On a wall inside Dr. Brian Forrest’s medical office in a suburb of Raleigh, North Carolina, is something you won’t find in most doctors’ offices, a price list:
Office visit $49
Wrist splint $41
Those are the prices patients pay for the services, and they pay on the spot. Forrest doesn’t take insurance. If he did, the prices would be far higher and not nearly as transparent. He says listing prices up front is about trying to do business in a straightforward way, “like a Jiffy Lube.”
Forrest’s practice, Access Healthcare, was born out of his frustration with the bureaucratic system run by major health care providers and insurance companies. His epiphany came about 10 years ago, as he was completing his family medicine residency at Wake Forest University. “I was basically being told I needed to see 30 patients a day every day, and that’s what we had to do,” he recalls, speaking with a soft drawl. He didn’t care for that pace, preferring to spend 45 minutes to an hour with each patient.
At one job interview, he was told he would be required to sign a contract saying he’d see a patient every seven minutes or have his pay cut. Most new physicians sign those contracts. Forrest, 38, wouldn’t. “I’ll borrow a term from McCain: I’m ‘mavericky,’ ” he says. “I like to fix things that are broken.”
He spent some time researching alternative business models and found inspiration in People magazine, of all places, which profiled a Vermont doctor who carried a stopwatch, charged patients $2 a minute, and didn’t take insurance.
Forrest decided to take a similar approach—minus the stopwatch. Clients pay him cash when they’re seen, known in the industry as “fee-for-service.” He sees a maximum of 16 patients a day and leaves the office at 5 p.m. Because he doesn’t have to file insurance forms, he only needs a single office assistant, and the low overhead allows him to charge less than other doctors. Occasionally, his charges wind up being less than just the co-pays for Medicare or private insurance.
He’s negotiated deals with a lab company to reduce his patients’ costs for tests. The lab loves being paid on the spot for services rendered and allows Forrest to charge his patients $30, for example, for a prostate-cancer screening test that the company bills to an insurer at $184. “For specialists, cash in the hand is better than a bigger amount charged to insurance,” he says. He’s found other doctors happy to join in, such as a cardiologist who’s willing to give discounts of 80 to 90 percent to his patients if he’s paid cash up front.
“The discovery I made was that by getting rid of administrative, bureaucratic hassles, I was able to do very well financially and at the same time have high patient satisfaction and good quality of care,” he says. Even more surprising, most of his patients are not wealthy. Half have no insurance, and another 15 percent are on Medicare. His patients include homeless people who have no other access to care and wealthy people who like the idea of spending more time with their doctor.
Practices like Forrest’s aren’t a panacea to the nation’s health care problems, and they can’t succeed everywhere. But he says his experience offers an important lesson: “There are a ton of different ways out there that address the problem and give you better quality at lower costs.”
The Democrats’ new command-and-control health care law is sweeping. For most Americans, there will be no escaping its effects: on premiums, taxes, access to doctors, and insurance coverage. But at the margins, some doctors and health care companies will find ways to operate successfully outside the system, offering patients more control over their health care and often at lower costs than in the government/private insurance oligopoly.
For all the elaborate theory behind the new law’s 2,400-page effort to “bend the cost curve,” it’s the smaller companies that are already bending it. Some, like Forrest’s office, are aggressively cutting costs—as any small business tries to do. Others have experimented with membership structures where patients pay a little more for extra care. And traveling abroad for surgery is expected to be a growth industry as frustration mounts with high U.S. costs and longer wait times.
“You will see a flowing toward boutique medicine, where physicians who want to practice without the encumbrances of dealing with mind-numbing rules and regulations will set up their own practices,” says Robert Moffit, director of the Heritage Foundation’s Center for Health Policy Studies.
With the passage of Obamacare, Forrest says he’s seeing more physicians aggressively search for alternatives, as he once did. Over the years, he’s helped a couple of dozen offices open across the country, and he’s started speaking at industry conferences about his practice. But in recent months, he’s been flooded with inquiries from fellow doctors. “Since the health care reform bill passed, you wouldn’t believe the number of doctors who have said they’ve had it and want to operate outside the system,” he says.
There’s little doubt that the new health care law is causing concern among doctors. And the frustration runs deeper than just occasional anecdotes, such as the Orlando urologist who posted a flier on his door in late March that read: “If you voted for Obama . . . seek urologic care elsewhere. Changes to your health care begin right now, not in four years.” The doctor’s story was linked on the Drudge Report, he appeared on Fox News, and a Facebook page devoted to him has more than 3,000 fans.
While those stories are interesting, more troubling is a survey reported in March in the New England Journal of Medicine that found that 29 percent of the nearly 1,200 doctors interviewed said they would quit the profession or retire early if the health care reform bill passed. Add to that a reported shortage of doctors, retiring Baby Boomers, and 30 million new patients who formerly lacked insurance, and the result could be disastrous.
“I don’t know how bad it’s going to be, but it’s already stretched to the limit,” says Dr. Marc Siegel, an internist practicing in New York and a Fox News medical contributor. “It can’t get any worse than this and still be functional for doctors.”
The average doctor leaves medical school $156,000 in debt, according to the American Medical Association—some closer to a quarter-million. So anything that makes medicine less lucrative could keep future doctors out of the profession. “The government cannot take for granted that our fuel is going to be pure altruism and selflessness,” Siegel says.
