Hybrid Concierge vs. Direct Pay: Considerations for Physicians

Hybrid Concierge vs. Direct Pay: Considerations for Physicians

In the last year or two, I have noticed the increase in discussion about the direct pay approach to patient care.

Here’s what’s surprising to me and others in the industry: While there are a lot of stories in the media, physicians aren’t asking us about this model. Doctors seem to understand that this is a model that is hard to realize for existing practices.

Just imagine telling your patients, “I know billing through insurance is easy for you. I know it’s just a $40 copay and you only visit a few times a year, but it’s hard for me. I’m no longer going to take it. You have to pay me $X annually.” That fee is often $200 annually to $300 annually, and in some models, physicians also charge a per visit fee.  For patients who only visit their physician a few times a year, the membership fee alone will cost more than what they have been paying for two to three office visits with copays.  Plus, if there are added per-visit fees, it can be much more than some patients are accustomed to paying.

Direct Pay Model

Despite drawbacks, the interest in direct pay is understandable. Efforts to slash provider reimbursement continue, forcing physicians to explore alternatives. Direct pay takes away that uncertainty.

It’s also a straightforward model. There are two ways that people can pay directly for their care: fee-for-service or via some kind of annual fee for participation; or some mix of the two. In most programs, physicians do not participate in any insurance or in-government plans.

Direct pay is a throwback to the days when doctors were paid for their services directly by patients. My observation is that while in specialty care there have always been a limited number of “cash only”   practices, there have been extremely few in primary care. Over the past ten years, I have seen a limited number in Manhattan, N.Y., Washington, D.C., and a smattering of practices nationally.

To a large extent, physicians who only participate directly in some plans and not others are already using a “direct pay model”   for part of their practice. They know, however, that while the hope is for more out-of-network patients who directly pay their fees, the reality is that getting those patients is difficult as long as there are other providers who accept the plan.

What Happens in the Real World

While I understand the interest in direct pay, I have questions: My first is what happens to those who have reached Medicare eligibility and can only see physicians if they have the finances to pay out of pocket? The same is true for patients who rely on their insurances to pay for their care. These folks will find a physician who does take their insurance.

This means that if a physician or practice were to say to its existing patient base that it was dropping all of its plans and program participation, the number of patients who stay will be limited.

Most practices cannot support this type of change and they negate the largest asset in their practice: their patient base. Our company has been approached by numerous physicians who have told us they tried a direct approach, dropped out, and now need help to survive.

Hybrid and Direct Pay: A Clear Difference

Here’s where and why I think the hybrid concierge model is such a good option for physicians today.

Hybrid concierge :

• Doesn’t disenfranchise patients as physicians remain in practice caring for all patients;

• Leaves the choice of whether to pay or not with individual patients — without taking good doctors out of the system;

• Is a transitional model that works for doctors in practice today (Again, it is extremely difficult for a traditional physician to suddenly move to a model that accepts no insurance;

• Ensures physicians maintain hospital admitting and referral privileges; and

• Doesn’t require physicians to have a large patient panel to cover overhead.

I do understand the concept and interest in direct pay — I even understand how and why it could work for some physicians in some markets. I just don’t think it is an option that is well-suited to the majority of physicians practicing today. Nor do I think it’s a model that promotes strong physician and patient relationships. In a direct pay model, you pay for quick, convenient access to a healthcare provider. It could be one physician one visit, another next, or an extender the next. In a concierge program, patients pay an annual fee because they like their chosen physician and because they want the enhanced services and benefits the program offers.

In the future, we’ll continue to see new models and tweaks of existing practice options, even the same models simply renamed and offered by new players. The real message to physicians is: Do your homework. Ask the right questions. Consider what is best for you and your patients.

Do you think direct pay makes sense? Which option do you prefer and why? I’d like to hear from you in the comments section below.

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1 reply »

  1. Dear CMT,
    Hybrid Concierge vs. Direct Pay:

    The issues raised are valid and have real $$ and patient care implications, without a doubt. But let’s look under the hood for a closer look to see where this all might lead. I strongly advise against going down this hybrid road with any intention of it leading to a better outcome. Here’s why:

    The notion that a “blend” of our current third-party dominated network system can co-exist (in the long term) in a mutual symbiotic relationship with a direct pay model, to the advantage of both the patient & physician, does not hold up from a longer term scrutiny vantage point. The model with the immediate momentum WILL dominate. Medical analogies abound to describe how this relationship would end, but the best one I can think of goes like this: If a patient has Atrial Fib with a hemodynamically unstable rapid ventricular rate, you can slow it down with Diltiazem and even make the patient feel much better (TEMPORARILY); but unless you correct the atrial fibrillation, the problem is going to come back over and over with potentially disastrous consequences.

    Likewise, network dominated, third-party driven financing derives its pathologic leverage from the fact that “managed care” has separate contracts with each of the two parties that wish to engage in business with each other; therefore it’s not the terms of the professional encounter that determine the rules of engagement, but rather the “negotiated” contracts with each party drawn up by the third that is in control of both! No doubt, if we continue to apply the same formula(s) to the way we operate our practices or finance medical care in this country, we will end up with more of the same. We need to hit the fundamental “RESET” button with the realization that it is not about the amount of money, small or large, that changes hands at the front desk, but rather or not if that exchange represents the entire transaction to the satisfaction of both parties.

    To see the end game clearly, consider one of my favorite medical fantasies! What if we had a magic wand that immediately dissolved & invalidated all third party payment contracts with physicians? RESULTS: Networks, and the control they wield, would vanish virtually overnight. The result of the vanishing contracts would be that subscribers coverage would be worthless, because the “benefits”, and I use that term loosely, that were once totally dependent on “providers’ ” willing participate in the scheme, are no longer operational. The policies would then be solely between the subscriber and the issuing company, as all true insurance should be. This would force the terms to be re-written so as to function as real insurance rather than PRE-PAID healthcare. This magic wand would create millions of free-agent patients and hundreds of thousands of free-agent doctors…Voila! Open market! Prices would normalize, provider expenses would fall, transparency would dominate and care would be simplified and the Doctor-Patient relationship would be more as it should.

    Of course, I’m not advocating that people do without insurance. To the contrary, I am advocating that we re-establish a true insurance market where policies are truly indemnity based, personal, portable, and not linked to employment or zoned by networks! My first financial advisor gave me some sound advice regarding the role of insurance 30 years ago: Never insure expenses that you fully expect to incur and that you can afford on your own with proper planning. If we applied that simple axiom to medical insurance, things would be much easier and less expensive in the outpatient arena; and I believe it would permeate into specialties and in-patient care as well.

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