Direct-Pay Care Slowly Expands to Heavy Managed Care Markets and Dares to Survive

Corporate | Politics & The Law | Posted by Michael Douglas, MD, MBA on January 28, 2013 at 11:25 AM | The concept began in the late 20th century, as some primary care clinicians could see the pending writing on the proverbial Medicare wall — their practices were losing money, as their overhead and Medicare/Medicaid beneficiary pools were increasing. The concept of concierge medicine — payment at the point of medical delivery in various forms — began to take shape. Originating in many pockets along the east coast in the 1990s, many primary care, physician-owned or solo enterprises began to forego insurance middlemen en toto, often including government programs — all in the hopes of boosting practice incomes, eliminating burdensome administrative costs, and — in their words — providing sound patient care for those who could afford it.

At this point, there are an estimated 1000 to 5000 physicians practicing this style of primary care delivery, with the specialty of internal medicine leading the pack. However, over the past couple of years, healthcare has seen an increase in the numbers of dentists and pediatricians engaging in this trend. In Minnesota, a heavily managed care region, some physician-owned, mid-sized enterprises are jumping into this space.

“I think you’re going to see (direct pay) in increasing numbers as soon as those 30 million people start flowing into doctors’ offices,” said Dr. Dudley McLinn of Specialists in Internal Medicine, a Minneapolis group of three doctors that started asking patients to pay out-of-pocket for care more than 10 years ago.

“There’s huge dissatisfaction” among primary care doctors, McLinn said. “There’s too much regulation and too much work for too little compensation. These doctors who aren’t very happy aren’t going to want to take care of even more people.”

Some groups, such as this, cite the oncoming complications inherent in the ACA as reason enough to buck Insurance altogether, and they’re betting that patients will be following them in significant numbers. Part of the appeal of the concierge model, proponents suggest, is the flexibility on the patient side of the fiduciary provider-patient relationship. Models based upon yearly retainers for a la carte delivery (email, phone consultations, etc.); so-called personal care models; and medical homes based upon direct care panels (members) seem to be behind increasing levels of interest in this type of care — especially among newly trained physicians just entering the primary care workforce.

Detractors cite the creation of a tiered system of medical care delivery that favors the wealthy. While it may be a rather knee-jerk response to concierge care, it cannot entirely be dismissed — especially in an era in which the overarching ethos inherent in the Hippocratic Oath intersects with the healthcare-access-for-all ideal President Obama is spinning ahead of the reform law’s launch. I think that a more expectant approach is needed to see how these models might work. It’s a little early to renounce direct-pay as dogmatic business model meant to help physicians in Wild West of healthcare reform; the interest should be in how concierge practice can co-exist with reform and lead to better healthcare outcomes. I think this makes the playing field much more level, as it forces Insurance to take notice instead of being the aggressor in the new healthcare marketplace of the early 21st century.


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