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Medscape/WebMD: Cash-Only Practices: 8 Issues to Consider

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By Neil Chesanow
May 15, 2014

Three (3) Experts Offer Surprising Insights

medscape2 may 2014 cash only practiceWith rising costs and the problem of Medicare reimbursement still unresolved, many doctors have given at least a fleeting thought to switching to a concierge or direct primary care practice.

However, many doctors who are contemplating a switch are understandably confused by what they read in the media or learn from other doctors. Those who have successfully made the transition to either form of practice say that they can better focus on patient care and can more accurately predict practice revenue.

If the practice doesn’t take insurance, practice administration is greatly simplified, fewer staffers are needed, and overhead can be reduced, these doctors maintain. If the practice continues to take insurance, membership fees, added to insurance co-pays and reimbursements, can boost revenues, they say.

But nagging questions remain. What’s the difference between concierge medicine and direct primary care? Is retainer medicine only or mainly for doctors who shun insurance? What does 24/7 access really mean? Can any competent doctor do this and succeed? What are the downsides?

For answers, Medscape turned to 3 experts who can offer a national perspective. Internist Garrison Bliss, MD, a movement pioneer, sits on the board of the Direct Primary Care Coalition and is Founder and Chief Medical Officer of Seattle-based Qliance Medical Management, the nation’s first direct primary care practice. Begun in 1997, it now has 5 locations in Washington State. Family physician Matthew Priddy, MD, is President of the American Academy of Private Physicians, a trade group, and lead physician at Priority Physicians, a 5-doctor concierge practice in Indianapolis, Indiana. Michael Tetreault is Editor in Chief of 2 online journals: Concierge Medicine Today and The Direct Primary Care Journal.

direct primary care journal2What they see is much confusion among doctors considering a switch, from which practice model to choose to how to succeed.

Here are 8 common misconceptions that they address.

Is Concierge Medicine Elitist?Some concierge practices are targeted to well-to-do patients, but most aren’t.

According to Garrison Bliss, concierge medicine was born in Seattle in 1995, with the advent of an upscale practice called MD2. Patients paid a $1000-a-month membership fee. It covered all primary care services. The practice didn’t take insurance. Today, MD2 has clinics in 8 cities, and each doctor’s panel is limited to 50 families.

In the 20 years since then, concierge medicine has effloresced into countless practice variations on this theme. But in general, says Michael Tetreault, “concierge medicine doctors charge an annual fee that is typically accepted either annually or quarterly. Annual fees range from $1200-$3000 nationally. We believe that about 80% of the concierge physician community falls within this price range.”

The History of Membership Medicine in America (1996-Present Day)

The History of Membership Medicine in America (1996-Present Day)

However, some concierge practices charge a good deal more: $5000-$20,000 per year, observers say. Wide variations in fees may reflect the level of personal attention that a doctor provides — Matthew Priddy once knew a concierge physician in New York who cared for 4 families and traveled with them on their yachts — the doctor’s reputation, and noncovered services offered. These may range from medical spas to therapeutic massage, “aesthetic treatments,” or sports medicine clinics, which may or may not be included in the annual fee.

Although concierge physicians started out as doctors to the 1%, over the years, the movement has taken a decidedly middle-class turn. For one thing, there are only so many concierge physicians that the high-end market will support. For another, not every primary care doctor wants a panel limited to affluent patients.

Many doctors find the term “concierge” off-putting. Even for concierge doctors seeking middle-class patients, it sounds unaffordably elitist. There have been several attempts at rebranding. “Private medicine” and “private physicians” are now the terms that many concierge physicians prefer to use, Priddy says.

Common benefits offered by concierge practices are same-day or next-day appointments, visits that last 30 minutes or longer, 24/7 cell phone access to the doctor, and a fancier waiting room than is found in the typical insurance-based practice. Some concierge physicians make house calls, Michael Tetreault says.

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It’s commonly thought that concierge physicians shun insurance. Not so. “According to our assessments over the years, 80% accept insurance,” Tetreault says, by which he means both commercial insurance and Medicare.

To be able to offer same-day appointments and extensive patient visits, concierge physicians must limit the size of their panels. “In a typical primary care office, a doctor will have 3000-5000 patients,” Bliss points out. “In a typical concierge practice, you would find a ratio of about 1 doctor to 600 patients.”

Adding to the confusion, the terms concierge medicine and direct primary care often blur together. Priddy views the term private medicine as an overarching rubric for a continuum of care, with concierge medicine at the higher end in terms of cost, private medicine in the middle, and direct primary care at the lower end of the price spectrum.

