The SimpleCare Story

Published February 1, 2002

Editor’s note: In “Fee-for-Service Health Care Makes a Comeback,” published in the inaugural (March 2001) issue of Health Care News, we offered a brief introduction to SimpleCare, and described how the program had grown to about 600 medical providers in 43 states. Here is the rest of the SimpleCare story, written by one of its founders.

I graduated from the University of Washington and am a board-certified Family Physician. I owned five family medicine-integrated medical clinics in the Seattle, Washington area, and as a consequence was very involved with all medical insurances—including Medicare, welfare, L&I, and several managed care contracts, in addition to a regular menu of insurance company patients.

My partner, David MacDonald, DO had recently joined me in practice. Dr. MacDonald is a highly respected board-certified Family Physician with an impeccable academic background.

A physician-colleague had a similar family practice, with multiple health care providers in five clinics open 365 days a year.

Both of our groups were dedicated to providing comprehensive, integrated medical wellness care for our patients. We both were extremely busy, never at a loss for patients. We created and founded the largest IPA in Washington State, in an attempt to protect the practice of independent medicine and assure continuity of care for the Medicaid and Medicare patients we had served over the years.

What Were We Doing Wrong?

Needless to say, we created a monster.

The IPA was born out of our passion to “stay alive”—we wanted to stay in business. The IPA, however, began to eat us alive instead!

On a Sunday morning about 18 months ago, Dr. MacDonald and I sat down to figure out why, when we couldn’t be busier, were we losing so much money? Why were we rapidly flying our businesses straight into the ground . . . not to mention the usual “where has the fun gone” stuff.

We both had excellent business staffs and business-wise ran a very tight ship. Our combined practice billings totaled over $10 million—not a tiny operation by anyone’s definition. Yet we calculated we were losing approximately $7 per patient or $80,000 per month.

That loss could not be made up in volume. The standard managed care response—”You just need more patients to win at the capitation game”—couldn’t have been farther from the truth! Believe me . . . we tried. Between the two clinic systems we took care of approximately 75,000 patients a year with 55 providers between us. The losses continued, and we depleted our total net worth and assets over a two-year period.

We knew we were losing money on several insurance types—Medicare, welfare, L&I, Pacific Care, Aetna, NylCare—virtually every managed care plan. We feared we could not suddenly cancel all managed care contracts . . . but the reality was we couldn’t remain viable if we continued with them.

The Paper Chase

Our practice was literally being exterminated by an expanding amount of paperwork intended to “improve care and hold down costs.” At one time we needed six medical records clerks, up from two, just to photocopy the records of patients who, on a monthly basis, transferred in and out of our care on these various managed care plans.

We took a look at an average patient charge:

  • My charge for a 10-minute patient visit was $79.
  • The insurance companies typically reimbursed $43.
  • Costs of collection were anywhere from $5 to $20 depending on the staff time, billing system, etc. All doctors know they don’t get reimbursed the full amount they charge for a visit, but most doctors completely overlook what it costs to collect even the discounted reimbursement.

By our calculation, then, I was actually being reimbursed $23 for a $79 office visit charge! Add in the overhead for the exam room (the national average is $30), and we discovered we were losing about $7 on each of the 75,000 patients we were seeing annually!

We could not cut our overhead any further—we had been doing that for the past two years (cheaper photocopy paper, less-fancy patient info, fewer nurses, fewer receptionists, no more “pantry stocking,” and so on). We were running as lean as we could . . . practically on bare bones.

“Cash Only” Solution

In April 1998, we looked again at the $80,000-a-month loss, concluding we both were destined to be bankrupt in six months.

Looking around the country to see if we were alone in our struggle, we were alarmed to find doctors everywhere were beginning to file bankruptcy in increasing numbers.

We concluded that a new system was the only way we and many of our colleagues could possibly survive.

As we searched for solutions, it quickly became apparent that if people would pay us for our services today, at the time of service, we could immediately cut fees in half . . . and begin to get out of those ridiculous insurance contracts. They were either bad because they didn’t pay enough, bad because they created too much paperwork and bureaucracy, or bad because they set us up for a fraud/felony charge when “examining parties” didn’t agree with the way we coded something.

We re-explored the “cash only” concept by asking ourselves, “How many health consumers in the U.S. represent the ‘cash-paying’ public?” The answer? Nearly 50 million Americans (1/5th of the country) are uninsured, and most would be very willing to pay a reasonable fee for their care, if they could find doctors who would accept payment in full at the time of service.

Trust me on this—we’ve been doing it and our patients are delighted!

SimpleCare Is Born

It was with great pride that we founded “SimpleCare”:

  • 100 percent patient-focused care
  • No lists of who can and can’t see us
  • No lists of what patients can and cannot have
  • No confusing and changing CPT codes
  • No insurance or patient billing
  • 100 percent bureaucracy-free
  • Hassle-free medicine!

SimpleCare is a “different animal”—no insurance billing, no extensive “document for the insurance company” chart notes. Just real medicine, real time with patients, real money paid before the patient leaves the office, and patients charged based on a simple coding system: Short, Medium, or Long.

We’re also working to establish a nonprofit organization, the American Association of Patients and Providers (AAPP), representing patients and providers of health care who want to work together to fix the health care system. Rather than insurers, attorneys, and special-interest groups, why not patients and doctors as the agents of change?

Our nonprofit application is pending, but the organization is up and running. The membership fee is between $20 and $35 a year—inexpensive, because we want to attract a large activist membership quickly.

