By Michael Tetreault, Editor
FEBRUARY 20, 2014 – Concierge medicine makes up a small but growing percentage of medical practices. However, if there’s one thing we’ve learned in the past several years about concierge medicine through observing this emerging health care market, it’s that people really don’t understand how many doctors there are and that it’s not healthcare for the rich. We should think of these pioneering doctors who carry around a medical bag with a stethoscope inside and who come to the aid of our family and our bedside as visionary physicians who want to normalize their practices and get back to practicing medicine as it was before 1960.
WHEN PATIENTS of CONCIERGE MEDICAL CARE WERE ASKED TO WEIGH-IN ON WHY THEY CHOOSE CONCIERGE MEDICAL CARE, THEY SAID…
Source: Concierge Medicine Today and The Concierge Medicine Research Collective © 2012
- 34% said price was the main reason they chose concierge medical care
- 29% said insurance compatibility was the main reason they chose concierge medical care
- 17% said Medicare acceptance/participation was the main reason they chose concierge medical care
- 6% said more time with my doctor was the main reason they chose concierge medical care
- 6% said less office staff to deal with was the main reason they chose concierge medical care
- 2% said limited/no waiting was the main reason they chose concierge medical care
- 6% indicated a variety of other reasons not included in the list above
The takeaway here is that a lot of concierge practices focus on limited or no waiting at their office and not on the real issues driving patients to these clinics, that being: insurance compatibility and price. While more time with the doctor and same day appointments are nice features of the practice, these were the least important aspects as to why patients choose concierge medical care.
THE NATIONAL MARKETPLACE
According to data analyzed from nearly 1,000 currently operating concierge practices in the U.S. between 2011 and 2013, we (Concierge Medicine Today) have determined the national average annual fee for concierge medical services is between $1,400-$1,700 per patient per year. Large networks of concierge medicine and direct primary care doctors have claimed a significant portion of the concierge doctor market share and thus help to keep prices from inflating too high in major metropolitan markets. I have found that some independent concierge doctors, those not affiliated with the larger franchise consulting companies, who are not part of a large group may charge higher rates, $2,500 and up.
According to industry physicians and business leaders currently operating in this market space, this price difference is primarily due to the fact that franchise concierge medicine practices are better supported during the initial launch period and do a better job of educating patients about what services will be included for the fee. Therefore, more patients sign-up by start-up. Meanwhile, independent physicians setting out to transition their private medical practice into a viable business model are at times, struggling to acquire the necessary amount of patients to support operational activities, thus, many are charging more per month for their services because they have less patients and less start-up support to help them with strategic planning, messaging and growth.
It’s also a little known fact that over 61% of concierge medical programs across the U.S. cost an individual less than $135 per month, this according to years of research and analysis by Concierge Medicine Today’s research and data collection arm, The Collective and their work in the industry. The Collective also found that some programs cost as little as $10 per month for children. Patients typically receive unlimited access to the doctor at their home, work or the doctor’s office along with unlimited technology visits, such as cell phone, web cam, email and texting. Furthermore, many concierge and direct primary care doctors offer access to wholesale pricing on prescriptions, lab tests, imaging services and medical supplies for pennies on the dollar. One example The Collective recently found was by a primary care physician in Atlanta, GA who has negotiated a CAT Scan through a local healthcare facility for his patients for only $150.
According to recent analysis by Concierge Medicine Today, the average combined annual household income of a Concierge Medicine or Direct Primary Care patient is:
- 34% – earn less than $100,000 each year
- 39% – earn between $100k-200k per year
- 14% – earn between $200k-$300k per year
- 5% – earn between $300k-$400k per year
- 3% – earn between $400k-$500k per year
- 2% – earn between $500k-$600k per year
- 1% – earn between $600k-$700k per year
- 2% – earn between $700k and above per year
WILL FEES BE GOING UP or DOWN? And WHERE?
Industry analysts at Concierge Medicine Today (CMT) are learning that fees are actually going down among independent, non-franchised concierge physicians, while fees are going up inside those doctors offices operating within a franchised concierge medical support system.
So, why is this the case if fees among non-franchised, independent concierge doctors are higher? Well, since the November 2012 election and the Affordable Care Act (ACA) moving into full implementation, more patients are seeking to lock-in a relationship and membership at a medical practice that offers transparent pricing and a plethera of services. CMT is also finding that the number of patients who are seeking concierge medical care is far greater than the actual number of primary care and family practice doctors available to serve them.
