4/21/2017 7:23:00 AM Free-market movement slowly gains steam Tadych: Transparency, doctor direct self-pay can lower health care costs dramatically
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As the national and local debate over health care continues to fester, mainstream Republicans and Democrats are boxing each other within a small ring of policy parameters, meaning they are mainly sparring over how much to fund or regulate within the existing health-care system, and arguing the finer points of how to lower health-insurance premiums, if they can.
In other words, policy makers are tweaking around the edges of what already exists.
But the basic foundation of the health-care system remains largely unchallenged: a three-constituent model of consumers, health-care providers, and the institutions that orchestrate the delivery of services from providers to consumers - and determine their pricing - namely, hospitals, insurance companies, and the government, the latter element forming a bureaucracy of care wherein decisions about pricing, protocols for care, and insurance requirements and choices are made.
The current debate is largely about the balance of power within the bureaucratic arrangement.
Just beyond the TV headlines, however, and growing in communities across the United States, is another health-care vision, a determined and alternative movement to restore the principles of the free market to the health-care industry.
In this world view, a free market would replace the institutional bureaucracy, or middle man, and restore a direct patient-to-doctor relationship in a streamlined and largely two-component, or direct, system.
The motor of the current model certainly is not market-fueled, those who advocate for this approach assert, saying the system in place is a government income-redistribution scheme in which insurance companies, brokers, and hospitals operate in secrecy, both to hide the real costs of health care and to camouflage massive transfer payments that are taken from certain sectors of society and given to other sectors, mainly through Medicare and Medicaid.
Nationally, such groups as the Free Market Medical Association and surgical centers such as the Surgery Center of Oklahoma are working to re-establish direct patient-to-doctor relationships, in which patients can pay doctors a transparent up-front fee for specific procedures and services, and to inject pricing transparency into the health-care model, which is critical, they say, to giving patients the information they need to choose quality and reasonable health care.
In the Lakeland area, a prominent advocate for the free-market patient-to-doctor movement is Dr. Kevin Tadych of Northern Wisconsin Bone & Joint, a board-certified orthopedic surgeon who is also part owner of Northwoods Surgery Center in Woodruff.
"We know health care is screwed up," Tadych told The Lakeland Times in a recent interview. "We all see it. It's a major problem. We have the most expensive health care in the world, yet our life expectancies are going down."
But, Tadych said, there's a silver lining out there, for patients and doctors alike.
"The good news is that a lot of doctors are waking up, and they are starting to realize that we can deliver health care at a fair and reasonable price, and patients love it," he said. "We get our lives back. We kick out all the bureaucracy, and the hopeful picture is, we can deliver health care. The movement is catching on. It's nationwide right now. It's not just money. It's good care and reasonable price. That's what we want."
According to a Heritage Foundation report, there were about 4,400 direct primary care physicians nationwide in 2014, compared to just 756 in 2010 and only 146 in 2005.
How it works
When a patient opts for the direct patient-to-doctor model, or direct primary care, the patient agrees to pay a posted price that more accurately reflects the true cost of the care than the charge incurred by going through insurance does. Patients pay for a single procedure or service, and in some settings they can pay a flat monthly fee for a range of services.
The patient wins with a lower price, quality care, and a direct relationship with the doctor, and also by escaping the matrix of mandated and often unnecessary tests and therapies insurance companies require before they will pay for certain procedures.
Meanwhile, the doctor still makes a healthy living but cuts the costs, time, and paperwork hassles associated with processing insurance claims.
Transparency is the key to it all, Tadych says.
"When you get yourself to a fair price, you're not ashamed of your price because this is what it takes to make a decent living, and you're not going to give your services for nothing," he said. "No one can do that. The reality is, when you don't post prices, you game the system."
People are hurt, Tadych says, and it's not just in the form of lower life spans.
"Are you really helping people when you help them physically but destroy them financially?" he asked. "That is not ideal, when people are broke and bankruptcy rates are going off the charts right now with Obamacare. Finances lead to broken up marriages and other bad things."
It's a senseless outcome when one considers that health care is not that expensive to deliver, Tadych said.
"But guess what is expensive? Insurance," he said. "The top paid CEOs in our nation right now are insurers. That's screwed up. At United Health Care, Stephen Hemsley makes $66.1 million. He makes $254,000 a day. He makes more in 10 minutes than 90 percent of the hard-working people who are actually making stuff make in a whole year. That's wrong."
Everything about insurance is too expensive, Tadych says, and that's where direct primary care comes in.
