NCPA - National Center for Policy Analysis

Physician Care With Less Bureaucracy and Lower Cost

February 22, 2002

An estimated 50 million Americans pay cash for physician visits. Many are uninsured or have health insurance policies with high deductibles. Largely as a result of excessive administrative costs associated with processing insurance claims, specialized medical services have also sprung up to meet the needs of these patients.

Analysis of a large, high volume, multi-location physicians' practice highlighted a common problem found in many practices. Insurance companies' average reimbursement for an office visit was just over half of listed prices. Nonetheless, extensive paperwork was required to process claims from patients' visit resulting in enormous over-head expense. As a result, a team of physicians decided to streamline a bureaucratic, unprofitable practice to accept reduced cash payments rather than bill a myriad of insurance companies. The physicians called their program SimpleCare and the results have been impressive:

  • One minute of patient care resulted in seven minutes of administrative tasks under insurance and managed care contracts.
  • Using simplified cash payments, seven minutes of patient care require only one minute of paperwork.
  • Profit per patient visit rose to $10 -- from a loss of $7 per visit.

Patient billing is much easier, requiring none of the verification of insurance plan conditions and coding under managed care. This allowed the practice to reduce the base price of a physician visit to less than average insurance reimbursement. Patient visits are as long in duration as needed and fees are based upon the amount of time spent with the physician.

Source: Vern S. Cherewatenko, "The SimpleCare Story," Health Care News, February 2002, Heartland Institute, 19 South LaSalle No. 903, Chicago, Ill. 60603, (312) 377-4000.


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