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What Is Concierge Medicine (Direct Primary Care) – Pros & Cons

What Is Concierge Medicine (Direct Primary Care) – Pros & Cons

American healthcare is expensive, inefficient, and often doesn’t produce optimal outcomes. Concierge medicine, also known as direct primary care, helps address all three problems. Direct primary care is a fee-based care model that forges closer connections between patients and providers, encourages preventive and proactive care, reduces bureaucracy and overhead for physicians and health systems, and provides an alternative to increasingly expensive health insurance coverage.

Healthcare is a big business in this country. According to HealthAffairs, healthcare spending accounted for 17.2% of total U.S. GDP in 2012. That marks a more than threefold increase from 1960, when healthcare spending comprised just 5% of the United States’ gross domestic product (GDP). And it’s far greater than healthcare’s contribution to GDP in other developed countries, where governments take more responsibility for healthcare delivery and aggressively regulate drug, procedure, and consultation pricing.

Per the Kaiser Family Foundation, the American healthcare system directly employs more than 13 million people: medical practitioners, administrators, insurance specialists, hospital support staff, and others. Other definitions of “healthcare jobs” place the figure even higher.

But U.S. healthcare is also cumbersome and inefficient. Simple but potentially life-saving medicines and procedures are often far too expensive for middle-class, working-age adults – who don’t qualify for Medicare or Medicaid and often don’t carry adequate insurance coverage – to afford out of pocket. These fundamental shortcomings drive down healthcare utilization while increasing complication and mortality rates. They also strain patients’ finances, compelling many to take out unsecured personal loans or rack up credit card debt to cover out of pocket healthcare expenses.

Health policy experts broadly agree that American healthcare delivery can and should be improved. However, the controversy surrounding the passage and implementation of the Affordable Care Act (ACA) demonstrates that what’s self-evident in theory is far murkier in practice.

Concierge medicine certainly isn’t without controversy, and it does come with its own share of drawbacks. However, its key benefits – stronger patient-provider connections, affordable primary care services, and less red tape for providers – make it an integral part of the next wave of healthcare innovation.

And it’s becoming increasingly common. According to Forbes, about 10% of all U.S. primary care providers are actively engaged in or “exploring” concierge arrangements.

Concierge medicine is a primary care model in which medical providers, typically family practitioners or internists, charge their patients a monthly, quarterly, or annual retainer (flat fee). Because the retainer is the primary funding mechanism, and insurance and Medicare are generally used secondarily or not at all, direct primary care arrangements are known as such because they cut out the insurance middleman.

However, concierge arrangements don’t meet the legal definition of health insurance under applicable state and federal statutes, including the Affordable Care Act – so concierge patients generally need to carry low-cost, bare-bones health insurance plans to remain compliant with the law and avoid potential tax penalties.

Concierge retainers cover routine office visits and in-office services, as well as lab work and simple diagnostics (such as x-rays) in some cases, but usually not prescriptions or procedures. Retainer amount depends on provided services, payment frequency, prevailing costs in the local market, panel size (the provider’s active patient population), and possibly demographic factors (such as the patient’s age).

Generally, annual retainer costs range from less than $200 to more than $5,000 per person, though high-end concierge medicine arrangements – in which doctors have only a handful of patients and remain on call 24 hours per day – can cost well over $10,000 per year. Family discounts are common in concierge arrangements, so families’ retainers are often lower than individuals’ retainers on a per-person basis. According to a late 2013 Wall Street Journal report, two-thirds of U.S. concierge retainers are less than $135 per month – regardless of whether they’re charged monthly, quarterly, or annually.

On the other hand, concierge retainers typically only cover primary care. Concierge patients must pay out of pocket for hospital services, specialist consultations, prescriptions, and other non-routine medical care not covered by their accompanying catastrophic plans. While it’s difficult to determine needs for such services in advance, patients weighing concierge arrangements against traditional health insurance plans need to estimate what they’ll utilize and determine which option serves them better.

To satisfy the Affordable Care Act’s individual insurance mandate, concierge and direct primary care arrangements must be paired with low-cost health insurance plans that cover more expensive medical services, such as hospital stays, surgeries, and multi-course treatments.