Despite what we hear in the media about the increase in concierge and private-pay physicians growing across America, there are simply not enough of these [concierge-style, direct care or membership medicine-style] physicians in the U.S. to meet the current demand. Interest in CMT’s “DOC FINDER” Search Engine [a national directory exclusively for concierge medicine and direct primary care physicians across the U.S. who are accepting new patients] has increased tremendously since the election. But, unfortunately, even if you include all of the doctors touting themselves as retainer-based or concierge medical practices — at the end of the day, the marketplace is still falling short.
There are currently four states that have a huge lead in the amount of active concierge or private-pay physicians in practice and consumers seeking their care. Florida, California, Pennsylvania and Virginia each have a significant number of people [most over age 50] seeking out concierge doctors and there is, fortunately, a sizeable number of concierge physicians to serve them. It is in these areas where we are seeing franchise concierge medicine fees increase and independent concierge doctor fees decrease due to competition, patient demand for transparency and the effect of the ACA in the national marketplace.
Interviews with various physicians and industry sources indicate that the average patient or consumer of concierge medicine and direct primary care services can withstand a small annual premium increase of about $25 to $160 per year. However, the problem with raising prices for concierge medicine patients, especially in private, direct-pay medicine and small medical clinics is that it causes patients to reassess how much value this care brings to their life. They also have other factors to consider such as their financial commitments, their current quality of life, recent good or bad experiences with the doctors’ staff, traffic and travel interruptions and how often do they actually utilize services on an annual basis.
“I don’t foresee any rate increases for 2015,” says Dr. Rob Nelson of Cumming, GA to one of his patients. “I don’t expect an increase in my costs for Lab or X-ray, so that component probably won’t be an issue. Unless my medical supply costs go up significantly, I don’t foresee any price increases for 2015. For your peace of mind, I will guarantee that you can renew with no more than 5% increase.”
Concierge Medicine Today (CMT) receives inquiries everyday from people looking to join a concierge medicine practice. CMT also regularly receives inquiries from doctors who are looking at how much they are charging for services. They are attempting to determine how they can balance those fees and still charge what their patients will pay without appearing to price-gouge their patients.
- Los Angeles, CA
- San Fransisco, CA
- New York, NY
- Palm Beach, FL
- Baltimore, MD
- Washington, DC
- Philadelphia, PA
- Seattle, WA
- Chicago, IL
- San Diego, CA
HOW MUCH DOES IT COST TO SEE A CONCIERGE DOCTOR?
CMT recently asked physicians from across the U.S. from December 2009 to December 2012 questions pertaining to their concierge medicine and direct primary care practice, cost, patient satisfaction, business strategies, revenues and more. The analysis revealed the following results:
- The combined average annual income of a typical concierge medicine [and direct care] patient is between $50,000 to $200,000 per year.
- Most concierge doctors and direct primary care physicians treat six to eight patients per day.
- More than 60% of concierge medicine and direct primary care (DPC) subscriptions/membership fees cost less than $135 per month.
- Read Full Story From CMT Three Year Analysis
(2013) Survey …
States with Doctors Considering Starting A Concierge-Style Medical Practice
- Texas: 10.6 percent
- Florida: 9.1 percent
- New York: 8 percent
- California: 6.7 percent
- North Carolina: 5.6 percent
- Illinois: 5.3 percent
- Washington State: 4.8 percent
- Pennsylvania: 4.5 percent
Increasing the Number of Concierge Physicians Across The U.S.
While the number of physicians entering concierge medical practices needs to increase, more transparent pricing among doctors is also needed. Unfortunately, our nation’s new health care reform law does little in this respect.
“Our opinion and that of our research arm, The Collective, is that there are approximately 5,000+ physicians nationwide,” says Catherine Sykes, Managing Director of Concierge Medicine Today and The Direct Primary Care Journal.
There are howver, three ways we see that will instantly increase the number of physicians stated above.
First, understand that the terminology being used in the concierge medicine or direct [primary] care marketplace describes many types of business models where doctors have some form of non-insurance or direct financial relationship with their patients. While all concierge medicine practices share similarities, they may vary widely in their structure, payment requirements, and form of operation. But at the end of the day, price transparency, access, affordable rates and the personal level of service provided to each patient is what they all have in common.
Second, understand that the term concierge medicine describes more specialties than just primary care, internal medicine and family medicine. Some dermatology, pediatric, cardiology and even dental practitioners are now providing a level of concierge medical care.
