Physiatry Practice Management Resources

Most outpatient physicians hate insurance companies (including Medicare). Their pay scales are insulting, and the necessary overhead makes seeing patients minimally profitable. Some physicians have decided to go “old school” and eliminate the insurance companies.

When Chuck O’Brien visits his doctor, they talk about his aches and pains, his heart problems and his diet, but never about his health insurance. That’s because Dr. Vern Cherewatenko is one of a small but growing number of physicians across the country who are dumping complicated insurance contracts in favor of cash.

Is this the health care wave of the future? Probably not, experts say. Most people are content with monthly premiums and $10 copays; nine out of 10 doctors contract with managed-care companies. But cash-only medicine is becoming an increasingly attractive option for doctors frustrated by red tape and for the 43 million Americans who lack health insurance.

“It’s a terrible indictment of the collapsing health care system,'’ said Arthur Caplan, chairman of the medical ethics department at the University of Pennsylvania Medical School. “Insurance and managed care were supposed to streamline — instead what they’ve done is add so much paperwork and bureaucracy they’re driving some doctors out.'’

When O’Brien leaves the exam room, he writes a check for $50 and he’s done — no forms, no ID numbers, no copayments.

“This is traditional medicine. This is what America was like 30 years ago,'’ said O’Brien, 55 and self-employed, who believes he has saved thousands of dollars by dropping his expensive insurance policy and paying cash. “It’s a whole world of difference.'’

Health insurers downplay the trend, while emphasizing recent efforts to mend tattered relationships between doctors and managed care companies.

Cash visits make great sense for patients and physicians.

Cherewatenko, a broad-shouldered 45-year-old who wears black jackets and red stethoscopes at work, switched to cash out of desperation six years ago. His suburban Seattle practice was hemorrhaging money, and he and his partners realized they were spending hundreds of thousands of dollars just to process insurance paperwork.

“We said, ‘Let’s cut out this administrative waste,”’ Cherewatenko said. Before, he charged $79 for an office visit and got $43 from an insurance company months later, minus the $20 in staff time it took to collect the payment. Now he charges $50 — and he never worries about collection costs, because patients pay in full after every visit.

Cherewatenko sees fewer patients now. His whole office would probably fit inside his old waiting room. But he says the freedom is worth it.

“Accounts receivable is zero. It’s a great feeling,'’ Cherewatenko said. “I feel like I’m a real doctor again.'’

He started a group called SimpleCare to spread the gospel of cash-only medicine. The organization steers patients to doctors who offer cash discounts, and gives technical and moral support to doctors who want to start cutting their ties to insurance. Membership has grown to 22,000 patient members and 1,500 doctors. Some reject all insurance and take only cash, while others continue to accept insurance while offering discounts of 15 percent to 50 percent for cash-paying patients.

Independent of SimpleCare, doctors in California, Colorado, Minnesota, Texas, Mississippi and other states have also quit the insurance game. Some tired of the paperwork and administrative expenses. Some wanted to spend more time with patients without managed care bean-counters peering over their shoulders. The patients who pay cash range from poor to wealthy, with most in the blue-collar middle.