Micropractices, a great idea for Physicians and a step towards free market in health care

The Journal of the American Academy of Family Medicine has published this article under the tag "Robin Hood Practice".

A fitting header, since Robin Hood stood up against the evil sheriff of Nottingham and...won.

Cash medicine is the way of the future, better than insurance hassles and abuse, better for the patient.

This is a quote!

Begin quote:

Seven years ago, I was a contented doctor in what I considered to be an above-average practice. Our group of seven family physicians earned incomes well above the national average. I had a panel of 2,600 patients and was taking six to eight weeks of vacation per year.

But our profitability came with a cost. We were passing patients through the office faster and faster, with more and more things falling through the cracks. Worst of all, many of my patients who lost their health insurance were no longer able to pay for the care they needed. I came to realize that I wanted something more for my patients and myself.

In a moment of inspiration, I decided to create a cash-only, low-overhead, technology-enabled, retainer-model practice in which I could care for patients who could afford to pay out-of-pocket for enhanced service as well as uninsured patients who could pay little or nothing at all. The practice's feasibility depended on a simple concept. I would recruit a small panel of patients willing to pay an up-front annual fee in exchange for extended patient visits (30 to 60 minutes), exceptional service, same-day access for all needs, direct access to me via electronic messaging or cell phone, and 24-hour on-call coverage. From these patients' enrollment fees, I could earn enough to spend half of my time providing primary care at no cost to uninsured patients who were ineligible for government health programs. It would be the ultimate self-sustaining nonprofit clinic. With this setup, I would regain my status as a physician whose paycheck was signed by his patients and not by third-party payers.

Formulating a plan

The more I thought about the idea, the better it sounded. I was fairly sure it would work, but I was nervous about making the leap. Then, in early 2002, my motivation increased after reading a series of articles in FPM by Gordon Moore, MD, on going solo in a small, low-overhead practice. I shared my idea with another family doctor from across town. He suggested we open the practice together. I realized that a two-physician practice would remove many of the concerns I had about cross-coverage for vacation and sick days. We could also share the overhead of hiring one medical assistant.

It was time to crunch the numbers. I knew from 14 years in a mostly capitated practice that my patients visited me an average of 3.6 times per year for 15-minute appointments. To provide the quality of care that we believed patients would expect in exchange for the retainer fee, we determined that we would need to be able to provide each one (we call these patients "benefactors") with approximately five 30-minute visits per year. We figured we needed about $600,000 in revenue per year to run the practice and pay ourselves and our medical assistant. At five visits per benefactor per year, we could see a total of 600 benefactors per year. To take in $600,000, we would need to charge an average of $1,000 per benefactor per year. For a breakdown of all of these calculations, see "How we did the math," on page 15.

My colleague and I began meeting weekly to outline the details of our plan. We formed a mission statement with concise goals. As practicing Catholics, we wanted the practice to have a distinctly Catholic flavor. We discussed the idea with our bishop's representative and later received a letter of his spiritual (but not financial) support. We began to contact friends and acquaintances with special skills who were willing to volunteer their time to the project: an accountant, two attorneys, a small-business consultant, an insurance broker, a priest and a graphic designer. We formed a board of directors and committed to an ambitious start date just 12 months away.

St. Luke's Family Practice is governed by a board of directors that meets regularly. Pictured are (from left to right) Douglas R. Hibl; J. Peter Herrmann, MBA; Dr. Forester; Terrance P. Withrow, CPA; and John Dunn, JD.

The nuts and bolts

The AAFP book On Your Own: Starting a Medical Practice From the Ground Up (available for purchase at http://www.aafp.org/catalog) provided a helpful outline for building our new practice from scratch. The attorneys on our board of directors helped us with articles of incorporation and bylaws. We applied for federal tax-exempt 501(c)(3) status as a nonprofit public benefit corporation.

Next we verified details of our status with several PPOs, Medicare and TRICARE, to be certain that when we made referrals or ordered tests for our benefactors that those providers' claims would be paid. The insurers repeatedly emphasized: "Yes, but you won't be able to bill us at all. Your patients will be wholly responsible for paying for your services." After a while, we quit trying to explain that we didn't want to bill insurance companies.

We developed a corporate identity, including a logo and an information pamphlet. We began designing a Web site (http://www.stlukesfp.org) that we would use initially for marketing and later for online scheduling, password-protected electronic messaging and patient education.

Seven months before opening, we told our respective physician partners of our plan. From our current lists of patients, we selected prospective benefactors and contacted them to explain our new practice concept. Three months out, we mailed pamphlets that included an invitation to upcoming informational meetings. We held three such meetings at local churches. They were well attended, with 50 to 100 people at each. About two-thirds of attendees were existing patients. We developed a 20-minute slide presentation to explain the basic idea behind the practice. After we made the presentation, we answered questions for 20 to 30 minutes. Enrollment pledges began to trickle in.

At the same time, we began preparing to provide free care to the uninsured (we refer to these patients as "recipients"). We wanted to offer our services to patients for whom other forms of financial assistance weren't available, so we met with the local directors of Medi-Cal (California's Medicaid program) and our county's Medically Indigent Adult Program and developed a simple checklist that we could use to confirm that a patient is not qualified for these or other government programs (e.g., Medicare or Veterans benefits).

Finally, we began to prepare the office itself. We decided on a modest 970 square feet space in a favorable location. We rolled the cost of our tenant improvements into a five-year lease. We selected an electronic health record (EHR), ChartWare, and began with very basic software programs for electronic patient management (Quicken and Microsoft Office). We financed the EHR and a simple computer network (one server with three desktop computers) over two years. A local medical supply company donated a significant amount of quality used equipment for startup. We were on our way.

