The idea for a new healthcare system comes from a Renton doctor.

It is not such a new idea, though. It’s based on a principle of cash in hand for work on body.

University of Washington graduate Dr. Vern Cherewatenko, 44, said he’s signing doctors up left and right on the “pay as you go” idea. It’s a system he calls SimpleCare. If a patient pays the doctor in cash, they get a reduction in the cost. Then, it is up to the patient, if he or she wants, to bill their insurance company.

“It’s what we used to do, before insurance and HMOs [Health Maintenance Organizations] existed,” Cherewatenko said. “We’re trying to teach doctors that they really can charge cheaper prices and get more.”

For doctors who face prohibitive insurance costs and “dealing with paperwork” costs, it can be the difference between making and losing money, he said.

“Doctors are not being reimbursed enough,” he said. “We found out money was going sideways and 68 percent of health care costs go to administrative costs. With so many people needing access to less expensive healthcare its time has come.”

Cherewatenko said HMOs and insurance companies are stuck in a “rigid system of codes” that require flat per-visit fees. He breaks it down this way. In the past he charged $79 for a 10-minute visit. But the HMO “could arbitrarily decide to pay” $43 or less. And with collection costs around $20, he’d end up with $23.

“With all the overheads, that meant a $7 loss for every patient visit,” Cherewatenko said. “Now I can charge $59 so the overall cost is less to insurance companies and the doctors get paid.”

And it helps those individuals who might not have health insurance.

These administrative-cost figures are borne out by studies from the Washington Alliance of Healthcare Systems and the Washington medical Research Foundation.

“Within three months, we went from losing $80,000 a month to making $10,000 a month,” Cherewatenko wrote in the online magazine Capitalism. “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.”

Having already gone bankrupt once before with a previous practice, and tired of the widening hole in his pocket, Cherewatenko looked around for a way to sew it up.

The result is the nonprofit American Association of Patients and Providers, a group of doctors who’ve found SimpleCare works for them.

“We let doctors individually charge a fair price for their services,’ he said. “We don’t regulate that.”

The AAPP is not an insurance company itself, but a group that helps organize and promote its members; now at about 1,500 doctors and other medical service providers.

The result? Cherewatenko’ new practice is now solvent under SimpleCare. So, what has stopped this idea from blossoming nationally?

“Fear, and essentially being brainwashed that you have to have health care insurance for something like a blood test,” he said. “We’re telling people, you don’t always need health insurance in every case. We’re saying, going for catastrophic coverage only will save them money.”

To cite one example, Boeing, with an average of $680 in healthcare costs for each of its workers, has a huge potential for savings. Cherewatenko sees the plan taking off further. There are also initial efforts to help the SimpleCare system work under Medicare.

Cherewatenko said such “catastrophic coverage” covers complete care for such things as prolonged and intensive cancer treatment.

It has not been a widely offered type of coverage. That’s changing, Cherewatenko said, as insurance companies realize one of the main reasons companies, doctors, and individuals alike are opting out is the prohibitive cost.

A different wrinkle

Patients who still cannot afford to pay the cost of a doctor’s visit have options, too. Part of the system called “Cares For America” allows patients to volunteer at a hospital or nursing home, for example, to “pay” for their help.

Participating doctors choose a certain number of patients per month they think they can give services to for free.

“Doctors mostly start small with SimpleCare but as they see it working they start telling the insurance companies where they can go,” Cherewatenko said. “Insurance companies are supportive because companies just aren’t buying and it gets them out of the doctoring business of having to choose what type of care is best based on cost.”

Simple.

Currently the only doctor in Kitsap County signed up is Shelton family practice Dr. Christopher W Penoyar.

   Dr. Galvin will speak about SimpleCare April 5, 9 a.m. to 3 p.m. at the Gig Harbor Health and Safety Expo, sponsored by the Gig Harbor Firefighter’s Association.