The Republic (AZ): Rival Concierge Medical Practices Battle in Court

By Ken Alltucker, The Republic |

JUNE 1, 2015 – Some family doctors fed up with assembly-line medicine and reimbursement pay from insurance companies have honed a pitch for their most loyal patients: Pay an annual fee of $1,500 or more in exchange for perks such as longer appointments, expanded care, prompt scheduling, after-hours service, and maybe even house calls.

The list of metro Phoenix doctors willing to break away from conventional practices to become “concierge medicine” physicians is a limited one. About 19 have agreements with two concierge companies that promote the service.

The service has become lucrative enough that two national companies are doing legal battle over the right to sign up doctors.

Boca Raton, Fla.-based MDVIP is the nation’s largest concierge company, with about 800 contracted doctors who serve roughly 240,000 patients. A California company that is attempting to recruit doctors in Phoenix and other big cities for this type of personalized medical care claims its efforts have been stymied by MDVIP.

Santa Monica, Calif.-based SignatureMD last year filed a federal lawsuit in California against MDVIP claiming that the company’s contracts with doctors are anti-competitive, unfair and violate federal law.

MDVIP filed a motion to dismiss the lawsuit, but a federal judge in April rejected the motion, allowing the lawsuit to continue.

MDVIP representatives said the federal lawsuit is a strategic maneuver to counter MDVIP’s lawsuit against SignatureMD in Palm Beach County, Fla., alleging theft of trade secrets and other legal claims.

“This is really an effort by a much smaller competitor to gain some leverage or toehold over MDVIP … to try to get (MDVIP) to back off another lawsuit,” said Jerome Hoffman, a MDVIP lawyer.

In metro Phoenix, MDVIP has 18 doctors under contract. Signature MD has no doctors under contract. A third company, Concierge Choice Physicians, has one doctor in Phoenix, one in Tucson and two in Benson, according to its website.

That’s a similar ratio that plays out in big cities across the nation. MDVIP serves 86 percent of concierge patients nationwide and controls 65 to 100 percent of concierge contracts in many big metro regions across the nation, U.S. District Court Judge Dolly M. Gee said in her order rejecting MDVIP’s motion to dismiss.

“It’s a stranglehold,” said Matthew Jacobson, CEO of Signature MD. “We are out there hustling trying to gain market share in areas saturated by MDVIP.”

The lawsuit claims that MDVIP signs doctors to five-year contracts with the option of a five-year renewal. Doctors who choose not to renew their contracts must not operate a concierge medical practice within 10 miles of their existing practice — or within 10 miles of any other MDVIP physician — for two years after their contract ends, the lawsuit states.

Signature MD claims that these doctors have little choice but to renew their contracts with MDVIP, the lawsuit states.

“MDVIP’s contracts with physicians have the effect of binding a concierge physician to MDVIP for the duration of that physician’s career in private practice,” the lawsuit states.

Hoffman said the non-compete clauses are more of an effort to protect MDVIP’s intellectual property. The company invests time and money to help a doctor establish a concierge practice, including marketing, administrative and billing support. The non-compete clause is intended to discourage doctors from taking MDVIP’s business model and using it on their own when the contract ends, according to Hoffman.

MDVIP charges Phoenix-area patients an annual membership fee of $1,650. A spokeswoman declined to say how the company splits the membership fee with the doctor, but the federal lawsuit said that MDVIP typically keeps $500 to $550 for each new patient, giving it fee revenue of more than $100 million each year.

Jacobson said that Signature MD has little room to grow in cities like Phoenix because MDVIP has already signed up the vast majority of the family and internal-medicine doctors who have a demographic mix of patients that may be willing to sign up for concierge care.

Hoffman said that the market of doctors willing to sign up for concierge practices is growing. He cited a court document filed by Signature MD that estimated as many as 10,000 doctors nationwide may be willing to convert to concierge medicine.

Jacobson said his company pursued the lawsuit to give his company and others a fair shot at making strides in Phoenix and other cities.

“This is truly about protecting the rights of the consumers, the physician and the competitor,” Jacobson said.



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