One of the characteristics of his practice that Dr. Forester appreciates most is not being rushed during office visits. Most visits are at least 30 minutes long.

Successes and setbacks

As our grand opening neared, we spent many nights cleaning, painting and preparing our new office. When we opened our practice on Jan. 1, 2004, we had more than 250 benefactors prepaid for the first year's care. The local newspaper wrote two articles that generated community interest. We made about 30 presentations to service organizations throughout the community, but most important, our practice grew by word of mouth.

For the first three months, we strove to get every benefactor into the office for a comprehensive exam and entered into our EHR system. We worked out the bugs in our Web site messaging and scheduling system. Three months later we began offering services to the uninsured. After one year, we had more than 400 benefactors between us and had conducted almost 900 office visits for uninsured patients. We were able to pay all our expenses, and we each took home a net salary of $78,000.

During the next year, the practice grew. Our net incomes in 2005 were $178,000. Last year they were $177,000, plus we made $15,000 deferrals to our retirement accounts. As we finish our fourth year of operations, we have about 550 enrolled benefactors. Since our inception, we've conducted 6,250 uninsured office visits and provided $500,000 in free care.

Our benefactors have chosen our practice for a variety of reasons. Some of them had an established relationship with my partner or me. Some wanted to support us out of a concern for the uninsured. Some were techies who loved the idea of electronic messaging with their doctor and scheduling appointments online. Many business owners and business travelers appreciated our capacity to be flexible about their appointment times and to treat them promptly.

Regardless of what initially drew them to us, our benefactors seem to like St. Luke's. After the first year, we had a 96-percent re-enrollment rate. Our billings are a snap - we send out one statement in mid-November, and by Jan. 31, we have collected over 80 percent of the year's charges with no additional effort.

Our biggest unforeseen challenge was securing nonprofit 501(c)(3) status for our practice from the Internal Revenue Service (IRS). The IRS had rules for nonprofit community hospitals, nonprofit emergency rooms, nonprofit drug treatment and counseling centers, and nonprofit educational programs, but they claimed never to have come across a nonprofit medical office. Very few nonprofit medical organizations give even 10 percent of their care at no cost, but we were giving 50 percent. We were small and different, and the IRS seemed content to bury us in unrelenting paper work and requests for further information. Our local attorneys and accountant had done about everything they could do when one of our new benefactors, a local developer who wanted to assist our efforts to help the uninsured, offered to contact a friend who was the principal of a high-powered Washington law firm specializing in charitable and philanthropic works. We quickly sent them our documents for review, and they agreed to help. After a few more months corresponding with the IRS, we flew to Washington for a meeting with the IRS attorneys, addressed their concerns and hammered out the final details.

On Dec. 21, 2005, almost two years after the start of operations, we were granted nonprofit 501(c)(3) status retroactively to our date of inception. The principal of the law firm generously wrote off his fee, and the benefactor's family foundation paid the fees of the other two attorneys - all because they believed in our practice's mission.

I would encourage other practices that are interested in following this model to apply to the IRS for nonprofit status. Any physician who wishes to apply can cite this article as support that such a model exists. We would also be happy to provide any similar organization our IRS determination letter or other information related to our application process.

How we did the math

The following equations demonstrate how we calculated the number of benefactors we would need to enroll in our new practice and the average amount we would need to charge them to meet our revenue goal of $600,000 per year.

Number of available visits per year:

48 weeks/year x 4 days/week x 7 hours/day x 2 patients/hour x 2 doctors = 5,376 weekday visits/year (This number was rounded to 6,000 visits to account for weekend, holiday and after-hours calls.)

Number of benefactors we could accommodate per year:

3,000 benefactor visits/year ÷ 5 visits/benefactor = 600 benefactors (The remaining 3,000 visits would be used by uninsured patients.)

Average amount we needed to charge per benefactor:

$600,000 ÷ 600 benefactors = $1,000/benefactor

We then estimated the age demographic of our benefactors and developed our payment schedule:

Children < 19 years	$500/year
College students < 23	$500/year
Young adults < 35	$900/year
Adults 35 to 60	$1,200/year
Seniors > 60	$1,500/year

Practicing rewarding medicine

One of the greatest joys of St. Luke's Family Practice is taking care of people who have no other viable medical care option. Though at first we were intimidated treating those with uncontrolled diabetes and severe mental disorders as outpatients, with time and experience we became more comfortable doing so through close follow-up. Some of our most important and rewarding new referrals have come from local emergency departments and hospital discharge planners requesting that we provide outpatient follow-up for uninsured patients.

Perhaps I became soft after 14 years of middle- and upper-middle-class practice, but one of the things I have really appreciated about caring for the uninsured is seeing more significant pathology. When someone doesn't seek a doctor's care for 10 or 20 years and then suddenly feels an urgent need, the problem is usually significant. Over the past four years, we have made more than a dozen diagnoses of life-threatening diseases at treatable and curable stages among our uninsured recipients.

Through our experiences, we have also learned about other community resources we can work with to help patients get the care they need, such as medications, immunizations and cancer screening. A few colleagues in subspecialties provide phone consultations liberally and occasionally see our uninsured patients for a small fee or no charge. When a patient's medical needs become so acute as to require emergency or inpatient services, they are frequently covered by the emergency Medicaid benefits. (For more details about our practice, see "Answers to Frequently Asked Questions About St. Luke's Family Practice," page 16.)

answers to frequently asked QUESTIONS ABOUT St. Luke's Family practice

Q. Why have you focused on outpatient care for the uninsured?

A. Primary care cognitive services are not the biggest health care expense for patients; however, getting patients into the primary care doctor's office is often the first and most important step to better health care. Providing free care to the uninsured offers basic health care services to those who might not otherwise go to the doctor due to financial concerns.