"The direct primary care model is like going to Cosco," he said. "OK, you get a membership fee and then you get all the wholesale prices. One doctor in Kansas is charging like a penny a pill for drugs, a dollar for a CBC (complete blood count), CT scans are $300 bucks. It's astounding how the prices come down."
On the other side of the equation, though insurance is more expensive, Tadych said, the health care it pays for is not helping to prolong lives.
"If you look at the Amish, they have no insurance at all, yet they live longer than the average person in America, and their life expectancy hasn't changed since the 1800s," he said. "They're still living to be 76, 78 years old. They're outliving all those with insurance."
The reality is, Tadych continued, insurance doesn't really make you live longer, yet it is sucking the wealth out of us.
"It's a huge middle man who is really not producing anything for our nation," he said. "They are preying off of, unfortunately, sick individuals. Not intentionally, but that's the reality of it."
So, Tadych said, his patients wanted something better.
"They come to me and they say, 'Doc, you guys have got to take back health care,'" he said. "They get gamed by the system. Insurance is just harder and harder to deal with in my 25 years of practice. I saw it happening gradually over the years. This hasn't just been this big black-and-white moment. The bureaucratic burden just kept coming on. There's an unethical, almost immoral, treatment of patients, (especially) after many pay around $1,000 a month with an almost $10,000 deductible."
Such insurance policies are really nothing more than expensive catastrophic policies, Tadych said, and, what's more, patients can't get the help they need easily or quickly.
"If someone wants to have an MRI, it's, 'No you can't have that.' First you have to have the therapy, and all this is expensive," he said.
The difference between the current insurance model and patients who go directly to the doctor like in the old days of TV's Marcus Welby is huge, Tadych said.
"When they came to see me for carpal tunnel syndrome, it's 'Yep, I can do your surgery today, in an hour,'" he said. "You could never do that with insurance. With my insurance patients, you have to have an expensive EMG test - that's a couple of thousand dollars - and it takes months."
A tale of two patients
Tadych compared the experiences of two of his patients, one who used insurance and the other who opted for the direct primary-care method.
In the direct primary-care situation, the patient asked Tadych if Tadych could perform carpal tunnel syndrome surgery without all the insurance mandated testing and therapy.
"I saw him and did the surgery and an hour later he went home, and for the first time in years he could feel his fingers," Tadych said. "He was back to work as a machinist within a week."
But that wasn't the case with the other patient, who chose the insurance route, Tadych said. The patient began his odyssey through the system one April.
"The other patient, I knew he needed carpal tunnel, but no, the insurance said he had to have an EMG," he said. "It took him months. It's a painful test and it's expensive. Then, it was 'No, you have to have therapy.' Then after several months of therapy you have to do a trial of drugs, splints. It was August by the time I got to do his surgery."
As a result, Tadych said, the patient developed a complication in his nerve, which Tadych said can happen with a compressed nerve.
"He didn't get back to work until December," he said. "His cost was up in the $10,000 range. The other guy, I charged $1,200. He wanted it done and he was happy. That's the difference of going direct, and that's what I've found, that if we take back health care, we can deal direct with our patients and have a patient-to-MD relationship the way it should be. And it just destroys cost."
Again, Tadych repeated, the key to the direct primary care model is transparency.
"The other thing you have to know to be a wise consumer, you have to post your prices," he said. "No market can function without your prices out there. And when you post your prices, the patient now has the ability to compare and understand and say, 'Hey I can get health care. It's not as expensive as I thought.'"
Tadych said he had looked at all his real numbers - took all his costs, direct and variable - and realized that when he jettisoned insurance, costs just came stumbling down.
On his website, on the page "Doctor Direct - Self-Pay Pricing," Tadych posts his prices - payment is demanded in full when services are provided - and explains how he can keep those prices so low: "We are able to offer these low prices due to the lack of expense in processing the claims, coordinating prior authorizations and coverage determinations as well as absence of risk for non-payment."
Those who choose the traditional insurance route and have Tadych file insurance claims are not eligible for the lower prices, but, for direct-pay patients, Tadych provides receipts and visit notes for those who want to submit to their insurance companies for potential reimbursement of eligible costs.
His website lists an example of the pricing difference for a new patient office visit. His average total cash price for a direct-pay visit is $159, while the average price billed to an insurance company is $300, according to the website.
Tadych also cited Dr. Keith Smith, a co-founder of the Surgery Center of Oklahoma, who has estimated that he can bring his price down on average 10 times from the insurance company charge.
"That's how much the middle man is driving the cost up above," Tadych said. "And the hoops we have to jump through as a provider to comply to deal with this, the time factors, everything, just takes the costs way off the charts."
