Paying cash to doctors affects the treatment plan

If we really want to find out how to damn near perfectly manage any medical problem as efficiently and cost-effectively as possible, we should be studying how doctors manage the medical problems of the cash-paying doctors they see in their own practice.

Read part one here.

My visit with Dr. Grubman was fairly simple. We discussed allergy shots and how they could possibly help significantly with my dust allergy. Since I always take Claritin (an antihistamine for my allergies), he couldn’t do a skin test to test for all the various common allergies (tree pollen, grasses, dog, etc) to include in the shots.

Claritin would inhibit the skin reaction that appears when your skin is pricked with something you’re allergic to. I’d have to be off Claritin for a week and then return to get tested. The other option is a blood test to determine if I’m allergic to other things. However, they are much more expensive than a simple skin test.  I decided to wait for the skin test when I can go off my Claritin for a week. Therefore, I did not get the expensive blood tests.

So here is where it gets interesting. Allergists get paid by the visit and by the various things they do, like skin tests— the more tests they do on you, the more they get paid. If a person is not taking any antihistamines and has insurance, many allergists often test for as many allergies as possible. They simply get paid more. I could have also gotten a CT scan of my sinuses to diagnose the sinus infection.

Instead, Dr. Grubman did it the “old school” way and simply examined me and listened to my story. I would have had to pay for the CT scan out of my own pocket, something that would have been anywhere from $350 to $1000 depending on which radiologist I randomly chose. Therefore, I did not get a CT scan.

Dr. Grubman also said to call him in three weeks to let him know how I am doing. He didn’t want to reschedule me for an office visit (where he would have gotten paid), he just wanted to communicate with me and make sure I am doing better. Therefore, I didn’t have the extra added expense of another office visit when a two minute conversation over the phone would suffice.

If I would have had traditional co-pay insurance, not been a doctor, and not seen a doctor who wanted to partner with me to do the right thing, I probably would have gotten a CT test and an array of expensive blood tests. The visit would have cost someone probably on order of $2000. And then the follow-up visit would have been scheduled, adding another $200 to the bill.

Because I paid cash, because Dr. Grubman and I are knowledgeable about my options, and because we both wanted to manage my problem efficiently and cost-effectively… we did the right things and the best things for managing my problem.

Also, on the way to Kings Pharmacy to drop off my prescription for Augmentin where I was quoted $144, I stopped in another mom & pop pharmacy and asked how much Augmentin would be. They quoted $79, almost half as much as three other pharmacies I called.

Jay Parkinson is a pediatrician and preventive medicine specialist and founder of The Future Well. He blogs at his self-titled site, Jay Parkinson + MD + MPH.

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  • Kent

    Augmentin for allergies…? Assuming you were also diagnosed with bacterial sinusitis, amoxicillin would have been much cheaper, as well as easier on your GI tract.

  • Primary Care Internist

    I have similar encounters with my young adult patients who have symptoms of allergic rhinitis all the time, given the season. And routinely, I advise them that i’m willing to refer to the allergist down the hall, but it will likely lead to lots of unnecessary testing, and the same management (prn antihistamines, NOT antibiotics).

    I guess they don’t teach efficiency in peds residency? maybe that’s why st.vincent’s folded.

  • Winslow Murdoch

    A routineq visit with a family med doc or internist would almost certainly not landed you with a recommendation for a Ct scan nor a test for allergies to evaluate for immunotherapy with a history of just one sinus infection.

    Fee for service Primary care with a retainer for administrative costs and value added service like the call back in a few weeks is the answer. The patient then is the educated consumer and the doctor is paid to discuss cost considerations as well to further add value to the care they provide, staying patient centric.

  • http://fertilityfile.com IVF-MD

    Good example. In fact, there are an infinite number of ways that doctors can come up with to make patients happier in addition to maximizing the efficiency of their healthcare dollar, as you’ve described. How about keeping an updated data base of drug prices at various pharmacies to help patients find the best savings? The possibilities are endless. Making the patient happy results in their telling their friends and doctors getting not only more quantity of patients, but also a better “quality” of patients, meaning appreciative polite friendly people, because those are the ones who tend to have more friends. A system where a satisfied patient results in greater revenue for the doctor is the best system. Of course, whenever I say that, I get the old argument that doctors should always try their best to make their patients happy regardless of the impact on their compensation. To that I reply, yes, of course. But you could also say that about police, teachers, postal workers and the folks at the DMV.

    There’s no doubt in my mind that a healthy and fair incentive system benefits everyone. When the natural incentive of the free market are destroyed, it can have terrible consequences down the line, leading to waste, fraud and customer dissatisfaction.

  • PAUL MD

    This is a great example of how it could and perhaps should be. As a tertiary referral subspecialist, I would be legally ruined by missing the sinus rhabdomyosarcoma (abeit rare). I like to practice “reasonable” medicine but I fear the tort system may be fueled by reasonable medical acts that have bad outcomes. Failure to diagnose always looms as the most common reason for suit.