Q. What procedures and services do you provide?

A. The lab tests we provide include urinalysis, microscopy, blood glucose, A1C, urine pregnancy and hematocrit. The diagnostic procedures we perform include ECG, spirometry, pulse oximetry, audiometry and PPD for tuberculosis. We also provide influenza and tetanus-diphtheria vaccinations, and corticosteroid, ceftriaxone, antihistamine and promethazine injections. Casting and splinting, as well as office "lump and bump" surgery, are also performed in-house. We pay for all the supplies and charge nothing for the service.

Q. What about payment for other labs and diagnostic studies?

A. Because we see patients more frequently and spend more time on the history and physical exam, we can sometimes order fewer lab tests. We send patients to the county facility to pay cash for labs (e.g., $15 for complete blood count, $30 for a comprehensive metabolic panel, $38 for a lipid profile). For radiographs, our patients get a 50-percent discount at a local radiology office for cash payment at the time of service. Most plain radiographs are $30 to $100. An upper GI runs about $120. Pelvic and abdominal sonograms run about $100 to $120. Most CTs are about $300 without contrast.

Q. How do patients get prescription medications?

A. Our practice strives for an evidence-based medicine approach that usually requires fewer and less expensive medications. We try to be price-sensitive when prescribing. A local pharmacy donates bulk medications (doxycycline, atenolol, metformin, hydrochlorothiazide and glyburide) that we divide into appropriate units and dispense free of charge. For medications with difficult substitutions, we provide limited pharmaceutical samples (e.g., thiazolidinediones, angiotensin receptor blockers, some antidepressants, atypical antipsychotics, nasal steroids). We also direct patients to a local pharmacy that offers selected prescription medications for $4. Additionally, we use patient assistance programs through the Partnership for Prescription Assistance (http://www.helpingpatients.org).

Q. Do you provide inpatient care?

A. We provide care at all sites for our benefactors - office, home, hospital, or rehab or skilled nursing facility as needed. We do not offer that same level of care for our recipients. It would take too much time away from outpatient care, which is what we feel we do best.

Q. How do you make sure recipients really don't qualify for other programs?

A. The county has a network of eligibility workers who work to sign up as many people as possible for Medicaid. Sometimes patients take advantage of our practice, but we concentrate our efforts where they can do the most good.

Q. Do the recipients pay anything?

A. The medical assistant asks recipients if they would like to make a donation at the end of their visit. If they ask us to suggest a donation amount and are from a working family, we suggest one hour's wage. On average, we collect about $12 per visit. The donations we receive from recipients are almost enough to pay our medical assistant's salary.

The payoff

Throughout our practice's creation and development, there have been trade-offs and challenges. Trying to practice medicine in the 21st century on a very limited budget can be difficult. But like anything else, our confidence and skills grow with practice. We no longer have to review insurance contracts, attend IPA meetings or scrutinize insurance aging reports.

One of the best parts of our practice model is that everyone who comes to St. Luke's wants to see us and hear our opinion. Without feeling rushed, we have the time to carefully listen to complaints, ask the necessary questions and perform thorough clinical examinations. We can fully utilize the Internet and electronic decision-making software to help us in real time. We also have time to call consultants and ask their advice as necessary.

We never could have created our practice without the initial inspiration, the support and confidence of our board of directors, our benefactors, our community and our families. After four years of success, we are glad we tried.

Send comments to fpmedit@aafp.org.

About the Author

Dr. Forester practiced in a conventional office for 14 years before co-founding St. Luke's Family Practice with Dr. R.J. Heck in 2003 in Modesto, Calif. Author disclosure: nothing to disclose.

End of quote!

For Physicians: How to Move to a Consumer Driven Practice and work on Reforming Health Care at the same time

Simple Action Plan

We have been working more and more for less and less. We are being suffocated by ever increasing regulations, which usually turn out just to be new tricks to pay us less (e.g P4P). Many primary care colleagues are at the edge of viability of their practices. The demand for physicians is said to go up, some even talk about a "physician shortage", yet, in contrast to the most basic economical rules, our reimbursements continue to go down. We have lost 60-70% of our earning power since the 80's, a unique situation without precedent.

Patients perceive us as "rich", the media portrays us as making a most comfortable living in the top 5% of incomes.

The media also prefer to report on errors and scandals, on our weaknesses and failures rather than medical success.

For politicians we are part of the problem, not part of the solution. We have no friends in politics, since physicians only amount o 1% of voters. Americans in general consider us "rich" and "too expensive" and one congressman mentioned that "all health care problems would be solved if we could just get the doctors to be satisfied with 75,000 a year".

Insurances earn by not paying us or by delaying payments. They have successfully applied salami tactics for 20 years to reduce reimbursements.

The organisation that is meant to represent us, the AMA, has long bought into the status quo, has surrendered in every important issue and keeps busy tweaking minutia. The "solutions" the AMA offers are anemic and pathetic, and they lack the guts to confront the root problems.

We have no friends and we have no allies. Nobody will help us. If we want change, we will have to do it ourselves.

