“The important thing,” counsels the fashion designer Diane von Furstenberg, “is to take your time and not get stressed,” but tell that to US physicians. Many of them think they have been pushed to see too many patients, which they have to do to make up for stagnant reimbursements. They are fearing yet more stress in January, when health insurance exchanges under the Affordable Care Act unleash millions of new patients seeking a doctor’s care. And from the patient’s standpoint, there are fears that as more people seek the doctor’s time, it will be harder to get the attention they need.
Looking for a way out, unhappy physicians have been switching to direct pay or “concierge” care, an alternative practice model that deals with the doctor’s concern about heavy workload and the patient’s interest in better access to care. Such practices charge patients a regular fee, making it possible for physicians to cut back their panels to only a fraction of what they used to be. Appointments are longer and the physician can delve more deeply into each patient’s case. Patients are also allowed to phone or email their doctors, a benefit not covered by most health insurance.
This approach can be traced back two decades, when concierge physicians began charging wealthy businessmen as much as $15 000 (£9000; €11 000) a year to cover exclusive health services, such as a health spa and 24 hour cell phone access to the physician. Now it has evolved into direct pay, a stripped down version with a fee as low as $600 a year. Experiencing steady growth in the past few years, some 5000 US physicians now practice either direct pay or concierge care. Mary Pat Whaley, a North Carolina business consultant who has been helping physicians set up these practices, thinks the model holds great promise. “It is a natural evolution, the next step in healthcare,” she says. “As more people come into the market, it will become more commonplace.”
Supply and demand
The lure of direct pay (Direct Primary Care, DPC) has captivated the medical profession. Whaley says physicians are interested because “they have been getting hammered” in their traditional practices, and direct pay helps them “get back control” of medical care. A 2012 survey of more than 13 500 physicians by Merritt Hawkins for the Physicians Foundation found that almost 7% of respondents planned to switch to the new model in the next three years.1 That statistic included 6.4% of specialists, even though direct pay is basically a primary care phenomenon.
If all the doctors who replied favourably to the survey actually entered the field, the number of direct pay physicians would mushroom to more than 50 000—more than 10 times the number today—but it is not clear whether they will do so, or whether there are enough willing patients to finance even a modest expansion of direct pay. Many patients still expect to get high quality care from physicians strictly through their insurance. Even when they sign up for direct pay, they still need to buy insurance to pay for specialists, hospitals, and pharmaceuticals. In fact, the Affordable Care Act mandates insurance coverage.
Facing the brute forces of supply and demand, direct pay practices have been cutting prices to as little as $50 a month to attract patients. An August article in Concierge Medicine Today reported that direct pay fees in major urban areas are “dropping dramatically due to increasing competition among physicians entering the marketplace.”2
To be competitive, physicians are coming up with new business models that appeal to certain populations. Karen Josephson, a geriatrician in Long Beach, California, makes house calls to older people and disabled people. Her practice, founded six years ago, has just 50 patients. She charges house call patients $4000 to $6000 a year, depending on how far she has to travel. To keep expenses down, she rents office space, has no staff and does all the billing herself, which is easy because she doesn’t accept any insurance.
Her first visit with a patient lasts two hours, and she maintains regular contact through emails, phone calls, and visits. “If you spend the time and really get to know somebody, treatment is so much easier,” Josephson says. “You understand their environment and the family.” The personal attention is paying off. Before they signed up with her, many of her patients were regularly admitted to the hospital, but now, she claims, they rarely see the inside of one. These results are similar to an unpublished 2010 study by Qliance, a direct pay company in Seattle, on its direct pay patients.3 Examining the outcomes of 3088 of its physicians’ non-Medicare patients, Qliance found that its patients have 35% fewer hospitalizations, 65% fewer emergency department visits, 66% fewer specialist visits, and 82% fewer surgeries than similar populations.
Josephson says she used to feel overwhelmed at her old job at Kaiser Permanente, the huge nationwide group practice, where she had 2000 patients, but now feels content. When she recently took a week long vacation, she had arranged for back up, but “I ran my business like I never left home,” through phone calls and emails with patients.
“This is a beautiful life,” she says. “I would never go back to a regular practice.” When she meets doctors in regular practice, “all of them are miserable, absolutely miserable,” she says. “All they have to look forward to is ICD-10 [international classification of diseases 10th revision], EMRs [electronic medical records], and Obamacare. I don’t have to deal with any of that.”