In many cases, concierge patients looking for low-cost insurance options choose one of two plan types. Patients under 30 are eligible for catastrophic insurance plans: low-premium, high-deductible plans that generally require holders to pay at least 40% of their medical costs out of pocket and don’t include premium subsidies for lower-income patients. Patients over 30 qualify for catastrophic plans under certain limited circumstances, known as hardship exemptions. Per HealthCare.gov, these include recent bankruptcy, homelessness, domestic violence, and the obligation to care for a seriously ill family member. All other patients are eligible for “bronze” plans, the lowest-priced of the Affordable Care Act’s four “metal” plan categories.

The insurance requirement does add significantly to concierge patients’ financial calculus. According to a 2018 ValuePenguin analysis of health insurance plans across the United States, the average 21-year-old American pays $167 per month for a catastrophic plan and $201 per month for a bronze plan. Per the National Council of State Legislatures, a healthy 40-year-old nonsmoker pays about $201 per month for a silver plan if they qualify for a hardship exemption. However, these costs vary widely by location – per ValuePenguin, average monthly premiums for 21-year-old patients across all plan types range from $426 in Alaska, to $196 in Kansas, to $307 in New Jersey.

However, even after factoring in the additional cost of bare-bones insurance plans, low-cost concierge arrangements are often less expensive than more generous health insurance policies, particularly for older individuals who don’t yet qualify for Medicare. They therefore can reduce healthcare costs for healthy adults who don’t take expensive medications or require lots of non-routine care.

doctor, nurse, and patient

Concierge medicine comes in three basic types.

1. Fee For Care (FFC)
The FFC model cuts traditional health insurance out of the equation. Concierge medicine providers following this model generally don’t accept insurance.

Instead, patients pay a flat monthly, quarterly, or annual retainer for office consultations and services, such as blood pressure checks, pelvic exams, and possibly routine lab work (such as cholesterol readings). Patients pay out of pocket for additional services (such as vaccinations, prescription refills, and diagnostic exams) as needed. Patients who can’t afford to pay out of pocket for the retainer, additional services, or both, can use health savings accounts (HSAs) purchased individually or through their employers to partially or fully cover the costs.

In many cases, retainers aren’t tied to specific services – rather, they entitle patients to unlimited care during the applicable period. In some, however, retainers function like a prepaid debit card: providers deduct the cost of each service as it’s provided. If patients exceed the amount of care allowed by the retainer within the period, they need to pay out of pocket for additional services.

FFC arrangements usually entitle patients to same-day (or, for low-retainer plans, same-week) appointments. They often come with remote provider access as well – you can call or text your physician with non-emergency questions at any time and expect a response the next business day (and, for high-end plans, sometimes right away).

Most FFC providers also have far smaller patient panels (regular patient cohorts) than non-concierge providers. Panel size varies widely among concierge providers, but can be as low as 50, sometimes even less for very high-end concierge services. FFC panels are rarely larger than 1,500 patients.

Full-time, insurance-based providers’ panels can have as many as 3,000 to 4,000 patients. That sounds like a lot until you remember that insurance-based primary care providers are often required by their employers to see 25 or more patients per day, whereas direct primary care providers see far fewer.

2. Fee For Extra Care (FFEC)
FFEC providers’ panel sizes are largely similar to FFC providers’. These arrangements also use out of pocket or HSA-paid retainers to cover the cost of agreed-upon suites of in-office services – usually on an unlimited basis, but sometimes on a debited basis with no period-to-period carryover. Unlike FFC arrangements, FFEC arrangements use Medicare or private insurance plans to cover the cost of additional services not included in the retainer suite, such as outpatient procedures and prescription medications.

This is a useful arrangement for Medicare patients, whose government-funded plans typically cover the vast majority of costs for such add-on items and services. It’s also useful for private insurance patients whose plan premiums are substantially lower than what they anticipate spending on additional services. Instead of paying cash out of pocket for the full value of these add-on services, they can use their insurance coverage to offset most of the services’ cost.

3. Hybrid
Hybrid-model patients typically rely on Medicare or private insurance plans (of any type, not just catastrophic or bronze) to cover the cost of routine, in-office care and additional services. Their monthly, quarterly, or annual retainers, which are typically much smaller than FFC or FFEC retainers, cover the cost of specialized or value-added services – such as customized health and wellness plans or house calls – that generally aren’t reimbursed under Medicare or private insurance.

