Why I Had to Close My Preventive Healthcare Clinic

Our system was predicated on integrated health, including cooking, exercise, nutritional therapy, and mindfulness meditation. Care models in the U.S. still reward treatment, though; not prevention.
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Lucy Nicholson/AP

On December 27, I closed MDPrevent, the preventive-medical practice that I co-founded three years ago in Delray Beach, Florida. The practice was created with the premise that patients would be better off if doctors focused their attention more on preventing disease than simply treating it. In clinical parlance, “primary prevention” means preventing disease occurrence, while “secondary prevention” means early diagnosis and treatment of existing disease before it causes significant harm.

The thrust of MDPrevent was primary prevention: to help patients identify their risk factors for the major chronic diseases and leading killers, such as diabetes, heart and lung disease, stroke, and cancer, and to help them make lifestyle changes to prevent these factors from evolving to illness. I focused on lifestyle counseling, rather than diagnostic tests meant for early detection.

But ultimately, the three major healthcare industry players—the providers, the payers, and the patients—all shared some responsibility for our failure.

Some may say that most start-ups fail. But what happened to MDPrevent is a cautionary tale. My incentives for creating this new model were more altruistic than financial. I previously cofounded, built, and sold a successful healthcare-services company. After spending years involved with the care of institutionalized elderly past the point where prevention makes any real difference, my ultimate goal became demonstrating that doctors could afford to focus on prevention without sacrificing their livelihoods. Of course, to start focusing on primary prevention, most doctors would have to undergo further re-education, as few have training in nutrition, exercise, sleep, stress, and the like.

MDPrevent realized this and assembled a team that included a health psychologist, registered dietitian, exercise physiologist, yoga instructor, health educator, and nurse practitioners. Our system was predicated on an integrated model of care in which the physician would complete an initial thorough health risk assessment, make appropriate internal and external referrals, and then monitor progress by reviewing records and periodically meeting with the patient. In addition to personalized care, our custom facility, which included a teaching kitchen, a gym, and classrooms, allowed us to also offer our patients group classes focused on healthy cooking, exercise, nutritional therapy, diabetes education, and mindfulness meditation.

We knew that for the model to be scalable, it had to be based on insurance reimbursement rather than out-of-pocket payments. We hoped that once we demonstrated the value of primary prevention in a setting that derived its revenue primarily from insurance, the rest of the medical establishment would see the merit and follow suit. Of course, in my mind, at that point we would also be well along in creating our own successful financial endeavor based on the premise of doing well by doing good.

First, the good news: On the personal front, after reading 50 books and more than 30,000 abstracts and studies, I reversed my own health issues. I dropped 25 pounds, brought my cholesterol under 200 and stopped taking medication for it, eliminated my irritable bowel syndrome and heartburn, markedly decreased my left hip osteoarthritic pain, and started running again for the first time in 10 years.

On the practice side, more than 1,000 patients came through our doors. Many people told us they loved the program, and we received many positive testimonials. Dozens of our patients sustained marked weight loss without drugs, supplements, or surgery. We successfully discontinued our patients’ statins, lowered or discontinued blood pressure and blood sugar medications, and watched people finally take control of their health. We religiously followed an insurance-based reimbursement model.

We lost money.

The bad news was that for every dollar we collected, our expenses equaled three dollars. I didn’t need my MBA to know that this was unsustainable, so I started cutting our costs. At the end, we were left with a health psychologist, a registered dietitian, and me. Even though I never took a paycheck, the Medicare reimbursement we received for our services still could not cover our costs. I even abandoned the offices we had built-out and moved to less expensive quarters we shared with an internist. It still made no difference.

So what had gone wrong?

First, few primary care and internal medicine doctors would refer to us. When I first met with a few dozen of them to introduce myself and the model, they raved about the concept and assured me they would make referrals. They said there was nothing like us, and they were right. Yet, other than for a small handful, they did not refer. When I asked several of these doctors why they had not referred, the most common explanation was that they simply forgot, or that they had made a referral, but their patients chose to not come. Some local specialists told us they would not refer to us because of fears of offending their primary care and internal medicine referral sources.

The hospitals were no better. One local hospital initially asked us to open a Certified Diabetes Education Center because the hospital was shutting down its own program for financial reasons. As opening the center was consistent with our educational focus, we exerted much time and money to get certified so we would be open by the time the hospital shut down its program. The hospital initially told us they would refer diabetics to us, but then someone reversed the decision and the hospital decided to refer to its sister hospital instead. We also met with another local hospital and asked them to allow us to incorporate our prevention model into their primary care practice, and they also turned us down.