Third, education. Most people understand that concierge medicine has had somewhat of a “brand/identity” issue. It’s been referred to as: membership medicine; boutique medicine; retainer-based medicine; concierge health care; cash only practice; direct care; direct primary care, personalized healthcare, direct practice medicine and, most recently, contract carrying healthcare. Because at its inception, it appeared costly, elitist and controversial, many people associated a “rich man’s” stigma to it. However, the consumer, the physician community and even some legislators are realizing that this form of healthcare delivery, when free-market driven, is saving money and providing “better care,” according to MDVIP hospitalization studies conducted in the past two years (See:www.ConciergeMedicineToday.com/hosp.html).
The recent Merritt Hawkins Study released this month [January 2013] tells us that growth in the physician marketplace for doctors expecting to transition into concierge or private-pay medicine is at less than seven percent. While this will keep some consultants busy for the next couple of years, the marketplace consumer is a long way from seeing a concierge doctor in every neighborhood.Regardless of how you describe it or the term you associate with concierge medicine, the public’s perception of these healthcare delivery models is changing for the better. Patient retention among concierge medical physicians is 7 to 9 years, two years longer than traditional, insurance based primary care practices. We expect this number to increase as time passes and more data becomes available. When a physician is free to create pricing structures that meet their local demographic demands without the intrusion from insurance and avoid providing “hamster healthcare,” which only allows doctors to spend 6 to 9 minutes with their patients, you make a happier patient, healthier family and less frustrated and fatigued doctor who is able to care for their patients more thoroughly and comprehensively.
AVERAGE MONTHLY COST $$$ OF A CONCIERGE DOCTOR IN U.S.* (Source* The Collective, 2013)
- Less than $50/mo. – Eleven percent (11%) of surveyed concierge medical practices cost a patient less than $50 per month.
- $51-$100/mo. – Nearly fourteen percent (14%) of surveyed concierge medical practices cost a patient between $51-$100 per month.
- $101-$135/mo. – Nearly thirty-one percent (31%) of surveyed concierge medical practices cost a patient between $101-$135 per month.
- $135-$180/mo. – Less than nine percent (<9%) of surveyed concierge medical practices cost a patient between $135-$180 per month.
- $181-$225/mo. – Less than one percent (<1%) of surveyed concierge medical practices cost a patient between $181-$225 per month.
- $226-$00/mo. – Nearly thirty-five percent (35%) of surveyed concierge medical practices cost a patient more than $225 per month.
However, high-deductible health care plans accompanied by a concierge medicine doctor or direct primary care monthly membership at a local clinic are no longer a novelty—they are becoming mainstream.
If more people are exposed to the cost value of concierge medical care, it will make a big difference in what they spend. A recent story ina widely popular national newspaper supports this belief. The paper reports that the State of Indiana has a high-deductible plan and another that’s a traditional HMO. People in the high-deductible plan spend thousands less than those in the HMO.
‘The average expense in 2009 for patients in one of these [high-deductible] plans was $6,393,’ the paper writes, ‘compared with $8,570 for patients enrolled in a more traditional health maintenance organization plan.’
According to the industry trade group America’s Health Insurance Plans, the number of people with these kind of high-deductible plans reached more than 11.4 million in January 2011, up from 10 million in January 2010.
In 2012, a survey from the Kaiser Family Foundation found that about half of all workers in “small” businesses (up to 199 workers) who have health insurance have these plans.
According to the Kaiser Foundation, the average expense in 2012 is $6,050 for an individual and $12,100 for a family. Out-of-pocket costs generally include the deductible, the patient’s share of the cost of seeing a doctor, prescription medicines and/or hospital costs.
Here’s the upshot: When you combine high-deductible health plan policies with a concierge medical program, you empower people and families to make better decisions about their health care, they in turn receive more comprehensive medical care and then the savings happen and stronger relationships occur between the physician and their patients. One concierge physician said it best when she said that her patients can say ‘I no longer have a doctor who needs to look at my chart to know my name.’
WHAT ABOUT THE IMPACT OF RETAIL MEDICINE in our local neighborhood and providing more convenient access to a primary care doctor?
Retail medicine and price transparency are quite possibly the future of affordable health care in the U.S. Like most large pharmacies, the creators of ‘Retail Medicine’ understood years ago the need for affordable, convenient and price-driven access to healthcare.
“Until retail and concierge medicine came along, we would blindly walk into a doctor’s office or hospital and not know (or in many cases, care) about how much things cost,” adds Sykes. “We don’t purchase our homes, our vehicles or other services in this way. It’s time we stop using our health insurance card as a form of credit.”
A lot of modern health care medical centers and physicians across the U.S. are now starting to show their prices to their patients before they sit down for a visit. Dermatology offices and direct primary care clinics are a good example. Until recently, hospitals, primary care and other health care specialties were one of the only segments in the U.S. that rarely listed how much their fees were for their time, services and products.
