Doctors Cure Insurance Woes

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 his doctor only accepts cash.

Dr. Vern Cherewatenko is one of a small but growing number of physicians nationwide who are dumping complicated insurance contracts in favor of simple direct payments from patients.

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

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

Is this the healthcare wave of the future? Probably not, experts say. Most people are content with monthly premiums and $10 co-payments; 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 healthcare 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.”

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

“I don’t look at it as a threat,” said Mohit Ghose, spokesman for the industry group America’s Health Insurance Plans. “It’s just a different way of practicing.”

Medical establishment leaders don’t object to doctors working for cash.

“This is America. One size does not fit all,” said Dr. John C. Nelson, president-elect of the American Medical Assn.

An obstetrician-gynecologist in Salt Lake City, Nelson recalled times when he believed managed care rules prevented his patients from getting the best treatment. He said cash-only doctors are driven by the desire to practice medicine without interference.

“There is a great intrusion by third parties into the patient-physician relationship,” Nelson said. “We can understand their frustration.”

Cherewatenko, 45, 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 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 companies. Membership has grown to 22,000 patient members and 1,500 doctors. Some physicians reject all insurance and take only cash, while others accept insurance while offering discounts of 15% to 50% 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 being blue-collar workers.

“When I first started, I thought it would be the elite. That’s not the case,” said Dr. Shelley Giebel, an obstetrician-gynecologist in Temple, Texas, who washed her hands of insurance eight years ago.

Her standard, hour-long annual checkup costs $140. Everyone pays cash.

If a patient needs extra tests or treatment, Giebel tells them upfront what it will cost.

“If it is an urgent test, we’ll go ahead and do it. We’re not going to delay medical care because they don’t have the money in hand,” she said. Often, patients return later with the money.

The cash-only movement isn’t just changing the way people pay, it’s changing the way these doctors work. Because of managed care’s low reimbursement rates, doctors on insurance contracts must limit their time with each patient.

Giebel said she would have to double her patient load to make ends meet if she relied on insurance. “How can you possibly talk about prevention of cancer and heart disease when you’re seeing patients every 12 minutes?”

Cash-only patients rave about the quality of care.

“They take time here with you,” said Jesse Rainwater, 59, a pastor from Bellevue, Wash., who credits Cherewatenko with teaching him to manage his diabetes. “They don’t just bring you in and run you out like a bunch of cattle. You feel like you’re loved.”

The cash-only approach evokes Norman Rockwell-tinged visions of country doctors being paid with chickens. The simplicity is tempting, but the truth is many people went without preventive healthcare in those “good old days.”

“Medicine used to be a cash-only business, and there were certainly many people who didn’t have the cash,” said Caplan, the medical ethicist. Doctors who insist on cash also have an ethical obligation to help people who can’t afford the fee, he said -- even if it means accepting chickens.

Cash crusaders acknowledge the need for some type of insurance. Without it, expensive surgery or hospitalization would force most people into bankruptcy.

O’Brien, a freelance marketing specialist, switched from a comprehensive health plan with $300 monthly premiums to a catastrophic plan that costs $75 a month and has a $2,000 deductible. He pays for routine checkups, and his insurance will kick in if he needs expensive care.

The promise of a cash payment lured him to Cherewatenko’s office, but the doctor’s personal attention keeps him coming back. The $50 exams are just part of the bargain for O’Brien. Cherewatenko recently met him for coffee to talk about improving his diet -- including an admonition to cut back on caffeine.