| Cash is King |
|
|
|
|
Weary of paperwork, managed care constraints, and low reimbursements, some metro-area physicians have shelved their contracts with payers and redesigned their practices. Source: Minnesota Medical Association Rob Bruley’s office doesn’t look much like a medical clinic. Located on the first floor of a green four-square house in the Linden Hills neighborhood of Minneapolis, it’s filled with sprawling plants, comfortable wicker furniture, and pictures of occupants from the turn of the century. In the summer, the front porch serves as the waiting room. Bruley’s practice is as unconventional as his office. A practitioner of both traditional and complementary medicine, Bruley holds degrees in medicine and chiropractic. He also practices on a cash-only basis. Bruley’s path to opening his own practice has taken a number of turns. A general practitioner who was part of the first class to graduate from Mayo Medical School in 1976, he did stints in California and Alaska before returning to Minneapolis to run the emergency department and continuing medical education program at Eitel Hospital in 1980—about the same time HMOs were changing the health care marketplace in the Twin Cities. He became disillusioned about the effect managed care was having on medical practice when he practiced family medicine in Watkins, a town of about 900 people south of St. Cloud, in the early 1990s. “You end up seeing a lot of people fast, and a lot of these people are desperately ill. You end up putting out a lot of fires, and you don’t get to the bottom of the issues,” he says. “You can’t do that unless you spend the time and talk to people.” And you can’t do that in a 15-minute office visit. Wanting to explore his interest in chiropractic after a chiropractor relieved his sciatica, Bruley enrolled in Northwestern College of Chiropractic in Bloomington in 1998. In order to support his family, he taught cardiology at the school and worked weekend-long emergency room shifts in Deer River, Minnesota. Moonlighting in the ER turned out to be one key to being able to open his own practice when he finished school. The other: the business courses he took at the chiropractic college. “Chiropractors have to be much more business savvy in general than physicians,” he says. “A physician can go out and sign a bunch of managed care contracts, join a clinic, and be put to work. Chiropractors aren’t guaranteed they’ll have one patient, so they have to be more business-oriented.” Bruley says one of his best experiences was having to write a business plan for one of his classes. “It forced you to think about what you want to do and how you want to do it. We didn’t have any of that in medical school.” Today, the Bruley Center is open to patients three days a week. Bruley charges $280 per hour in 15-minute increments and takes cash or checks. The clinic does provide patients bills with ICD-9 codes that they can submit to their insurers. “Some get reimbursed on an out-of-network basis,” says Bruley’s wife, Mary, who handles the practice’s accounts. “But we tell them not to expect it.” She says 30, maybe 40 percent, of patients get something from their insurers. Although most of Bruley’s patients have insurance, he is seeing more and more with high-deductible policies—including a number of physicians. Since opening the practice in late 2002, the number of patients he treats each week has grown to an average of 16. Bruley spends one to two hours with each. In addition to not having to absorb the cost associated with filing insurance papers, Bruley says he’s saved money by outfitting the clinic as economically as possible. He points out furniture that used to be in his home, and file cabinets and a desk that came from a used furniture sale. He doesn’t do X-rays or lab work in the office but instead sends a number of patients to HealthEast Medical Laboratory, which operates out of HealthEast’s three east metro hospitals, where they pay a fraction of what a clinic or hospital would charge for most standard lab tests. He sends others to Northwestern Health Sciences University for functional medicine tests. Bruley still spends one to two weekends a month in Deer River. He says that extra income and being able to create a niche practice—functional medicine, a combination of traditional and complementary medicine that focuses on understanding the causes, prevention, and treatment of complex, chronic diseases—have been critical to making his business plan work. “The nice thing about traditional medicine is that there are a lot of ways to do part-time work and make the transition rather than go cold turkey,” he says.
Farewell, Medicare Today, the physicians work with insurers on a fee-for-service basis but don’t sign contracts in which they agree to be paid a negotiated rate. And last July, the group opted out of Medicare. “Throughout the 1980s, we discovered that managed care was not the kind of practice we wanted to have,” says McLinn, who looks more like a business executive in his suspenders and pinstriped shirt than a practicing physician. “A lot of people made money off managed care, but people didn’t get care.”
