Oregon Community Adopts SimpleCare Approach

Published April 1, 2002

McMinnville, Oregon family physician Mike Jaczko D.O. was struggling to keep his doors open. With high hopes … and more than a little desperation … he attended a lecture sponsored by the American Association of Patients and Providers (AAPP), whose mission is to develop health care solutions.

By implementing AAPP’s SimpleCare program, Jaczko was able to reduce administrative costs and offer more affordable health care. His clinic began to stabilize financially. Jaczko says the SimpleCare program “gave me the motivation to continue working in health care and serve others.” His goal now is to persuade city administrators and employers “to switch to this model.”

Other local physicians observed his success. Dr. Erik E. Swensson, president of the McMinnville Physicians Organization (MPO), invited AAPP cofounder Dr. David MacDonald to share with MPO members and area business owners ideas for a comprehensive transformation of their health care delivery system.

All 62 members of the McMinnville Physicians Organization became SimpleCare providers.

Keeping it Simple

SimpleCare works on a basic premise: If patients pay for routine medical care at the time of service, the administrative and billing expenses that inflate the cost of health care can be dramatically reduced. Those cost reductions can be passed along to patients. MacDonald says SimpleCare providers “can usually reduce their rates by 30 to 50 percent.”

Such cost reduction claims are supported by a 2000 survey sponsored by the Washington State Medical Education and Research Foundation. The survey reported, “Today over 50 cents of every dollar received by medical practices goes to the cost of running the practice and dealing with insurance plan requirements, not to patient care.”

Back from Bankruptcy

AAPP cofounder Dr. Vern Cherewatenko, who developed the SimpleCare program, has experienced the success of SimpleCare firsthand. He used to charge patients $79 for a 10-minute office visit, but was reimbursed only $43 by an HMO. After factoring in administrative expenses of $20 and overhead of $30, his practice experienced a $7 net loss for every patient he saw.

Cherewatenko and his Renton, Washington group practice, Primary Care Providers, went bankrupt, and Primary Care Providers filed for Chapter 11 reorganization. In his reorganization plan Cherewatenko says Primary Care Providers “intends to develop the SimpleCare side of the practice until we no longer are in need of insurance company contracts.”

Doing so, he says, is the ultimate solution for “trimming the administrative burden that is killing many physician offices today.” More than half of Cherewatenko’s current patients are SimpleCare members; his practice charges them only $35 for the 10-minute office visit that used to cost $79. Nevertheless, the practice makes a profit of $5 on each of its SimpleCare patients.

Strengthening Relationships

To the benefit of health care consumers, some 600 physicians in 38 states have become SimpleCare providers. McMinnville’s Swensson said SimpleCare is capturing the attention of physicians for reasons other than financial.

“We can spend more time with patients when we spend less time on paperwork,” Swensson notes. “Furthermore, insurers can’t interfere with the doctor-patient relationship when patients pay for their own services. Final decisions about the kind of treatment and who will give it are made by the patient.”

Other health care providers in McMinnville are joining the parade. According to MPO Executive Director Anne Hamilton, Willamette Valley Medical Center, the local hospital, is working to adjust its system to accommodate SimpleCare patients and providers. MPO is also seeking a pharmacy to join the program.

Area insurance agents are working on ways to bring more major medical, high-deductible policies to the community to help individuals, families, and businesses that wish to employ SimpleCare as a way to bring down health care costs.

In doing so, the agents will help return insurance to its original purpose: protecting individuals against unforeseen catastrophic events. As Cherewatenko puts it, “Insure for the big stuff, pay cash for the small stuff—just like you do with your car.”

The challenge of making health care more affordable is being met in McMinnville, through the SimpleCare model. Keep your eye on that Oregon community as local doctors and other health care providers work to implement this creative solution.

Kurt T. Weber is vice president of Cascade Policy Institute, a Portland, Oregon think tank.

For more information …

visit the SimpleCare Web site at www.simplecare.com.