S02E09 -

How can we make health care third‐​party free?

When you go to see the doctor, they’re required to code your visit in order to get reimbursed by an insurance company or by Medicare or Medicaid, and what they put down influences what they get paid. But, Direct Primary Care doctors are trying to challenge how we envision our health care system.

Does there need to be a middleman in health care? Why can’t consumers pay their health care providers directly? How do we make basic primary care cheaper?


Tess Terrible spoke with the following guests throughout this episode; Dr. Ryan Neuhofel, Dr. Brandon Alleman, Dr. Nicholas Tomsen, Christy Ford Chapin, and David Hyman

Music by Cellophane Sam & Blue Dot Sessions



00:15 President Donald Trump: Before I took office, health insurance premiums had more than doubled in just five years. I moved quickly to provide affordable alternatives. Our new plans are up to 60% less expensive and better.

00:30 Christy Ford Chapin: What is so interesting about what the AMA did is that they really constrained what the economic role of the physician could be.

00:38 S?: We suffer a little bit from insurance addiction in this country.

00:41 Former President Barack Obama: If you like your doctor, you will be able to keep your doctor.

00:45 President Donald Trump: There are those who want to take away your healthcare, take away your doctor.

00:50 S?: When I entered medical school, when you have to take the Hippocratic Oath, I think most medical students view that as do no harm aspect of our oath as like no physical harm, right? No, don’t cut off the wrong leg. Don’t prescribe the wrong medicine. But another aspect of that, that I don’t think most medical students take into account, is do no financial harm.

01:06 S?: Our system is riddled with fraud.


01:15 Tess Terrible: This is The Pursuit. I’m Tess Terrible.

01:17 Landry Ayres: And I’m Landry Ayres.


01:22 Landry Ayres: Healthcare in the United States is confusing. It is exhausting to deal with. It is expensive, but it is so, so important. For a while now, there have been plans floated all over the place claiming to fix American healthcare. But there’s a growing movement that has already started in the United States, and it’s saving patients’ so much money, it’s rather hard to believe. For more on this, we turn to libertarianism.org’s Tess Terrible.

01:55 Tess Terrible: I’m talking to the doctor, not my doctor. My doctor is a five‐​foot Russian woman who always ends my annual physical by asking, “And are you happy?” I’m talking to Dr. Ryan Neuhofel or Dr. Neu, as his patients call him. One thing unique to Dr. Neuhofel’s practice is that he doesn’t take any insurance. He’s a direct primary care doctor.

02:20 Ryan Neuhofel: Direct primary care, also known as DPC, is a direct model of healthcare where primary care physicians, like myself, contract directly with our patients to provide them primary care medical services outside of the traditional insurance‐​based reimbursement system that most people are familiar with when they seek healthcare.

02:39 Tess Terrible: And how did direct primary care get started?

02:42 Ryan Neuhofel: That really was the grassroots movement of a bunch of primary care physicians, mostly family medicine doctors who were just really fed up with the way that the American healthcare system works, frustrated with various things, including administrative burdens, not being able to spend enough time with our patients, and ultimately not being able to provide the type of care that we wanted to, to our patients. So it really started organically and a handful of physicians around the country, probably seven to eight years ago, and since then, it’s grown into a pretty robust movement of over a 1,000 physicians around the country.

03:16 Landry Ayres: That’s right, it’s not patients fighting for more affordable personalized healthcare, it’s providers, doctors who were overwhelmed by the bureaucracy they had to wade through just to provide basic primary care.

03:32 Ryan Neuhofel: For primary care and for most common routine healthcare services, things that could be affordable and predictable, adding middlemen, layers of people in between the provider of that service and the consumer of that service only complicates things. Although we’re really used to purchasing our healthcare through managed care or insurance company, I think what we’re showing in DPC is that people could go directly to the their medical providers oftentimes, and find that the service is much better and more affordable actually. The goal in primary care is to have an ongoing relationship with a doctor. So given that doing this on a membership basis, monthly membership basis, makes a lot of sense. And we arrange that kind of like when people join a gym or subscribe to Netflix or pay Amazon Prime or Costco. And for that membership fee, which is usually between $50 and a $100 a month for adults, cheaper for kids and often for families cheaper, and for that, we’re able to care for people in a really innovative way. And so instead of nickeling and diming people for every office visit, every phone call, every email, we’re able to bundle that all together in direct fixed monthly fee and provide people a really great service without them having to worry about every little thing that we might recommend.

04:45 Landry Ayres: Dr. Neu is pointing out a really important problem here. Since healthcare insurance companies are the middlemen, they are actually the ones paying for what you get from the doctor. To find out what to pay, they individually bill every type of service, communication, treatment, medicine, everything. Direct primary care doctors are trying to bundle that all together to avoid unnecessary overcharging.

