[Editor's Note: I have lots of requests for posts on owning, managing, and selling practices. Lots of docs, particularly in primary care, are experimenting with direct patient care or concierge style models these days in an effort to retake control of their lives and practices, provide better patient care, reduce burnout, and maybe even increase their income.
The following guest post about these models was submitted by Cameron, “a physician advocate”. His full name, the name of his company, his company's and the link to the company were removed after publication when the post was found to be in violation of our guest post policy, having been previously published elsewhere.]
There’s one question physicians, and practice owners ask themselves above all others:How can I continue to practice medicine with the low and inconsistent reimbursements rates my practice gets from the insurance companies?
First, find a reputable company to negotiate the insurance payer reimbursement rates for your practice. Most practices neglect this, but if you haven't negotiated your rates in the last 18 months, you're leaving money on the table, missing out on short and long term profits, and limiting your options.
Switch to a Direct Care or Concierge Practice Model
Second, is to switch your practice to a direct medical care or concierge medicine model. Concierge and direct care practices minimize or eliminate the headache of billing and collecting from insurance.
It's true that the transition is a large undertaking, which is why you want to first negotiate higher rates with the payers, so you have more income to help you transition. The results allow many physicians to focus on patient care, improve their income, avoid burnout, and lessen their administrative burden.
The trick to switching to a concierge or direct care mode is to convert your practice strategically and know what questions you’ll need to answer:
What's the Difference Between Concierge and a Direct Care/Primary Care Practice?
Patients and health care providers often regard a Concierge practice and Direct Care practice as the same thing when, in fact, there are a few differences:
Direct Care Practices
- Patients pay a monthly fee directly to the provider
- Most DC practices often only offer primary care (Direct Primary Care)
- Fees cover longer appointments, labs, managed care, and coordination with specialists
- Usually, don't accept insurance or reimbursement from government plans
- Allows the practice to have more predictable income and expenses
Concierge Practices
- Most require their patients to sign an annual contract with fees that are higher than DC practices but include more access to the provider
- Patients are often given physical exams and screenings that are far more in-depth than the typical annual physical or specialist visit
- Concierge practices often continue to accept insurance payers/government plans and bill them when applicable
- Fees are often higher than DC practices
There are other differences, but it boils down to the fact that Direct Care is usually only Direct Primary Care practices, and Concierge practices offer more premium care at a higher price. Direct care and concierge models are possible with many specialties; particularly for patients with a chronic condition, including endocrinologists for diabetic patients, urologists for erectile dysfunction, and OB/GYN for pregnancy. Almost every specialty can adapt to this model.
6 Questions Asked About Transitioning to a Direct Care or Concierge Medical Practice Model
#1 Will Practice Costs Go Down?
One of the biggest attractions of the direct model is that physicians no longer need to bill and collect from insurance payers. The amount of time and overhead spent on billing and collecting from insurance companies is enormous. Physicians spend, on average, 15% of their total revenue on billing and collecting. Concierge and direct care practices spend very little time or money on the patient collections process, as most practices charge the patients credit cards every month. Removing the insurance payer, coupled with a lower cost to collect, allows concierge physicians to earn a higher income and give patients better access to care for less money.
#2 Do I Need to Attract Only Wealthy Patients?
This is a common myth about concierge medicine that needs to be debunked. Inexpensive subscription-based models can be both affordable for a patient and offer a great salary for the physician.
#3 Can My Practice Convert Our Medicare Patients?
This is a tricky question. Medicare allows physicians to contract with patients to provide service privately, but the physician needs to opt-out of Medicare. They may not return to Medicare for a period of two years and cannot bill Medicare for this duration for any Medicare beneficiary. Try to approach Medicare patients with the understanding that it pays relatively well compared to commercial plans. That certainly isn't always the case, but many physicians feel that the current payment rates and the ease of billing Medicare means that they continue to see Medicare patients even with a concierge practice.#4 What Role Will My Existing Insurance Plans Play in the Process?
If you have the financial ability to start from scratch and drop all your contracts, great, most physicians don't have that luxury, which is why negotiating your payer rates is essential. The best approach is to convert slowly and strategically, and higher rates allow you to do that.
Review the lowest paying contracts as they may be costing you money or barely breaking even. Complete an analysis of your hourly overhead (fixed and variable) to see what you are earning under your contractual rates. If these contracts aren't making a profit, consider converting these patients to concierge patients.
