“The Challenge For Concierge Medicine in The Years Ahead.”
“To those who say concierge doctors are hurting the system by diminishing the number of patients we can care for, my reply is: if you keep doing the same thing year after year, you are going to get the same results!” said Dr. Joel Bessmer of Members.MD based in Omaha, NE. “If we don’t focus on salvaging the doctor-patient relationship and allowing the appropriate time for each patient’s care and follow-up, patients will begin to feel their primary care is a waste of time.”
Concierge Medicine and Direct Care ‘By The Numbers’
By Michael Tetreault, Editor-In-Chief
MAY 7, 2014 — It’s time we take a serious look at the math behind concierge medicine, boutique practices and retail and direct-pay offices. These practices have been hammered in the media and press headlines over the years and riddled with nay-sayers bringing up tough topics such as patient abandonment, insurance participation and my favorite, ‘this is just wealth care.’
We talk to physicians and patients each day either looking for a doctor or considering a move into this industry. What I find is that most people either don’t understand or are not aware that the majority of concierge doctor’s offices operating today throughout the U.S. treat 500 to 750 “concierge medicine” patients AND have an insurance component [approx. 1,900 patients per practice on avg.] to their practice as well. Meaning, most concierge doctors accept and continue to participate in their HMO, PPO and managed care insurance contracts long after they have announced to a local community that they now offer a concierge medicine membership program to allow “more access to the doctor.”
A lot of doctors do this for several reasons. The most common, keeping the insured side of the practice acts as a safety net during start up and entry into the industry of membership-based medicine. Doctors say … ‘if this subscription plan doesn’t work out, at least I still have my insured side to fall back on.’
“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].”
“The biggest mistake in my opinion is charging too low,” says Mike Permenter, Executive Vice President and Chief Development Officer at MedFirst Partners LLC. “Conversions [into this private-pay marketplace] will eventually be unnecessary as the public becomes more aware of the benefits of these types of memberships. The big challenge is continuing growth after the initial conversion. Customer service, as described by some physicians, is the number one way to grow [this type of] practice. Linking the service to local self-insured employers is a good way to grow but certainly requires expertise with regards to structuring the appropriate benefit, usually a high-deductible plan with an HSA plus a membership.”
Where patient abandonment discussions along with moral and ethical issues typically arise is when the doctor discontinues all insurance relationships in his/her practice and simply charges a cash fee for his/her services, thereby releasing 1,900 patients from the practice.
Understanding the insured component of a true concierge medicine practice, 2,500 patients do not typically leave the practice because a doctor isn’t able to treat them or keep them as part of his/her practice. Conservatively estimating that most traditional [non-concierge] primary care and family physicians have a patient panel of 2,500 patients. Let’s say 6.9% of 13,575 doctors convert to concierge medicine. This equates to about 950 doctors out of 13,575 transitioning their practice business model to concierge medicine. Thereby leaving 13,050 doctors to serve a population of roughly the same amount of insured patients.
“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),” adds 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. With the right planning, a hybrid can be converted to a Direct Primary Care model. I predict there will be many hybrids converting to a Direct Primary Care model in the future.”
Where is the shortage?
If research says only 15% of concierge doctors do not participate in insurance, that means that 15% of 950 doctors will provide cash-only services to a patient base of roughly 600 patients each. Backing into the math, that means 143 [15% of 950 doctors] doctors will treat about 600 patients each equating to a serviced patient population of 85,800 [143 x 600]. If each of the 143 doctors had 2,500 patients, that means 271,700 patients no longer have a doctor that will accept insurance. Divide this patient population number [271,700] by the amount of doctors left who are still accepting insurance and choose to not participate in a concierge medicine practice whatsoever [13,050], that means each of the 13,050 doctor’s offices have the opportunity to welcome about 20 new patients into their practice. (5*)
Obviously the challenges are greater in rural or under-served areas. However, in the cities where concierge medicine is gaining ground, there should be enough physicians to service the patient-population seeking care.
The Merritt Hawkins data also states … it’s interesting to note here that physician practice “owners” are more likely to embrace concierge medicine than other types of physicians, presumably because they have an entrepreneurial mindset.