05:12 Ryan Neuhofel: So we are third party free, so the only people we bill are our patients, and they are usually pretty happy to get services in that way.

05:22 Tess Terrible: This is Dr. Brandon Alleman and Dr. Nicholas Tomsen. They are also direct primary care doctors.

05:28 Brandon Alleman: Something that we talk about a lot, both with our patients, but also was kind of one of the founding principles of our clinic was that we want our incentives to be aligned with our patients, and the best way to do that is to have a direct relationship with them, that isn’t muddied by a third party. And so for us, when a patient comes in and has a medical concern or a medical question, I don’t, in my decision‐​making, need to worry about whether that’s going to be something that’s covered by an insurance product or not, I decide with the patient, is this something that is medically necessary. And then since my relationship is directly with the patient, I can help them to figure out what the best way is to accomplish the thing that’s medically necessary.

06:17 Tess Terrible: I’m sure you’ve heard of the Hippocratic Oath, this is the oath doctors take before entering into medical practice. It’s where we find the phrase, “Do no harm.”

06:27 Landry Ayres: This is exactly what doctors knew Alleman and Tomsen and others are hoping to do: No harm.

06:36 Tess Terrible: It’s difficult to do no harm when healthcare is controlled by a bureaucratic system.

06:42 Landry Ayres: But American healthcare wasn’t always like this. To understand how we got here, we have to go way, way back to the turn of the 19th century.

06:53 Christy Chapin Ford: Before we had a formal welfare state, particularly at the federal level in the United States, people needed to figure out ways to help one another when they fell on bad times.

07:03 Tess Terrible: This is Christy Ford Chapin. She is the author of Ensuring America’s Health: The Public Creation of the Corporate Health Care System.

07:13 Christy Ford Chapin: During the beginning of the 20th century, for example, if you looked at the medical care market, you would see a wide variety of different experiments going on with how to finance and organize medicine, ’cause everybody’s excited, all these new treatments and everything. And so you have unions figuring out ways to get medicine to their members, mutual aid societies, which were often based on ethnicity that were consumer cooperative, where you might have a physician group, but then the members vote in a board that represents the consumers, and they’re the ones who kind of decide salaries and building costs and all that type of thing. Businesses try different models, farmers have their own association, so that’s not everything, but it gives you an idea of the wide variety of things that are going on.

08:04 Christy Ford Chapin: I think the most interesting model, and what I think would become most popular, because progressives and reformers were really behind this and it was popular with consumers, were the prepaid physician groups. So you would have all the different specialties working together on the difficult cases or cases where somebody had a number of different diagnoses. At the end of the day, the physicians would get together and discuss how to handle those and troubleshoot to see if they can figure out what the problem was or how to approach multiple illnesses.

08:34 Christy Ford Chapin: The other thing that was really interesting is a lot of them paid their physicians with a base salary and then a cut of the quarterly bi‐​annual profits. And the reason that was so important is because unlike almost any system I can think of today in Western developed countries, unlike that, you actually have a situation with a physician is tied to the bottom line, so it is in their best interest to think carefully about how they use resources.

09:03 Landry Ayres: This was a particularly turbulent time to be a doctor when your place in society was changing pretty rapidly. Doctors were not always as respected as they are today, a lot of medical treatment was done by midwives or others, most of which we would now consider alternative practitioners, but the discoveries of Pasteur and Koch and germ theory were sending shock waves through the field of medicine, and they wanted people to know.

09:31 Christy Ford Chapin: The American Medical Association was founded in the 19th century, in 1847. They were founded during a period when physicians did not have as much prestige and professional standing as they do today. But what is so interesting about what the AMA did is that they really constrained what the economic role of the physician could be. So when the AMA is founded in the 1840s, what positions want to do is they want to clean up and elevate their profession, they want to reform education, they want to create physicians who are better educated and viewed more highly, they also want licensing laws. Some states have licensing laws, a lot of them had been repealed during the 1830s, but they wanted the government to control who could practice medicine. But what’s so interesting about the licensing piece is the AMA made it so that physicians could not decide what worked best for them or even start their own model. The AMA really, until the late 1930s, was against health insurance, and so they did not want physicians contracting with any of these groups. These are third parties. It’s kind of an insurance payment mechanism, as you can see, you’re paying a monthly fee whether it’s to your union or to your physician group.