“If it’s a higher price point and you travel with the family, you truly are a concierge medicine doctor,” he maintains. “If it’s a medium price point and you do house calls, take care of your patients in the hospital, and do same-day appointments and longer physicals, then that’s probably private medicine.

“The lower-cost practices aren’t going to see you in the middle of the night in the emergency room, and they’re not necessarily going to do house calls,” he says, “but in general, they give you a lot more time than the typical family medicine or internal medicine practice would. Those would be the folks who fall into direct primary care.

“But in reality,” Priddy says, “it’s all the same thing. It’s all private medicine.”

Concierge Medicine vs Direct Primary Care

SUMMER 2015 Revised Definition From Contributing Physicians and DPC Industry Contributors.

SUMMER 2017 Revised Definition From Contributing Physicians and DPC Industry Contributors.

Confused by this semantic hair-splitting? Join the club. Even concierge and direct primary care physicians may be confused about which type of doctor they are.

“In polls, we’re asking the actual physicians, ‘Do you consider yourself a concierge doctor or a direct primary care doctor, or do you consider yourself both?'” Michael Tetreault, the journal editor, says. “Most say that they consider themselves a concierge doctor. But they still don’t understand the differences. A lot of doctors consider themselves to be both.”

Nationally, direct primary care practice is considerably newer than concierge practice — and there are considerably fewer direct primary care than concierge physicians. Tetreault estimates that direct primary care physicians make up about 20% of the retainer medicine movement right now; the other 80% are concierge physicians.

“Generally, direct primary care is a cash-only practice,” he says. “However, although we have no hard data, we estimate that less than 20% of direct primary care practices accept insurance. So there are some that do.”

Direct primary care physicians charge less than private or concierge physicians: “from $25 to less than $100 a month,” Tetreault says. “We believe that these fees represent about 90% of the direct primary care physician community.”

That fees are payable by the month rather than by the quarter or year is important to many direct primary care patients, who may have cash flow problems in a tight job market. “That’s a big difference,” Tetreault says, “no long-term contract.”

Direct primary care practices may or may not offer same-day appointments. Most probably don’t, Tetreault says. The doctors probably won’t give out their cell phone numbers, meet patients in the ER if they have a late-night crisis, or make house calls — although some direct primary care doctors do make house calls, he adds.

If house calls are offered, they are typically billed separately, not included as part of the monthly fee. Flu shots and vaccinations are usually billed separately too.

“Many direct primary care practices do not build in concierge medicine service components, such as 24/7 care, cell phone text messaging, and instant or same-day appointments,” Tetreault says. “And yet, some do.”

Concierge practices composed exclusively of concierge patients (most practices include a mix of concierge and traditional patients) generally limit their panels to 600 or fewer patients per physician. “Direct primary care practices, because they charge a lower fee, need more patients on their rosters,” Tetreault explains. “They typically have under 1000 patients.”

The distinctions between concierge medicine, private medicine, and direct primary care may be ultimately meaningless, since some doctors call themselves whatever they feel sounds better, and there are so many practice variations, many overlapping, that it often isn’t clear which is which.

An Increasingly Growing Movement?

It’s easy to get the impression that many doctors, fed up with traditional medicine, are about to switch to concierge medicine and direct primary care.

concierge-medicine-today-2014_1436231384938_block_12For example, a 2012 survey of some 14,000 physicians by Merritt Hawkins found that nearly 7% of practice owners planned to switch to a concierge practice in the next 1-3 years.[1]

According to the Association of American Medical Colleges, there were 817,850 active physicians in the United States in 2012, the latest year for which statistics are available.[2] How many of these doctors are in concierge or direct primary care practices?

“We believe — and this is after years of verifying doctors, talking with actual doctors, talking with business leaders, and talking with physicians who are influencers — that there are slightly less than 6000 physicians who are verifiably, actively practicing concierge medicine or direct primary care across the United States, with probably another 6000 practicing under the radar,” Michael Tetreault estimates.

Right now, far more traditional doctors are telling surveyors that they plan to switch than actually appear to be doing it.

How Hard Is the Transition From Your Regular Practice?

“I’m getting ready to transition to cash only,” one family doctor comments. “It’s not that difficult. The insurance companies want us to think it is, so that they can make all the money and we stay broke.”