Always remember that we are the ones with the knowledge, the skills and the expertise! We do not need anyone to diagnose and to treat. Those who have pushed themselves into the patient-physician relationship do not know medicine, and they are only able to harass us, because we have signed contracts allowing them to do so. Without us, they are nothing!

We have to remember that we have signed the contracts that allow them to withhold, deny, restrict, control, demand pre-authorization, delay and defraud us. We can cancel these contracts. And, with the coming "shortage of physicians" there is no better time. We have to remove the control of medicine from the third party payers. And we have to do it ourselves. Fortunately, this is not hard and may even be not just rewarding, but fun.

Here is a simple action plan. The actions complement each other, each strengthens the other. The plan is flexible, you can start wherever you want and you can go as far as you want. Going just a little step is good for you, going far helps your colleagues as well. the more physicians participate, the larger the impact on health care overall will be.

After putting our personal finances in order, we take a close look at our practice and see which third party payers (and yes, that includes Medicaid and Medicare) are loosing propositions. We gradually, deliberately, smartly drop third party payers based on an economic analysis of our practices. This shrinks the networks of HMOs and reduces their power and market appeal. At the same time we unite into large groups working under one tax ID to bill together and negotiate together ("group practice without walls"). This increases our numbers and direct negotiation power with the remaining HMOs until we drop them too. At the same time we educate our patients about alternatives to HMOs, so that they favor more attractive options of insurance coverage, such as HSA, HRA, cooperatives, individual tax deductible health plans etc. We offer cash services at a very competitive price. We can do this since we would greatly benefit if we received the same amount of money in cash right from the patients - rather than from an HMO that pay us only after a lot of administration hoops, shenanigans, withholds and months of delay. "Carecredit" and other options may make it appealing to the patient. The more patients drop HMOs, the weaker they get. And finally, we talk to our colleagues about these issues to come to common concepts and understandings, to unite us. One of the possible ways to do this is Sermo, the physician-only online community founded in Cambridge in 2006.

This is the plan:

1. Get your personal finances in order first

Consider a fee-only financial advisor. Fee-only advisers are paid by the hour and consequently have less of a conflict of interest than advisers who live on commission. Go over your personal finances, make a long term plan and a mid-range plan. Determine how much income you need as a minimum, what kind of drop of income you can afford while you drop HMOs, and for how long. Initially your income may decrease when you drop the low paying plans, although it does not have to.
Secondly, talk to your partner to get his or her agreement. While dropping HMOs may reduce your income initially, this is temporary and it will to a greatly improved quality of life in the long run. It is essential to have the support of your partner during this time.
Consider postponing larger purchases that put you in debt such as a new car, new home etc. Don't fall for the myth that "doctors are rich and can afford luxury". Living above your means will chain you to the third party payers. Limit your luxury purchases and spend wisely in general. Limit your monthly payments (new car, renovation of condo or house etc).

2. Streamline your practice finances

Sit down with your office manager, your accountant and/or your billing service. Write a business plan! The business plan should include your mission is and your financial goals. Write into the plan what you want to earn on a monthly and yearly basis. Look at your overhead. Based on your planned revenue and your overhead you can now calculate what you have to collect, what you have to earn for each visit and what you have to earn for your most common services. Note those figures. This is a standard business process that astonishingly is not done by many physicians.

Now make a spreadsheet with the ten most common procedures or services in your field. List what each third party payer reimburses you for these services. Calculate which payers will allow you to reach your business goal and which payers do not! Plan to drop the payers that do not allow you to reach your business goal! This is a crucial step.

You may also calculate what each third party payer contributes to your overall collections to help you with the decision about which payer to keep and which ones not to keep. Calculate the average payment for each visit from each payer. Consider the number of patients from each payer. Calculate the accounts receivable for each payer - as a fraction of the charges after 30 days and after 60 days. That informs you about their delays and denials, about the hassle and sleaze factor. Decide which third party payer makes no sense economically and also which payer gives you the most hassle.

3. Drop third party payers that threaten your financial viability

A colleague wrote the following: "I started with the lowest paying HMOs. It is a 2 year process. First I stop taking any new patients from that HMO. Then 1 year prior to dropping them, I will send out a letter to the patients with that insurance informing them that I will be dropping that insurance the following Jan. I send out this letter with the labs that I send to them prior to their physicals. They come in for their physical and they have the opportunity to ask me why I am dropping their plan. I inform them. I tell them which plans I will be taking and that they can still see me if they have out of network benefits. I would say that most patients change insurance or continue out of network with me."

Send certified return receipt cancellation letters to those third party payers that drag your practice down. It is likely not feasible to drop all third party payers at the same time. Start small, gain experiences, then drop more. Remember that you are not "abandoning patients", you are merely becoming an "out of network physician". You are supporting HSAs and high deductible insurances. You are moving your practice towards "consumer directed health care" or towards "cash medicine" or towards concierge medicine". Promote HSAs coupled with high deductible health plans (also called catastrophic coverage) to your patients by several means, such as those described in Neil Baum's book. We will talk about this more later.

The following two books are extraordinary useful and well written: "Think Business" by Owen Dahl, $69, a kind of mini-MBA for physicians written by a veteran of medical management, and "Marketing your medical practice" by Neil Baum, $89, a fantastic book by a successful urologist in private practice. And of course there is "Medical Economics" magazine....

Legal disclaimer: Do not coordinate this purely economical plan with your colleagues, since this might be misconstrued as a "conspiracy". In the past acting as a group to flex our muscle or to influence prices was deemed illegal for physicians, since it might "worsen patient access to health care" or "might increase prices" - something that actually never happened. This was ruled "illegal", since obviously the consumer is a higher priority than physician income or influence. This is a hidden compliment and an acknowledgment of our power.