There’s usually a limit to what the retainer covers. For instance, a hybrid retainer might cover one session to outline a comprehensive health and wellness plan (outlining healthy behavior adjustments, target weight and blood sugar, and other health indicators) per year, with additional office visits or adjustments to the plan requiring out-of-pocket payments for the provider’s time.

In some cases, providers that offer hybrid concierge arrangements also accept traditional insurance or Medicare patients who don’t pay any retainers at all, and thus don’t get value-added services. For concierge patients, the lower retainer offsets the higher cost of non-catastrophic insurance coverage.

In a way, the concept of concierge medicine predates traditional insurance arrangements. Wealthy people have long had intimate relationships with providers – often personal physicians, or physicians who served only a handful of deep-pocketed clients – offering personalized, responsive, often round-the-clock care.

However, modern concierge medicine didn’t come into being until the mid-1990s. Concierge Medicine Today has a great timeline of the industry’s history and development. Highlights include:

doctor and patient fill out forms

The rise of concierge medicine – evidenced by growing practice counts and swelling patient rolls – is driven by a number of related factors.

Although concierge patients are required by law to carry bare-bones insurance policies purchased through Affordable Care Act marketplaces or other sources,  doing so is frequently cheaper than carrying more generous traditional health insurance policies, especially for healthy patients. When they need care, healthy people are thus more likely to seek out concierge relationships as affordable alternatives to gold- or silver-plated insurance policies, which they may rarely use.

Broad, deep cultural shifts, spurred by technology and other factors, are changing consumers’ relationships with service providers, including healthcare professionals. Younger people (millennials and Gen Z) increasingly expect responsive service as fast as possible. And that’s good news for concierge medicine providers that offer same-day appointments, shorter diagnostic wait times, off-hours consultations, and similar perks.

According to the American Association of Medical Colleges, the United States faces a shortfall of anywhere from 12,500 to 31,000 primary care physicians by 2025. Because people with health insurance are more likely to use primary care providers, this shortage is exacerbated by the dramatic (10 million plus) rise in the number of insured Americans due to the ACA. This two-headed trend is sure to worsen the problems with which many primary care patients are familiar: long appointment wait times, perfunctory or rushed service, and lack of deep provider-patient relationships.

It’s also contributing to the rise of so-called mid-level practitioners, such as nurse practitioners (NPs) and physician assistants (PAs). NPs and PAs complete several years of schooling (though not as many as MDs or DOs) and are permitted to perform many duties traditionally reserved for physicians, such as conducting full physical exams and prescribing medicine.

Although “nurse-only” practices are increasingly common, most PAs and NPs work under the supervision of a physician. They earn very comfortable livings, but don’t command the same earning power as physicians. However, because they can do pretty much everything primary care physicians can, their bosses don’t have to see their patients regularly. This means that practices utilizing PAs and NPs don’t have to keep as many physicians on staff – and can therefore pass their reduced labor costs onto patients.

Many low-cost concierge practices rely heavily on NPs and PAs. These lower-cost practitioners serve as front-line care providers that can do pretty much everything their physician supervisors can. Their bosses step in only when there’s a complex problem or issue that their support staff can’t resolve.

The lower cost of employing mid-level practitioners allows concierge practices to maintain healthy staff-to-patient rations to deliver personalized care that includes longer consultations and greater familiarity with patients’ unique needs. Without mid-level providers, it’s not at all clear that the low-cost concierge is sustainable or scalable.

Modern concierge arrangements wouldn’t be possible without Internet-connected personal electronics. One of the biggest perks of direct primary care relationships is technology-enabled access to providers – patients’ ability to call, text, exchange pictures, and video conference outside of the office (and, often, office hours). Other technologies utilized by concierge providers, such as remote monitoring of homebound patients and telemedicine systems that allow providers to conduct thorough exams across wide distances, also rely on powerful processors and fast Internet connections.

What’s more, there are dozens of smartphone (and desktop) apps designed to help concierge and direct primary care patients and providers. In fact, many concierge providers include the cost of such apps in their retainers – though many apps are free.

