Pay-as-You-Go M.D.: The Doctor Is In, But Insurance Is Out
Maverick Physicians Skip Red Tape and Cut Charges

By RHONDA L. RUNDLE
Staff Reporter of THE WALL STREET JOURNAL

GREENEVILLE, Tenn. -- After Aaron Smith's weight plunged and he began
feeling thirsty all the time, several doctors balked at seeing him
because he doesn't have health insurance. On the verge of heading to the
emergency room, his mother saw a newspaper ad: "No health insurance? Try
Patmos EmergiClinic."

The ad put the Smiths in contact with a small but growing corner of the
medical world where insurance is viewed as the problem with, not the
answer to, rising health-care costs. Frustrated by red tape, some
maverick doctors have cut out the middlemen, allowing them to offer
less-expensive service and a return to the days when nothing came
between patients and their family doctor.

A few days later, Mr. Smith, who was down to 133 pounds from 170, had a
physical examination and a battery of blood, thyroid and other tests at
the Patmos clinic, which is near the supermarket where he works. It
turned out that Mr. Smith, 28 years old, was diabetic and his blood
sugar was dangerously high. He left the clinic that day with a
prescription and an appointment for a checkup a week later. The tab for
the visit, including the tests, was $150, which his mother, Charlotte,
cheerfully paid on her way out.

Robert S. Berry, the founder and only doctor at the clinic here, offers
what he calls "low-priced treatment" in exchange for "payment at the
time of service," or P-a-t-m-o-s. The 45-year-old physician doesn't
accept any third-party payment -- not even from Medicare, the federal
program that covers a large chunk of the nation's medical bills. He says
insurers "brutally intrude in the doctor-patient relationship and put
doctors and patients at odds with one another."

By accepting only cash, checks and credit cards, he keeps his
administrative costs to a minimum and passes the savings on to his
patients. He posts prices on his Web site and on a huge
turquoise-and-orange sign in front of the clinic. A typical office visit
costs $35, a set of blood tests is $20 and a pregnancy test is $10.
Other doctors in town typically charge $55 or more for an office visit
and send patients to an outside lab where blood work can start at $100.
Dr. Berry also carries a few common drugs: Antibiotic eye drops cost $5
and amoxicillin is $7.

Dr. Berry jokes that visits to his office cost something "between an oil
change and a brake job."

Similar cash-on-the-barrelhead clinics are sprouting across the country.
Dr. Berry and others like him say they are demonstrating a way to lower
costs and relieve pressure on emergency rooms that are crowded with
people without insurance. Besides, more patients are digging deep into
their pockets even if they have insurance, as premiums and co-payments
rise.

Pay-as-you-go medicine is "a phenomenon that certainly isn't in the
mainstream yet, but it seems to be becoming more visible and perhaps
more common," says William Jessee, president and chief executive officer
of Medical Group Management Association, a physician organization in
Englewood, Colo. The arrangement doesn't work for major medical
problems, which everyone agrees still require some form of health
insurance.

Todd Coulter, a 39-year-old internist in Ocean Springs, Miss., stopped
taking insurance in August 2002. "I was tired of being dishonored and
disrespected" by insurance companies that delayed payment or denied
claims altogether, he says. Then one day, "I looked up and realized that
cash-paying patients were subsidizing rich people with insurance"
because insurance payments were discounted and harder to collect, he
says.

Dr. Coulter sees fewer patients these days. By cutting his office staff
to two part-timers from seven -- including four who were full time -- he
says he was able to reduce his charge for an office visit to $40 from
$60. His practice income after expenses has shrunk to about $115,000 a
year from $175,000, but, he says, "I don't spend all day begging Blue
Cross & Blue Shield for money." Dr. Coulter also says he thinks he is
improving medical care for people with chronic conditions such as
diabetes and hypertension because they can afford to see him once a
month.

In Greeneville, a woodsy town of 16,000, Dr. Berry has some fans. Ella
Price, the owner of the Backstage Coffee House & Cafe, applauds him for
helping people such as herself who can't afford the $500-plus-a-month
cost of medical insurance. "Around here, that's a house payment," she
says.

