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Two physicians use cash flow to keep cost low
July 26, 1999
Gestin Suttle; The News Tribune
Renton family physician Vern Cherewatenko and his medical partner sound like evangelists, preaching the gospel of lower prices for patients who pay cash up front.
He and Dr. David MacDonald say it solves problems for both doctors and patients who are fed up with high cost, excess paperwork and limited access to treatment.
"My greatest frustration is the paperwork," MacDonald said. "It's frustrating that I have to spend more time with the paperwork than I spend with the patient."
They call their back-to-the-future idea SimpleCare - fixed, low-cost fees for services, paid in cash at the time of treatment.
They hope their plan catches on with other medical professionals, and have started a nonprofit group, the American Association of Patients and Providers, to do that.
They are spreading the word with a Web site bursting with exclamation points touting their plan (www.simplecare.com), with radio infomercials on Talk America, and through press releases they plan to send throughout the United States.
The doctors figure that nearly half their cost of delivering service for managed-care patients is the administrative paperwork.
Take out that red tape and get payment up front, and doctors can cut their fees by about half, sometimes more, they say. Lowered fees mean more patients can afford to pay for treatment on their own. For instance, Cherewatenko and MacDonald can charge $35 for an office visit that would cost $79 if paid through an insurance claim.
"SimpleCare is a way to help doctors and help patients at the same time, by taking out the waste," Cherewatenko said.
He and MacDonald are part of a growing national backlash against managed care. In some ways, the Puget Sound region is a leader; 275 Medalia clinic doctors last year joined the United Salaried Physicians, becoming the first doctors in Washington state to unionize.
MacDonald and Cherewatenko say their plan is better than joining a union, which their literature says "only adds another level of administration to the mess."
Besides their own services, they conduct some low-cost tests in their in-house laboratory and have agreements from three other labs to provide lower rates in consideration of up-front payment. Doctors in several states also offer SimpleCare through their association, and other doctors are calling the Renton clinic every week to find out more about the program.
Tacoma resident Connie Waits is a SimpleCare convert.
The 50-some-mile round trip to see Cherewatenko and participate in the program "is worth the drive," she said.
She and her husband have been without insurance for several months. He changed jobs, and coverage at his new job took awhile to kick in. The couple couldn't afford to keep medical coverage through his former employer because it would have cost about $500 a month, she said.
But Waits is a diabetic, and needs ongoing care.
The Waitses are among the 650,000 people in Washington, or 11.4 percent of the population, who are without medical insurance, according to the state insurance commissioner's office.
Connie Waits heard about Cherewatenko's plan while interviewing him on KTBW, a Christian television station in Federal Way.
She also wanted to see Cherewatenko because he wrote a book on diabetes.
When Waits saw the doctor for a recent check-up, Cherewatenko stressed the importance of losing weight to control her disease, then spoke his mind about insurance companies that don't cover weight loss treatment.
"Women have not had obesity looked at as a bona fide medical condition for a long time," he told Waits. Yet if weight were controlled, so many other diseases, such as hypertension and diabetes, might never show up, he added.
"I know," Waits said. "Why don't they get that? Why don't they get it?!"
Asked about SimpleCare, health care official John Holtermann said he was not familiar with the Renton doctors' program. But Holtermann, regional vice president for Regence BlueShield, the state's largest insurer, said he understands the doctors' frustration - especially over the paperwork.
"I think they have a point and it's a concern we hear consistently," he conceded. His company is working on streamlining and improving communications and the process, he said.
But Holtermann said insurance can provide a good safety net beyond purely medical coverage. Having a third party keeping track and checking on what a doctor is doing can help ensure the physician is delivering the best care in the most efficient way possible.
With insurance, he said, "We have some responsibility to make sure the customer gets what they want."
Without insurance, Holtermann said, "Who's watching, in that kind of environment, about quality issues?"
The office of the state insurance commissioner had not been aware of the SimpleCare association until it was contacted for this article.
A spokeswoman, Barbara Stenson, said the office has looked into the doctors' operation to make sure it is not running afoul of state laws. The commissioner wanted to make sure the group itself was not acting like an insurance company, she said. The office found nothing wrong.
("We definitely are not acting like an insurance company; not even close," MacDonald said.)
Beyond that, Stenson said, the office takes no position on the program, adding, "There is no prohibition on doctors ... asking for cash."
MacDonald says SimpleCare works with insurance, too.
The doctors suggest patients who have no other coverage get a high-deductible policy, which costs less than comprehensive coverage and would provide coverage in case of a major disease.
For instance, Regence offers a plan with an annual deductible of $5,000 costing $58 per month for individuals in their 40s, said Chris Bruzzo, company spokesman.
The same individual wanting comprehensive coverage would have to pay more than five times that to purchase a managed-care plan modeled after the state's Basic Health plan, which is $310 a month, with no deductible.
The doctors also promote the use of medical savings accounts, which allow people to save a portion of their annual deductibles in a manner similar to an individual retirement account. Those funds earn tax-deferred interest and can be withdrawn for medical expenses without penalty, said Rhonda Wenzel, director of administration for American Health Value, a medical savings account trust administrator. (Nonmedical withdrawals made before age 65 are penalized and taxed, whereas those made after age 65 are taxed but are not penalized, she said).
Cherewatenko and MacDonald conceived of their program one Sunday morning in 1997.
They were meeting with a friend, a third doctor who was experiencing insurance troubles.
"We were going bankrupt" and needed to figure out a solution, said MacDonald, an osteopath.
Cherewatenko was operating five clinics and was hurting, even though business was booming.
"We were losing $80,000 a month," he said.
He calculated his actual costs to see patients and figured he was losing $7 per patient per 10-minute visit, when taking into account the administrative cost of dealing with insurance.
After that Sunday meeting, the doctors formed their patients and providers organization. Patients pay a $20 membership fee to belong to the group and to receive a medical newsletter, MacDonald said. There are several hundred members.
After coming up with the plan, Cherewatenko closed all but one clinic. He's been profitable since July last year, three months after implementing SimpleCare. But he is still paying off payroll tax debts of over $400,000.
SIDEBAR
Here are what Renton doctors Vern Cherewatenko and David MacDonald charge under SimpleCare, compared with what they typically charge when insurance paperwork is involved:
Lab draw: / $5 / $10-15
Short visit (10 minutes): / $35 / $79
Medium visit (20 minutes): / $65 / $95
Long visit (30 minutes): / $95 / $120
* Staff writer Gestin Suttle covers insurance. You can reach her at 253-597-8646 or gestin.suttle@mail.tribnet.com.
© The News Tribune
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American Association
of Patients and Providers
www.aapp.net
SimpleCare™
(a program of the AAPP)
www.simplecare.com
