In an experiment to improve access for the working uninsured, Memorial Hermann Healthcare System in Houston plans to open a cash-only clinic where patients will be able to pay a flat $45 for an office visit.
The primary-care clinic won't accept insurance-not even Medicaid-and will be staffed by nurse practitioners and physician assistants rather than physicians, two measures that are expected to keep costs below those of other outpatient settings.
National hospital alliance VHA, Irving, Texas, and the VHA Health Foundation, which designed the all-cash clinic, believe it will be the first of its kind run by a U.S. hospital system. It is scheduled to open Aug. 18 in southwest Houston.
"We're doing this very much as a test model," said Carol Paret, Memorial Hermann's vice president of clinical information management. She described the clinic as a "medical home" where patients with a little money can receive coordinated care. "It's a huge and growing need," she said.
Many access initiatives have targeted indigent patients, but recently there has been growing recognition that a significant number of uninsured people might have the means to pay for services. A study released in March by the Robert Wood Johnson Foundation found that nearly 71% of people who were uninsured during 2001 and 2002 were employed. According to figures in the study, 32% of people without coverage had incomes that were at least 300% of the federal poverty threshold.
Yet focus groups conducted by VHA showed that the working uninsured have difficulty accessing efficient, coordinated care. Many physicians' offices eschew patients without an insurance card, while indigent clinics offer low levels of service. "They're proud and they don't want to be treated like an indigent person," said Linda DeWolf, vice president of VHA's foundation.
As a result, these patients often end up in emergency rooms where they can't afford to pay the charges, resulting in bad debt for hospitals.
If used, the all-cash clinic could reduce costly uncompensated care for providers. In Harris County, where Memorial Hermann has a 21% market share, and surrounding counties, bad debt-the amount of services that are billed but never paid-is 4.5% of gross patient revenue. Memorial Hermann had an operating margin of 6.05% in 2002 on operating revenue of $1.6 billion.
If the clinic is successful, Paret said, "We would hope that maybe other systems would open these around the city." The clinic, to be called Neighborhood Health Center, will operate in a strip mall near Memorial Hermann Southwest Hospital in Houston, one of nine acute-care hospitals in the not-for-profit system. The mall also contains an art store, a small furniture store and some restaurants.
Heavily Hispanic and Asian, the area has many residents who work in hourly jobs that don't offer insurance, Paret said. The clinic will be open extended hours-a total of 72 hours weekly-and patients will be able to make same-day appointments. Patients will be required to pay upfront, and prices for lab tests will be disclosed before they are ordered so patients can decide whether they want them.
Not processing insurance claims will eliminate the need for about three full-time administrative jobs, Paret said.
While VHA refers to an "all-cash" model, the clinic will accept payment by credit card or check. It also will offer gift certificates, Paret said.
Memorial Hermann budgeted $350,000 to open the clinic, including funding 10 months of operational shortfalls during the startup. The system's goal is for the clinic to cover its operating costs, for which it will need to attract 1,100 patients per month.
Ron Pollack, executive director for consumer advocacy group Families USA, expressed skepticism that patients with "marginal incomes" would pay upfront for care, especially if there are extra charges-the $45 fee will not cover lab tests, prescription drugs or referrals to specialists. "My presumption is that any clinic that requires dollars upfront will have a limited clientele," he said.
Pollack added that it would be "absolutely false" to assume that people with low income levels, who are not targeted to be patients of the clinic, already are adequately served.
Memorial Hermann participates in Gateway to Care, a coalition of Houston providers and others that is trying to increase access for an estimated 800,000 uninsured and underinsured residents in Harris County. According to its Web site, gatewaytocare.org, the program operates a telephone triage service and a "navigator" service to help connect patients with providers. It also is pushing to open more federally qualified health clinics that will serve patients with incomes below 200% of the poverty level. Paret said the all-cash clinic will "augment" those efforts.
VHA designed the model based on research that included focus groups in Dallas, Houston and Rochester, N.Y., in late 2000, and began soliciting hospitals to test the model more than a year ago. DeWolf said some hospitals declined to participate because they already support alternative strategies, such as free clinics.
Another stumbling block for some hospitals was that their physicians objected to the use of midlevel practitioners, DeWolf said. Paret said Memorial Hermann didn't encounter physician resistance, although some physicians sought assurance that the clinic would not compete for insured patients.