Move from Medicare to the Market

Physicians Practice: In presentations and seminars, you've said that for a lot of physicians, the way to become less dependent on Medicare and other managed-care programs is to be more "market-driven." What do you mean by that?

Amish: It's really about being focused on the customer and the overall needs of the marketplace, and then providing people what they desire. Take a look at your end-customer, your patients, and ask: What is valuable enough to them that they might be willing to pay more for it than what the government will mandate or an insurance plan will cover? Clearly, some of the most skilled physicians are already doing this. They've basically said, 'We're no longer going to accept new Medicare patients, or certain HMO patients.' Or if a patient has Medicare or a particular insurance plan, they'll tell the patient, 'You can pay us cash upon service delivery, and we'll give you a receipt that spells out the appropriate codes, and you can deal with the payer yourself.'

Physicians Practice: But are these tactics available only to those physicians who attract the highest-income patients?

Amish: No. There are many things the average practice can do to be more customer-focused and engender loyalty. For example, in California, some primary-care physicians are saying, 'I will guarantee that I will be your physician. I'll take care of you and make sure you have exactly what you need -- and I'll do it for a set fee per year. And it will cover everything except major surgery.' We've had a couple of physicians here who've gotten people committed to writing a check on the spot, because one of the things consumers are most distressed about is a lack of control. They're frustrated that every time an employer changes health plans, they end up with someone new. And it's the same with government programs like Medicare -- patients have to go to whoever is available.

Physicians Practice: What you're describing is essentially a different type of capitation -- with the patients paying a set fee out-of-pocket, even though they may have insurance. Why are they willing to do this?

Amish: They want a certain quality of care, and they don't feel like they're getting it anywhere else. So they're willing to pay. What kind of car do you drive -- a 10-year-old Ford Taurus, or have you chosen to pay extra for a car with features you want? I once screwed up an ankle, had surgery, was in a cast, and the cast got wet. They took the cast off, put on another one, and it was too tight -- my toes were turning blue. ... They said they weren't going to take it off because it wasn't covered by my insurance. Finally I just asked, 'How much is a new cast?' They said $100, and I wrote them a check.

The point is, we've become complacent as consumers because we think the insurance system is going to take care of us, but in many cases, the rules are so rigid, that's not what it's about. And physicians who say, 'We're going to provide you the care you need, the care you want, we'll provide the extras nobody wants to pay for' - those physicians will do well.

Physicians Practice: What's driving this trend?

Amish: Look at how bad things have gotten in healthcare generally. No stakeholder is happy with the current state of healthcare. Patients are unhappy because they feel like they have more restrictions. Hospitals are having fewer beds booked, and they have less money for staffing. Nurses are unhappy because they have too much paperwork and not enough nurses on the floor. The insurance companies are unhappy because the prices and claims keep going up. And employers aren't happy because despite using managed care, their costs keep rising. Everyone's unhappy, and that's a prescription for one of two things: transformational change or chaos.

Physicians Practice: How is this situation affecting physicians in particular?

Amish: Physicians are getting squeezed. They're being asked to accept less money, to do things faster, they have more and more paperwork associated with how they get paid, and every time they turn around, there's more pressure to pay them less for something. And that puts a second pressure on practices -- most of them went into business because of a desire to heal and cure. When there's more financial pressure on them, they find themselves unable to give everything they want to their patients.

Physicians Practice: The preconception is that the financial pressure is coming more from government payers than private payers. Do you agree, or do you think it's about equal?

Amish: It's not equal, but clearly there's discontent with private payers, as well. It's highest with HMOs, but not exclusive to them. Meanwhile, the cost [of insurance] keeps going up and up, and people feel like they're getting less and paying more. So the value proposition seems to be going down, and people don't like that.
And the government, every time they cut payments or say something isn't going to be covered, private insurers follow suit -- and they do that almost in lockstep -- so the whole system is very frustrating.

Physicians Practice: How do demographics come into play?

Amish: Well, one of the things happening demographically is that baby boomers are getting older, and as a group, they've been a pretty rebellious lot. Right now they're rebelling against the medical system. They're saying, 'We want to be partners in these decisions. We want more than six minutes of your time. We want you to educate us and talk to us about the options. And then you can tell us what's covered and what's not.'

Physicians Practice: This one-fee-covers-everything model is very different for most practices, isn't it?

Amish: It is different. And I'm not recommending they all move to that. What they need to do is figure out what they do well. For example, if you're a physician with a loyal patient base, and you like taking care of everything for people, then maybe a one-size-fits-all model would work for you.

But maybe you're a doctor with exquisite surgical skills, and you should get some extra certification in plastic surgery. Maybe you're an excellent diagnostician, and you could charge extra for certain kinds of diagnostic services. Or if you have relationships with nontraditional healers, maybe you could put a practice together with an acupuncturist, a massage therapist, and a chiropractor. Every physician needs to create a practice that matches their own strengths with what their patient group wants.

Physicians Practice: What about offering clinical services that aren't available at all in most managed-care plans?

Amish: I know a lot of dermatologists who are specializing in Botox treatments. There's a high demand for that because it's not as drastic as a facelift but makes you look a lot younger. Dentists are offering a lot more cosmetic dentistry: 'Let's see if we can make your teeth brighter.' Doctors of all kinds are looking at services that maybe aren't necessary, but that people do want -- and [they] want good quality because it does affect their health.

Sometimes an additional service is as simple as putting together ways to educate patients. People want that badly - the number two use of the Internet today is healthcare information. And people are willing to pay for it. A cardiology practice could do a seminar on exercise for heart patients, for example. If you have 50 people come in and you charge $35 apiece, does that help ease the pressure on the rest of the practice? Yes, it's huge.

Physicians Practice: And how do physicians figure out what to charge?

Amish: The smart physicians do a little research. What you offer and what you charge depends on what patients want and how much they want it. Touch base with patients to find out what their tolerance is for a price increase, if you provide an extra service. Ask them what services are really important to them.

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This article originally appeared in the January/February 2003 issue of Physicians Practice.