Therefore do not write emails or letter about this using any other terms than "purely economical reasons" and "supporting consumer driven health care" and use only verbal communication in private places. And understand that this is NOT done to fix prices in any way, but to move the health care system to "consumer driven" - a system that offers maximum transparency, and uses market forces to deliver cost effective, affordable, high quality medicine to everybody. Consumer should call the shots and not the insurance, and therefore consumers should holds and control the money and not the insurances. That is why we are moving away from insurances, to empower consumers.
And we are obviously doing this based on purely economical thinking. We "think business", something that we have learned from just those HMOs - remember?

Should anyone threaten, bring up or even hint at us doing something "illegal" or "conspiring", go to the media and show how this person or entity wants to cheat the consumer and wants to prevent the consumer from being in charge! Consumer driven health care is the ultimate democratic health care system and should be supported by everybody! Nobody will dare object to our move in that direction!

Stop taking new patients 2 years prior to dropping the plan because it is often the case that many other doctors are dropping the same plan. You may have a rush of new HMO patients because the panel of that insurance is drying up. It is harder dropping an HMO which is 30% of your practice than 15%.

Inform the patients a year in advance because many insurance plans require the employee or employer to sign up for the following year 6 months or more before the end of the year.

Fortunately, the amount of physicians that show third party payers the door and still provide affordable health care are increasing. More and more of us are moving towards something between consumer driven and concierge care.

Here is a very interesting article from the American Academy of Family Physicians that publishes on this: The "Robin Hood Practice". Very fitting name, since Robin Hood stood up against the evil Sheriff and...won. http://www.aafp.org/fpm/20080200/12anew.html

4. Join or create a "Group Practice Without Walls"

This is the solution when you are faced with one or two dominating HMOs in your area holding 40 plus percent market share, which makes it very hard to cancel their contracts. This is a good solution for colleagues who prefer to have someone else handle the business aspects of medicine and for those who prefer to be employed.

Group Practice Without Walls means the physician continues to practice in his/her own facility, yet is part of a group, just not under one roof. The group does marketing, billing and collections, sometimes, but by now means necessary, also staffing and management. All members have the same tax ID. This way a large number of apparently independently practicing physicians can represent themselves as one group, buy and negotiate as one group, with the obvious advantage of using your larger numbers. The laughter of HMOs about you will become a lot softer.

I have seen this work very well in in a group of 100 plus ObGyn and Gyn physicians, to which I was introduced by chance in 2002. Since then I have spoken with half a dozen members since and they seem most satisfied with this model. Some of the points mentioned here apparently are off as I was told recently and I would be happy to correct them. But, in summary, it is an excellent model, it works and it is reality.

Joining this group gives an ObGyn reimbursements of about twice Medicare/Medicaid. For example: global fee for prenatal care, delivery and postpartum care yields $1500 from Medicaid, and members of this group receive around $3000. Same amount of work, probably even less for a non-Medicaid patient. Members of this group work in their own private offices, with their own staff, own equipment and rooms, mostly following their own clinical guidelines and decisions, own budget, own finances etc. Except: they bill together and negotiate together under one tax ID. They pay about 5% of collections for billing. Members pay an admission fee for admission to the group and would have to pay a fee when leaving the group.

The management of this group negotiates with the remaining HMOs and frequently fires the lowest paying third party payer. They achieve reimbursements of 120 to 200% Medicare. These groups can be set up so that the individual practice is an LLC within the larger LLC of the group. Billing goes through one single entity. They pool some labs and technical services such as Xray, mammography, ultrasound, bone density, but also cosmetic services, such as botox, epilation, vein therapy etc

How do you set it up? You first spread the word among the best doctors and the key players in the area offering to join you. Then you retain an attorney experienced with formation of such as group. this is expensive, but worth it in the end. You must stand up to anti-trust scrutiny. Your ultimate goal is to attract enough doctors to reach enough critical to have negotiating power, but not as many to violate anti-trust laws. Consider staying under 50% of physicians in your specialty in the area. This may take several years, but is well worth it.

5. Get support from your patients

The transition towards consumer driven health care (and away from HMOs and third party payers) will be much easier with patient support. There is a profound lack of knowledge about consumer driven health care, high deductible insurance plans (HDHP) and Health Savings Accounts (HSA). Once we help our patients understand these issues, they will help us in the transition to more economic and more responsible care!

Learn: buy a HSA/HDHP for your own employees and your family. Browse the most educational and easiest to understand websites on HSAs. Summarize the info into a one half page note. Post this in your office, hand out leaflets to your patients, leave them in your waiting room, post it on your website, in your monthly newsletter, email it to friends and colleagues, drop in mailboxes of other docs in your hospital. Ask your hospital HR to offer them, give a talk at the hospital and at the local chamber of commerce. Write a blog. Create a Google Alert on "HSA". Read and lay out Regina Herzlinger's book "Who killed health care" in your waiting room.

Teach: Educate your patients that they might save 30-40% of coverage costs, that HSAs are funded with pre-tax dollars, that they own those dollars, that they roll over to the next year and may collect interest!

Even Medicare has Medical Savings Accounts available during the current enrollment! A huge benefit - it eliminates the need for MediGap coverage.

HSAs teach the patient accountability and are the only solution to ever increasing health care costs.

Act: Offer cash services for your patients with HSAs! Patients need to know what to do with their HSAs!! Post a list of prices for your 10-20 most common services. You could even post a comparison list with the prices of a local plumber, electrician etc for comparison - an eye-opener!