#5 How Can I Convince My Existing Patients to Make the Transition?
Patients with high deductibles are starting to understand that more of their healthcare will need to be paid for out-of-pocket. Still, converting patients to concierge medicine takes some patient education. Physicians need to communicate to their patients the added benefit of paying a little extra for better access, same-day appointments, shorter waiting times, and other premium care. You will need to examine your marketing strategy to promote your new practice and attract new patients in addition to converting existing patients.
#6 What Changes Would I Need to Make to My Practice?
The most significant change you'll need to make is with improving your customer service. Concierge patients will expect extra services such as same-day appointments, shorter waiting times, and better physician communication and accessibility.
A concierge and direct care patient demands a higher level of customer service from your staff. Utilize technology to satisfy concierge patients' expectation of better accessibility to their physician. Purchase a HIPAA compliant system that allows telemedicine and patient interaction – the ability for a patient to email their physician means less unnecessary visits.
It might be daunting to think of transitioning to a new model, but ultimately, Direct Care and Concierge models are the future of healthcare. They result in a better income for practices, better care for your patients, and the opportunity to practice medicine without the headaches of the insurance companies.
What do you think about Direct Care and Concierge medical practice models? What are some of the pros and cons? Would you consider the transition? If you have transitioned to Direct Care or Concierge medicine, what have you learned in the process? Comment below!
Has anyone compared prescribing practices or evidence based medicine between the different types of groups?
With DPC and concierge medicine you set yourself up with a huge conflict of interest of putting customer service ahead of quality healthcare.
I am sure it can be done but I would find that a struggle on a daily basis.
Good overview. Thanks.
I have a private practice that is 100% out of network. I have a smaller patient panel, have more time to spend with them and thus have strong relationships that are built on mutual trust and respect. I have the time to discuss what I recommend for treatment and why. My patients know they can reach me with questions or concerns. Every patient gets a free brief phone screen prior to first appt to make sure that our philosophies are compatible. Most patients want to feel heard and understood and they seem satisfied even if my refs differ from their expectations.
How is call in direct primary care? I cringe at the idea of having to be available by phone after hours in order provide good customer service.
I think that conflict exists in most practices, no? Our administration certainly has a high priority on customer service/happiness. We want those patients to choose our ED again. However, I’m a firm believer that quality healthcare is the ultimate customer service, even if we’re not giving patients what they think they want (narcotics, more testing etc) in the moment.
Yeah…I agree with Sophia and WCI…and I actually strongly disagree with this statement: “With DPC and concierge medicine you set yourself up with a huge conflict of interest of putting customer service ahead of quality healthcare.”
Not sure if you meant it, but in my opinion this is an antiquated way of thinking and unfortunately hurts medicine as a whole. Getting paid for providing great care is not something to be ashamed of. I’m not saying the system can’t be manipulated, but as WCI says, all systems can. Consider a PCP that only takes insurance…but then owns his/her own blood lab and imaging center. He/She could then order tons of unnecessary tests and images simply to increase the top line revenue.
My point is that if you have only economic goals in the practice of medicine, you will find a way to work the system. Having a DPC or Concierge practice has nothing to do with your ethical standards and the implication that it does is an ugly one.
Thanks,
I’ve ran a Direct Primary Care office for the last 3 years and can tell you a few things I’ve found in the process.
1) Overhead is nearly Microscopic compared to conventional insurance-based practices – My entire billing department consists of a glorified PayPal account and runs me about 5 hrs per month – Automated – Welcome to the 21st Century – It’s also extremely predictable and my A.R. is all of 15 days out (I collect on 1st at 15th of the month)
2) Medicare is a beast – You have to formally opt OUT of Medicare if you want to take them in your office – That’s the simplest and cleanest option out there
3) It’s given me my life back for sure – I have a full panel of 600 patients and see 6-8 per day, come in at 9, leave at 4 and take Friday afternoons and Wednesday mornings off 🙂
4) I actually feel my incentives are MORE aligned with patient care rather than customer satisfaction – Instead of 4-5 visits/copays/claims, I can help resolve their issues in a single visit. Education is key in healthcare and I can finally spend 20 minutes explaining why you DON’T need an Antibiotic for your URI. It’s a bit empowering for patients.
