David vs. Goliath: Individual Care or Institutional Care – by Robert Nelson, MD

I love to comparison shop; especially when it comes to electronics and computer stuff. I compare all the specifications, acronyms and numbers. I’ve even been known to immerse myself in Consumer Reports, with all the gusto of researching a doctoral thesis, before buying home appliances. The word nerd comes to mind. I confess, it was a pretty intense two weeks leading up to the purchase of our washer & dryer a few years ago. But, I am happy to report that the pair has worked flawlessly, thanks to my meticulous scrutiny.

Trying to find better ways to do things has always intrigued me. It seems this tendency to compare and want the best carries over into my professional life as a doctor. Deep down, I suppose I knew early on in my career that there was a lot of dysfunction and really messed up processes going on in health care. Seeking a better way to practice medicine is what set me on the journey to eventually start my own Direct Primary Care medical practice.

Maybe it’s time we do a little comparison shopping to make sure we are getting the best value for our health care dollars and make sure our best interests are being represented.  


So for comparison purposes, I’ll refer to medical practices like mine as David. To be fair and give due credit, there are many other “Davids” out there that existed before me and blazed the trail for me and those that follow. Before we discuss David in more detail, let’s review what a trip to the doctor can encompass based on standard operating procedures that are in place currently.

There are a plethora of the speed bumps, pitfalls and snares associated with a routine visit to the doctor. Seeing a doctor for a simple problem can sometimes feel more like you are filling out a mortgage application or tax return! I am speaking of issues that pre-date the Affordable Care Act. However, the ACA just piles on the costs and dysfunction as opposed to improving it.

First, there are networks issues to consider: is the doctor in or out? (Sorry, we are not in your network so we require a deposit of $250 before we can see you. Really?) Do you need a referral from you primary doctor? Is your policy a PPO or POS or HMO? Do you pay the primary care co-pay or the urgent care co-pay? Have you met your deductible? Does co-insurance apply? Not to mention the delays often encountered when trying to verify coverage & eligibility after hours or weekends, etc…

I’ll call this conventional, institutional-sponsored path of going to the doctor, Goliath.

And, many of the Goliath-associated hassles are often endured for problems as simple as Strep throat or an earache! These hurdles have become the new normal; occurring more regularly than not.

Sure, some patients walk in, pay their co-pay, see the doctor and then leave. Even with those “easy” cases, there were all kinds of busy work going on behind the scenes. This non-patient care work adds a tremendous amount to the cost of routine health care because a third party is paying for it.

These non-patient care costs include the front desk person who enters the insurance and billing information; the coding & billing personnel that make sure the chart is documented correctly so it is “billable”; the claims specialist that reviews the charges and submits the “claim” for work already done, who then has to adjudicate the claim if it wasn’t paid correctly or try to collect balances from the patient.

Anyway, I think you get the picture. It is a tricky maze to maneuver through; and it’s only going to get worse. And I didn’t even mention the expense to the patient and/or employer for the privilege of being able to carry this cumbersome and expensive product called a Health Plan. The average cost of a family Health Plan sponsored by your employer is approaching $17,000 dollars per year! Do we really need this complex, expensive, hassle-laden Goliath of a product just to see a doctor? Apparently the answer is mostly, “yes” for the majority of Americans.

Friends, this IS the sorry state of our health care landscape in the U.S. – and it is totally unnecessary. It does NOT have to be this way.

David to the rescue! Doctors are choosing this type of medical practice pathway all across the country in order to provide more personal, less expensive, more flexible, more lifestyle friendly routine medical care; even to the uninsured, under-insured and self-insured. These new models, called Direct Primary Care or Direct Pay Medicine are helping many people have access to medical care that had previously avoided needed care due to costs or other impediments to access.

So, why and how did routine medical care become so complex and full of bureaucratic red tape? It would take an entire book to tell the whole sad story.

Suffice it to say, that about 40 years ago physicians and complicit patients, both with understandable motivations, ceded the purse strings of routine health care to insurance companies, now known as third party payers. We now pay these third parties a boat-load full of money, not only to insure us against unpredictable large economic losses like surgery or cancer, but they pay a majority of all the small stuff too. “Insuring” the affordable stuff (essentially prepaid care) is very expensive way to finance medical expenses and this is one of the main cost drivers in outpatient health care today. The other big cost driver is physician participation in health plan networks combined with ICD/CPT based billing. These two linchpins allow monopolistic-like control by insurance companies and account for the inflationary spiral of health care costs that we have witnessed over the past 30 – 40 years.

Here is the present day irony in all of this. The exorbitant insurance premiums we pay support the coding & billing procedures and those inflated charges justifies the premiums. This creates a situation called the “charge master’s price”. We usually associate this with hospital bills, but it applies to almost any transactions involving third party payers. The charge master’s price is essentially the charge one would pay if you were billed the raw charge that the hospital or medical practice submits to the Health Plan based on a given code level. The usual victim of this phenomenon is the unwitting self-pay patient who tries to do the right thing and pay their bills.

This is the stuff that bankruptcies are made of. And of course, the doctor doesn’t get paid the full amount billed to the insurance company ~ they usually receive about 60% of what is billed after everything is adjudicated and collected.

The charge master’s billed charges serves to support and justify the premium and that is how publicly traded health plan companies make a profit. The mechanism works the same for non-profits, but they just call it revenue in excess of expenses. The self-pay patient often feels the direct blow head on, but we all pay way more than is necessary is this dysfunctional system.

That thought brings us full circle back on topic.  Let’s compare David and Goliath.  I have constructed a table that compares an ideal (in my mind) outpatient health care model with the realities of today’s third-party dominated system.

Click on the link below and review the chart.  Which one do you prefer?

David vs. Goliath

by Robert W. Nelson, MD

Editor & Publisher: The Sovereign Patient

January 20, 2014