BUSINESS | CONSULTING
Concierge Medicine Consultants: Once Only Few In Number, Now Numbering In The High 30’s-40’s.
By Michael Tetreault, Editor-In-Chief
JUNE 17, 2014 – The competitive sea in the concierge medicine consulting marketplace is becoming more crowded. Not for every doctor, boutique practices remain a niche segment of the health care system but consultancies are now registering more physicians than ever.
Concierge Medicine Today has been covering this space for many years and when we see a consultant or company starting to do something that is innovative, we take notice and investigate. Journalism 101. What sparked my interest to revisit a previous article I wrote in November of 2010 is a concept developed years ago by Renée Mauborgne and W. Chan Kim called Blue Ocean Strategy. A blue ocean is a metaphor for companies operating in uncontested market space.
In the early 2000’s, the concierge medicine marketplace was predominantly serviced by two or three consulting companies. In 2010, the number increased to over 20. Today, that number has grown into the high 30’s – 40’s.
Large franchise companies, like MDVIP, continue to capture a significant portion of the market share. They still have an edge, in that they helped build the existing sea they now sail in. These franchise concierge medicine consultancies like MDVIP and Concierge Choice help to keep prices low and competitive for not just their physician clients but their patient members as well.
In 2007, P&G acquired a 48% stake in MDVIP, a concierge medicine company that was formed in 2000. Then, in December 2009, Procter & Gamble acquired 100% ownership in MDVIP for an undisclosed sum. This acquisition was reported by Concierge Medicine Today. (See “Boutique Medicine Venture Generates Marketing Intelligence for Procter & Gamble”), February 4, 2010.) MDVIP is the largest concierge medical company with between 550-640 practices across the U.S. and more than 180,000 patient subscribers.
Other successful, less franchised consultancies such as Specialdocs, Cypress Concierge Medicine and Latady Physician Strategies continue to innovate, offering differing models, competitive fees and personal service within a doctor’s practice.
“Even after 10+ years in this still rather exclusive space,” says Roberta Greenspan of Specialdocs, “I continue to have great enthusiasm for the successes and ongoing growth of the concierge model. Every day we hear another story from our physicians and their patients about how much this type of practice change has improved their lives.”
Currently, there’s a phenomenal opportunity for these companies to innovate and sail into clearer, bluer waters. Concierge Medicine Today hears from concierge and DPC physicians every day who are frustrated with their consultant or transition experience. There is definitely a way for existing and future consultants to improve on service and price. Dyson made vacuum cleaners a tech-gadget with its futuristic design and disposing with flimsy one-use filters. Why can’t concierge medicine consulting companies incorporate something from a service, price or technology-perspective just as unique?
Companies like Specialdocs, Inc., Latady Physician Strategies and Cypress Concierge Medicine are already bringing innovation and highly personalized service into this niche space. But when the most common complaints heard about the consulting and franchise concierge medicine industry is poor customer service and high prices, how are these companies servicing the marketplace and offering something truly unique to their physician clients?
Nancy Latady of Latady Physician Strategies addresses this and says “for the implementation phase – the actual practice conversion – we either do everything for them (holding their hand throughout the process), or we provide coaching if they want to do most of it themselves. Our primary goal is to help physicians transition their practices successfully – by doing it right the first time, resulting in more patients, more quickly, and to achieve greater profitability.”
Concierge Medicine Today (CMT) knows that physicians are being offered intolerable reimbursements from traditional insurance and health plan relationships. Years ago, 120% of the Medicare fee schedule was considered to be a frightfully low reimbursement. Insurers and managed care networks are now offering reimbursements at 75% of Medicare Rates or even lower in some extreme cases.
The language of strategy rather than the delivery of platitudes is more informative and effective with physicians when talking to them about how concierge medicine will benefit their practice, patients and bottom-line. For consultants to sail and compete in the concierge medicine ocean over the next two to four years, the company that will repeatedly give its physician clients something that feels refreshingly new and solves their problems in a way no existing consultant has done will exit the red ocean and begin trawling in blue waters.
Cypress Concierge Medicine is a Louisiana based healthcare consulting company that specializes in concierge medicine transitions. Cypress is unique in that it does not own or directly manage physician practices. Instead, they provide direction, oversight, regulatory support and control, on-going legal review and the expertise necessary for a physician to provide a positive experience for each patient encounter.
“With concierge medicine, the impact for patients and physicians is phenomenal,” says Richard Doughty, CEO in a recent article on Baton Rouge’s The Advocate.
One of the reasons behind the company’s success is that it offers doctors the personal touch, Doughty said. That approach gives doctors confidence in the company, Doughty said. Cypress doesn’t want to lose its person-to-person quality or make physicians feel like each one isn’t important.
Doughty attributes all of his success, past and future, to his faith. Cypress’ growth is really up to God, adds the article.
“I will tell you this … God is doing some amazing things,” Doughty said. “I just don’t want to limit Him.”
The paper adds, the company offers two key advantages over competitors: a lower-cost fee structure and the ability to tailor a practice model to the physician and his or her patients.
In a typical concierge practice, the management firm gets one-third of the membership fees patients pay, Doughty said. Most contracts are for five years, and the fee structure remains the same over the life of the contract. If a practice has 600 members and the members pay $1,500 a year, the management firm’s share is $300,000 a year. Over a five-year contract, that adds up to $1.5 million. But most of the heavy lifting is done during the first 18 months of moving the practice to the concierge model, Doughty said. After that, if the management firm has done a good job, there’s not nearly as much work required.
Cypress drops its fees each year, in proportion to the amount of effort and energy required to maintain the practice, Doughty said. The difference for doctors generally amounts to several hundred thousand dollars over the course of a contract.
Cypress Concierge Medicine offers three practice models, Doughty adds.
- A straight concierge practice.
- A blended model under which the physician maintains his practice’s current patient population, but personally sees only the patients that join the concierge practice. The doctor oversees nurse practitioners or physicians assistants, who manage the non-concierge patients.
- A block-time model, where the physician dedicates a certain portion of the day to concierge patients and the rest to traditional patients.
The number of physicians signing on with concierge practice companies continues to increase. A report by Merritt Hawkins, a physician staffing firm, found that nearly 10 percent of practice owners planned to convert to concierge practices over the next three years. The Concierge Medicine Research Collective (“The Collective”) estimates concierge medicine doctors and direct primary care physicians number to be approximately 5,000-5,5000 in the U.S. and Canada. This according to analyses and a recent examination of the national marketplace by The Collective as well as interviews with corporate industry leaders.
Many doctors fly under the radar. Concierge Medicine Today believes the growth rate will be high in the coming years – possibly as high as 15% plus of primary care doctors due to the Affordable Care Act (ACA). In 2013 alone, industry sources and concierge consultants tell us that they have seen as significant increase in physician interest to support this growth.
According to The Collective, concierge medicine doctors and direct primary care clinics across the U.S. now serve over 240,600 patients (June 2013).
As more and more companies and individuals sail in these waters and seek to find their catch, inevitably this will mean a price war and ultimately, the physicians moving into these practices will benefit the most.
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