Another business model that some doctors have been exploring is a “concierge” or “boutique” practice. Often, these practices combine the acceptance of traditional health insurance with an added fee, which doctors say relieves the pressure to move quickly from one patient to the next and allows them to focus on prevention, not just treatment.
There are plenty of companies following this model—with names such as Hello Health and MD2. One of the largest is MDVIP, a Boca Raton firm that has 365 member doctors and 125,000 patients in 28 states and the District of Columbia. MDVIP doctors accept and process insurance, but for an additional $1,500 a year, they give an exhaustive 90- to 120-minute physical exam and run tests that insurance often doesn’t cover, such as screening for mental or sleep disorders. They also help the patient develop a wellness plan and stick to it.
The idea, says company president Darin Engelhardt, is for a doctor to take on more of the role of a health coach than just a treater of illnesses. A typical family practice might have 2,500 patients. MDVIP doctors have only 600.
Engelhardt says the service isn’t just for the wealthy and that people in many different income ranges are patients. He also believes that by giving doctors an alternative business model, MDVIP is keeping them from leaving health care, while at the same time offering patients needed flexibility. “It’s really just a choice along the continuum of choices for health care consumers,” he says.
Before he affiliated with MDVIP two years ago, Dr. Ned Stolzberg was seeing about 30 patients a day. Now that he’s cut the number of patients in his Phoenix-area family-medical practice from nearly 3,000 to around 400, he averages little more than a dozen a day. The extra time, he says, allows him to do the sorts of things he thinks a doctor should, such as coordinating care with a specialist for a woman diagnosed with breast cancer or spending 45 minutes talking to a diabetic about nutrition and exercise.
“Now, I can spend a lot more time working on the complicated cases,” he says. “It makes me feel like I’m being a real doctor now, like here’s what I was trained to do, and now I can do it.”
He says his patients come from all walks of life, from dot-com executives to school bus drivers and about half are on Medicare. “There are people of very modest means who find this to be a value to them,” he says.
MDVIP has continued growing in the last two years, despite the economic slowdown. Engelhardt sees more growth ahead, as the addition of 30 million uninsured Americans into medical offices is likely to further limit doctors’ time with individual patients.
“Health care reform is only going to put a greater spotlight on MDVIP as patients look for alternatives,” he says. “The need for choice will be much more pronounced over the coming years.”
The sector is also seeing an influx of outside capital. Consumer giant Procter & Gamble bought MDVIP in December. In April, Seattle-based concierge practice Qliance Medical Management announced it had raised $6 million in venture funding from a group led by Amazon.com founder Jeff Bezos, which included actor Drew Carey and Dell founder Michael Dell as investors.
Some providers and patients are taking a different tack to get outside the system—leaving the United States altogether.
It’s not just celebrities heading abroad for cosmetic work. As other countries have become more sophisticated medically, they’re offering all sorts of elective work, typically at a fraction of what the procedures cost in the United States. Foreigners still come to the United States for treatment, but there’s an even greater number of U.S. patients heading overseas. The countries with the most accredited hospitals include India, Brazil, Thailand, and Singapore.
“Medical tourism,” as it’s known, has been growing for years. The number of U.S. patients heading abroad is expected to increase 35 percent this year—to 878,000—and then double to more than 1.6 million in 2012, according to a report last year from the Deloitte Center for Health Solutions.
“We see [Obamacare] as a potential boon for medical tourism,” says Renee-Marie Stephano, president of the Florida-based Medical Tourism Association. Some of the more popular procedures offered abroad include bariatrics, experimental cancer treatments, and knee and hip replacements. Orthopedics in particular is expected to be a hot area in the coming years, as once-active Baby Boomers enter their 60s and 70s.
Some insurance plans, looking for ways to save money, have started experimenting with covering procedures performed abroad. There’s also great interest from patients with high-deductible plans.
Take knee replacement surgery, which in the United States might cost $50,000. A patient with insurance might have to pay an $8,000 deductible. In Costa Rica, the entire procedure costs closer to $11,500. “You can stay at home and pay an $8,000 deductible, or you can go to Costa Rica with your wife and spend three weeks recovering,” Stephano says. “This is more of a cost-conscious, consumer-driven approach.”
And the quality of care abroad can often rival or surpass that in the United States, she says. For instance, the Food and Drug Administration only approved hip resurfacing surgery—an alternative to hip replacement—in 2006, which means U.S. doctors have been performing it for at most four years. Doctors in India have been performing the procedure for more than a decade.
It’s not just cost that’s attractive, either. In Canada and the United Kingdom, health reforms have led to longer waits for procedures. If that happens here, as many expect, then Americans might take a harder look at treatment abroad.
Such market-driven approaches to health care seem poised to thrive in the years ahead. As Obamacare ramps up, doctors and health providers will continue devising creative alternatives for patients who demand choices as the government tightens its grip. “Necessity is the mother of invention,” notes Brian Forrest. “Doctors who are fed up with the way it is are going to be doing all kinds of different things.”
Tony Mecia is a freelance business writer in Charlotte, North Carolina. He is a former business writer and editor at the Charlotte Observer.