In addition, he said, when there is a middle man and the prices aren't posted, the game becomes how much can I get out of insurance as opposed to what is my cost.
And it's only getting worse, Tadych said.
"Now they are looking at narrow networks so if you have this insurance, you can't even go see this doctor," he said. "They are looking at how they are going to control costs with what's called MACRA (Medicare Access and CHIP Reauthorization Act of 2015). It's the new thing, but it's basically cookbook medicine. You have to follow this, this, and this, and if you don't do all these steps, you can't go on to the big procedure. So all this stuff is just coming to a head right now."
The bigger picture
Of course, the bigger health-care picture involves much larger institutions and much larger economies of scale in health-care purchasing, and Tadych explained how that works with the middle-man system.
"There's a buyer," he said. "Let's say it's an employer and he's self-funded. He gets so much health care for his employees and they cover that amount. He needs to come to the seller of health care, which is me, but what they do is they usually end up going through a middle man. They usually go through a health-care broker, and the broker, because the prices aren't posted, he says, well,
'Dr. Tadych typically wants
$10,000 for a carpal tunnel, but guess what? I got him down to $5,000.
So you get a 50-percent discount
if you go through us.' So the employer is like, 'Wow, this is great. I could never have done this myself.' So then the broker comes to me and says,
'I've got all these employees and
I'm going to give you 80 percent in Medicare.' That is about 80 percent
of a $300 charge, so they want to give me $240 to do a carpal tunnel
The thing is, Tadych says, he doesn't charge $10,000 or even $5,000 for a carpal tunnel surgery.
"What the buyer of health care doesn't know is what the seller really would say is, 'Hey I'm willing to do these things for under $2,000,'" he said. "Yet he thinks I really want $5,000 because there is no posting, so no one knows. If I only went to him directly and said, 'Here's my prices,' he would know right away that this guy in the middle is gaming the system. It's the perfect trifecta."
Cutting out that middle man would save millions of dollars, both for employers and employees, Tadych says.
Then, too, there are hospitals and big health-care systems, and they don't like to compete on price, Tadych said.
"You have to look at what are they maintaining," he said. "They've got big facilities. They've got a lot of staff and administration. There are a lot of things in a big system that don't generate any revenue. So they are income redistributing to those things, and the bigger the system, the less likely they want to build this model of price transparency because, yeah, if you can get $5,000 MRIs, that can float a lot of stuff. But all of a sudden you're competing with Smart Choice, who is down to $580, and they are making huge waves in this state. That takes a lot of revenue out and it makes it very tough."
The truth is, Tadych says, institutions in the current system have to increase prices in a lot of ways to try and get revenue on the commercial side to pay for those sides that don't make money and in fact lose money, which, he says, is generally Medicare and Medicaid.
"I was getting $18 a visit to see a Medicaid patient," he said. "That is far below my costs. I figure is was just better to do it free. Why take that blood money?"
The three Cs
So what would a direct primary care, free-market system look like overall, and how does that movement gain traction?
"I really like what Ben Carson offered, very high HSA (health savings accounts) savings that allow all the smaller stuff, the non-major non-emergency things - not the car crash, not the cancer - to be dealt with, which, by the way, is the bulk of health care," Tadych said. "That's where 90 percent of all health care is done."
Then, Tadych said, you have to have catastrophic policies to cover the majors.
"Think of it of it as homeowners' insurance," he said. "If you're
thinking of getting your painting
done, your toilets fixed, or your yard cut, you're not going to get a reasonable homeowners' yearly fee. Most people don't complain about homeowners. It's not that expensive and it's for the big tornado, fire, what have you. It's a shared pool of money. It works."
And those kinds of coverages can be established through co-ops, too, Tadych said.
"We used to do that a lot in the 40s and 50s," he said. "Especially in the black community. Blacks were big co-opers before Medicare came along. That community type of thing worked, and that's what insurance should be, a kind of community effort to cover the real catastrophic things and then you have to let people be the voters of what health care should be."
When patients come to see him and see his price, Tadych said, they are effectively voting.
"They are saying I want your services more than I want this money in my hand," he said. "And I'm saying, 'I'll give my services for your dollar as a fair exchange.' You vote every time you decide to buy health care when it is posted."
In the end, Tadych said, a common-sense health-care system is pretty straightforward.
"The three Cs really make all the sense," he said. "It's cash for the most part, and catastrophic health insurance for all the big stuff, and charity. A foundation is a charity. People give to good causes. And it does work. Americans still have it. They want to help people."
Richard Moore is the author of The New Bossism of the American Left and can be reached at www.rmmoore1.com.