This is a common theme among doctors who have made the switch and then write motivational essays for other doctors on how to succeed: Transitioning to and running a concierge or direct primary care practice is not that difficult, they insist, particularly if you stop taking insurance,

“That’s BS,” counters Matthew Priddy, whose 5-doctor primary care practice doesn’t take insurance. “We’ve been open for 12 years and have been very successful in Indianapolis. It’s not easy.”

Doctors_Guide_COVER_2015_10x17_FINAL_1Priddy’s wife, an ob/gyn, is a hospital employee. When she’s not on call, her evenings and weekends are her own. “But when you own a business, even when you’re not on call, you have business meetings,” Priddy points out. “There’s a whole other aspect to it that I personally think is great, but if it’s not your bag, it can be a bit of a drag for folks.”

“Some doctors would say this is easy, especially the successful ones,” he reflects. “But there are also doctors who failed, gave up, and went back and worked for hospitals. Those folks are out there too, and they would probably tell you that it’s impossible. It can be a little bit of a selection bias when you talk to the doctors who are oft-quoted in the media or who are involved in national organizations. But that is more the exception than the norm.”

Will You Be Able to Attract Enough Patients?

For concierge doctors, attracting new patients can be a challenge. That’s why most concierge practices are hybrid models, Michael Tetreault observes.

Hybrid practices generally take commercial insurance and Medicare for most patients, who pay the usual copays and get the usual 15-minute visits of a traditional practice. But hybrid practices also offer same-day appointments, longer visits, 24/7 cell phone access, and perhaps other concierge amenities to a smaller group of patients, who pay an annual fee for better service.

One concierge consultant, who specializes in hybrid practice start-ups and has assisted in over 200 transitions, estimates that most of his clients’ panels consist of about 90% traditional patients and about 10% concierge patients.

Traditional patients always have the option to upgrade to the concierge service. How many patients will actually opt to do this is the question. A hybrid practice lets doctors test the viability of the retainer concept in their panels before committing to a full concierge practice, in which all patients pay an annual fee to be members. If there is enough demand, a doctor can then transition to a full concierge model.

Converting patients from the traditional side of the practice, however, isn’t easy.

“There are downsides to a hybrid practice,” Tetreault says. “Number one is that a lot of patients will get into a wait-and-see mode. They will say, ‘I can still see my doctor. I’m just going to file through insurance. I might have to wait longer to get an appointment, but that’s fine.'”

For concierge and direct primary care physicians who don’t take insurance, getting traditional patients to make the transition can be even more of a challenge.

“When people are already paying $800 a month for healthcare, it’s hard to convince them that they need to pay an extra $80-$150 a month for direct primary care,” Bliss says, “unless they have a ton of money.”

It usually is well-to-do traditional patients who are “early adopters,” becoming the first patients not only of the more expensive concierge practices but also of the less expensive direct primary care practices, he says, although few practices of either type can exist on solely on wealthy patients. The most logical patients for more personalized care today are Baby Boomers with multiple chronic conditions, for whom a 15-minute visit isn’t enough.

concierge-medicine-today-2014_1436231384938_block_6However, the largest market — Medicare patients — is the least likely to appreciate the benefits of retainer medicine, experts say. Many seniors don’t understand the concierge or direct primary care concept when doctors and staff try to explain it, or why they should pay extra when they are already paying for Medicare coverage. Many Medicare patients live on a fixed income and can’t afford to pay an annual fee, no matter how inexpensive it is.

Only a fraction of your traditional patients will typically join you in a retainer medicine practice, experts caution. It’s not unusual for a traditional primary care practice with 5000 patients to have trouble attracting the 300-600 patients needed for a full concierge practice, or the 1000 or so patients needed for a full direct primary care practice. Doctors who open with half-full practices court financial collapse.

“Unrealistic expectations are what I hear in many doctors’ comments,” Tetreault reports. “Doctors set themselves up for hard times over the next 12-24 months by underestimating the market. We’ve seen physicians fail because of lack of capital. They think, ‘My patients love me. There’s no way they’re not going to continue to use me after I transition. I’m affordable. How can they not choose this? This is great!'”

One family doctor, who left a primary care group practice to open a solo concierge practice in 2003 — without a single patient going in (a restrictive covenant prevented him from taking practice patients with him) — told Medscape that he wiped out his entire savings keeping the practice afloat, and that he finally earned $100,000 in 2012, 9 years after he left traditional practice.

Should You Seek Expert Help?

Another common theme among successful concierge and direct primary care physicians, at least those who offer inspiration and advice to traditional doctors contemplating a switch, is that starting a retainer practice “is so easy that even a doctor can do it.”

