LIBERTARIANplace

• malpractice insurance
• several employees just to process health insurance forms
• several more employees just to respond health insurance inquires that are often an obvious delaying tactic
• and other employees or contractors to bill patients multiple times while the health insurance company decides what to do with the claim, and several more times for the amounts the health insurance companies did not pay either due to deductibles, co-pays, excessive charges (beyond reasonable and customary) or services not covered, diagnoses inelligible, etc.
• the cost of extra computers, office equipment, office furniture etc to accomodate all the extra data processing and storage required for health insurance purposes...

How much do you think you would save? How much would your doctor bill be?

Well, obviously it depends on a number of other factors such as the real cost of running a medical practice without the artificial cost of dealing with health insurance, such as:

• office rent (which would be much less due to the need for fewer employees and less storage space)
• employee compensation (again, much less without having to process health insurance-- possibly just one person who could serve as receptionist and bookkeeper, taking fees from patients as they check in, entering the receipt in the book and never having to process that fee again.)
• basic insurance such as physical liability, minimal malpractice for real honest mistakes and worst case outcomes, and contents protection.
• utilities, phone, and internet (again, much less costly due to smaller offices and fewer staff).
• professional memberships, licensing fees, continuing education
• A Fair Salary for the doctor

For purposes of this model, we paid the doctor $180,000 per year salary after all other office expenses. We made reasonable estimates of the costs of the real expenses listed above including a total compensation package for the receptionist/bookkeeper at $36,000 per year. One could quibble with any of these assumptions, but the point is to illustrate that this model is realitic and could be utilized.

Obviously the doctor may want to pay his one office assistant more than this, and may want to pay him or herself more than this. But we have given the doctor lots of latitude to do so. We have allowed the doctor only six hours of patient care in the office per day, 20 days per month, 240 days per year and have allowed for only four patients per hour. 

Limiting the practice to four patients per hour gives the doctor the opportunity to take his or her time and be thorough with each patient, and obviously benefits the patient greatly as well. Limiting the doctor's office hours to six per day gives him or her the opportunity to make hospital rounds without cutting into evening family time. It should also be noted that if the doctor does keep hospital rounds, there is another income stream since only office visit fees have been factored  into revenue in this model. The additional revenue would allow the doctor to pay him or herself a higher salary and/or to pay more in employee compensation. (We are not addressing hospital fees at the moment, just the cost of front line medical care.) 

Also, the doctor could certainly operate on this model and see significantly more patients per hour, and/or work more hours per day seeing patients as another means of funding higher salaries without increasing the cost of an office visit.

So... how much would it cost you to see your typical primary care physician on this model?

How painful would it be to fork over the entire fee for the office visit up front, before even taking off your shoes or having your blood pressure taken?

Are you sitting down?

Well, first lets reveiw.

• You will have your doctor's undivided attention for as long as you need it. He has budgeted 15 minutes for you (of face time) but some patients won't need that much, so you can literally have all the time you need. 
• You will not have to worry about receving bills from your doctor and wondering whether or not you have to pay now or wait for the insurance company to do something else. You already paid the doctor. You can keep your insurance and try to collect from them, but at least you don't have to worry about doctor bills in the mail. Instead you're waiting for a check (but as your doctor can tell you from experience, "Good luck with that.")
• Due to the doctor's complete withdrawal from any involvement with third party payers, and his or her policy to buy minimal malpractice insurance (with patient waivers) all the doctor has to pay for is rent, one additional salary, and basic office & professioal expense.

In other words, it is a win/win. You get more quality time from your doctor. Your doctor eliminates most of the business aspect of his or her practice, but could it also cost you less?

Well... According to our figures, using this model, the doctor's salary and expenses, when annualized and then divided by 240 days of office hours are $1,135 per day. If the doctor were to do his own lab work, add another $100 for a part time lab technician, and all the supplies and equipment needed for this. (Complex lab tests would still be outsourced.)

Therefore, your cash on the barrel fee for service at this practice would be...

Are you sitting down? Do you have a wet cloth handy? Brace yourself now...

$55 (rounded up). Think you can handle that?

I would venture that most of us could handle that, but what about those for whom this amount is prohobitive? Another doctor could operate an office with the same basic overhead but see six patients per hour instead of four, and offer two additional office hours per day and--- voila! The cost per patient is cut in half! Now we're talking...

Better sit down again!

$26 cash on the barrel!

So what about ancillary & alternative therapies: Physical Therapy, Psychotherapy, Occupational Therapy, Acupuncture, Chinese Medicine? The same is true. If these providers didn't have to maintain multiple staff to deal with health insurance companies  and didn't have to process all that date, electronically and on paper, they could also serve you for half the current cost per visit, and in some cases perhaps even less than that!  Because we have never seen the inner workings of a clinic or doctor's office we have no idea the burden that health insurance claims places on the providers. If we as consumers had to deal directly with our health insurance companies we wouldn't stand for the kind of treatment they give our clinicians. We would demand simpler processes, transparent policies, and lower costs. Yes, lower costs! Because just as processing claims in the current lugubrious way is costly to clinicians, it is also costly to health insurance companies. But they don't care. They just pass the costs on to you. As does your doctor, clinic, hospital, etc. 

If we were to implement this type of model en masse, the masses would be re-evaluating their need for health insurance, and the type of insurance they purchase if they purchase any at all. With front line care so affordable, high deductible policies would be more desirable for more people. Or... what about "Hospital Insurance?" (Or major medical in the true sense of the word.) In other words, health insurance that only covers major diagnostic testing, major medical procedures and inpatient care. This would make health insurance less expensive for everyone because it would not be utilized as frequently. More on this in the next article. 

--jwh--