Concierge medicine takes healthy, inexpensive patients, and turns them into higher cost patients, with no improvement in outcomes.
Friday, October 18th, 2013 | By Chris DeNoia
I am a patient of a fairly prominent concierge medical group in San Francisco. Concierge medicine is a new approach to primary care. Membership based, the group is highly personalized promising a superior healthcare service. And I have to confess I like it. The service is good, the facilities are top notch, and the medical team is knowledgeable and affable. After my first visit, the practitioner communicated via email a summary of our meeting. This included my To Do list, which included obtaining an Over the Counter drug, things to monitor, etc. (being on the wrong side of forty, things start to break down…) Regardless of my positive personal experience, I know this is bad for the healthcare industry.
This is not a rant against one group. It’s an observation on concierge medicine in general or rather, a payment model lacking proper incentives.
In a prior blog post, I recounted the Australian Prisoner anecdote of why incentives matter. The moral of the story is clear: if you want lower costs and improve outcomes, incent the physicians to lower cost and improve outcomes. How do you do this? As Clarence Darrow once quipped, “Ever since the Phoenicians invented money, there has been only one answer to that question.”
What is the economic incentive in concierge medicine? Typically, there are two payment structures. First, the access fee, sometimes referred to as an annual fee or membership fee. This is the fee to become part of the club, obtain 24/7 access or whatever additional benefits the concierge practice includes in the club. Second, the concierge practice continues to bill Fee For Service (FFS) to the payers, e.g.: insurance companies, employers, or the individuals.
Let’s examine this economic incentive structure against the goals of the Triple Aim goals:
- enhance the patient experience of care (including quality, access, and reliability)
- improve the health of the population
- reduce, or at least control, the per capita cost of care.
Does concierge medicine enhance the patient experience?
Clearly the answer is yes, the model succeeds exceptionally in this regard. This has been confirmed by a Tufts University Study done in 2009. The economics suggest concierge medicine will continue to deliver reliable accessible offices, although some with the granite countertops and spa like waiting rooms are a little excessive. After all, members should be spending very little time in these waiting rooms in the first place! Members will drop concierge service if the practice fails to deliver on the patient experience. This is similar to members leaving big box stores such as Costco or Sam’s club if the bulk bargains are not delivered. Interestingly, most big box stores have little or no profits from the sale of goods, rather the very high correlation of net income to annual fees. Let’s call this a win for concierge medicine.
Does concierge medicine have better clinical outcomes?
There is no data that supports there are better or worse clinical outcomes. A question also raised in consumer reports this February. Without elaborating on the anecdotes, let’s call this one an undecided vote.
Does concierge medicine control or reduce the cost of care?
Concierge medicine is a premium service, by definition raising the cost of care. The annual fee raises the overall costs for primary care above the current FFS rates. In my particular case, a Well Care visit is reimbursed $437.60, the additional concierge fee of $149 will increase my total primary care costs 34%+. For healthy individuals who only utilize their annual physical, this cost is a significant % increase. This percentage increase reduces with additional utilization, but never approaches zero.
More importantly, with an economic incentive on patient satisfaction, concierge medicine practices are a perverse incentive to make unnecessary patients referrals to a specialist. There is no penalty or incentive to dissuade a referral, however, there is an incentive to refer to a specialist, whether they are medically necessary, which increases the patient satisfaction. Herein lies the biggest issue with concierge medicine. Let’s call this a big loss.
Consequentially, concierge medicine shows an improvement at one of the Triple Aim goals (patient experience) while failing at another (reduce or control costs). In this aim, it violates the Hippocratic Oath to do no harm; concierge medicine takes healthy, inexpensive patients, and turns them into higher cost patients, with no improvement in outcomes.
Until the economic incentives are aligned for concierge medicine practices to control costs while improving outcomes, concierge medicine will continue to be a broken Triple Aim stool; consisting of one new leg, one old leg, and one significantly weaker leg. These incentives can only be aligned where the provider is accountable to the ultimate risk bearing entity, the purchaser, whether that is a self insured employer or the payer.