“The people who can pull this off are often people who already have long-term existing practices,” Garrison Bliss explains. “You need to have 10-15 years in practice, so you have an established base of patients who trust and like you.

According to CMT's DOC FINDER, which receives thousands of unique patient visitors every month, California takes the lead with the most amount of prospective patient searches looking to connect with a doctor. ConciergeMedicineToday.com has become the leading digital resource for timely, trusted health news and concierge medical information and their DOC FINDER search engine is one of the most recognized, publicized and utilized physician search engine in the world.

“It also matters if you have people with chronic illnesses, or who are older, who just don’t want to go through the heartbreak and complexity of finding another doctor,” he continues. “And it depends on whether you really do provide extraordinary service already. The practices that do great work, have large patient populations, have been around for a long time, and have great reputations can often make this transition without difficulty.”

“You must survey your patients, communicate the right messaging, and have someone who can train your staff on what to say when a patient comes in asking questions,” says Tetreault. “The doctor is there to treat your flu. He’s not there to answer a lot of insurance questions. But it’s important to have people who can.”

Must you hire an expert? No. But be sure you can do a demographic analysis of your traditional practice, conduct your own patient surveys, create promotional literature for the new practice, market to your patients, and personally address their questions.

Can Any Doctor Do This?

Starting a concierge or direct patient care practice is tougher than it may seem. One concierge marketing consultant told Medscape that her firm rejects two thirds of the doctors who seek help with a transition. Why? Their traditional practices are not sufficiently established to make a move that’s likely to be successful.

This consultant asks doctors 2 key questions: How long have you been in practice in your current location, and how many patients have you seen in the past 2 years? Doctors who have been in practice in the same community for a minimum of 8 years, but preferably 10 years or longer, are good risks. If the doctor is a primary care physician, seeing about 1600 patients over a 2-year period is also desirable.

A doctor’s interpersonal skills are also crucial to success.

“The doctors whom I’ve seen who have done poorly didn’t have the ‘love factor’ with their patients,” says Matthew Priddy. “Their patients wouldn’t drive across town to see them. With primary care, so much of what you’re selling is that relationship with the patient — that comfort they have in knowing you. In my experience in hiring physicians for my practice, in cases where it hasn’t worked out, it wasn’t because they were bad doctors. It was because their personalities just didn’t jibe well with patients.”

A concierge marketing consultant described a traditional physician who was planning to convert to a concierge practice but hadn’t yet informed his patients. Patients who had seen him only a few days before were baffled to receive a flyer in the mail making the announcement. “Why didn’t Dr. Smith tell me about this when I was in the office?” they wanted to know. They were miffed.

Are Concierge Patients Extra-Demanding?

dpc research 2015Most concierge and some direct primary care practices promise patients 24/7 cell phone access to their physicians. Is it tantamount to being on call 24/7 as a lifestyle?

“The question I’m most often asked in regard to patients is: Does private medicine attract the type of needy patients who feel like they’re paying money so they can boss you around?” says Matthew Priddy. “Will they call me in the middle of the night because they have a hangnail? Do they demand that you do unreasonable things, like get them an MRI in 5 minutes?”

The answer, he says, is generally no.

In fact, this was Priddy’s biggest fear before he made the transition: that patients who paid a fee to be a member of the practice would act like prima donnas. “I didn’t want to be someone’s butler,” he says. “I was worried that there would be a sense of entitlement among our patients — that we’re paying you X amount of money a year, and if I want that antibiotic, you’re going to give it to me. And if I want those pain meds, you’re going to write those scripts for me. Or I’ll quit.

“We absolutely have people who sign up with that attitude, and we tell them they can quit,” he says. “I’m not going to write you a script for Vicodin® just because you write me a check. That’s not how it works.”

But demanding patients have been the exception, not the rule. “Ninety-five percent of our patients are fantastic,” Priddy says. “Five percent aren’t. That’s just life.”

References

  1. The Physicians Foundation. A survey of America’s physicians: practice patterns and perspectives. September 2012. http://www.physiciansfoundation.org/uploads/default/Physicians_Foundation_2012_Biennial_Survey.pdf Accessed April 23, 2014.
  2. Association of American Medical Colleges. 2013 state physician workforce data book. November 2013. https://www.aamc.org/download/362168/data/2013statephysicianworkforcedatabook.pdf Accessed April 24, 2014.
 Medscape Business of Medicine © 2014  WebMD, LLC
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