5) My patients are some of the most unhealthy I have seen – A1C > 15, Diabetic Foot Ulcers, Uncontrolled HTN, and I’m their only source of reasonable healthcare –
6) Cost – It cost me $30,000 to start my clinic from scratch – I cash flowed it positive at 3 months and think the Transition is much easier than most would think – Sure, it’s a risk – I cannot discount that – Just my experience and encouragement for others thinking of ‘taking the plunge.’ I bankrolled it with Rural ER shifts, Urgent Care shifts and it seems to have worked out really well 🙂
Sorry a long comment to a pretty generic post, but I’m happy to talk about my experience anytime –
What did/do you use for an EMR? Is Epic, for example, affordable for a solo concierge practice?
“First, find a reputable company to negotiate the insurance payer reimbursement rates for your practice.”
This is exactly what I need lately! Can anyone help me find one of these companies? I’m in Colorado, if that matters.
No, I think the secret here is that you are severing your relationship with the insurance industry outside of out of network reimbursement.
Like Sophia, I have a cash-only out of network practice, and it functions smoothly with minimal hassles and administration . Fees are at least double the insurance rates, and I can respond quickly to patient needs . I would never go back.
I don’t think trying to negotiate with the insurance companies is worth it. I’d be curious to see if anyone out there has had success with ” a reputable company to negotiate the insurance payer reimbursement rates for your practice.”
I am currently in an ophthalmology subspecialty and am in the process of transitioning into direct care. Volumes are definitely lower, but I’m much happier and enjoy spending more time with and giving the added service to the patients that do come in.
I’m interested to hear how this works in a subspecialty that either: 1. Has a large surgical component or 2. Has very expensive in-office drug/ancillary test costs. I have considered how direct care might be implemented in my career, but it always seems impossible since patients would need to pay for a lot more than 30 minutes of the physicians time.
Edit: Nevermind, I clicked on your profile and you’re about the only ophthalmology subspecialty without either of factors 1 or 2 above!
I’m not procedural and all of my patients have private insurance and use it to pay for labs and medications. Most of my patients are able to get some reimbursement for my time via out of network benefits as well. Any hospital-based care goes through insurance. My patients pay extra for more time with me at appts, better access btwn appts and more privacy as I have no additional staff that they have to interact with. The only time I deal with insurance is prior authorizations but I often refer patients to goodrx for coupons and I’ve started charging a fee for PAs bc they take so much time and I hate them so much. I could see this being scaled to any specialty with an office component though set up costs are certainly higher if you need a lot of equipment.
Surgical and hospital based subspecialties (ICU, trauma etc) seem like the would be harder to do this with.
Charging for PAs – I like that idea!
Why shouldn’t you be able to? I mean, lawyers charge for every 15 minutes they spend on your case, why do doctors have to hit 10 ROSs to get paid for their work? It’s crazy the way docs get paid. Government and insurance payors make for a very weird payment system.
Completely agree, and as my patients are already used to paying me directly for my time, I can implement this immediately.
I think it’s an issue of expectations. I’m a psychiatrist and I had a patient tell me he left another psychiatrist – nicknamed “The Billing Queen” – because she billed for all her time, phone calls, etc,, and he added “like a lawyer”. No reason to be expected to work for free. As lawyers will tell you, “All I have to sell is my time”. But patients may be less accepting of this, and you might have to manage any consequences.
Am a GI. Most of the practices in my area are making their money via surgical center ownership and are not doing that great in the office despite seeing a lot of patients. Any specialists out there using these types of models? I don’t see how it would work for GI or other procedural based specialty , especially if you need to do a procedure either in a surgical center or hospital setting . Unless you are doing something specific like integrative medicine office consultations only , but don’t see how you can still see bread/butter GI patients who need colon cancer screening etc.
Great post! I’m a surgical specialist (bariatrics and advanced MIS) and have been trying to figure out how to make this model work for me. I have some colleagues with both concierge and dpc practices who have approached me about having a concierge surgical practice so they can have a surgeon on hand to send their pts to.
However this doesn’t seem sustainable but am wondering if there’s a different approach for those requiring ORs and (sometimes) extensive pre-op testing?
Interested in any concierge practice’s experience in expenses (i.e. total expenses as a percentage of revenue, and a breakdown of employee, rent, etc.) My reason for asking is that typical MGMA data shows family practice somewhere between 52%-58% of practice revenue goes to pay expenses. Wondering if concierge practices are seeing lower expenses.
At least you’d spend less time fighting insurance.