She says her direct pay practice has never been sued for malpractice, adding that patients are less likely to sue physicians with whom they have close relations. However, direct pay physicians may need to carry malpractice coverage anyway. It is required in at least seven states, and it is often a requirement for hospital admitting privileges, according to the American Medical Association.4 Also, not having any insurance can put a physician’s personal assets at risk.
Not everyone is happy, however, according to a survey of direct pay physicians released in June by the Concierge Medicine Research Collective.5 Although 55% said they were very satisfied with the arrangement, 27% were only somewhat satisfied and 18% are not satisfied. And while a hefty 62% reported more income than before, 25% saw no change, and 13% reported a decline.
David L Albenberg, opened a direct pay practice 10 years ago in Charleston, South Carolina. He now has 340 patients, a high patient retention rate and an adequate income, charging patients $1200 to $2400 a year. But he has misgivings about patients’ attitudes. “I wish it were easier,” he says. “I’m a little disappointed about folks not understanding what we are trying to do.” For example, when new patients see his empty waiting room, rather than being impressed with the easy access, they wonder if he is hurting for patients. And when he personally answers the phone—he tries to answer by the first ring—they think he doesn’t have enough to do.
Patients can be demanding. “I have seen a massive increase in expectations over the past 10 years,” Albenberg says. “No one wants to wait for a minute to talk to me.” But he adds that rarely has he had to part ways with patients who had “unreasonable expectations.”
To succeed with direct pay, “you need to think like a businessman,” Albenberg says, “but a lot of doctors come into this without any sense of business.” Recruiting patients is the biggest challenge. Typically, direct pay physicians derive their patient base from their old practices. To effectively recruit their patients, physicians are advised to meet with each one face to face, explaining the new practice and giving them the option of finding a new doctor. But many doctors find it hard to drop long time patients who say no. Albenberg says some physicians hang on to these patients, but it requires juggling two practice styles.
Direct pay physicians also have a hard time giving up third party reimbursement. Even though doing so would substantially cut their administrative costs, 75% of direct pay practices continue to work with insurers, according to the American Academy of Private Physicians, which represents direct pay practices. Albenberg has completely stopped dealing with insurers, but he understands why others have not. They may want to keep ties with payors “in the event that things on this side don’t work out,” he says, adding that when physicians opt out of Medicare, they have to wait two years to get back in.
Insurance payments can also supplement income from direct pay fees. However, healthcare attorneys warn that Medicare regulations and some contracts with private insurers prohibit “double dipping”—charging for the same service twice. Insurers in states like Illinois have reportedly removed direct pay doctors from their networks.
Transitioning to direct pay is a complicated matter, involving legal, marketing, and financial expertise. Both the American Association of Private Physicians and the Direct Primary Care Journal offer continuing medical education courses to help prepare physicians for direct pay practices. Doctors can also get help from consultants like Whaley or from companies like SignatureMD, which help physicians set up and ease into operation. Other concierge and direct pay companies include MDVIP, Qliance, Paragon, and MD2.
Challenges and opportunities
There may be some bumps on the road ahead. In addition to growing competition among themselves, direct pay practices also face new threats from insurers, who are launching payment models that deal with some of the gaps that prompted the direct pay trend. Medicare and commercial insurers are starting to pay for patient centered medical homes, which mirror the advantages of direct pay, such as quick turnaround appointments, longer patient visits, and coverage of emails and phone calls. Also, since 2010 the Affordable Care Act has required that commercial insurers cover a variety of preventive care measures—including a “well woman” office visit, and the in 2011 the law directed Medicare to cover annual check-ups—without any charge to the patient.
These new challenges, however, might have little effect on the direct pay movement. Medical homes tend to be limited to patients with chronic conditions, and the American Association of Retired Persons says Medicare coverage does not cover all elements of the annual check-up. Meanwhile, other trends suggest a greater demand for direct pay in the future. For years, physician supply has not been keeping up with demand, which has made it increasingly difficult to find a doctor. Also, a surge in the use of high deductible insurance policies, with deductibles as high as $10 000 or more, may provide a new opportunity for direct pay. High deductibles mean there is no longer any insurance coverage for many routine office visits, which could make it easier for direct pay practices to justify their services.
Cite this as: BMJ 2013;347:f6465
Competing interests: I have read and understood the BMJ Group policy on declaration of interests and have no relevant interests to declare.
Provenance and peer review: Commissioned; not externally peer reviewed.