Although the physicians were able to make a go of it without the guarantee of patients that goes along with managed care contracts, Medicare reimbursement put a different kind of squeeze on the practice. “Probably 50 to 60 percent of the patient contacts we have are Medicare patients, and we were getting paid about 38 cents on the dollar and overhead was 48 cents,” he explains. “So 60 percent of our patients weren’t even covering our overhead, and Medicare patients require more time.” McLinn says the program worked well because participants got the personal attention they wanted and the practice could bill Medicare for covered services. “But there was this overriding threat from Medicare that maybe some of the benefits—same-day appointments, comprehensive medical care—maybe we cover that,” he says. “Of course, they don’t. But the problem is, who are the judge and jury? They are.” Rather than change the way they practice, the physicians severed their ties to Medicare for two years starting July 1, 2005. That’s meant signing a contract with each patient indicating that he or she understands that the practice is no longer part of Medicare and that the patient is responsible for the bill. It’s also meant creating a new tiered system of services provided to patients on a cash basis. Patients can sign up for one of four levels of care. The most comprehensive one costs $3,000 a year and includes an annual physical, hospital care from their primary care physician for as many days as they’re in the hospital, office visits, lab work, same-day appointments, and parking. The second level costs $1,500 a year and includes all but the physical and hospital visits. The third, for $800 a year, includes office visits only. The fourth option is for patients to pay as they go. “None of these amounts is staggering,” says McLinn. “But they do make a difference in terms of our bottom line.” Since opting out of Medicare, McLinn says the practice has retained about 75 percent of its former Medicare patients who felt the type of care and attention they were getting was worth the price. “There were some patients who couldn’t quite come to grips with this, but every day we’re getting phone calls from them,” he says, adding that they are making arrangements to provide care to long-time patients whom they know can’t afford the tiered system. In the end, he expects the practice will keep about 90 percent of its former Medicare patients.
McLinn says having an established practice (three of the four partners have been in practice for more than 25 years) and providing the type of service their patients are willing to pay for have been the fundamental reasons for their success thus far. “We see 10 to 15 patients per doctor per day,” he says, adding that most of their new patients are referrals from existing ones. “Ninety percent of the time, patients say they can’t see their doctors long enough, can’t talk to them. We sit with our patients until they’re sick of us,” he explains, adding that one of the partners is on call all day, every day.
Changing Face of Medicine Graduates of the University of Minnesota Duluth family practice residency program, the Hagbergs got their first taste of corporate medicine working for Kaiser Permanente in the late 1980s and early 1990s. Practicing out of small clinics on the island of Oahu in Hawaii, they soon found themselves caught up in Kaiser’s struggles with how to pay their physicians—on salary or according to the time spent with patients. “Sometimes it was really frustrating,” says Elizabeth Hagberg. “I liked treating my patients and felt I was making a difference. But at the same time, if you feel overworked and need more staff and can’t adequately see everyone you need to see, it becomes frustrating.” Hagberg felt that same frustration when she and her husband returned to Minnesota in 1992 and worked at clinics in the Twin Cities. “They wanted us to see a patient every 15 to 20 minutes. I had an older patient population, and by the time you got them in the door and talked about their medications, 20 minutes was up.” Both physicians wanted more control over their work and their lives as they juggled career with the demands of raising three children. “Both of us felt that if we wanted to work hard, we wanted to work hard in our own clinic,” says Hagberg, who became interested in dermatology while working in Hawaii and thought about joining an established dermatology practice in the Twin Cities. “Then I started learning about Botox and lasers and what they could do. One piece of information led to the next. I got very excited about the possibilities of all the technology that’s available with laser treatments for skin diseases and cosmetic procedures.” With a large investment, which covered startup costs including the purchase of Sciton lasers and remodeling of a former urology office in the Southdale Medical Center in Edina, they opened Skin Rejuvenation Clinic P.A. in January 2005. The idea was to create a practice where the majority of offerings weren’t covered by insurance. But starting out wasn’t easy. Unlike dermatologists or plastic surgeons who move into nonsurgical cosmetic work, the Hagbergs didn’t have an existing practice from which to draw patients. And advertising proved to be more expensive than they thought. (They’ve since found the best form is recommendations from satisfied patients.) Hagberg says she, husband Mark, and an esthetician see about 50 patients a week. She hopes to one day have three full-time estheticians at the clinic and to build the business to the point where she and Mark each spend about two-thirds of their time there so they can have more flexibility and be home with their kids when they’re needed. So far, seeing patients and running the clinic has proved to be a more-than-full-time venture for Elizabeth; Mark currently works in the emergency department at Hutchinson Medical Center in addition to putting in hours at the clinic. Although the practice does 99 percent of its business in cash, Hagberg says they do a small amount of work that’s billed to insurers—a reminder of what she left behind. “It’s a huge exercise in frustration,” she says. “No matter what insurance a patient has, getting them compensated if a mole is removed takes an exorbitant amount of time on the phone and doing paperwork.” Hagberg says she’s talked to several physicians who are interested in starting similar practices or adding cosmetic, cash-based services, including a cardiologist from Chicago, an ER physician from Minnesota, and some family medicine physicians from the southern part of the state. Her take on the experience: “It’s a lot more freeing,” she says. “I don’t have someone telling me how long I can spend with patients. I can be here as much or as little as I want. I’m the boss.”—Kim Kiser |
| Next > |
|---|