  • Alina

    I don’t think it’s right to suggest that paying cash affects the treatment plan in the way that it’s less wasteful.

    The treatment plan depends on your physician experience, competence, and ethics. Period.

    My PCP spends as much time as necessary with his patients, regardless of their payment type (third party PPO, HMO, Medicaid, Medicare, or cash). There are no 5 minutes visits here. He accepts patients with all payment types and this is a small practice with only 2 physicians on staff. How do they do it?

  • Max

    How dare you. You suggest allergists do more tests simply for money (including your friend by implication) and yet here you are, a pediatrician, making $5000/month loan payments, living in Manhattan? Are you kidding me? Here I thought pediatricians averaged about $80k/yr. I’ll bet your allergist friend wishes he could afford a $5k loan payment per month. If you let this go unchallenged, Kevin, you are no true blogger.

  • http://nostrums.blogspot.com Doc D

    The lesson here can be generalized to all health care systems where patients do not have to make judgments about value. I ran a hospital some years back which provided free care to beneficiaries. I was always getting beat up for a utilization rate 1.8 times the general population (our patients were comparable: socioeconomic, co-morbidity, etc). That is, our patients sought care almost twice as much. Patient surverys said that they over-used the sytem because they could, and because it cost them nothing. The doctors had no incentive to keep costs within what patients absolutely needed, because it cost the patients nothing to do the “nice to have” tests. Somebody else paid for it (the American taxpayer actually). Reformers had all these ideas about nurse triage 800 numbers, refill appointments, encouraging self-help, elminating OTC from our pharmacy, etc. None of that worked (but it never stopped them from coming up with new plans).

    Any doctor who sees fully subsidized patients (either Medicaid, or no deductible/no co-pay insurance) has had the experience of looking at a patient chart before entering the examining room and seeing, “Chief complaint: wants Tylenol prescription.”

    I’m all for insuring access to care, but with perverse incentives, we will have trouble funding it.

  • http://www.channahthailand.com Wade

    I live and work in Thailand where the vast majority of people do not have medical insurance of any form and it is all cash, pay for service. You see some ingenious ways caring doctors sort out the issue even to the extent of one friend of mine actually being paid with the gardening at his home being done and a chicken for dinner. Very old school.

  • http://onhealthtech.blogspot.com/ Margalit Gur-Arie

    The only thing I find astounding about this visit is that the doctor spent 45 minutes talking to you. 45 minutes!! Maybe if everybody got 45 minutes for an allergy visit, we would save billions in unnecessary tests.

    And good thing the doctor wasn’t using electronic prescribing. Otherwise you wouldn’t have been able to get that great deal on Augmentin.

  • HJ

    It’s interesting you contribute the quality of your care to paying cash and not to the fact you are a doctor. In this article you imply that doctors don’t offer patients appropriate health care for financial reasons. As a patient, if I were to say something like, “My doctor cares more about his bottom line than my health,” I would guess I would be heavily criticized.

    One thing that keeps my away from the doctor’s office is the feeling that I will get nothing out of the appointment if I don’t want an array of tests. Perhaps it only seems that patients want every test available because those that don’t want testing, don’t come see a doctor.

  • http://turnyourheadandcoughMD.blogspot.com Max Power

    Wait a second, you are saying that when patients spend their own money, they are more judicious with how it is spent?

    Your suggesting that physicians, when they are face to face with the economic impact that their treatment decisions cause, they find ways to boost the value of their patient’s dollar?

    This sound suspiciously like a free market to me. And we have all been told that the free market just doesn’t work. Right?

  • Alina

    DocD and Max – why is it always the patient that’s being blamed? Why doctors never really look at their colleagues to see that not all are “created equal?” Who is really the Subject Matter Expert, the patient or the doctor?
    Shouldn’t the doctor be responsible for recommending the appropriate treatment? As a patient I’ve experienced both sides – doctors who are responsible and prescribed what they should and others who order unnecessary tests just to make another buck. It’s all about ethics and respect for self (as a doctor) and for the patient.

  • http://turnyourheadandcoughMD.blogspot.com Max Power

    @ Alina.

    I don’t recall putting the blame on the patient. And you are presenting a false dichotomy by pigeonholing physicians into either “prescribing what they should” or ordering extra tests “just to make a buck”.

    Nobody is disputing that health care is not as efficient or cost-effective as it could be, but the reasons are more complex than doctors being greedy.

    Because virtually all health care costs are paid by a third party, neither the patient nor the physician have any emotional attachment to the cost of the services. Neither of them have any real incentive to restrain the amount of treatment delivered.

    You and others can argue that physicians should just exercise self-restraint solely out of their sense of ethics. It would be nice if they did, and maybe all our woes would be solved. But it still remains that despite the efforts of all the talking heads and finger waggers, doctors still order numerous tests “just to be safe”.

