Imagine buying medical care as you do haircuts or auto repairs, making choices based on need, quality and price, with your decisions driving competition and your money going to pay providers rather than to insurance billing or cost-shifting.
Some Anchorage physical therapists have begun offering such a deal. They take cash, check or credit card only. They don't deal with insurance companies or government plans.
"Everyone knows straight up what they will pay when they come in," said therapist Laura Regan.
And that price tends to be much lower than at traditional practices. Compared to list prices, as much as 75 percent lower.
Instead of working the insurance game to maximize reimbursements, cash-based providers compete on price and work hard to keep clients satisfied so they will come back.
Sometimes capitalism works when you give it a try.
Regan and her partner, Bibo Chung, started Peak Rehab on the cash model four months ago. They're enjoying the freedom of working for themselves, without insurance company interference, and taking home more of the money their clients pay — almost all of it, in fact.
David Dissebrett is trying it too, after selling a traditional practice where he estimated a third of his revenue was spent dealing with insurance and related overhead. His new cash-only, one-man practice is called Body Systems Physical Therapy.
The therapists think their patients recover faster too. When clients are spending their own money, they work harder on home care exercises between visits.
I recently met Regan and Chung at a gym in an industrial area off Old Seward Highway. Gary Levin lay on a table as Chung worked on his ankle.
The women have no office or employees. They use inexpensive cloud software to manage calls and appointments. They meet patients in the borrowed gym, at their own homes, or at clients' homes or workplaces.
Today's hourlong treatment would cost Levin $110, cash.
"To me it's a quality-of-life expense," he said. "You go out to dinner and don't think twice about spending that kind of money, so why not do that for your health?"
But not everyone spends $110 on dinner. And therein lies the problem.
The cash model works best for inexpensive types of therapy with patients who can afford to pay.
The style of physical therapy practiced by Regan, Chung and Dissebrett is hands-on, with little equipment needed. Most medical practices have unavoidable expenses for equipment, rent, nurses, techs and receptionists, even without counting excessive overhead for billing.
Insurance companies and government programs prohibit the providers they work with from making cash deals with covered patients. It's one or the other. Chris Wilson, of Ideal Motion Physical Therapy, said that makes it nearly impossible for most practices to accept cash.
"A cash model is a great idea and would likely save the consumer money and have great fiscal advantages to the provider, but I feel in this country and with our current health care economy it is an utopic ideal and only services those who can afford to pay outside their policy or do not have a policy, which of course is illegal," Wilson wrote in an email exchange.
Commercial policyholders can use their benefits at a cash clinic, but they have to handle the claim themselves. Peak Rehab provides instructions, but they don't get involved in the back-and-forth with the insurance company.
Some people give up in that bureaucratic slog. Which may be one reason the insurance companies do it.
At his former, traditional practice, Dissebrett said, staff had to send paperwork to insurance companies over and over again until demanding a signature receipt to prove that billings were actually received.
He said his billing contractor charged 7 percent of revenues and he also paid two office staffers to package and send paperwork, cover phones and be present during each other's days off. All that required space, computers, rent, insurance, and enough therapists to make all the fixed costs worthwhile.
On top of those overhead costs, clinics jack up charges because they don't know what insurance will pay. Their costs are fixed, but their revenues depend on seemingly random reimbursement amounts.
The system puts financial incentives on the quality of billing rather than the quality of care.
Alan Gross, an orthopedic surgeon who has exposed excessive doctor income as he campaigns for reforms, said owner profits also play a part in high costs. A clinic can charge huge mark-ups for tests and procedures done by lower-paid employees.
"They're skimming a lot off the top," he said.
One reason Regan left work at traditional practices was because of the enormous charges. She would get a fraction of the money her clients paid.
A large physical therapy practice where she previously worked used techs and assistants with limited training to treat patients on machines. As a Ph.D.-level therapist, she was pushed to feed patients to them, seeing many a day, often more than one at a time.
At her cash-only practice, she sees far fewer patients, sees them more intensively, and charges them much less.
Many of her clients do have insurance but can't use it. Half of Americans now pay deductibles of $1,000 or more. Policies on Alaska's individual marketplace have deductibles of up to $6,350.
Without a major health problem, people with those policies are unlikely to be able to use their insurance for physical therapy. Going to a therapist who charges much less is a good deal, even if they never submit a claim.
High deductibles are supposed to discourage patients from unnecessary treatments. But research shows they also keep patients from getting necessary treatments.
For example, women with high deductibles tend to put off care for diagnosed breast cancer, according to a new study by Harvard researchers published in the Journal of Clinical Oncology. On average they delayed chemotherapy seven months, The New York Times reported.
That probably costs lives.
The solution to these problems is a health care system built around health rather than money. The cash model is clever workaround, but it isn't a solution.
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