The following is a post by MPFJ staff writer, Kevin Mercadante, who is a professional personal finance blogger, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry.
Obamacare is causing a rise in cash-only doctors, a trend that has been at work for several years but seems to be accelerating. We’re not seeing a wholesale shift of medical practices going from primarily insurance-based payments to cash, but the number making the conversion is increasing steadily, at least from very low levels.
There are a number of reasons why both a doctor or patient would want to go the cash-only route. Though it isn’t for everyone, there are circumstances where it makes a lot of sense.
Why a doctor would go cash-only
As much as anything, the healthcare industry is seeing massive shifts as a result of healthcare reform. What will be seen under Obamacare is more of a top-down system, which will invite a far higher level of rules and regulations. Many medical practices have already been struggling under the weight of increasing administrative responsibilities from healthcare insurance companies. But Obamacare is giving government a greater say in the process, which is increasing that burden substantially.
It’s not just that the increase in rules and regulations is merely irritating. Every healthcare practice experiences direct costs as a result of compliance. This will raise overhead in the form of increased staffing in order to meet compliance requirements. That will have the domino effect of also increasing indirect employee costs, higher insurance expenses, greater benefits, and even rental space for a larger staff.
A medical practice can sidestep these expenses by opting out of healthcare reform – and the insurance benefits it will provide – and going the cash-only route. It’s a form of cutting out the middleman – the insurance companies – in the healthcare industry.
Cash-only doctors are also able to treat patients the way they see fit. Participation in healthcare networks and their insurance company sponsors can create a series of enforced protocols, that a cash-only doctor does not have to adhere to. This gives the doctor much more flexibility in treating patients.
There’ll also be more flexibility in treating patients who are either struggling financially, or going without health insurance altogether. Doctors can charge lower fees with a cash-only basis, even adjusting those fees to the patient’s ability to pay.
Cash-only arrangements generally come in two forms: fee for service and subscription. Fee for service means that you can walk into a doctor’s office, receive treatment, pay in cash, and be on your way. With a subscription service, you pay a monthly fee to the practice, which can often get you unlimited visits.
Are there benefits to you as a patient?
There may be even more reasons why you as a patient would want to consider cash-only doctors. There are also downsides, and we’ll get to those in a minute. But first consider the following benefits:
People who don’t have health insurance.
Cash-only doctors will have an obvious advantage for people who don’t have any health insurance at all. Even though the healthcare reform law requires everyone to have health insurance, or face penalties, it’s still very likely that there will be millions of people without coverage anyway. Cash-only doctors will be a definite option for such people.
Cost. At some practices it may be possible to have doctor visits that will cost less than the co-payment you’ll need to pay under your health insurance plan. You may also get an increased level of service from a primary care physician, rather than getting shuttled off to a battery of specialists that are mostly matter of doctors practicing defensive medicine (that is, protecting themselves from lawsuits).
A return to the days of the family doctor. Under the current healthcare arrangement, doctors are typically limited to spending no more than a few minutes with each patient. The cost and burden of participating in a health insurance network require the doctor to see dozens of patients each day. Cash-only doctors won’t have that requirement, and will be in a position to spend as much time with you as is needed. Some cash-only doctors have even returned to making house calls.
Eliminating hassles with insurance companies. I don’t know about you, but any time I or anyone in my family receives any kind of medical treatment, it sets off a chain reaction of interactions with insurance companies to get the claim reimbursement for services rendered. Cash-only doctors will eliminate that interaction. It’s a cash and carry arrangement, and that’s the simplest form of business transaction.
“Concierge care”. This is essentially a subscription type service, and you pay a monthly fee for unlimited visits. It may also include a wider range of treatment options.
Competition to mainstream healthcare. We don’t usually think about the big picture when it comes to health care – we’re primarily interested in being treated. But cash-only doctors represent a potentially viable alternative to mainstream healthcare, and that may put downward pressure on fees and prices even with medical practices that work with insurance companies.
NOTE: The term “cash-only”, also extends to debit and credit cards, and presumably private installment payments. It’s use refers to the absence of funding from insurance companies.
The downsides of cash-only doctors
For all of its virtues, the concept of cash-only doctors is not without its limits. Most obvious of course, is that cash-only is only viable at the primary care level. If you are operating without health insurance, and relying on cash-only doctors to treat you, it’s just a question of time before you will have a major medical expense that you will have to pay out-of-pocket. Because of cost, it’s unlikely that the providers of such services will accept a cash-only option.
If you are young and healthy, and rarely use health care of any sort, the cash-only concept will work well for the occasional doctor visit. But if it includes participating in a monthly subscription service, it may end up costing you more than you ever get out of it in benefits.
And since cash-only doctors are not part of insurance arrangements, it is unlikely that they are in any wide healthcare networks that would provide a large number of choices as to providers for expanded medical services. Again, this can be a complication when healthcare needs rise beyond the primary care level. Sooner or later, you’ll brush up against the need to use the services of insurance-only providers, and you’ll have to be prepared for that outcome – even while using a cash-only primary doctor.
You can find cash-only doctors in your area simply by doing a web search that includes cash-only doctors along with your ZIP Code. And of course, never overlook the value of word-of-mouth referrals from other people.
How about you all? Have you ever used – or considered using – the services of a cash-only doctor?
Share your experiences by commenting below!
***Photo courtesy of http://www.flickr.com/photos/eroc/7175277081/sizes/n/
