Direct Primary Care – A Future ‘Injection’ of Free Market Forces
Steve Ambrose is a strategy and business development maverick, with a 20-plus year career in several different healthcare and technology areas. A well-connected team leader, his business interests and writings span across healthcare A.I., patient engagement, population health, telehealth, care delivery efficiency, chronic disease management and end-of-life care.
Best-selling Author Og Mandino once said: “Always seek out the seed of triumph in every adversity.”
It appears that a small, yet growing number of America’s front line health providers are doing just that. Instead of going gentle into the ‘not-so good night’ of taking on increased risk, greater healthcare bureaucracy and more administration headaches, these medical mavericks have drawn a philosophical line in the sand.
I’m speaking of Direct Primary Care (DPC). For the uninitiated, DPC is an emerging model where general practitioners elect to disassociate from, and no longer bill services to health payers – including Medicare. DPC practices average between 600-800 total patients (vs. the national 2,300 patient base average for traditional PCP patient panels).
This return to front line doctoring – ‘sans insurance’ – translates into a cost reduction of up to 40% in staffing and reduced administrative complexity. EHR software finds itself replaced with lighter applications to track, schedule and bill patients. Practices may also choose to utilize mhealth/telehealth technology to monitor/connect with patients.
Patients in these practices are often those in low to middle incomes, with high deductible health plans (HDHPs). For this reason, DPC doctors develop network relationships with other local medical specialists and services. The result is patients gaining access to discounted medications, imaging and labs, plus lower service fees from local specialists – all on a cash basis.
And Presto! We have a true two-party care relationship, where doctors focus purely on patients, instead of blending in payers as their second healthcare customer.
The median monthly DPC fee for an adult is about $70; and fees for kids priced between $10 to $20 per child. Many DPC practices also cap monthly family fees. Pricing is independent of pre-existing conditions and current health status, and allows for more face-to-face time, as often as needed.
These practices report reducing urgent care and ER visits, plus less hospital admits and re-admits. Quality and outcome data has apparently started reaching malpractice insurers, now quoting lower rates for direct vs traditional primary care practices.
Here is where it gets sticky. DPC is rightly considered a ‘health service’, both by the Affordable Care Act (ACA) and 16 states. However, under section 223(c) of the U.S. tax code, the I.R.S. wrongly considers it a ‘gap’ or secondary health plan. Therefore, DPC is not a qualified medical expense – and fees paid by patients are not reimbursable by Health Savings Accounts (HSAs).
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