“Maybe we should be examining why our patients would rather go to a retail clinic that see us (their primary care doctors),” adds Nelson. “Here are just a few of the comments I hear from urgent care patients as to why they come to the retail care centers instead of their primary care physician: my urgent care center couldn’t get me in; my urgent care center doesn’t do stitches anymore; my urgent care center doesn’t do x-rays in office; my urgent care center doesn’t take walk-in patients; my urgent care center usually refers me to specialist for everything anyway; and my urgent care center won’t return my calls.”
As the healthcare system prepares to cope with an influx of 30 million Americans who will have health coverage as a result of the Affordable Care Act, a surging market of retail clinics is poised to take on a wider role to relieve the bottleneck. According to a recent article by Bill Malone in the AACC, he writes ‘Retail clinics are also adding new tests that go far beyond caring for scraped knees and scratchy throats. The growing list of tests includes lipid panels, HbA1c, microalbumin, HIV, fecal occult blood, influenza A and B, and even screening for methicillin-resistant Staphylococcus aureus. Clinics offer many of these tests as part of adult and child physicals, and more recently, Medicare wellness visits, and more.’
The article also notes that the expected influx of newly insured patients under the Affordable Care Act provides both opportunity and uncertainty for the retail clinic model, according to the lead author of the study, Ateev Mehrotra, MD.
“If more people are seeking primary care, and there is no dramatic increase in the number of primary care physicians, we could face a situation of increased demand and worsening access. Without an alternative, more patients may go to a retail clinic,” he said. “The flipside is that a significant segment of patients who go to a retail clinic don’t have a primary care physician. If under healthcare reform more people gain access to primary care physicians, it’s still possible they could choose the physician’s office over the retail clinic.” Mehrotra is a policy analyst at the RAND Corporation and an associate professor of medicine at the University of Pittsburgh School of Medicine.
According to Cain, family physicians have responded to the demand for greater flexibility by expanding access to appointments. “Family doctors have responded so that about 75 percent of their offices have open-access, same-day appointments and about half have evening or weekend office hours,” he said. Results from an AAFP physician survey also found that about 31% of respondents offered weekend appointments. Both AMA and AAFP are urging insurers not to give patients an incentive to use retail clinics, warning of the potential for duplicative tests and treatments, higher costs, and lower quality.
As retail clinics have grown in number and ventured into the sphere of chronic disease management, they have also met with stern criticism from some physician groups, such as the American Medical Association (AMA) and the American Academy of Family Physicians (AAFP). AAFP has been vocal in opposing any expansion of the scope of service in retail clinics that approaches managing chronic conditions. It believes that high quality and coordinated care depend on relationships with primary care physicians—a relationship with which retail clinics interfere.
“AAFP believes that the best healthcare comes from a patient-centered medical home, where you have a strong primary care focus with comprehensive, coordinated, and continuing care,” said AAFP president Jeffrey Cain, MD. “When retail clinics start talking about managing chronic disease or performing well adult exams, that’s further fragmenting an already fragmented health system. We believe patients will have better care and better quality if they find that care within an ongoing relationship to a primary care physician who knows that person.” Cain is chief of family medicine at Children’s Hospital Colorado and associate professor in the Department of Family Medicine at the University of Colorado Health Sciences Center in Aurora.
MOVING THE INDUSTRY FORWARD
Moving forward, the more doctors (not office managers, staff or nurses), communicate with patients face-to-face and provide other value-driven options, the more those patients will come back again and again and better yet, tell their friends and family to see you too. Afterall, what primary care of family medical practice do you know of today that spends more than forty five to ninety minutes with each patient on every visit?
In surveying thousands of physicians for the nonprofit Physicians Foundation, Merritt Hawkins, a national consulting and search firm in Irving, Texas, recently reported that about 7% of respondents said they were planning to transition to concierge or cash-only practices in the next one to three years.
“We believe the growth rate will be much higher in the coming years – possibly around 15% due to the Affordable Care Act (ACA). Although this is our opinion,” said Sykes, “we have certainly seen an increase in physician interest to support it.”
Overall, concierge medicine and direct primary care is thriving in major metropolitan markets and prices are dropping dramatically due to increasing competition among physicians entering the marketplace, retail medicine pricing, price transparency demand from patients and uncertainty about the implications of the Affordable Care Act.
“Instead of viewing the status quo PCP model as the center of the universe,” notes Nelson, “maybe we should take some plays from the Retail Clinic playbook before we become obsolete.”