Dr. Berry says he started thinking about setting up a clinic when he was
working as an emergency-room doctor at Greeneville's Takoma Adventist
Hospital because treatment was "ridiculously expensive" for people
without insurance. Many patients weren't sick enough to be admitted to
the hospital, but they came to the ER because they didn't have a doctor.
At the ER, these patients received treatment but not comprehensive care.

Dr. Berry's musings about self-employment turned serious when Takoma
Adventist fired him in December 2000 after about 3½ years there. Carlyle
L.E. Walton, the hospital's president, says he dismissed Dr. Berry
because he's a difficult person who rocked the boat and alienated some
patients by lecturing them about smoking and obesity, among other
things. "Clinically, he is above reproach -- I would go to him in a
heartbeat -- but he is highly condescending and confrontational," Mr.
Walton says. There were also conflicts over work schedules and
compensation, Dr. Berry says.

Besides describing Dr. Berry's payment philosophy, the clinic's peculiar
name makes a personal statement. Patmos is a Greek island where the
Romans sent political prisoners. The clinic, explains Dr. Berry, serves
people who are "politically exiled within our health-care system."

Dr. Berry launched his clinic on Jan. 10, 2001, with two doctors
including himself, an office manager, and the equivalent of a full-time
nurse and a paramedic. A 1989 graduate of the University of North
Carolina Medical School in Chapel Hill, Dr. Berry is board certified in
both internal medicine and emergency medicine. With strong credentials
and low prices, he figured that he could build a clinic and "they will
come."

But as the weeks and months passed, Dr. Berry had to lower his
expectations. Patients didn't beat a path to his door even after he
distributed fliers to convenience stores, restaurants, beauty salons and
barbershops. Word-of-mouth advertising seems to be boosting business
now. And people who have lost their insurance, along with their jobs,
are finding their way to the clinic.

Dr. Berry expects to earn about $120,000 this year after expenses,
perhaps half of what he might earn as an emergency-room doctor in
Knoxville, 65 miles away. Working with two alternating part-time office
assistants, Dr. Berry gets a lot of walk-in business. His clinic
occupies the street-level floor of a small brick building nestled
between a Ford dealership and a U.S. Army recruiting office on a busy
road. Dr, Berry says his overhead is about $6,000 a month and that he
thinks it would triple if he were to start accepting insurance. He says
he would need to hire an office manager to review long and complex
insurance contracts and two billing clerks. Reimbursements from some
insurers are so low, he says, that he would also need to hire a nurse to
give shots and otherwise help him speed up patient flow.

The clinic's patients are mostly farmers, mechanics and other low-income
working people in the surrounding rural area. Many are Hispanic. Most
don't have health insurance. "These are good folk who pay their bills.
I'm not giving anything away," Dr. Berry says.

One recent morning, Donald Reid came in for a routine checkup for his
high blood pressure. After his exam, he bought a three-month supply of
the hypertension drug enalapril from the clinic for $60, a 30% discount
from the retail pharmacy price. Mr. Reid, a 52-year-old management
consultant, and other members of his Mennonite church shun insurance for
religious reasons. Some of them have turned to Dr. Berry when other
doctors refused to see them for that reason. "Dr. Berry has been a
blessing to us," says Mr. Reid.

Patmos isn't for everyone. One recent morning, a pregnant mother and her
small daughter arrived at the clinic and were quickly sent away by Dr.
Berry's assistant, Jennifer Bowerman. "I'm sorry, we don't accept
TennCare," she told the woman, who marched out in disgust. TennCare is a
$7.1 billion state and federal health-care program for the poor.

Another patient, Deborah Spencer, signed in at the counter. After a few
minutes, Dr. Berry emerged from the back and ushered her into one of his
three exam rooms. She complained of a pesky cough and runny nose. A few
minutes later, she left satisfied, clutching a new prescription.

Ms. Spencer says it's difficult to get a timely appointment to see a
doctor who accepts her medical insurance and when she does, it's a long
wait at the office. Compounding the frustration, her Blue Cross & Blue
Shield coverage requires her to pay $20 at each visit. By contrast, the
charge at Patmos is usually $35. "For an extra $15, it's worth coming
down the street," says the 32-year-old sales representative.

Write to Rhonda L. Rundle at rhonda.rundle@...

Updated November 6, 2003