Direct patients to the cheaper HDHP providers that actually save money. Traditional HMOs may price these plans so that they become less attractive. Tell your patients that every bank can administer a HSA.

Links: AMA brochure... http://www.ama-assn.org/ama1/pub/upload/mm/363/hsabrochure.pdf
and http://www.ama-assn.org/ama1/pub/upload/mm/372/i-05cmsreport3.pdf
US Treasury Dept...http://www.ustreas.gov/offices/public-affairs/hsa/

Consumers for Health Care Choices is a national membership organization, chaired by a former president of the American Medical Association. http://www.chcchoices.org /Greg Scanlen, greg@chcchoices.org, tel:301-606-7364

Politicians, blissfully unaware of true details of health care, may claim that consumers actually do not know enough about and are "not smart enough" and not "educated enough" and "too weak" or "need protection" from all the other players in health care - and that of course, the "government knows best" and has only the best intentions and the best advice for consumers.

"Hi, I am from the government and I am here to help you"

A well designed HSA can save 30-40% on total coverage costs, including the HSA contribution. Further, this contribution is not lost, but owned by the individual, is rolled over into the next year and may collect interest. For the 80+% of us who are basically healthy, HSAs are a great deal. For those that are chronically ill, it is a wash. Employers like HSAs because they save money for the employer. HSAs have proven to decrease costs. Taking all risk away from the patient leads to overuse of resources because it is a lot easier to spend the insurer's money than your own money.

The vast majority of transactions can occur with a debit or credit card at point of sale, no need to file a claim.
Currently, pre-tax HSA dollars can be spent according to IRS section 213(d) which defines healthcare broadly as anything therapeutic, including "alternative medicine" or chiropractic care, while cosmetic surgery is not an "allowable expense"

The opposition to HSAs takes several forms:
1. Only the well-off can afford them
2. People with HSAs will see them as just another investment scheme, and will avoid needed medical care (including essential screening) to "save" this retirement money.
3. We have 4 or 5 generations of consumers / patients in the US who don't have a clue how much their insurance / Medicare is really paying, and will be shocked back to the old ways when they get their bills.
4. Unless they are combined with a cash-for-care schedule of lower payments (less hassle, less paperwork, lower charge) there is not much advantage to having an HSA.
HSAs would actually work great in a "health care cooperative", where physicians AND their patients unite and truly work together to combat their common enemy, disease.
Big opposition will come from HMOs, since they have the most to loose. Pharma is lobbying for a "carve out" of drug costs from the HSA dollars. If patients know the actual cost of drugs, they will prefer generics and "Direct to consumer advertising" will tank.

Unfortunately, most physicians are not offering cash services. We all should post a list of our services for cash payers - independent to the fact if we take HMOs and or Medicare / Medicaid etc. Just good business sense. You inform the patient, you give them an option and you get them thinking in the right direction.....hm, this is what it costs....with all the ramifications, such as why is my insurance so expensive or so cheap, could I afford this on my own without insurance? and so on

Educate your patients about alternatives to insurance, mention HSAs and high deductible plans. The AMA has leaflets on this.

Patients often think that we receive all the money they pay to their insurance. They assume we make millions. It often is an eye-opener that we receive about the same amount the HMOs keep for their administration (withholding and denying) and they are often very surprised to find out how little we get paid for services. It is incredible effective to create a list comparing our services point by point with the services and prices of an electrician or plumber - and you will find that they come out ahead! This creates sympathy from the patients and the willingness to drop HMOs

6. Get support from your colleagues

Previously we had recommended to put your own finances in order to be able to survive for a while with less income, then approach your practice from a business point of view: first establish how much you want to earn, calculate what each payer has to pay for your most common services and then drop those HMOs that do not meet your business needs. When Jack Welsh was CEO of GE her routinely dropped the two least profitable lines of business. Do the same with third party payers. This is plain economic thinking, and obviously not a plan to boycott third party payers. Start or join a group practice without walls. Encourage patients to enroll in HDHP / HSAs instead of conventional HMOs. This saves our patients money, allows them to accrue savings tax free, while paving the road for cash practice for us.

The last component is to spread the word to as many physicians as possible! Encourage your colleagues to join Sermo, to join our discussion. This way we can learn form each other how to save the health care system. Let them participate and contribute to our discussions. Keep talking about health care reform, stay in touch, write a blog, read about the issue, email a summary of the plan to friends and colleagues, drop a flyer in mailboxes of your colleagues at the hospital. Just invite them to Sermo, maybe the AAPS, the rest will follow!

Unfortunately, the AMA has given up any attempt of true representation. I am very upset that they have good ideas such as supporting HSAsand tax credits, just to be completely quiet about it! What are they thinking?

Follow the plan for yourself and it will be very helpful. Tell your colleagues about it, spread the word and the effect will multiply!

Curb Your Enthusiasm For The Canadian System

POsted on the taxpayerblog by Lee Harding at 1:15 PM on Tuesday, February 12, 2008

The umpteenth survey has confirmed what politicans refuse to face: citizens want health care reform. Pollara's 10th Health Care in Canada Survey not only shows citizens want change, it shows health care professionals also want it. "Sixty-nine per cent of nurses felt the system needed significant change, while 62% of doctors favoured 'some fairly major repairs.'"

