout among staff in England had reached "emergency" levels.
Registered nurses Molly Rindt and Erika Haywood are nurse mentors on US recruitment platform Incredible Health. In this joint Q&A they tell Healthcare Global about their own experiences of burnout and what can be done to tackle it.
What does it mean to be suffering from burnout?
Some of the most common reasons for nurse burnout include long work hours, sleep deprivation, a high-stress work environment, lack of support, and emotional strain from patient care.
While every profession has its stressors, the nursing industry has some of the highest burnout rates. The massive influence on patients’ lives, the long hours, and many other factors put nurses at risk of severe burnout. And with the rise of COVID-19, many healthcare professionals feel the strain more than ever.
Burnout in nurses affects everyone — individual nurses suffer, patients are impacted, and employers struggle with enormous turnover. This is why it’s crucial for healthcare systems and management to watch for signs of nurse burnout and take steps to provide a healthier workplace. Employers should be careful to watch for burnout symptoms in their healthcare staff — and not ignore them.
Symptoms include constant tiredness, constant anxiety related to work, emotional detachment and unexplained sickness.
How widespread is this problem?
Unfortunately, burnout affects approximately 38% of nurses per year and even the WHO recently labelled burnout as an official medical diagnosis. To put this statistic into perspective, nearly 4 out of 10 nurses will drive to work dreading their shift. Burnout is a reason nurses leave their positions.
Other top reasons for leaving included a stressful work environment, lack of good management or leadership, inadequate staffing, and finding better pay or benefits elsewhere.
Even before the pandemic, demanding workloads and aspects of the work environment such as poor staffing ratios, lack of communication between physicians and nurses, and lack of organisational leadership were known to be associated with burnout in nurses.
Have either of you experienced burnout?
Rindt: I have experienced burnout as an RN. I was constantly fatigued, never felt like I was off work, and would frequently dream I was still at work taking care of patients. In my particular situation, I needed to take a step back and restructure my work schedule to allow for more time off. After doing this, I was able to reduce burnout by deciding to work two shifts back-to-back and then have 2-3 days off.
Haywood: I definitely experienced constant anxiety related to work - so much so it would impact the days I wasn’t at work. At one point, I was even on medication to help combat the anxiety and stress I was facing on the job.
I had heart palpitations, chest pain, and wouldn’t be able to sleep before working the next day, which slowly started to impact other aspects of my life. I knew I couldn’t continue to live this way, it wasn’t sustainable. Because of this, I began to focus on my needs and prioritising self-care, especially during the beginning of the pandemic. Putting my needs first and not feeling guilty were necessary for me to overcome burnout.
What impact is COVID-19 having on nurses' wellbeing?
Some nurses have suffered devastating health consequences. Many nurses have dealt with excessive on-the-job stress, fears of becoming infected, and grief over seeing patients succumb to COVID-19 while isolated from their families.
New evidence gathered by the International Council of Nurses (ICN) suggests COVID-19 is causing mass trauma among the world’s nurses. The number of confirmed nurse deaths now exceeds 2,200, and with high levels of infections in the nursing workforce continuing, overstretched staff are experiencing increasing psychological distress in the face of ever-increasing workloads, continued abuse and protests by anti-vaccinators.
However, other small silver linings that came from the pandemic include increased professional autonomy, leadership opportunities and career growth potential.
How much of the cause of burnout is due to the hospitals or healthcare providers, and what can they do to address it?
Nurse fatigue poses serious problems for healthcare organisations, and a recent survey from Kronos found 63% of nurses say their job has caused burnout. The survey also found that more than 4 out of 5 nurses think hospitals today are losing good staff because other employers offer a better work/life balance.
Nurse burnout not only contributes to staff turnover, but it can impact the facility’s quality of care, patient satisfaction, and even medical outcomes.
Strategies to address burnout include training improving nurse-to-patient ratios, include nurses in policy discussions, and prioritise fostering a healthy work culture in hospitals.
What does your role mentoring nurses on the Incredible Health platform involve?
Rindt: My role can vary based on the needs of the nurses. The nurses love knowing they have someone in their corner who can give interview preparation advice or provide suggestions on how to improve their resume. Knowing that there is someone who is well-versed in the job process and can help set expectations on what to anticipate, really helps to remove a layer of uncertainty.
Haywood: When screening nurses, it is customised to what their individual RN or nurse practitioner needs, and at a time that is most convenient for them. Nurses are busy and often aren’t thought of first. Being able to provide support from the very beginning of their career advancement journey helps tremendously. We also provide resources such as resume templates and tips that can help nurses be successful and feel supported.