Tuesday, February 15, 2005, 12:00 A.M. Pacific
A health plan that covers it all: cash
By Nick Perry
Seattle Times staff reporter
A growing number of Washington doctors, pharmacists and patients believe they have found an alternative to the spiraling cost and bureaucracy of health insurance.
Cash.
The state's first cash-only pharmacy opened in Lynnwood last year. A Renton doctor who has spurned insurance is developing a national following for his brand of health care. And a Mill Creek practice is experimenting with its own cash-only system.
For some patients, paying cash for routine visits and prescriptions is becoming the norm. The rising cost of insurance is forcing some employers and employees into plans that cover only catastrophic care. Cash also can be the only option for the more than 600,000 people in Washington without any health insurance.
Carolyn Kunard, 54, is typical of a new breed of cash patient. When husband Craig Kunard was laid off from his job at the Experience Music Project in Seattle a couple of years ago, the Mukilteo couple found themselves paying $750 a month to keep their insurance through COBRA, a federally-mandated program that helps people maintain health insurance between jobs.
The Kunards found that their insurance did not help much with their prescription costs. So they switched to paying around $300 per month for a policy that covers only expensive, catastrophic care, and began paying the full cost for prescriptions. Then they discovered the cash-only Save Now Discount Pharmacy in Lynnwood.
"It's unbelievable to me the prices you can get here," Carolyn Kunard said on a recent visit.
Save Now founder Todd McElroy said that's because he saves up to 30 percent of staff costs by eliminating insurance paperwork. Even as the pharmacy becomes larger, the labor savings will be more than 15 percent, he said. That enables him to offer prices competitive with low-price Canadian pharmacies, he said.
"There are so many people out there in the U.S. who don't have insurance, or they have it and are losing it," McElroy said. "There is a big change taking place."
Professor William Dowling, of the University of Washington's School of Public Health and Community Medicine, said cash-only health-care providers remain a very small but growing part of the industry.
"Slowly but surely, employers are shifting more costs of health care to employees," Dowling said.
If the push by President Bush to move toward a consumer-driven health-care system — with higher out-of-pocket fees — really takes hold, the trickle of cash-only business could turn into a flood, Dowling said. And as people begin shopping around for bargains, more experiments like the Lynnwood pharmacy will undoubtedly pop up, he said.
Central to Bush's health-care agenda are health savings accounts, created by Congress in 2003. These combine tax-sheltered savings with high-deductible, catastrophic insurance. Only a tiny fraction of employers and employees have switched to such accounts. But with big tax breaks offered as an incentive, many more may follow.
McElroy's pharmacy, which opened last May, is still a new venture and has not yet begun turning a profit. But McElroy, a former pharmacy consultant, already has plans for a second branch in South King County.
Steven Saxe, the executive director of the state Board of Pharmacy, said that McElroy's business model is untested.
"It's not something that's generally done," Saxe added. "The biggest reason is that a lot of people do have insurance coverage, and you are effectively eliminating patients."
But McElroy points out that patients can still file their own insurance claims based on receipts — even if a pharmacy or doctor chooses not to deal with the paperwork.
Some doctors are already old hands at a cash system.
Dr. Vern Cherewatenko of Renton said he decided to switch to a cash-only system in 1998 after he found himself bogged down in insurance paperwork. For every minute he was spending with a patient, he'd spend seven minutes dealing with paperwork, he said.
Not anymore.
"I'm seeing a few less patients, but I'm able to spend a lot more time with them," Cherewatenko said. "I'm profitable and they're happy."
For each visit, Cherewatenko charges patients a fee ranging from $50 to $150, based on the amount of time they spend with him. He doesn't bill people. Instead, he takes cash, checks or credit cards at the time of the appointment. He refers out some services such as X-rays to other providers who also accept cash.
Cherewatenko also launched SimpleCare, a nationwide network of doctors and patients who support a cash system for routine care. He said 18,000 providers pay a small fee for an educational packet about running a cash-only business, and to be listed on a Web site.
"It's fixing the doctor-patient relationship. It's getting reconnected without the middlemen in between," Cherewatenko said.
The idea of being able to spend more time with patients also drove Guardian Family Care to move to a cash-only system, said Dr. Nancy Morgan, who runs the Mill Creek practice with her husband.
Morgan charges a monthly fee of up to $75 for each patient, who can visit as often and as long as he or she wants. Morgan said the idea was to get away from the treadmill of 10-minute patient visits offered in traditional practices.
"We were looking for a way to get back to old-fashioned medicine where the doctors and patients decide how much time they spend together," she said.
While Morgan targets middle-income earners, other Seattle doctors are targeting wealthy patients by offering high-end "concierge" medicine. Patients can pay up to $10,000 a year for first-class, personal medical attention, including doctor house calls to vacation cabins.
Such retainer-fee systems have raised concerns at the state Office of the Insurance Commissioner, where officials think that the doctors may be offering an unregulated form of health insurance. The insurance commissioner is considering new regulations for such practices, a spokeswoman said.
There are potential benefits and downsides to a cash-based system, said Dowling, the UW professor.
The benefits include a more competitive health system, and patients becoming better informed and more selective about when to use services, he said. More employers also might be able to offer some health coverage if it cost them less, he added.
But early studies show employees who choose catastrophic coverage tend to be healthier and wealthier than the general population — which could cause premiums to rise for those remaining in traditional plans, Dowling said.
And paying cash may discourage lower-income earners from getting routine checkups, increasing the chances of more serious problems developing, he said.
"There is an ethical issue when increased out-of-pocket costs affect low-income people more than others," Dowling said.
Nick Perry: 206-515-5639 or nperry@seattletimes.com
seattletimes.nwsource.com |
