A Physician Overcomes His Addiction to Third-Party Money

Guest post from Steven Horvitz, DO

I am solo Family practice in southern New Jersey.

Back in 2006 I saw the writing on the wall that solo docs were in trouble. Revenues were stagnant due to insurer fee schedule reduction, yet expenses kept rising. My practice style does not fare well with quick visits so adjusting my practice to a treat-em and street-em quickly was not in my plans.

In 2005 United Healthcare and First Health insurers were creating issues with referrals and formularies and since I did not have a large percentage of those patients I dropped those plans. Most of those patients either switched insurance to remain with me or paid me my cash fee.

Around the same time Medicaid decided to demand a renewal with an application that would take many hours to review and put together. So I decided Medicaid was out as well. Both were business decisions and both worked. Since Medicaid only paid $16 a visit, I only informed the frequent flyers who abused the system that I no longer accepted Medicaid. They left. About a dozen others I never informed and just treated them pro bono without them knowing. I just didn’t submit any claims to Medicaid. Some of them made it out of Medicaid and remained with my office ever since.

So dropping three insurers, while probably only 10-20% of my practice gave me the confidence that my practice was not dependent upon insurance. But I still was not ready to terminate all 3rd parties. Yet the other insurers were starting to get bolder and tighten the noose further. So what to do next?

I was in a multi-specialty IPA that was in the process of losing the specialists to their own specialty IPA’s. So the primary offices remaining had a decision to make. Increase our membership and negotiate with insurers if they would, join into a newly merged large multi-specialty practice, or disband and go it alone. It probably went 50-50 with going it alone and joining the multi-specialty IPA. Of course I remained solo. But still in a predicament of the insurers noose.

I was then approached by a Concierge company who wanted to convert my practice over. This was way back in 2007. I allowed them to survey my practice. They thought it would work. I agreed it would work but I still declined. In my opinion, the patient annual fee asked was too high and would limit the amount of patients in my community who could afford to see me. Interestingly, I believe the annual fee is the same today, 8+ years later.

So I was still stuck after turning down all the above options. So I had to decide what I wanted to do. So I wrote down my requirements.

  1. I wanted to remain in control of my practice. That meant remain solo. So no joining a group practice.
  2. I wanted to keep my fees within the range of 95% of my community and be allowed without fear of breaking any law, to reduce my fee or do pro bono work if I chose.
  3. I wanted less intrusion into my practice which meant lessen the impact of third parties.
  4. I wanted to lower my overhead.
  5. I wanted to continue with an open schedule that I controlled, seeing patients for as long an appointment time as I wanted/needed.
  6. I wanted to treat patients as I believed necessary, and not be beholden to EBM or insurer guidelines that I disagreed with.
  7. I wanted my practice to be both professionally rewarding and financially viable.

So I gave it 2-3 months to sink in, researched various models of care available at the time, and decided to get off the third party ship before it sunk. I sent termination letters to ALL insurers other than Medicare in the Fall of 2007, so by January 2008 I was free.

I took a hit with a reduction in income the first few years, but as I always lived within my means, it was doable. Probably just over half my practice left, but those were the patients who did not value my services. They believed docs were worth only a $10- copayment and treated us as such.

Every year since then my practice has grown in size and revenues. In 2009 I switched to FFS and DPC, even though DPC I don’t think had its name yet. In 2012, with the advent of Meaningless Use, I opted out of Medicare. Now it’s 2015 and I think I have the same amount of Medicare patients I did in 2012. Believe what you want, but seniors do value our services. They remember when it was customary to pay a physician directly. They are on our side in this battle but until someone leads they remain quiet.

Starting in 2015, all new patients in my practice must be DPC. FFS patients I had seen prior are grandfathered in and remain FFS.

Every patient in my practice is there because they want to be, they choose to be, and they value my service appropriately, at a price I choose and display on my website. It’s a pleasure to go to work every day.

Now I am helping recruit other docs for a DPC venture at no costs to them. In fact they can sign up while they are still indentured to insurers as the DPC patients will have their services carved out. I believe Josh Umbehr of Atlas MD has been helping many docs across the nation convert to DPC. There are other DPC models out there as well as Concierge models to choose from. The ACOFP and the AAFP are sponsoring a Direct Primary Care Summit in July. You just have to be willing and ready to explore, understand, evaluate and plan out what is best for you and your practice. While you must prepare for all contingencies, try not to let fear cloud your judgement. At the same time don’t let your ego lead you to believe you will be successful regardless of your new business plan.

The longer you remain in the system, the harder it will be to extricate yourself from it. Time is running out. If you believe in your abilities in a free market, the time is now.

It can be done.
It needs to be done.
It should be done.
Before it’s too late!

Steve Horvitz, DO http://www.drhorvitz.com/

1 thought on “A Physician Overcomes His Addiction to Third-Party Money

  1. 3rd party reimbursements come with so many strings attached. Medicare can go back 5 years & demand money back from you for billing/coding errors. Outrageous!

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