10:54 Christy Ford Chapin: They were opposed to all of this. And even though some physicians did it, what they did is they went after them, and there were some really high profile cases, and many that were not known, of how they revoked the licenses of physicians and kicked them out of the AMA, which made it very difficult for them to get malpractice insurance at the time, opt‐​in pressured hospitals into receding their admitting privileges. So something that seems very small, like requiring a medical license, actually allowed the AMA to fundamentally structure the entire healthcare market the way they wanted to.

11:32 Christy Ford Chapin: They’re out there fighting every experiment that the market comes up with and every group, and going after physicians, and even publishing warnings in the Journal of the American Medical Association warning physicians that they will come after them and destroy their careers. Then once the 1930s comes, the Great Depression, of course, there’s lots of legislation going through to reform and restructure all types of different economic sectors. Well, of course, people are looking at healthcare, especially after Germany had their healthcare program, England had already created one for workers in 1911 as well, so of course, in the United States, people who were in the administration under President Roosevelt were looking to reform healthcare, as well. And now, the AMA was fighting the marketplace, and they’re also fighting the government, so it’s too much. You can’t fight market competition and the government at the same time. So what they end up doing is saying, “Okay, fine, we’re gonna compromise. We’re gonna approve insurance, we’re gonna say health insurance is okay.” But they create this very, very specific model. They say, “We’re gonna allow health insurance, but we are only going to allow insurance companies to fund insurance.”

12:47 Landry Ayres: And here is where many of our troubles with healthcare began.

12:52 Christy Ford Chapin: Physicians have to start doing things like calling the insured to ask permission to put their patient in, and they have to start going before utilization review committees and all these different kinds of rules and regulations being put on physicians, the very thing that they hoped to avoid.

13:11 Landry Ayres: While all of this happened almost a century ago, we are still almost inextricably tied up in a system that the AMA set up in the 1930s.

13:22 David Hyman: Everybody responds to the incentives that we create. So if we say, “Here’s a very large pot of money, and we’re not gonna guard it very carefully, and even if you steal it, it’ll take us a while to figure it out, and then we’ll go and look for you, and maybe we’ll find you and maybe we won’t,” you create lots of incentives for people to play all sorts of games. And the money that’s at stake is so large that it’s a huge temptation.

13:49 Tess Terrible: This is David Hyman. He’s a professor at Georgetown Law and the author of the book Overcharged: Why Americans Pay Too Much For Health Care.

13:58 David Hyman: When you go to see the doctor, they’re required to code your visit in order to get reimbursed by an insurance company or by Medicare or Medicaid, and what they put down influences what they get paid, because higher intensity codes and performing certain interventions carry a much larger paycheck than other things do.

14:23 David Hyman: Now, if you went to a body shop for a dent in your car, you get quoted an upfront price, your insurance agrees to pay it, there’s never any surprise bills from the guy who painted the bumper or re‐​attached a new door. If there was, you’d go berserk. The insurance company would not include that body shop in their network anymore. You’d never go back there. You write up a nasty review on Yelp. The same for the rest of the economy. In healthcare people have no idea what the price is. People working in the system have no idea what the prices are, and not surprisingly, there’s incentives to sort of up‐​code, as it’s called, to reclassify conditions, even though it wasn’t the thing that brought the patient to the doctor, even though it might not have been even related to the thing that the doctor did.

15:13 David Hyman: And it’s not just doctors, it’s hospitals and nursing homes and pretty much everybody in the system, the Durable Medical Equipment Suppliers, respiratory therapists, you find frauds everywhere. Our system is riddled with fraud.

15:38 Tess Terrible: Getting adequate healthcare can be stressful, not to mention the added stress of having to navigate how it gets paid for. All of this is hard on patients, and sometimes it’s also hard on doctors. It’s hard to balance giving the best care you possibly can while trying to navigate a constantly changing health care system.

16:00 Christy Ford Chapin: You’ve seen how physicians have started to get so fed up with this. And I think we saw the beginning of this, I guess it was about 20 years ago, you started to read about concierge medicine. The general practitioner saying, “I’m fed up of dealing with hours of paperwork every day. That’s it. I’m gonna go off, I’m not gonna accept insurance. And so, of course, with something like that, they had their patients paying a monthly fee. But that’s for the wealthy, right? That’s not something your regular person was gonna do ’cause it was expensive. Well, the interesting thing about the way the market around that is developed is now you’re seeing groups of general practitioners doing this, and they’re trying to make it kind of the middle‐​class [16:37] ____ pack version of concierge medicine. But I’m pretty excited about that movement, because since it’s kind of at the beginning of it, and it’s already, it’s called… What do they call it?

16:50 Landry Ayres: It’s called Direct Primary Care.

