As healthcare reform heats up, more physicians are considering fleeing the traditional practice model for a concierge practice model. While concierge medicine is all the rage right now, and boasting financial success for many physicians, it has the potential for failure if not executed properly. Whether a physician is starting their career under this model, or transitioning an existing practice, there are many variables to consider before pursuing concierge medicine.
NTC Healthcare spoke with two industry experts to gain more insight into the important considerations for practices in pursuit of concierge medicine.
About the experts: Mike Permenter, Executive Vice President and Chief Development Officer at MedFirst Partners LLC., has over 30 years of Medical Operation and Marketing experience, including being a true Physician advocate in the Direct Primary Care Market for the past 6 years. Melissa McCormack is the medical analyst at Software Advice, a free resource that reviews and compares medical software. She is also the managing editor of Software Advice’s medical blog, The Profitable Practice.
NTC Healthcare: How can a practice know if they are a good fit for a concierge medicine model? What factors should they evaluate (e.g. specialty, community demographics, practice structure)?
Permenter: It depends a lot on which business model is used. If the physician decides to continue billing Medicare and third party insurance, then there are two distinct models, a fee for non-covered services (FFNCS), and blended models (hybrids). These models need legal review in each state as state laws differ.
The FFNCS model is considered a “lifestyle” model and requires that the physician reduce the size of their practice, and offer non-covered value , usually an executive physical and a wellness program, 24/7 availability of the physician, and a variety of additional services for members. Hybrids attempt to carve out benefits for a smaller number of patients while maintaining the existing practice with mid-levels. There is also a model whereas the physician attempts to manage both members and non-members in the same practice. I don’t see how this is sustainable long term. The propensity for Medicare to change their rules makes these risky models in my opinion.
McCormack: The concierge model is really best suited for practitioners that serve in a GP or primary care capacity. That could include family medicine physicians and those specializing in internal medicine, as well as specialties like pediatrics or obstetrics and gynecology. The key is that the doctor-patient relationship needs to be one of primary care—in other words, you are your patient’s primary physician relationship.
In terms of demographics and patient base, you also need to be fairly confident that at least some of your patients—say 20-30%—could afford a subscription-style membership to your practice. For example, if your patient panel consists primarily of low income patients, you’re probably not a good fit for a model that requires patients to pay an annual subscription fee out of pocket.
NTC Healthcare: One of the benefits of starting a concierge practice is the ability to really tap into the healthcare needs of the local community. What factors should be considered and what kinds of research can physicians do to determine what the community needs and demands are?
Permenter: This is the key to the success of the industry. Once the general public, and especially self insured employers “buy into” adding primary care memberships to their health plan, and the communities see the value in becoming a member of a practice whereas they can keep their Dr, the industry will grow exponentially.
McCormack: Concierge practices are great for patients who want to spend more face-to-face time with their doctors, be able to make appointments quickly, and connect with the doctor outside of the office visit. The fact that patients pay a monthly or annual fee makes the model more viable for practices who see their patients more often.
The biggest example that comes to mind in terms of community/patient needs is that of chronically ill patients. Patients with chronic illnesses have more complex needs and visit the doctor more regularly than other patients. That makes them relatively more likely to find value in the concierge model. So physicians who treat a lot of chronically ill patients may have more “demand” for the concierge model than those who don’t.
NTC Healthcare: Are there particular medical specialties, outside of primary care, that have found better success than others in switching to this model or would you only recommend this structure for primary care physicians?
Permenter: “There are concierge practices that work in a variety of specialties. There have been pediatric, gynecology, and pulmonary physicians who have converted primarily to a Direct Pay model. Ped/Med physicians who can provide primary care for both children and adults is a very attractive model.”
McCormack: Primary care physicians are definitely the “target market” for this type of practice. That’s because in order for this model to be financially sustainable for the physician, there must be a number of patients willing to pay annual fees to belong to the practice.
The national average of concierge fees today is around $1,700 per patient per year. Patients typically aren’t going to be willing to pay that fee to be part of a specialty practice that they may only need to visit on a one-off basis. The annual fees become worthwhile for the patient when the doctor is the one the patient visits regularly, so that the patient really values having the faster access and deeper relationship the concierge model tends to facilitate.