Some concierge and direct primary care apps facilitate patient-provider consultations. Others use push notifications, email alerts, and consultations with personal health coaches to help patients manage specific conditions, such as diabetes, or general medication regimens. Still others help providers and patients securely organize and store medical records.

Here are a few popular examples:

man using a healthcare smartphone appf

With smaller patient panels, direct primary care providers are far more accessible to patients – both electronically and in person – than their traditional peers. They also have shorter wait times for office visits (many offer same-day appointments) and fewer backlogs for lab and diagnostic work. Shorter diagnostic turnarounds can measurably reduce patient stress.

For instance, the results of biopsies on potentially cancerous lesions often take weeks to arrive when obtained through traditional, insurance-based practices or hospitals. Concierge patients, who generally endure shorter wait times for such high-stakes tests, are likely to suffer less uncertainty-related stress by getting conclusive results sooner.

Direct primary care’s smaller patient panels, shorter wait times, and more attentive practitioners make it easier for patients to establish continuity of care – to see the same primary care provider over the course of numerous office visits, establishing a long-term relationship built on trust and mutual respect.

Simply having a dedicated primary care provider is correlated with improved health outcomes, because patients are more likely to show up for appointments and follow advice from providers they know and trust. For instance, a Residency Research Network of South Texas study (per NIH) found that type 2 diabetes patients with dedicated primary care providers manage their conditions better than patients without dedicated primary care providers.

With fewer patients to see overall and on a daily basis, concierge providers can spend more time with each individual patient. According to Medical Economics, direct concierge providers spend at least 30 minutes with patients per consultation, more than double what insurance-based providers typically spend on routine visits. This is a welcome relief for patients used to rushed office visits that don’t allow enough time to cover every issue in detail (or even get to some issues).

And whereas traditional providers often have too many patients to keep straight, concierge providers – particularly at the high end – actually get to know patients by more than the numbers on their charts. Given the intimacy of the provider-patient relationship, it’s impossible to overstate the value of feeling comfortable in the presence of your doctor.

Traditional medical practices and health systems have to deal with the byzantine requirements of the modern insurance industry. Even small practices need to employ full-time staffers to keep tens of thousands of billing codes straight, or work with expensive outside companies to bill properly and ensure they’re paid for services rendered. Larger health systems employ whole teams of billing and coding specialists to deal with private insurers and Medicare. To put it mildly, billing and administration collectively comprise a huge chunk of healthcare providers’ overhead.

By contrast, concierge providers that hew exclusively to the FFC model don’t have to deal with insurance at all. Concierge providers that offer FFEC or hybrid arrangements do need to work with insurers and Medicare, but not to the extent of practices and systems that base their entire care model around insurance. In any case, they can pass the savings from lower overhead onto customers via lower retainers or out-of-pocket add-on fees.

Many patients have ambivalent relationships with their primary care providers. On the one hand, they recognize their doctors’ expertise and trust them to provide quality care. On the other, they’re often distressed by what seems like a quantity-over-quality approach to care (and billings) in primary care and other medical specialties. In fact, in a 2008 NIH study, sicker patients requiring more care actually report higher satisfaction levels than healthier patients requiring less care, largely because the sicker patients spend more time with their doctors and form closer relationships.

But the concierge model encourages closer patient-provider relationships for all patients, not just the ones who need lots of care. This facilitates deeper understanding, comfort, and good feeling between patients and providers, boosting the medical community’s image and reputation. While that’s clearly a boon for providers, it’s also good news for patients at large, as people who trust their doctors and like spending time with them are more likely to approach them proactively rather than wait until a medical problem can no longer be ignored.

a team of doctors and healthcare providers

If you want a direct primary care provider who has only a handful of other patients, is available 24/7, and is willing to more or less serve as your personal health coach, you’re going to pay handsomely for it – to the tune of $10,000 or more per year, plus any out-of-pocket expenses not covered by the retainer. That’s substantially more than healthy adults pay even for generous health insurance policies, according to the National Conference of State Legislatures.

Concierge medicine novices often assume that concierge retainers are equivalent to health insurance premiums for ACA compliance purposes. Unfortunately, they’re not. To avoid ACA tax penalties, concierge patients need to carry a catastrophic plan if eligible or bronze health insurance policy on top of their direct primary care arrangements.