Then there were the payer problems. Most of the third-party insurance companies in the area did not cover our services at all. Medicare was the exception, but reimbursement was insufficient to cover our costs. Although the Affordable Care Act included provisions to reimburse for services such as an Annual Wellness Visit (AWV) and Intensive Behavioral Therapy for Obesity (IBTO), Medicare still paid less for such visits than other appointments of a similar length. As a result, many doctors told me that they had simply started lumping the AWV with a scheduled medical visit, often spending less than 15 minutes on a service that, when done right, could easily exceed an hour.

We also approached the larger Medicare managed care companies, thinking that they would embrace our model as a way to save money on hospitalizations, prescriptions, emergency care, and specialist doctor visits. One small insurance company did contract with us in 2013, and not a single one of their patients needed a hospital visit after seeing us all year. We attribute that to the fact that each patient was offered, and most took advantage of, no-cost nutritional and psychological counseling. The other companies rejected us, and we were told by their representatives that they did not want to threaten or dilute their existing doctor relationships.

But the final, and possibly most important, factor was a Medicare contracted audit we went through. A few months ago, we received a letter requesting we submit records for services we rendered and billed for Intensive Behavior Therapy for Obesity (IBTO). This new service introduced by CMS in 2012, allows doctors and nurse practitioners to provide obesity counseling to patients who qualify with a body mass index over 30. The service involves 15-minute weight-loss counseling sessions, for which Medicare reimburses about $25. Meanwhile, 15 minutes of any other kind of medical counseling is reimbursed by Medicare at about $75. Based on our cost structure, by the time we finished paying for the costs of the provider and the overhead, we were losing about $25 for every 15-minute visit. If we had billed $75 instead, we would have netted $25.

So imagine our shock when we received a letter from a Medicare sub-contractor informing us that we would need to submit to a record review. After submitting our records, we were told that our claims were inappropriate. When we questioned the results, the response was that the records indicated that the obesity-counseling service had been mostly provided by a registered dietitian instead of a physician or nurse practitioner, as required. When we responded that we had used a registered dietitian under Medicare’s “incident to” rule, which allows a licensed professional to take over for a physician after the initial physician visit, the reviewer claimed she wasn’t aware of this Medicare provision.

Eventually, we spoke with her supervisor, who told us that if I had co-signed the records, they would have been approved. But when we explained that the rules did not require a signature, she concurred. She advised us that the denial would probably be overturned during the mandated appeal process, but since they had already completed their review, there was nothing more she could do.

In a last-ditch effort, we told them the following: MDPrevent was the largest provider of IBTO in Florida and had only billed all year a total of approximately $35,000 for the procedure. We further explained that this low amount, which led to losses for us, was why few others were providing the service. National statistics suggested that we may have provided the service more frequently than any other doctor in the U.S., even though it was not financially worthwhile. But now, we were being asked to potentially refund the little money we did get paid.

The supervisor agreed to consult with CMS. Eight weeks later, we have yet to hear back from her. Nevertheless, the audit convinced us it was time to call it quits.

The final contributors to our demise were the patients themselves. Primary prevention requires work: making better food choices, adding more physical activity, engaging in meaningful activities, and developing tools to better manage stress.

Based on our review of the credible research, our model mostly excluded dietary supplements and multivitamins because the science mostly did not support their use. When it came to pharmaceuticals, we didn’t rush to prescribe if there were a non-drug alternative. This approach was a turn-off to many patients who expected a prescription or emphatically clung to beliefs in supplements. And the no-cost, no-deductible, no co-payment provisions in Medicare’s preventive benefits may have had an adverse effect on people’s sense of its value. How much would you appreciate something that has no cost to you? For many patients, it seemed easier to take supplements than to be more attentive to food labels and exercise habits.

So after losing $2 million, yet reaping heartfelt thanks from patients who benefited from us, I have hung up my stethoscope. Patients loved my practice because I was willing to spend up to two full hours with them, most of it not reimbursed by insurance. The extra time often meant successfully making a diagnosis that had eluded other doctors for many years. It takes a very long time to get a thorough history and do a good exam and almost no time to prescribe a medication for a presumed illness. I chose the former. Insurance pays for the latter. Unfortunately, we still have a healthcare system that makes money by treating disease, rather than by preventing it.

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Steven Charlap is a medical doctor based in Delray Beach, Florida. He was the founder of HealthDrive, a medical and dental practice, and MDPrevent, a preventative-healthcare clinic.

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