The days of using your insurance to see the family doctor are numbered.

As more patients join the practice and I hear each new patient’s story, I become more impressed with the benefits of direct primary care for both the patient and the physician.

Recently, a 63-year-old female, who we’ll call Martha, came in for a visit. Martha is an out of work chef who, due to financial hardship, hasn’t had health insurance for three years.

Despite having poorly controlled diabetes, high blood pressure, and a chronic skin condition, Martha took no prescription medication. This wasn’t because the medications themselves were too expensive. All five of the medications that I currently prescribe for her can be purchased on a local pharmacy’s discount drug list, and her total bill per month is less than $35, including insulin. The reason Martha was without medication was that the cost to see a doctor was too high and, therefore, she could not obtain a prescription.

I’ve seen numerous other patients who have told this same story. Why can’t these people afford to see a physician? Primary care is relatively cheap to provide! So what’s the catch?

The answer starts with how clinics are structured. The clinics frequented by most people bill insurance for the great majority of the clinic’s income. Once
 a decision is made to bill insurance for health care services it starts a chain reaction that ends in having to hire a large number of people and/or invest in a lot of technology.

Employees and software are needed to make sure that the patient’s insurance is active before the visit starts, employees have to be hired to call the insurance company to obtain prior authorization for suggested procedures, software is needed to prepare the bill that has to be in a certain format, and more people are needed to call the insurance company after the bill is returned unpaid with a note saying that an “i” wasn’t dotted or a “t” wasn’t crossed. Patients have to wait 15 to 30 minutes and listen to  hold music to speak to an actual human being when you call your insurance company, health care professionals have to wait just as long.

Before doctors even open the doors of a new clinic that accepts insurance, they’ve had to hire a number of people just to manage the clinic’s relationship with insurance companies. Part of the clinic’s overhead expenses are these employees that must be paid even when no patients come in. And these paid positions have nothing to do with the quality of medical care that the patients receive.

Now let’s talk about what your insurance company will pay for your visit. For 
a typical follow-up visit for low to moderate severity issues, your insurance company pays anywhere from $45 to $75 to the doctor’s office. You can also add your $20 copay to this amount. The American Medical Association suggests that these visits are supposed to take 15 minutes face-to-face with the patient. That doesn’t happen very often.

If your doctor has 4 of these visits per hour, she is paid anywhere from $260 to $380 per hour when you include the payment from the insurance company and the collected co-pay. The last primary care doctor I spoke with told me that his hourly overhead is $700. When your expenses are greater than your revenue the math doesn’t work, but those are the numbers.

If the clinic takes insurance they have to make up for the low reimbursement somehow. They do it by making a profit on every little thing that they offer you. This is the $50 tablet of Tylenol issue. Labs and even basic supplies are marked up 500 to 1,000 percent.

So if you pay cash for your care — and even if you have insurance, you are paying cash for your care until you meet your deductible — you’re getting a rotten deal at a clinic that bills insurance. The majority of your money is paying for staff and equipment required to deal with insured patients rather than your actual medical care.

My overhead is a phone, an electronic medical record, internet access, rent for office space and one medical assistant. The clinic is built lean because we don’t have to deal with the insurance companies.

The revenue that is generated through the monthly fee of $39 to $89 per month is where 
we get the money to pay our overhead and the doctor’s salary. We don’t need to make a profit on anything else. So what do we do? We spend more time
 with you, and we pass our savings on everything else related to your health care to you.

The great majority of the most common labs are $
5 at my clinic. Procedures at my clinic like repairing a cut, an EKG or removing a toenail are free. We don’t even recover our costs for these procedures. A bag of intravenous fluid costs $10. Such a coveted luxury would likely cost more than $175 at an insurance clinic.

Since we know that most of our patients will be price sensitive because 
they either don’t have insurance or will not have met their deductible, we’ve researched the lowest prices for imaging and procedures that you’ll need outside of our office. Many times, we can save our patients 50 percent off of listed prices.

Direct primary care reduces the costs of care to the point where the average American can once again afford to see a physician on a regular basis.
 This is powerful information for our society. Insurance isn’t necessary within this relationship because the care is affordable. Actually, keeping insurance out is what makes this relationship functional and
 affordable. Insurance is for unpredictable events that would be financially catastrophic.

I believe that direct primary care is the revolution that is necessary to change the trajectory of the missile that is health care spending in the U.S. It would likely even lead to better outcomes by allowing family physicians the actual amount of time that is necessary to help patients make substantial changes to their lives and overall health. Which is why most of us became doctors in the first place.

This essay is cited in the KevinMD record on direct primary care.

Chris Larson is a family physician and can be reached at Austin Osteopathic Family Medicine.