According to ValuePenguin’s analysis, the average U.S. monthly catastrophic plan premium for a 21-year-old in 2015 was $167. Per the National Conference of State Legislatures, 40-year-olds paid $201 per month for catastrophic coverage (though it should be noted that individuals over 30 are only eligible for catastrophic plans under extreme circumstances). The average monthly bronze plan premium was $201 for 21-year-olds, and $256 for 40-year-olds.

However, actual out-of-pocket premium costs vary by location, year, insurer, and federal subsidies. Most people earning less than four times the federal poverty level are eligible for subsidies proportionate to their income.

Regardless of the final out-of-pocket premium cost, catastrophic and bronze policies add significant costs for concierge patients. Make sure you factor that in as you evaluate the relative cost of traditional, insurance-based primary care and direct, retainer-based primary care.

Traditional health insurance policies, whether bare-bones or generous, generally don’t cover the cost of concierge retainers. If you want to save for the cost of your retainer over time or use pre-tax dollars (wages or salary) to pay for your retainer, you likely need a health savings account or flexible spending account (FSA). Some health insurance policies are compatible with HSAs, such as Medical Mutual’s HSA-compatible plans, and employer-sponsored benefit packages often include HSA or FSA options (or both).

These issues can get complicated. If you’re not sure how to maximize the dollars you’ve earmarked for healthcare or simply need to determine which option makes the most sense given your employment situation and healthcare needs, speak with an insurance agent or employee benefits specialist.

While patients lucky enough to have (and afford) gold-plated concierge arrangements have physicians or competent mid-level practitioners at their beck and call 24/7, mass-market direct primary care patients don’t have these privileges. However, it’s common for mass-market patients to mistakenly assume that they’re entitled to call or text their physicians at all hours. When they’re ignored or sent to voicemail, they wonder why – and their satisfaction with the arrangement declines accordingly.

Relatedly, direct primary care patients sometimes expect closer doctor-patient relationships and enhanced access to produce unrealistic health outcomes. There’s a legitimate case to be made that because they don’t feel like cogs in an impersonal healthcare system’s wheel, concierge patients are more likely to heed their providers’ advice and make better health choices, which can then lead to better long-term outcomes. However, concierge physicians can’t simply wave a curing wand and obviate unfavorable genetics, years of poor health decisions, or simple bad luck.

Although more direct primary care providers are coming onboard every year, concierge medicine remains niche-bound. Traditional, insurance-based primary care remains the norm in the United States. This means that patients in some geographical areas – particularly rural regions that are already medically under-served – are likely to have trouble connecting with concierge providers that fit their budget and care preferences.

I used to live in a rural region in which most primary care doctors (including my own) worked for a insurance-based health system. The area’s lone direct primary care provider, an independent practice with a handful of licensed physicians, charged a reasonable annual retainer. But the practice hewed to a naturalistic, nontraditional style of medicine that appealed to some patients and alienated others. Patients interested in concierge medicine generally, but not convinced by this practice’s methods, didn’t have a nearby alternative.

doctor takes the blood pressure of a senior woman

Even as concierge medicine changes the face of the American healthcare industry, similarly efficient solutions are doing the same for other hidebound industries. In fact, concierge medicine is just one example of a much broader economic shift made possible by dramatic technological changes.

Personalized, on-demand service of the sort available through concierge medicine apps and arrangements is now available in virtually every economic niche. Amazon and other online retailers offer same-day (and even one-hour, in some places) delivery of almost anything you could want. Ridesharing apps like Uber and Lyft put personal drivers at your fingertips in minutes. Automated investment platforms employ sophisticated algorithms to achieve returns comparable to the average human advisor’s – at a fraction of the cost.

Amazingly, future innovations promise to render these now-exciting solutions quaint before long. For those without a vested interest in old, inefficient ways of getting things done, the future looks very bright indeed.

Have you ever used a concierge medicine app or service?

Updated: October 16, 2018
Categories: Health and Fitness, Lifestyle

Brian Martucci writes about frugal living, entrepreneurship, and innovative ideas. When he’s not interviewing small business owners or investigating time- and money-saving strategies for Money Crashers readers, he’s probably out exploring a new trail or sampling a novel cuisine. Find him on Twitter @Brian_Martucci.

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