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Top Doctors Move to Simpler 'Self-Pay' Business Models

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Partly in response to the Affordable Care Act (ACA), and partly due to the ongoing squeeze from the insurance industry, leading doctors in private practice are transitioning out of insurance, and into all cash billing. This simpler 'self pay' model holds advantages for both doctor and patient, with faster access to care, unhurried appointment times and price transparency with no mysterious billing practices.

The common wisdom has been that the ACA will result in healthcare rationing, with 40 million newly insured patients entering a market with no additional healthcare providers. However, leading doctors in high demand are finding that with effective marketing of their services, they can simply opt out of the Obamacare insurance products altogether, in some cases only accepting cash as payment for their services.

The cash market for healthcare already totals more than $250 billion (including co-pays, non covered procedures and fee for service providers). Moreover, the trend to cash pay healthcare has been building for years in Primary Care. It's now estimated that over 4,000 Primary Care providers have transitioned to 'Concierge Practices,' where patients pay an annual cash fee for unlimited access. This trend is now starting to include Specialist Care providers too.

Online Marketplaces

hello md
Hello MD

Technology is playing a role in the transition. Many new companies are focused on providing lesser quality care, for more people. These include a number of Telehealth services where 24/7 accesses is provided over telephone or video link to a licensed provider for a cash fee. Pricing varies but is typically around $50 or less, which is comparable to parking, co-pays and time wasted in a traditional doctors office visit. Others have established online marketplaces where patients can shop treatments for a cash price, which has brought price competition to an otherwise inefficient market.

For doctors unwilling to compromise on the standard of care provided, a move to all cash billing along with more effective marketing offers an attractive alternative to the insurance market. One such provider is orthopedic surgeon Dr. Nicholas Colyvas in San Francisco. Along with the transition of his surgery practice, he has invested in HelloMD - an online marketplace for leading doctors - and taken a management position as the company's Chief Medical Officer.

"Talk to any doctor today and you will quickly start to understand the level of frustration with the insurance markets." said Dr. Colyvas. "You are expected to provide service, with no guarantee of payment, a lengthy billing delay and ever-reduced compensation for doctors. Being able to simply set a cash price, and get paid at time of service is attractive to leading doctors that have demand for their services." he continued.

Foreign Patients

Another lucrative source of self-pay patients lies in foreigners who would pay cash to access top US medical care. It's estimated that as many as 1 million such patients visit the US each year from countries in the middle east, Europe, Russia and increasingly China; where an estimated 2 million millionaires are poorly served by their local healthcare system. The sum total of this inbound 'medical tourism' is estimated at $5 billion each year. Much of that has gone to large hospitals, but individual physicians in private practice are now turning to online strategies to market their services directly to these patients. With foreigners able to compete with US patients for access, top doctors are starting to prioritize their schedules through simple compensation criteria.

Tiered Healthcare System

Just like countries with socialized healthcare provision, it seems clear that the US is transitioning to a system where different levels of care are accessible, according to socio-economic realities of the patient population. A basic level of care will be provided to most people, however limited provider choice and lengthy wait times are forcing those with the means to pay into a partial or total cash based system. These factors and others have created fertile conditions for leading doctors in private practice, to transition their business models to the top end of the payer mix, where a high standard of care continues to be provided. From an international perspective, the US continues to represent the best care available, and patients from other countries are increasingly competing for the time of these world-leading expert doctors.

Mark Hadfield is the CEO and Founder of HelloMD, an online marketplace of top doctors. The company connects patients seeking the best medical care available with a leading specialist in their area, for a simple cash price.

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