16:53 Tess Terrible: I had a lot of questions about this. What about pre‐​existing conditions, emergency room visits, or even pregnancy? Honestly, I was still a little skeptical. This seemed too easy to me, almost too straightforward for health care. And honestly, this is coming from someone that really, really doesn’t like going to the doctor. Do you think direct primary care can work for everyone, or are you mainly seeing it in the upper class right now?

17:31 Brandon Alleman: No, in fact, that’s a huge miss number. So a huge percentage of patients who find my clinic and DPC practices around the country are on the opposite end, they are not the healthy and wealthy that some of our critics or skeptics believe. And in America, even when people have insurance with high deductibles, they can’t afford care, so a lot of people are carrying around a card in her wallet, but they can’t actually afford the care that they need. And a lot of those people find us, and a lot of my patients tell me, “This is the first time in the last decade that I’ve had a doctor I feel like I can go see and not be concerned about cost.” We’ve tried to build in as much value to our membership as we possibly can: Wholesale medications, wholesale labs, MRIs, radiology. So we’re serving the needs as a primary care doctor through my advice and recommendations exams. But then financially, we’re actually building in so much more for our patients that it’s kind of a no‐​brainer for them. The majority of people who find me have chronic diseases: High blood pressure, diabetes, they need more routine health care. Those people know that they need to follow up with the doctor sometimes every couple months, so they see a much bigger return in that because they can come see us as often as they need.

18:44 Nick Alleman: I think that’s where it becomes fun too. These are people that aren’t just a patient, these are people that become friends of ours, and we know them and their family really well, and when they succeed, that’s really fun, and that’s the awesome part about being a physician in this system.

19:01 Brandon Alleman: Being family medicine, it’s a great way to take care of the whole family, so to be able to… For a young family to be able to see them, watch them grow. And I’m just starting to have some of my people who I have initially delivered, get pregnant again, just to be able to walk through that whole process with them, so deliver them and then take care of their baby, and watch that baby grow up, and then deliver the next one. It’s just a great, great way to be part of somebody’s family.

19:27 Tess Terrible: Do you ever encounter new patients that had to navigate this insurance system and come to you kind of defeated by it all?

19:39 Brandon Alleman: Every day, every single day. That’s the thing is, we have opted out of that system: All insurance plans, Medicare, Medicaid. And a lot of people who are looking at it from the outside, who don’t quite understand what we’re doing, they look at us like we’re abandoning patients because we decided not to contract with an insurance company of the government, but the truth is that we had to do that, because many of us have seen the devastating impact that the traditional system has had on our patients’ lives. It’s truly sad. I talk to people almost every single day, who join our practice, and I hear their stories, and it’s heart breaking, the amount of the suffering they’ve had, both physically and financially and otherwise, because the system hasn’t taken care of them. And it’s not the doctors in it, it’s not the hospitals in it, it’s just the [20:28] ____.

20:31 Brandon Alleman: We suffer a little bit from insurance addiction in this country, so people think if they have a card in their pocket, that’s how they’re gonna access healthcare. And they view us as, “Oh, this is something I just have to pay more for,” when really, this is the proper way of getting health care, is having something that is valuable and paying out of pocket for it. Insurance in any other realm is for catastrophic things. We just have allowed that to be the case in health care yet.

20:58 Brandon Alleman: At the end of the day, people do still need some form of insurance as a financial tool. We’re not saying that the concept of insurance to go away, we think people need something to back them financially. So if someone needs surgery that costs thousands of dollars or hospitalization that costs tens or hundreds of thousands of dollars, of course, they need insurance for that type of stuff, much like using your car insurance for only the big stuff. So the biggest problem is, is trying to find out a solution for that side of the equation. So I don’t think that’s a detriment of the direct primary care model itself, but it does pose challenges for patients who are trying to find multiple parts that fit the overall needs of their health care. But I think if we could move away from the insurance reimbursement system, which really is what drives everything, we would see this flood of innovation, we would see doctors offering packages and subscriptions, and they really look much more likely consumer industries that we’re familiar with, that has drastically improved. If you look at the ease of travel, booking hotels and flights, even grocery shopping, I think that’s really where this is all headed. DPC is at the spearhead of that, where really the only large number of doctors who’ve embraced this idea, but it’s really just scratching the surface of what’s possible.


22:29 Tess Terrible: Thanks for listening. The Pursuit is produced by Landry Ayres, Natalie Dowzicky, and me, Tess Terrible. Music by Cellophane Sam and Blue Dot Sessions.

22:41 Landry Ayres: The Pursuit is a project of lib​er​tar​i​an​ism​.org and the Cato Institute. To learn more, visit us on the web at www​.lib​er​tar​i​an​ism​.org.