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Dealing With Doctors Who Take Only Cash

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A few weeks ago, my wife and I were at our wits' end: our 4-month-old daughter wouldn't sleep for more than an hour at a time at night. We had consulted books and seen our pediatrician, but nothing was working. So my wife called a pediatrician who specializes in babies who struggle with sleep problems.

The next day, he drove an hour from Brooklyn to our house. He then spent an hour and a half talking to us and examining our daughter in her nursery. He prescribed some medicine for her and suggested some changes to my wife's diet. Within two days, our baby was sleeping through the night and we were all feeling better.

The only catch was this pediatrician did not accept insurance. He had taken our credit card information before his visit and given us a form to submit to our insurance company as he left, saying insurance usually paid a portion of his fee, which was $650.

A couple of weeks later, our insurance company said it wouldn't pay anything. Here's how the company figured it: First, it said a fair price for our doctor's fee was $285, about 60 percent less, because that was the going rate for our town. Then, it said the lower fee was not enough to meet our out-of-network deductible.

While we were none too happy with the insurance company, we remained impressed by the doctor: he had made our baby better and was compensated for it, all the while avoiding the hassle of dealing with insurance.

Last year, I wrote about doctors who catered only to the richest of the rich and charged accordingly. But after my experience, I became interested in doctors for the average person who take only cash. What pushes a doctor to go this route, often called concierge medicine? And how hard is it to make a living?

As to why doctors decide to switch to a concierge practice, the answer is almost always frustration.

"About four years ago, one insurance company was driving me crazy saying I had to fax documents to show I had done a visit," said Stanford Owen, an internal medical doctor in Gulfport, Miss. "At 2 a.m., I woke up and said, 'This is it.' "

Dr. Owen stopped accepting all insurance and now charges his 1,000 patients $38 a month.

"When I decided to abandon insurance, I didn't want to lose my patient base and make it unaffordable," he said. "I have everything from waitresses and shrimpers to international businessmen. It's a concierge model, but it's also the personal doctor model."

Dr. Owen, who once had three nurses and 10 examining rooms, said it was now just him and a receptionist. He has become obsessed with keeping overhead low, but he said that, for the first time since the 1990s, his income was going up.

At the other end of the spectrum is David Edelson, who runs a practice called HealthBridge in Great Neck, N.Y. In addition to five doctors, the practice has a full fitness center and provides the services of a personal trainer, nutritionist, acupuncturist, sleep expert and stress-management consultant.

"The current model for primary care is broken," Dr. Edelson told me. "Either I can go down with the ship, sell my practice to a hospital or take my practice in the wrong direction. Or I can develop a better mousetrap, which is more time dealing with patients and their care."

Dr. Edelson has reduced his own practice to 300 patients, from more than 3,000. Of those, 250 pay $1,800 a year for concierge services and 50 others receive scholarships. He estimated that from the combination of the membership fee for the extra services and what gets billed to insurance for typical care, he will make $600,000, and more of that will end up in his pocket.

"We're bringing in the same fees but we're reducing our overhead," he said. Fewer patients means fewer medical assistants, receptionists and staff members to deal with insurance.

But of the five doctors in the practice, he is the only one to go fully concierge. Another, William Klein, is testing the model, with 15 percent of his patients in the concierge program. Dr. Klein said he was hedging his bets because he was not sure what the new federal health care law would mean for primary care physicians.

Weren't some patients getting shortchanged by this hybrid model? He said he saw no difference in care.

"It's like paying for first class and not coach," Dr. Klein said. "Everyone is getting to the same destination, but some people have a better seat."

This approach to medicine is not without risks for the doctors and downsides for patients.

The biggest concern for a doctor is running afoul of insurance regulations that prevent doctors from billing twice for the same service — for the care, which is submitted to the insurance company, and for the concierge fee, if the fee doesn't cover something extra. Some insurance companies also bar doctors from offering concierge services.

David Hilgers, chairman of the law firm Brown McCarroll, said the risk to a doctor with a practice dependent on Medicare reimbursements was particularly acute.

"Medicare will not allow you to charge a patient in addition to what the government pays," Mr. Hilgers said. "There is a risk of losing your practice and your license and being penalized by the federal government for doing so."

He said a doctor in the past could justify the concierge fees by saying he was charging for an annual physical, which Medicare did not cover. But now, annual physicals are covered, so concierge doctors have be careful how they word contracts with patients if they plan to bill Medicare, he said. Any fee would have to be for services Medicare does not cover — unless the doctor opted out of all insurance.

Dr. Edelson said he was aware of this. He said the concierge fee and the insurance reimbursements were two different streams of income, one for membership in HealthBridge and the other for traditional medical services.

The other issue is quality of care. All the doctors I spoke with said that they had switched to a fee-for-service model for three reasons: to preserve their incomes, to avoid the administrative hassles of insurance and to provide better care.

Harry Greenspun, a medical doctor and a senior adviser at the Deloitte Center for Health Solutions, said that while the concierge model was certainly heavy on service, there was no correlation between that and the quality of care. "In a lot of these concierge practices where you're getting all these services, we may find out that the quality of care isn't higher," he said. "It could be the emperor has no clothes."

As a former chief medical officer for Dell and Northrop Grumman, Dr. Greenspun said he had had several "executive physicals," the long and intense exams many of these concierge practices promote. "As a physician, I know the quality of care is not better," he said. "It's the bathrobe and slippers. I know I've received a whole lot of unnecessary tests."

And, of course, going the concierge route just is not an option for many doctors.

Robert Lahita, chairman of medicine at Newark Beth Israel Medical Center, said he understood why primary care physicians and internists would consider switching to a concierge practice: their reimbursement rates are the lowest among doctors, and the time it takes them to handle administrative work is essentially uncompensated.

But Dr. Lahita, who specializes in treating rheumatoid arthritis, lupus and other autoimmune diseases, said the concierge model was not right for specialists, who charge substantially higher fees.

"The vast majority of patients I see have very little money and are very, very sick," he said. "It would be unconscionable for me to take cash. I'd limit my practice, and it wouldn't be wise."

He said frustrated primary care physicians have other options, like becoming a doctor in a hospital or selling their practice to a larger group that will handle the administrative issues.

Other health care experts suggested that the benefits of concierge medicine had been romanticized. "It may not be the panacea a physician is looking for," said Steven M. Harris, a partner at the law firm McDonald Hopkins. "Certain physicians are attracted to the retainer payments and perhaps lose sight of the responsibilities that go hand and hand with a concierge practice. There are significant demands on the physicians' time."

Dr. Owen says he is happy and feels that he is practicing family medicine the way his father and grandfather did. "Primary care is the least pay, the most work and the most responsibility," he said. "Under this model, you can make a good living. You won't get rich, but neither did the doctors in the 1960s."

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