Concierge/DPC Practice Models: What Model Is Best For Me?
PART 2: Pros and Cons of Converting to a Hybrid/Segmented Concierge Medicine Business Model
By Michael Tetreault, Editor
APRIL 2, 2015 – The business and day-to-day operation of any medical practice is challenging. Concierge and Direct Practice physicians will tell you the same challenges exist in their business model as well. In Part 2 of our series entitled “Concierge/DPC Practice Models: What Model Is Best For Me?” we are going to look at how some physicians are operating their medical practices in what is called a “Hybrid” or “Segmented” business model. “Hybrid” concierge medicine practice is where physicians charge a monthly, quarterly or annual retainer or membership fee for services that Medicare and insurers don’t pay for. Under this model, practices and physicians will bill Medicare and insurance companies for patient visits and services covered by the plans. They also offer a traditional model of healthcare which is generally staffed by a Nurse Practitioner (NP) or a Physicians’ Assistant (PA). These two-levels of service are offered under the same roof but have very different payment models.
What Does This Look Like Practically?
Simply stated, the medical practice has two businesses under one roof, Business ‘A’ and Business ‘B.’ Under Business ‘A’ those patients wishing to be treated by the physician will likely pay a monthly, quarterly or annual fee to the practice and receive services such as: quick appointments; email access; phone consultations; newsletters; an annual physical, prolonged visits and comprehensive wellness and evaluations plans. Business ‘A’ will bill Medicare and the patients’ insurance company for visits and services covered by the plans and services not listed in the Membership Service Agreement (MSA). Business ‘B’ however, is where the patients schedule an appointment to see a Nurse Practitioner or a PA and that care is overseen by the Physician in the practice. Business ‘B’ will bill Medicare and the patients insurance company for visits and services covered by the plan, accept co-pays, deductibles, etc. If patients on Side ‘B’ must see the overseeing doctor, it’s very likely they will see him.
So Why Join Business ‘A’ of the Physician’s Practice?
Services inside a “Hybrid” concierge medicine practice on Business ‘A’ may include: quick appointments; email access; phone consultations; newsletters; annual physical, prolonged visits and comprehensive wellness and evaluations plans. Each patient should check with their Physician to find out what services are included in their Membership Service Agreement (MSA). These are only examples of some of the typical services provided. Services vary by state, physician and specialty. These services, along with ensuring they will maintain an ongoing relationship with their Physician, on the outset, can be very attractive to patients.
Advantages To Physicians Operating Under The “Hybrid” Concierge Medicine Practice Model
- Physicians who operate in a “hybrid” concierge medicine business model typically see 6-15 patients per day.
- Proven track-record. According to CMT’s (www.askthecollective.org) The Research Collective, over 80% of concierge medicine practices in the U.S. accept insurance and Medicare patients.
- Spend more than 30-minutes per visit with each of their patients, allowing doctors to get to know their patients better.
- Increased annual reimbursement compared to traditional, managed care and insurance-driven primary care practices.
- More time to research valuable, cost saving treatment options and drugs for your patients.
- Provides a safety net for you in the transition process as this dual model approach initially has less disenfranchised patients and less stress and anxiety throughout the transition process as patients continue to participate in the insured, non-concierge side of your practice.
- More time to spend with your family.
The “Hybrid” Challenge
Such as life, nothing good ever comes easy. The transition to a “Hybrid” concierge medicine model or “Fee-for-Non-Covered-Service Model” has its challenges. When a physician chooses the “Hybrid” business model, he/she must first carefully interview either a Physician Assistant (PA), a Nurse Practitioner (NP) or Physician partner that will replace you and your time under Business ‘B’ of the practice while you migrate and start Business ‘A.’ Most physicians will likely hire a PA or NP for cost reasons. Once this is accomplished, a physician needs to spend some time explaining reasons why he is opening up Business ‘A’ of his practice and taking on a more formal ‘observational’ role of Business ‘B’ of the practice.
Sometimes, transition consultants who assist doctors in establishing a “Hybrid” concierge medical practice will train a temporary transition manager whose job it is to mirror the physician’s schedule. That Transition Manager will also be available to meet with patients as they come through the office on their regular visits, explain the benefits of joining Business ‘A’ of the practice and what the cost, features and benefits might be. All the while, informing patients that they can still see visit this location and see an NP or PA for their regular care, if they choose to do so and not join Business ‘A’.
