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Friday Interview: Healthcare Innovation

Apex doctor takes no insurance, requires pay at time of service

Welcome to Carolina Journal Online’s Friday Interview. Today the John Locke Foundation’s Donna Martinez interviews Dr. Brian Forrest of Apex, who has opened a medical practice that he believes is the healthcare model of the future. The interview aired on Carolina Journal Radio (click here to find the station near you).

Martinez: Dr. Forrest, first of all tell us about your medical practice in Apex and why it’s different from the traditional medical office that we’re used to encountering.

Forrest: Our office in Apex has been open now for about three years, and when we first opened, I made the decision not to except any health insurance contracts and to basically accept payment at time of service. My initial goal, I thought, was going to be to help serve people who fell through the cracks, who potentially did not have insurance, people that were normal cash-pay patients that often were in a position that they could not afford healthcare insurance, and they really had to pay for insurance — or for medical bills — out of pocket. What I found over the last three years that’s very interesting is that about 75 percent of my patients have some form of third-party medical insurance, and they still choose to come to our practice because of some of the unique features and the way we can practice medicine differently — by not accepting insurance and not having the overhead staffing and administrative costs associated with filing insurance.

Martinez: So it sounds like you have chosen to take the approach that gets you out of the traditional model that is very heavy in paperwork, dealing with third-party companies, etcetera. How does that benefit you as a business person, as a doctor who’s a business professional?

Forrest: I think one of the key ways it benefits us is that, before I started this practice, I had worked in a couple of different places and, even in residency, I remember that we were often asked to see 15 to 16 patients per half day. And in the private world of medical practice, patient visits have been shown to be increasing by 7 percent every year. Here in Raleigh, the average is between 20 and 30 patients per day.

Martinez: Really? That’s incredible.

Forrest: I really wanted to not be pushed that hard. I know a lot of patients feel frustrated, they feel they get sort of herded in and out of offices. They sometimes wait for 50 minutes and get seen for five by their provider. So what I really wanted to do is flip that around, not just for the patients, but also for me, so that I felt like I had time to spend with a patient, to enjoy our encounter and really feel like it wasn’t rushed so we would have time to make appropriate medical decisions. So a lot of times I tell people — and patients have told us — that the difference is, it’s sort of an inverted time frame where instead of waiting for 50 and being seen in five, in our office they can be seen in five minutes and be seen for 50 minutes. One of the major things that you would notice at our office is that a full-schedule day for us is usually 10 appointments. Then we leave the rest of the day open for walk-ins for our patients so that if they’re sick, they don’t have to necessarily wait two or three days to get in to see their healthcare provider.

Martinez: What I think is interesting about this is, it really seems to be creating a one-to-one relationship between the patient who is consuming healthcare and the patient actually paying [for] healthcare. That’s very different from what most of us are used to dealing with, where we have an insurance carrier, we pay a co-pay, a deductible, but we never really know what the cost of the services are that we’re consuming. Do you see your patients paying more attention to what they’re actually buying?

Forrest: We certainly do — and I’ll try to clarify some of that. When I was at Wake Forest, I actually did sort of an observational study myself where I talked to practice managers and actually looked at the cost of doing business per se for medical practice. And the interesting thing I found is that the average charge for just an average visit was around $93. However, the amount of money that it took these practices to collect their bill was about $50 per patient visit. So that meant that out of the $93 they charged, $50 of that was going to overhead. And the other issue is collections. A lot of times, insurance plans and patients who can’t pay or whatever, a lot of the times your collections are less as well. So, in this observational study, the average amount collected was only $39 and these practices were spending $50 per patient to collect $39. Well, obviously, if you do that math it means the practice managers were saying, “See more patients, see more patients.” What was happening was, we were actually losing more money, because what I have found is that, for my type practice, per provider, we’re saving about $210,000 a year in practice overhead. What we simply do is reinvest that back into the practice, such that we can reduce our fees, and our fees are about 50 to 80 percent less than the traditional practice because of being able to have low overhead by getting rid of these administrative cost associated with insurance.

Martinez: You believe this is the model of the future, and as you also know, in late 2003 Congress created health savings accounts. The goal was to have more people have access to healthcare coverage. Those [health savings accounts] are basically where you have a high-deductible, but low-premium insurance policy in which, if you have illness or an accident, you are covered, but the individual actually pays for more of the day-to-day things. Are you seeing patients who are coming in, who are accessing that health savings account model?

Forrest: Absolutely. We’ve had two types of patients. We’ve had patients who come to us initially because they know about our type of care and also that they know about — they already have — a healthcare savings account and they know that with our model, they will be able to save a substantial amount of money each year. And then the other phenomenon that we have is, a lot of our patients who are self-employed and who have maybe been buying their own health insurance out of pocket with co-pay coverage. After they are seen at our office for a while, they realize — it dawns on them — that they could be saving thousands of dollars a year if they would switch to a healthcare savings plan. So for instance, if a person had been paying $200 per month for a plan that gave them $15 co-pays at the doctor’s office, and they came twice per year, their total cost per year would have been $2,430. If that person changes to a high-deductible insurance and their premium was only $100 a month, and they paid $45 for an office visit at our office twice per year, then they would only be out $1,290 out-of-pocket per year. By using a healthcare savings account — which actually they’re going to be able to put pre-tax dollars in so actually they’re having another savings there — they can save over $1,000 a year over what they would have spent if they had had a traditional insurance and these lower co-pays.

Martinez: This does seem to be one of these classic, win-win situations. It sounds like patients are getting more time with you as the medical professional, also at a lower cost, and you feel good about the service that you’re delivering. Is that a fair representation of it?

Forrest: I think so. I think patients have had a very, very positive response to this. The insured patients value the increased access and the ability to spend more time with their physician. The uninsured patients certainly appreciate the fact that they’re getting charged a fraction of what they normally would. I think one of things is that people really think that routine healthcare is a lot more expensive than it is — because of the healthcare premiums they are paying. But it’s really not. In fact, I have a pre-paid option in my office where patients can pay $300 a year, which is only $25 a month, and basically all of their office care is free, including their cholesterol test, their prostate test, their hemoglobin A1c if they’re diabetic. And what we do for those patients is, they pay their $25 a month and we give them a $5 office visit for every time they come. So for patients who have multi-disease, complicated healthcare — like diabetic, hypertensive patients —we’re able to provide them a $300-a-year-care that pretty much covers their needs and takes care of all their lab work and other things. And, we really only charge extra for very, very unusual type tests.

Martinez: Dr. Forrest, I understand you are enlisting other doctors, that you are finding a lot of interest from other medical professionals in moving towards this model, are organizing folks.

Forrest: Well, I’m not organizing per se, but I’m certainly being sought out. I have probably met with dozens of doctors over the last year who have wanted to go out to lunch, who have wanted to do things — basically to get together and talk about this model. And several have put those into place and there are several new ones in Wake County starting now.