It is also important to mention that there are conflicting numbers regarding the actual growth each year of concierge medicine and private-pay healthcare offices touted by industry sources and media outlets. To date, key physician leaders in the industry tell Concierge Medicine Today that most crucial data compiled about this industry’s growth has come from The Merritt Hawkins Study, MDVIP and The Concierge Medicine Research Collective.
Concierge Medicine Today reported early in 2013 that there are currently four states that have a huge lead in the number of active concierge or private-pay physicians in practice as well as patients seeking their care. Florida, California, Pennsylvania and Virginia each have a significant number of people [most over age 50] seeking out concierge doctors and there is, fortunately, a sizeable number of concierge physicians to serve them. According to Dan Hecht, MDVIP has a high physician retention rate and the number of physicians who have left the MDVIP network over twelve years is very small. 2*
In late 2012, Concierge Medicine Today published a report from MDVIP and the American Journal of Managed Care. They stated that patients under the care of MDVIP-affiliated primary care physicians experience a dramatic decrease in hospitalizations versus comparable non-MDVIP patients, according to the study profiled in an article published in the peer-reviewed The American Journal of Managed Care (December 2012). This first-ever, published study done on hospital utilization in the MDVIP personalized healthcare model found a 79% reduction in hospital admissions for Medicare patients and a 72% decrease for those with commercial insurance between the ages of 35-64 in MDVIP-affiliated practices. As a result, MDVIP, the largest national network of primary care physicians, delivered to the healthcare system a one-year savings in excess of $300 million. 3*
The study also found decreased MDVIP hospital readmission rates for Medicare members when compared to the 2009 readmission rates for non-MDVIP Medicare patients, for such conditions as acute MI (heart attack), CHF (congestive heart failure) and pneumonia. MDVIP readmission rates are below 2% for these conditions compared to the national averages that range from a low of 16% to a high of 24%. 4*
While the debate continues whether concierge medicine will exacerbate the doctor shortage, we can see that there is actually a proven, viable history that these types of healthcare practitioners are showing that primary care can be saved. I am sure this argument will keep the media and nay-sayers busy for the next couple of years. However, the marketplace consumer is the one who is showing all of us that we are a long way from seeing a concierge doctor in every neighborhood. We do need them and we need more of them.
No one is talking about the concierge physician shortage.
“Despite what we hear in the media about the increase in concierge and private-pay physicians growing across America, there are simply not enough of these [concierge-style, direct care or membership medicine-style] physicians in the U.S. to meet the current demand,” says one concierge doctor in Dallas, TX.
Rural Areas Hit Hardest.
Concierge Medicine Today reports that it is extremely difficult to find a concierge or cash-only physician in rural areas such as: Idaho; North Dakota; South Dakota; Louisiana; Mississippi and others. Oftentimes, less than half-a-dozen practitioners serve an entire state.
“Direct practices should be successful in most cities and states where there is an inadequate supply of primary care physicians,” says Dr. Chris Ewin, Founder and physician at 121MD in Fort Worth, TX. “This may be true in the country with the correct practice model. Most important, a physician needs to have social skills to sell him/herself and there new practice model to their patients and their community.”
“It’s about believability. Would it work for me? Could it work for me?” says Richard Doughty, CEO of Cypress Concierge Medicine, a Louisiana-based company helping doctors move into this industry. “Where physicians have taken an early leap of faith, if you build it they will come, overwhelmingly they have been satisfied. As a result, physicians now have many examples of colleagues experiencing the benefits of concierge medicine for themselves and their patients. In those areas, we see momentum continuing to build.”
What About The Doctor Shortage We Keep Hearing About … Will Concierge Medicine Really Make It Worse?
Simply answered, no;
The numbers of practicing concierge medicine and direct-pay doctors doesn’t matchup to media reports. First, in 2013, a national survey of physicians that Merritt Hawkins (*1) recently completed on behalf of The Physicians Foundation sheds some light on this question. The survey garnered responses from some 14,000 physicians, who revealed a wide range of information regarding their morale, practice metrics and practice plans. Physicians were asked what changes they plan to make in their practices over the next one to three years. Close to seven percent of all primary care physicians indicated they plan to switch to a concierge practice.
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