The Loop

Concierge Medicine: The Answer to the “Patient Mill”?

Filed under: Health Care Reform

Both healthcare expenses and the number of patients receiving care have risen exponentially in the last 25 years. Today, the average primary-care physician cares for a stable of 2,300 patients. He logs about 93 "patient encounters" each week, comprised of office, hospital, and nursing home visits as well as phone calls. Insiders refer to this volume of business as a "patient mill." It's no wonder that a 2012 survey revealed 75 percent of doctors in the U.S. felt they were at full capacity or overextended.

Add to this issue the individual mandate of the Patient Protection and Affordable Care Act, which has led to an influx of 15 million more Americans with health insurance who didn't have it before. In order for physicians to meet this growing demand for care, they'll likely have to spend even less time with patients than they do now. This directly contradicts the growing call for more focused care. Today's physicians see far more patients and spend less time with them than in the past, despite the fact that more people suffer from chronic conditions. And yet, when a provider can spend only a few minutes with a patient during each visit, it's difficult to see how he can provide enhanced care for measurable improvements.

The Concierge Solution
One answer to this growing problem is concierge care. If you're familiar with a couple of television shows on the USA network – Royal Pains and Rush – you've seen this new concept in action. While in some ways concierge care resembles a throwback to the days of the humble country doctor who made house calls and was paid in chicken eggs, these TV renditions portray a slicker, more modern version of medical care with portable medical equipment and prescription drugs on demand.

In reality, concierge care isn't quite as slick or as fast paced. Generally, patients pay a retainer fee that can range from $1,800 to $20,000 per year depending on the range of services. In some cases, patients are simply paying the additional fee for better access, including priority office visits, 24-hour care, and even house calls, while insurance covers the actual services rendered. At the higher end, a retainer fee pays for basic services such as check-ups, screenings, lab work, and regular office visits, while insurance kicks in for major medical expenses and hospitalization.

According to the American Academy of Private Physicians, an association that represents concierge doctors, there are about 10,000 concierge doctors nationwide compared to 300,000 physicians in regular practices. Today, approximately three percent of Americans are enrolled in concierge plans, which may be aligned with the "one percent" often touted as controlling one-third of America's wealth. As such, critics of the practice expound on the inequity between patients who can afford the higher level of care over those who cannot.

There is debate among healthcare economists as to whether concierge practices hurt or help the woes of the industry, but on one point there can be no question: Quality of care. It is estimated that the average concierge practice sees 300 to 400 patients compared to the 1,000 to 4,000 range in a regular primary care practice. Despite the higher fee, concierge medicine offers numerous benefits to patients that can lead to better outcomes. These advantages include:

• More time with each patient to deliver comprehensive care
• A greater focus on health maintenance to prevent more serious and costly health conditions
• Eliminating insurance-related incentives that often influence healthcare decisions
• Seeing fewer patients, bringing less exposure to risk and less chance of committing medical errors

Direct Primary Care
Another trend in self-pay medicine is the less prestigious, more affordable model of direct primary care (DPC). A DPC physician charges the patient directly, outside of insurance, usually in the form of a low monthly fee (generally between $50 and $100) that covers comprehensive primary care services. The practice can charge a lower fee because it saves up to 40 percent on overhead expenses associated with insurance claims, coding, claim refiling, write-offs, and billing. The DPC model caters to a wider base of patients than concierge care, in the range of 800 to 1,000 per physician.

While the majority of concierge patients carry insurance, many of those who see DPC physicians do not, opting to pay cash directly to the provider. Under the PPACA, DPC meets the individual insurance mandate for people eligible to purchase a catastrophic health plan, which means they are under 30 or meet one of the hardship exemptions. This type of policy requires a member to pay all medical costs out-of-pocket up to a high deductible, after which expenses for essential health benefits are paid by the catastrophic plan.

The DPC model also is growing. By 2012, the number of DPC physicians in U.S. had grown to 4,400 from just 146 in 2005.

Employer and Healthcare Plan Options
Employers are starting to leverage self-pay models as part of a "DIY healthcare reform" trend to engage population health management. The movement shifts the emphasis from cost savings to quality care and better access. Long term, patient-centered care should lead to lower costs through improved population health and enhanced productivity.

To this end, some employers pay a blanket monthly fee to a concierge practice, similar to a gym membership. Members then have the option to see the concierge doctor without having to pay out-of-pocket for regular office visits.

As employers continue to transfer the responsibility of healthcare costs to workers, concierge medicine is expected to grow more popular. However, because members are inexperienced at "shopping" for healthcare services, there is a growing industry of companies that specialize in helping consumers find the best healthcare at the best price.

For example, for $50 a month, one company assigns each participant a personal healthcare coach and enables 24/7 access to Mayo Clinic nurses for telephone care and support. Another company uploads electronic patient records to a centralized, password-protected portal. Each participant can view and share their X-ray and MRI images, screening and lab test results, etc., from any device with internet access.

Logistic Issues
Unfortunately, the concierge model is not generally aligned with other popular efforts to reduce healthcare costs. For example, annual or monthly subscription fees for private care generally cannot be applied to a member's insurance policy deductible. Nor are they eligible for reimbursement from a health savings account (HSA) or healthcare flexible savings account (FSA) unless the physician agrees to assign the fee to a specific visit or medical service. However, Sen. Orrin Hatch (R-UT), who is a key proponent of the DPC model of care, along with Rep. Erik Paulsen (R-MN), have proposed legislation to change IRS rules so that money saved in HSAs can be used to pay for monthly DPC fees.

However, Section 10104 of the PPACA states that individuals enrolled in a direct primary care medical home may purchase insurance solely for services not included under the direct primary care program. To qualify for this exception, direct care medical home enrollment must be coupled with a wraparound insurance policy that "meets all requirements that are otherwise applicable." While currently there are proposed regulations to clarify such requirements, to date this type of policy has not yet been developed.

As implementation of PPACA continues to draw more Americans into the healthcare system, more people are likely to recognize the value of concierge medicine and the more affordable direct primary care. Critics of the self-pay model worry that this will lead to an increasing shortage of providers. However, proponents of the new trend claim the opposite is true. Many primary care physicians are already leaving the field due to declining pay and increasing patient loads. If anything, concierge medicine has re-engaged doctors who previously considered retiring because it allows for a more rewarding financial and professional experience, thereby extending their careers. Furthermore, the growth of both concierge and DPC medicine is adequately addressing the needs of upper, middle and lower income populations.

The Future of Personalized Healthcare
These self-pay models of care are expected to grow in coming years due to physician dissatisfaction with net revenues, long hours, burnout, and disenchantment with the inability to provide quality, comprehensive care. The number of physicians transitioning to the concierge business model has been growing at a rate of 15 to 20 percent a year. In addition to primary care doctors, concierge medicine also is catching on with specialty physicians.

As the concierge and direct primary care models of health care become more mainstreamed, there will likely be more options for employers and healthcare plans. Whether subsidized as a member perk or as a catalyst for better health over the long-term, priority access and high-quality care offer a competitive benefit for attracting and retaining members.

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