There's a new medical experiment going on, and it doesn't involve any mice.

A growing number of physicans have chosen to take up an insurance-free practice. These doctors refuse Medicare, Medicaid, and private insurance, and bill patients directly.

Your first thought might be that this is a luxury service, but it doesn't end up working that way. Here's why:

The typical medical practice spends 65-70% on overhead, much of which is for the special and elaborate paperwork and negotiations involved in billing insurance. According to a survey in Health Affairs, the average American doctor spends 43 minutes a day on insurance paperwork, in addition to the support staff's time spent on it. This paperwork is for the insurance companies or Medicare/ Medicaid, not for the good of the patient or the practice -- and Health Affairs estimates the total cost at about $31 billion each year. 

The typical medical practice also does 90% of its work at pre-negotiated discounted fees. The insurance company negotiates lower prices on the services, and pays the doctors less. The patient's savings over private billing is based on their ability to pay the lower fees the insurance company has negotiated for them.

Physicians who switch to direct patient billing can lower their overhead and charge the discounted fees directly to the patients -- often ending up with a better bottom line than they have when the vast majority of their work is done through insurance.

Add electronic invoicing, which routinely improves collection of fees by 32% or more and reduces staff and storage requirements, and physicans can earn more  with a smaller staff and a smaller space. A more patient-centered practice, a less stressful office environment, and quality care for uninsured as well as insured patients are the results.

At present, just under 2% of U.S. physicans run insurance-free practices.  The number is growing, though. The experiment has been largely successful for those who've tried it, and some experts are suggesting that this new trend may solve the problem of shortages of medical professionals, as well as offering more affordable health care to patients.