Q&A: Adopting a Concierge Medicine Practice Model? Part Two

This week we continue the conversation with industry experts discussing the important considerations for physicians and practices pursuing the concierge medicine model. If you haven’t already, see Part One – Q&A: Adopting a Concierge Medicine Practice Model.
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: Some concierge practices opt to continue accepting specific kinds of insurance and operate as a kind of “hybrid” combination of a direct-pay and traditional practice model. Is this recommended despite the potential difficulties in ensuring that special “concierge” services are distinctly separated from reimbursable services? Is this model high risk?

Permenter: It is risky to me. We do not participate in Medicare models at all.

McCormack: The type of “hybrid” model you’re talking about definitely presents some risk. These practices have to be extremely careful not to double bill—in other words, their membership fee can’t be for services they also charge to insurance. That requires a close eye on the books, so practices operating under this structure would benefit from an office manager or another dedicated employee who can really own the oversight of these billing issues. 

Despite the risk, experts estimate that around three quarters of concierge practices do accept insurance. That may be because cash-only practices run risks of their own: namely, decreased participation. To successfully operate on a cash-only basis, you need to be confident that your patients can afford—and are willing—to pay out of pocket rather than through insurance, or else are willing to file through insurance themselves for an out-of-network provider visit.

NTC Healthcare: When switching to a direct-pay model, many practices over-estimate the number of patients that will stay with the practice. Is there any research available which displays an average patient retention rate after practices transition to concierge?

Permenter: In my experience, the typical conversion of an existing practice that meets the criteria of 2000+ panel with 40% over the age of 50, 15-20 patients seen per day, then the average opening will usually be from 12-15% of the panel. Retention, if customer service is excellent will be 92% or better. If customer service is not the mantra, the memberships will dwindle. 

McCormack: Typically, anywhere between 15-30% of patients choose to stay with the concierge practice and pay the subscription fees. This of course can vary dramatically from practice to practice; a good way for doctors to decide whether the concierge model is viable for them is to simply survey their patients and ask if they’d be willing to pay $X per month or per year in exchange for the advantages of the concierge model. 

The nice thing is, once patients join a concierge practice, they tend to stay. The average patient retention rate (i.e. patients who “renew” by continuing to pay the annual subscription year after year) is 92-94%.

NTC Healthcare: Is it true that by operating as a direct-pay model, practices run the risk of being entirely excluded by commercial insurer networks? Is the same true for Medicare?

Permenter: If structured appropriately I believe the Direct Pay route is much safer than staying in Medicare.

McCormack: First, I should say that a lot of people use “direct pay” and “concierge” interchangeably, but there are some distinctions between these two terms. The goal of a pure “direct pay” practice is really just to eliminate insurance. Patients pay the physician directly for the same type of care they would be getting if they went through insurance. Concierge medicine, on the other hand, is actively looking to limit the number of participating patients in order to offer more extensive services to them. Getting rid of insurance may be a secondary goal, but not one all practices will share.

That said, with a concierge model, there is a chance you’ll get payer pushback. Some states’ commercial insurers choose to drop concierge doctors from their networks, presumably to avoid the double billing risks and headaches. This certainly isn’t guaranteed to happen, and in fact isn’t a problem for most practices.