Physician cuts out insurance, sets up flat-fee practice
“I tried to remove all the things that, if you look at studies, inflate costs.” Dr. L. Lee montgomery
In early 2010, Dr. L. Lee Montgomery was practicing in the McComb, Miss., area when an article in Medical Economics magazine caught his eye. The story was about a North Carolina physician who didn’t accept insurance or file claims paperwork; whose patients paid him at each visit; only worked an eight-hour day; and earned twice as much as a typical family physician.
Montgomery, who worked in hospitals and nursing homes, forgot about the story until late last year, when he helped a friend set up her own practice in Summit, Miss.
“The more we started talking about the model, the more appealing it sounded to me on many, many levels,” Montgomery said. “So as I was helping her set up her practice, I became more and more excited to set up my own private practice in the same model.”
In mid-March, Montgomery opened Louisiana Family Medicine on Perkins Road. He picked Baton Rouge because he wanted to live in a metropolitan area in the Southeast, and the city offered a more family friendly location than New Orleans for his children.
Montgomery is targeting two growing segments of the population: people who don’t have health insurance or who are covered by high-deductible plans, as well as small businesses that can’t afford to provide coverage to their workers.
His pitch is simple: For $29.95 a month, a patient becomes a member. Members pay $50 for an office visit and $10 for most lab tests. Patients also have the option of $10 video-chat visits. Employers can get their workers access to primary care without shelling out thousands of dollars a month for group health insurance. Montgomery is also trying a blended approach, accepting patients’ insurance coverage while building up the new practice.
“I tried to remove all the things that, if you look at studies, inflate costs,” Montgomery said.
This means no X-ray machine or other imaging equipment and no in-house laboratory.
Studies show that doctors who have X-ray machines in their offices order more X-rays than physicians who don’t have the machines, Montgomery said. The same holds true for physicians who make money off of lab work, he said.
Montgomery said his practice model also avoids other pitfalls common to the health-care system.
For example, the current fee-for-service model is set up so that doctors don’t get paid unless the patient comes into the office, Montgomery said. Physicians can manage some things by telephone or video chat, but insurance companies won’t pay for those consults.
So doctors’ whole motivation becomes getting patients in the door because that’s the way to get paid, Montgomery said.
By leaving insurance companies out of the equation, Montgomery’s patients get to do video chats with him.
Although the technology isn’t adequate for diagnosing a new problem or an emergency, a video chat has its place, he said.
Say a 30-year-old woman came in for an office visit to have her antidepressant medication adjusted, Montgomery said. The patient should have a follow-up in a week or two, but with a video chat she doesn’t have to take half a day off from work for an office visit that, at some doctors, costs $70.
The video chat lets Montgomery see the patient’s face and ask how the medicine is working and whether there have been any side effects, Montgomery said.
If the patient is happy with the plan of care, Montgomery has accomplished the treatment goal, he said. And everyone has saved time and money.
Montgomery is one of a growing number of doctors trying non-traditional practice models.
The 2009 American Academy of Family Physicians survey found that 1.2 percent of respondents were in a concierge, boutique or retainer medical practice. In these practices, patients pay a monthly or annual fee in exchange for physician services.
In the 2010 survey, 3.0 percent of respondents said they were in cash-only, direct care, concierge, boutique or retainer practices.
Dr. Glen Stream, president of the American Academy of Family Physicians, said that in visiting the academy’s chapters he hears more and more about examples of cash-only primary care models.
“It’s still a fairly small number of practices, but I do think it’s growing, at least in my non-statistical survey method,” Stream said.
Whether the number of these practices continues to increase depends on whether the U.S. Supreme Court rules on the constitutionality of the Affordable Care Act, Stream said. If the law is tossed out, a lot more people will see the model as a solution to the current system.
Working-age, relatively healthy people pay an enormous amount of money for health coverage, but they usually don’t need much health care, Stream said. For many, combining a high-deductible plan and “a sort of pay-as-you-go model” for minor health issues and preventive and wellness care makes more sense.
“Insurance makes great sense if I need a heart transplant or if I have a stroke, and I’m ill, and I need rehab services for months and months,” Stream said.
But it’s sort of odd for insurance to finance the management of a minor chronic illness like high blood pressure or a routine checkup, Stream said.
Montgomery said his practice complements high-deductible plans, a growing part of the health insurance picture.
In 2011, 16 percent of insured adults were covered by the plans, more than three times the amount in 2005, according to the Employee Benefits Research Institute
Stream said the so-called cash-only practice model — patients also can pay with credit or debit cards — cuts out the overhead expense of the insurer.
Physicians can provide services at a more reasonable cost for patients and potentially be more financially successful at the same time, Stream said.
Meanwhile, Montgomery’s other target group, the uninsured, is also on the rise in Louisiana. In 2009, 20.1 percent of the state’s adults didn’t have insurance, according to an LSU report released in February. In 2011, that number jumped to 22.7 percent.
Neither the Louisiana State Medical Society nor the American Medical Association has statistics on cash-only practice numbers, said Sadie Wilks, a spokeswoman for the state medical society. However, the Physicians’ Foundation, a nonprofit that helps doctors improve their practices, is now doing a nationwide survey that includes practice metrics, and those results will be released this fall.
Jeff Williams, executive vice president of the Louisiana State Medical Society, said the current health-care environment poses a number of challenges for patients and physicians, including national health reforms, the state’s transformation of the Medicaid program, as well as skyrocketing insurance premiums for businesses and individuals.
“As a result, we will begin to see more innovative practice solutions as physicians try to find ways to make health care more accessible and affordable for their patients while continuing to provide the highest quality of care,” Williams said.
Stream agreed that there are all kinds of models being tried.
In the state of Washington, workers whose health plans allow them to make pre-tax contributions for things like dental work can use that money to pay the monthly membership fee, Stream said. That works out well for the patient and the practice.
Other states, such as Oregon and California, have passed legislation to allow for these types of practices, Stream said.
“I think we’re seeing a whole lot of different efforts to adapt to a dysfunctional system,” Stream said.
Montgomery said he’s excited about his practice model.
Unlike a concierge practice, where patients pay annual fees of $1,500 or more, the cash-only model doesn’t contribute to the shortage of primary care physicians, Montgomery said.
Concierge practice models are great for doctors, Montgomery said. A well-established physician with 3,000 patients can reduce that to 600 people with a concierge practice, reducing his workload while increasing his income.
The problem is that the United States already has a shortage of primary care physicians, he said. If primary care doctors start cutting the number of people they treat by 80 percent, the problem gets even bigger.
Montgomery said his model can increase access to care.
“I think it’s one of those few wonderful opportunities where I can make a true difference, making the world a better place, and make a fair living,” Montgomery said.
The practice will provide primary care at a reasonable cost to people who don’t have good access to that care, Montgomery said. These patients won’t end up in the emergency room, incurring thousands of dollars in debt that they can’t pay, and that helps everyone.