HEALTH CARE CHECKUP
Health Care in Canada Survey highlights:
- 68% of Canadians think the system needs major repairs or complete rebuilding.
- 57% of Canadians rate their health as good or excellent.
- 57% feel they are receiving quality health care.
- 37% of Canadians reported being diagnosed with a chronic illness.
- 48% believe access to good quality, timely health care will improve in the next five years.
- 49% think access to family doctors has worsened.
- 30% strongly support giving Canadian access to private clinics if wait times guaranteed for certain procedures aren't met in the public system.

Capitalism is not the cause of America's health care problems, it is the cure

I LOVE this book, it "feels" right. It is written by a Canadian physician that trained in his own country, is most familiar with his local health care system, and who later moved to the US. He has a clear view of the amazing development of medicine in the last century and now is a senior fellow at the Manhattan Institute. His own thinking evolved from the support of HillaryCare as a medical student to promoting individual chocie and competition today. The foreword is from none other than Milton Friedman

The book is "The Cure". David Gratzer writes well, and his style is easy to read. Here a few quotes:

" as public opinion and reform efforts in Canada were moving towards more privatization, in the US they have been moving in exactly the opposite direction. As I have worked in both countries, I am unsettled to see mistake made north of the 49th parallel repeated in the south. The direction of American Health care reform is eerily familiar. It's like watching a car accident unfold in front of me: a series of small events, leading to a spectacularly disastrous end"

"In Chapter Three I argue that four decades of reform have failed because they have been premised on two bad ideas, one favored by Democrats, the other by Republicans, and both worsened the problems they were intended to solve." Medicaid and Medicare on one side and the HMOs on the other side. "Both visions have now lost it's luster. America's health care policy is now akin the Eastern Europe's political terra incognita after the collapse of the Berlin Wall; Everyone knows that it doesn't work, but no knows how to proceed. The crisis will only deepen until we find a third way between the Scylla of big government and the Charybdis of bureaucratic HMOs. "

"If America can lead the world in medical innovation, it should also be able to rethink it's health Care system.America has reformed other sectors of its economy that once appeared in crisis. In telecommunication, in banking and in other sectors, this transformation has meant deregulation and increased reliance on market mechanisms. Health care is the exception. Is it any wonder that Americans are dissatisfied? Could it be any clearer what must be done?

Health Care stands at a crossroads. If we stay mired in an economic model from the World War II era, government's role will keep growing, costs will continue to swell and Americans will eventually see the kind of rationing that has afflicted Canada.....If however Americans unleash the market forces that have transformed five sixth of their economy, if they choose more choice and more competition, then American health care will become cheaper, better and more accessible for everyone.

Capitalism is not the cause of America's health care problems, it is the cure"

Everybody should read this book. Dr. David Gratzer, "The Cure. How Capitalism Can Save American Health Care" Foreword by Milton Friedman. Encounter Book $17.95

“Pragmatic” Health Care Reform?
posted by Michael D. Tanner on the CATO blog

The Washington Post has a story today gushing over how “pragmatic” and “moderate” Democratic presidential candidates are being in pursuit of universal health care. Moderate in comparison to Michael Moore maybe, but let’s look at what those candidates are actually proposing:

1) An individual mandate requiring every American to purchase a specific government-designed insurance plan or face financial penalties. (Edwards and Clinton). Such a mandate, however unenforceable in practice, is an unprecedented (except for Massachusetts) infringement on individual liberty and sets the stage for further regulation of the insurance industry.

2) A “play or pay” mandate on businesses, requiring them to provide employees with health insurance or pay additional taxes (Obama, Edwards, Clinton). Such a mandate would raise the cost of employment resulting in a loss of jobs and lower employee compensation.

3) A government-mandated minimum benefits package for insurance (Obama, Edwards, Clinton). Rather than true insurance—spreading catastrophic risk—the government would require a “Cadillac” policy, leading to a feeding frenzy for special interests representing providers and disease constituencies.

4) Community rating and guaranteed issue, raising the cost of insurance for young and healthy individuals. (Obama, Edwards, Clinton).

5) Price controls on insurance premiums (Obama) and prescription drugs under Medicare (Obama, Edwards, Clinton).

6) Huge tax increases, ranging from $65 billion per year (Obama) to more than $120 billion per year (Edwards).

7) Massive expansion of government health care programs like Medicaid (Obama, Edwards, Clinton). Edwards would also create a new government-run health care program like Medicare to compete with private insurance.

8) Managed-competition-style regional insurance pools or “connectors.” (Obama and Clinton).

The fact that Massachusetts governor Mitt Romney and the Heritage Foundation also support many of these proposals doesn’t make them any more moderate. These proposals would radically increase government control over one seventh of the US economy, would increase taxes, destroy jobs, and slow economic growth, and most importantly would lead to worse health care for millions of Americans.

posted by Michael D. Tanner on 07.10.07 @ 9:50 am

The Anti-Universal Coverage Club Manifesto

I found the following quote on the blog of Cato and I find it very interesting.

The Anti-Universal Coverage Club is a list of scholars and citizens who reject the idea that government should ensure that all individuals have health insurance. It exists to challenge the idea that “universal coverage” is the best way to protect and promote health.

The following principles explain the club’s opposition to “universal coverage”:

Health policy should focus on making health care of ever-increasing quality available to an ever-increasing number of people.

“Universal coverage” could be achieved only by forcing everyone to buy health insurance or by having government provide health insurance to all, neither of which is desirable.

In a free society, people should have the right to refuse health insurance.
If governments must subsidize those who cannot afford medical care, they should be free to experiment with different types of subsidies (cash, vouchers, insurance, public clinics & hospitals, uncompensated care payments, etc.) and tax exemptions, rather than be forced by a policy of “universal coverage” to subsidize people via “insurance.”