“One of the most difficult occurrences is when patients who does not understand the program or who philosophically disagrees with the membership fees (i.e. thinks this is for rich people) accuse the physician of abandoning them,” says one former Transition Manager in Arizona. “Sometimes patients can be very vocal about their opinion of this and at times, be quite rude. This is very disheartening to most doctors, at least in the early stages of the transition process. ‘Saying goodbye’ to some long-term patients is one of the reasons many Physicians are reluctant to convert [to a Hybrid model].”
There are some distinct implementation and management challenges to the “Hybrid” model. Physicians are strongly encouraged to establish a team of trusted advisors, which may include:
- a “Hybrid” medical practice consultant;
- a Transition Manager;
- an attorney;
- a supportive spouse;
- and an accountant … to name a few.
“Patients are educated, possibly more than ever, as a result of the changes to our healthcare system,” adds Richard Doughty, CEO of Cypress Concierge Medicine based in Louisiana. “Patients are looking for answers and options and taking more initiative in their overall health. Following their doctor into concierge medicine for many patients is exactly the vehicle that meets their needs. In addition, knowing others who have benefited from that relationship with their concierge doctor confirms the value as their doctor makes this change.”
- The average membership is typically much lower than other models because a lot of patients are given to option to stay with the practice, as they always have, and continue to see a PA or NP under their insurance. Patients understand that the NP or the PA has to be overseen by the Physician and if they need their doctor, it’s likely they will request to and be able to see him/her.
- There are great NPs and PAs. But not a lot of them will jump on the doctors hamster wheel and see 30 to 40 patients per day while they see their overseeing physician treat 6-10 patients per day. There is likely to be high turnover of NPs and PAs as well as burnout among staff and other support members. Frequently the Physician will decide to work both sides of the practice in order to help the Nurse Practitioner (or Physician Assistant, PA). Once this occurs, members have been known to leave the practice as they see no differentiation, or at least not enough to pay a fee.
- The staff that is helping the NP or PA is as busy trying to manage the chaos as they have been in the past. Support staff is crucial to highlighting the doctors Business ‘A’ of the practice. Customer service is key. There is likely to be high turnover among these team members. If you share staff, this can create its own set of dilemmas. If part of the time some staff are frantically moving patients through Business ‘B’ of the practice to see the PA or NP and then are relied upon to switch hats and be a strong advocate and customer service representative, some things are going to be forgotten and this message will ultimately be communicated to patients on both sides of the practice. If there is a lack of customer service the patients have been found to leave the practice entirely.
- The most important challenge to the model is trying to keep it profitable. Typically, in addition to a lower number of members, there is also a significant number of patients that will leave the practice altogether, choosing not to participate in either Business ‘A’ or Business ‘B.’ Frequently, the Physician is made to believe that his/her membership fees produce additional revenues added to the revenues of his/her original practice, and that he or she is likely to earn $300k – $500k more with this type of medical business model. Additionally, because there are no decreases in the size of the overall practice, and Business ‘B’ of the practice requires billing support, it is very difficult to reduce expenses in these types of “hybrid” concierge medical business models.
“With the right planning, a hybrid can be converted to a Direct Primary Care model,” says Mike Permenter, industry expert and consultant to physicians. “I predict there will be many hybrids converting to a Direct [Primary] Care model in the future.”
MDVIP, the country’s largest concierge medical group, has contracts with around 640 practices and operates in nearly every state across the contiguous U.S. They have been operating and helping physicians enter into concierge medicine business models for over a decade.
ON THE SIDE: “When I first heard about hybrid type models I was excited about a model that would allow some of the patients to become members of the concierge side of the practice while the rest were seen by a mid-level (Nurse Practitioner or Physician’s Assistant),” notes Permenter. “After all, this would eliminate having to part with those long-term patients. They could just remain in the practice and see the mid-level, and their insurance would be billed as always. It turned out not to be so attractive for both the patients and the Physician.”
All in all, “Hybrid” concierge medicine programs can be successful if the transition is done appropriately. There are a few companies that specialize in these transitions. CMT has a list of those companies on www.ConciergeMedicineToday.com –
In Part 3, look at the pros and cons of operating a Direct Primary Care practice and provide varying viewpoints from physicians, business leaders and others on the popular business model and topic.