Common-Sense Coding

We developed SimpleCare from a clean slate, creating a common-sense, no-hassle system for seeing patients and getting reimbursed fairly, without penalizing patients who pay for their visit before leaving the office–just as they do for the vast majority of goods and services they buy.

We created a simple coding system: just three codes rather than the 7,500 +/- codes found in the CPT manual. The CPT scheme was designed for billing; since we weren’t billing anyone, we didn’t need (and didn’t want) to use the overly complex CPT scheme. One physician asked, “But is this legal?” I can’t tell you how many doctors think the CPT manual is a legal document; it’s not. It is nothing more than a joint venture between the American Medical Association and the Health Care Financing Administration (now the Centers for Medicare and Medicaid), for coding uniformity only.

Our three SimpleCare codes are S-M-L: 10 minutes is an S (Short); 20 minutes is an M (Medium); and 30 minutes is an L (Long). Our clinic charges $35 for an S, $65 for an M, and $95 for an L. A reasonable fee—without the paperwork costs—is assigned to specific procedures, lab work, x-rays, etc.

Other doctors across the country have employed SimpleCare and have adopted the S-M-L system using their own fee structures. We do not tell doctors what to charge for their respective S-M-L or procedures. Individual doctors set their own fees and agree to take the SimpleCare Pledge:

“I will give my patients, that pay in full at time of service, my best price.”

Highly Satisfied

We’ve developed a few SimpleCare office forms, but we’re no longer burdened by thousands of dollars for administrative hardware, software, staff time, down time, re-bill time, fight time, denial time, etc. Because we aren’t burdened by these costs, our patients aren’t either. It would be completely unethical, of course, to charge patients for CPT-related billing services that aren’t being used because patients are paying in full at the time of service.

We even saved the $49 it would have cost us for a new CPT book and determined SimpleCare was immediately Y2K-compliant. Within three months, we went from losing $80,000 a month to making $10,000 a month. According to AAPP estimates, if the entire U.S. health care system were converted to SimpleCare, American patients would eventually save some $300 billion annually!

The cash-paying patients love SimpleCare: There’s less wait before seeing the doctor, and they no longer have to pay exorbitant fees pushed up by excessive administrative costs. We were able to reverse our “patient-to-paperwork ratio” from 1:7 (1 minute with the patient, 7 minutes on paperwork) to 7:1 (7 minutes with the patient and 1 on paperwork).

Our patients receive more quality time from their physicians, and there has been a quantum drop in complaints from our patients as we have rid ourselves of the “busy work” of managed care. The office runs more efficiently and “clinic stress” fell immediately. The nurses are ecstatic; they no longer have a phone attached to their ears, listening to “hold” music for 45 minutes as they plow through bureaucracies. They are back to referring patients to the specialists we, or the patients themselves, choose . . . and it now takes 30 seconds, rather than 45 minutes, for the referral to take place.

Regaining Control

We knew the SimpleCare system was allowing us to regain control of our destiny. We knew we were doing absolutely the right thing for our patients and for health care in general.

With that confidence, we were able to take the next step to free ourselves from the red-tape laden health care system. With staff input, we identified the insurance companies that were the greatest source of frustration for us: low reimbursements, delayed reimbursements, and/or excessively burdensome paperwork. We began to send the problem companies 90-day cancellation notices. We were able to phase out the “bad apples” and phase in a new population of cash-paying patients. There’s a lot of them out there.

News about this simple, fair form of health care is spreading. Over the last year articles about SimpleCare have appeared in the Wall Street Journal, Puget Sound Business Journal, South County Journal, and Medical Marketing News. Dr. MacDonald and I have told the SimpleCare story to national radio talk show audiences from New York to Washington—including National Public Radio, the HealthMax Health Hour, and the Medicine Man Show. We’ve gained the attention of several state medical associations, the Association of American Physicians and Surgeons, and many small and large businesses. Dr. MacDonald and I have been giving seminars to many community organizations, all with very positive (“It’s about time!”) responses.

A Call to Action

SimpleCare is not theoretical, “chalk-board” talk. We’ve tested the program and continue to expand it daily in clinical practice . . . and in the process have managed to save a small family medical practice in Renton, Washington from becoming extinct. SimpleCare has given us the power to rid ourselves of the red tape burden imposed by more than a dozen insurance companies, with more on the chopping block. It’s allowed us to get back to the business at hand: caring for our patients, rather than caring for their insurance companies. We are getting paid a fair price for our services and spending much more quality and productive time with our patients.

If you sincerely and passionately wish, as I did, to regain control of

  • your professional career,
  • your patients,
  • your life,
  • your practice,
  • your income, and
  • your ability to practice unencumbered medicine,

then SimpleCare is that solution.

We now have nationally licensed clinical laboratories ready to go, with pharmacies and radiology groups joining in. Many people with whom we have discussed SimpleCare feel it is the quickest, simplest, most ethical, and most common-sense approach currently on the table to fix the uninsured, under-insured, and poorly insured (high cost-low value) problem in this country. That is precisely why we are escalating the national expansion of this plan.

I welcome you to be part of the solution!

Vern S. Cherewatenko, MD, M.Ed. is chairman, president & CEO of the American Association of Patients and Providers. He can be reached by email at [email protected].

For more information . . .

visit the AAPP Web site at, and the SimpleCare site at You can also email your questions to [email protected]. Doctors and health care practitioners can join the AAPP for just $35/year; membership gives you the SimpleCare plan and other benefits. Patients can join the AAPP for $20/year (individual) or $35/year (family).