To join, post something to your blog or email me here. If you blog about the club, pro or con, please send the link to that address as well.
posted by Michael F. Cannon on 07.06.07 @ 4:33 pm

Canadians face long waits for many kinds of health care

This one is for all these dreamers who want to socialize a whole sector of the American economy:

JEFFREY NACHT, M.D.Published: December 9th, 2007 01:00 AM at http://www.thenewstribune.com/opinion/insight/story/224748.html

As a half-time practicing orthopedic surgeon in Tacoma and a half-time faculty member in the Department of Medicine at the University of British Columbia in Vancouver, I have come to appreciate the differences of these two health care systems, both of which are often touted as the very best.

As I have spent more time in Canada, I have started to appreciate the way its system affects doctors and their patients. The revelations have been nothing short of astonishing.

We hear a great deal about how much less Canadians spend on health care and what a wonderful system they have where everyone has access to “universal health care.” But how they accomplish this is not exactly as advertised.

According to no less a source than the World Health Organization, Canadians, for the price they pay, now have the worst health care system in the world. WHO ranks Canada’s health system as the third-most expensive system in the world, and rates it 30th in efficiency and 18th in access to care.

How does this affect its physician work force? The answers might shock you.

Surgeons are “controlled” by limiting access to operating rooms. In British Columbia, all elective operating rooms shut down at 3 p.m., except at Vancouver Hospital (the tertiary care center for all of the province), which shuts down at 5 p.m. except for emergencies.

Surgeons are given a very limited number of surgical “block times” in which to do their work. Younger surgeons get less time, and senior surgeons get the prime slots, just as in Britain. Each surgeon has a waiting list or “queue.” When a surgeon does an emergency case, the patients on his waiting list are pushed back by one slot for each emergency he does. That way the hospital’s budget for the number of surgeries it must pay for is not impacted by unexpected additions to the schedule.

Patients often try to call in favors or use their influence with their surgeon to find ways to “jump the queue” or move up in the list. Waiting times can be shocking.

In most major metropolitan areas, a patient will usually wait for nine to 12 months for a smaller procedure such as carpal tunnel surgery or a hernia repair, and 14 to 18 months for a major procedure such as a total joint replacement or cardiac valve replacement.

Somewhat more urgent cases do not fare much better. My wife’s aunt developed symptomatic coronary artery disease a few years ago. She was referred to a cardiac surgeon at Vancouver Hospital, who recommended that she have a two-vessel bypass. He put her on the “wait list” and estimated that she would have her surgery in eight months.

Because of emergencies that kept adding delays to his “elective” schedule, the aunt finally had her surgery 18 months later. By that time, she was virtually a cardiac cripple and required a four-vessel bypass. Due to her severely deteriorated condition by the time she got to surgery, she did not survive.

My Canadian father developed a large abdominal aortic aneurysm when he was about 70. He was referred to a vascular surgeon, who scheduled him for repair of the aneurysm nine months later. He finally had his surgery 13 months after the decision for surgery was made. Three times he was admitted to the hospital for the surgery and sent home when an emergency bumped him off the schedule.

Imagine how that would work here in our community.

To make matters even more difficult, the provincial government started additional budget-cutting measures a few years ago, dictating that half of the elective operating rooms in the entire province close for eight weeks each year to save money. Each hospital was allowed to choose which eight weeks it would close.

Economic decisions like these are based on the fact that for hospitals, patient care is a liability that must be limited whenever possible to remain within their budget, not a source of revenue as it is here in the U.S. This turns the equation of health care economics upside down and leads to the worst kind of rationing.

Internists and primary care physicians have another set of issues. The government limits how many patients each doctor can see and bill for each day. If you exceed the government’s quota, you simply won’t get paid for the additional work.

However, there is a work-around. Many physicians do their office practice and quit when they see their “limit.” They then travel to another community and work in an urgent care or after-hours clinic. As long as it is in another municipality (an outlying community with a health care need) they can bill additionally and get paid. This often means traveling 50 miles or more to work in a clinic distant enough to circumvent the quota rules.

Similarly, services are often limited by available resources. There are only a few MRI machines in the whole province, so the waiting list for these studies can be six to 12 months. CAT scanners and ultrasound units are more readily available and might only take a few weeks to schedule.

In the Foot and Ankle Reconstruction Centre in Vancouver, I work alongside three full-time orthopedic specialists who do most of the complex surgery of this type for all of southwestern British Columbia, which has a population base of about 2 million people. These poor guys have a waiting list of over 5,000 patients who need surgery. Their waiting list for elective cases exceeds three years.

So how do Canadians like their health care system? Surprisingly, most think it’s great, at least until they need access to care. There is a pervasive socialist mentality that most Canadians subscribe to. Even though there are long waits and limited available high-tech services, at least everyone waits the same amount of time.

There is no deductible or co-pay, so when patients do need care, it’s essentially free. Canadians do pay for health insurance, but the premiums are graduated, based on income, and even the highest premiums are only a fraction of what Americans pay for private insurance. If you make less that modest income, your premiums are waived altogether.

However, you can’t access care outside of the system. Tiny pockets of “private health care” have emerged here and there. However, these centers take no government payments; it’s cash only. They treat primarily workers’ compensation and “third party injury” cases, as well as patients from outside the province.

So do Americans really want this type of system? More pertinently, do American doctors want to work in this environment?

The answer, once you’ve looked at the dirt swept under this rug, is likely to be absolutely not.