    Did it occur to you or anyone else why the doctor spent 45 minutes with the patient? I’m quite sure it was not out of charity or goodness so much as it was the fact that the doctor was actually paid for his time.

    If a patient is paying cash, then I can charge a fee that adequately covers my cost. I am going to want to keep that patient coming to me, so I am going to take extra care that the patient feels that they are getting their dollar’s worth. I am going to arrange my practice so that I can be as efficient as possible, and at the same time, giving the patient the time and care they are paying for.

    At the same time, the patient is going to judge the quality of care, my use of their time, and the services I offer, and make a decision as to whether they want to continue to utilize my expertise.

    Note that these are not foreign ideas. These are the principles employed during practically every single business exchange. Yet they are completely foreign in medicine. Why is that?

    • Alina

      Max – I don’t recall putting the blame on the patient.
      You said “Wait a second, you are saying that when patients spend their own money, they are more judicious with how it is spent?”
      Alina – With this statement you’re suggesting that when patients don’t pay the bill, they just don’t care about how much the tests cost. Anyway, that’s just not the case. You’re basing everything on the cost, but as a patient is that the only thing you consider? Not all tests are without risks you know. Some can actually do more damage and if they are unnecessary, would you go for it?
      Max – And you are presenting a false dichotomy by pigeonholing physicians into either “prescribing what they should” or ordering extra tests “just to make a buck”.
      Alina – When a physician recommends a test that even the patient knows is not necessary then we can’t really say it is done “just to be safe.” PCP said was puzzled by recommendation, specialist second that and an overseas physician was able to correctly diagnose patient via a mere telephone conversation. That to me sounds either like pure incompetence on the part of the recommending physician (which had many years experience) or he did it to make more money (the facility would have benefited from performing more tests, quite costly I may add). Guess what, it wasn’t about the money as the patient’s insurance would have covered everything. So, I stand by my initial post when I said that some physicians are really good, while others are quite the opposite (for different reasons).
      Max – “Did it occur to you or anyone else why the doctor spent 45 minutes with the patient? I’m quite sure it was not out of charity or goodness so much as it was the fact that the doctor was actually paid for his time.”
      Alina – Okay, this one is really funny. Since you brought it up, why did the allergist spend 45 minutes to diagnose a sinus infection? And how much does it take to Rx an antibiotic for this? Further, the author says that the allergist is an acquaintance, former attendant to be exact. So Jay pays the allergist $150 so they can go down memory lane and probably make small chat. I do that with my friends and acquaintances for free! Seriously, now, would you pay $150 for a sinus infection diagnosis? Where is the value in that? That could have been done in 5-10 minutes.
      As I posted a few days ago my PCP spends 30-40 minutes even with Medicaid patients and he gets paid by the same formula as the rest of his peers (I know, I know some states pay more than others, but he’s not in a top-paying state). Some insurance companies also have quite liberal fees and spend a pretty penny for a longer visit.
      Max – If a patient is paying cash, then I can charge a fee that adequately covers my cost. I am going to want to keep that patient coming to me, so I am going to take extra care that the patient feels that they are getting their dollar’s worth. I am going to arrange my practice so that I can be as efficient as possible, and at the same time, giving the patient the time and care they are paying for.
      Alina – Interesting. So for all your patients who are covered by an insurance plan, do you tell them upfront that you would not give them all your attention, and in fact they will receive suboptimal care b/c they are not paying you cash?
      Max – At the same time, the patient is going to judge the quality of care, my use of their time, and the services I offer, and make a decision as to whether they want to continue to utilize my expertise.
      Note that these are not foreign ideas. These are the principles employed during practically every single business exchange. Yet they are completely foreign in medicine. Why is that?
      Alina – Incidentally I know a thing or two about business strategy. The whole thing with all doctors going into cash-paying practices, as it’s being suggested all the time, I can tell you that it will never happen – for a series of reasons. I’m not going to go into business strategy now (nothing is free, right? ), but will tell you that first and foremost, a provider or manufacturer has to always consider the customers, their willingness and most importantly ability to pay. The market would never support such a model, especially in these current conditions. Not all of us live in the Hamptons, you know….
      If you are a physician and you take all forms of payment, you have a duty to serve all your customers the same, unless you disclose upfront that your services and the amount of effort you put in will be different depending on their payment form. I suspect that’s not the case.
      If you want consumers to chose then you also have to offer price transparency. Right now, not even the walk in clinics where they expect you to pay cash don’t advertise their prices. I never understood this concept where you’re expected to sign your life away without knowing exactly what you’re going into.

  • Med Humanities

    After having xrays for another problem, my internist reported the results (negative) and mentioned that the radiologist noted some spinal stenosis & recommended an MRI. Since I have little or no discomfort from the stenosis, and was not planning on doing anything about this “incidentaloma,” I refused the MRI. It should be noted that I am fully insured and it wouldn’t have cost me a dime.

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