Direct Primary Care

By Ken Terry
July 22, 2022

Numerous initiatives to save independent primary care have been launched over the years, with varying degrees of success. These initiatives and trends fall roughly into three categories: prepayment for primary care outside of insurance, practice reengineering, and value-based contracting through ACOs and larger primary care groups. This article explores these efforts to resuscitate primary care.

 

Prepayment for primary care is usually associated with a capitation payment—that is, a set amount per member per month—from an insurance company. In contrast, the kind of prepayment discussed here comes from patients, usually in addition to a patient’s insurance. Such arrangements are further subdivided into “concierge” arrangements and “direct” primary care. A concierge practice usually accepts private insurance and government programs. In addition, it offers enhanced services and enhanced access to a primary care physician for annual or monthly fees. Because these fees are fairly high, the concierge approach is designed for affluent people. As a result, the approach is inherently limited. Also, while this strategy can increase physician incomes, practices must still cope with insurance requirements.

A direct primary care (DPC) practice, in contrast, doesn’t accept insurance or participate in Medicare or Medicaid. The practice derives all of its income from monthly membership fees. In return for these fees, which are generally lower than those of concierge practices, patients receive extended visits, clinical, lab and consultative services, care coordination, and comprehensive care management. Most DPC practices advise patients to purchase high-deductible insurance to cover any non-primary care services they may need.(1)

Growing Trend

There are around 800 DPC practices in the United States, and the number is growing.(2) Many primary care physicians find the idea of not having to deal with insurance companies appealing. It’s a leap to give up all insurance payments, but there seems to be a market for direct primary care, especially among people who are uninsured or have high-deductible plans.

DPC practices usually charge less than $100 a month.(3) Rob Lamberts, MD, a Georgia primary care doctor who is board-certified in internal medicine and pediatrics, charges just $50 a month. That keeps his practice affordable for most patients, including those on Medicaid, he says.

Lamberts launched his solo DPC practice after leaving a group practice in 2012. In that practice, he handled between 2,000 and 3,000 patients, and his office visits were usually very brief. In his current practice, he has only about 800 patients and can spend up to half an hour with any patient who needs it.

The majority of Lamberts’ interactions with patients occur via text messaging or email. He has three times as many of these virtual visits as in-person visits. Lamberts averages eight to 10 face-to-face encounters with patients daily; on his busiest day, he might see 15 patients. Despite this, he says he is earning as much as he was before. Moreover, he doesn’t have to deal with all of the administrative and billing-related tasks that take much of a physician’s time and effort in traditional practices. And he doesn’t have to pay someone to file insurance claims and follow up on them.

The DPC financial numbers are compelling. At $50 per month, or $600 per year, 800 patients generate nearly $500,000. As a rule of thumb, primary care physicians earn about half of their gross, and Lamberts has less overhead than most primary care doctors do. Therefore, his income must be equal to or above the average for a primary care physician.

Just as important, he enjoys his work and feels much better about the care he provides than he used to. Many doctors see 30–40 patients a day, he says, “and they go home feeling abused and dirty and like they haven’t given good care, and I don’t have that problem in my practice.”

Low Overhead

Jeff Pearson, the California family physician, launched a cash-only primary care practice in 2018 after being in a large group for several years. While he doesn’t charge patients a monthly fee, he charges less than other practices in his area for the same services. He can do that, he says, because his overhead is very low.

Pearson sees only 10 people a day, on average, compared to 20–25 people in his previous practice. He spends 20 minutes to half an hour with each of his patients, rather than the seven minutes he gave each of them, on average, when he was with the group practice. Although he doesn’t accept insurance, he says, his patients may pay him less out of pocket than they’d pay a traditional practice if they have high-deductible insurance or no insurance.

Lamberts and Pearson like their cash-only practices because they don’t have to cope with insurance rules, have low overhead, and can spend more time with patients. This approach also benefits their patients, who receive better care in some ways than they would in a practice that accepts insurance. But as some observers point out, the cash-only approach has one glaring flaw: if a significant fraction of practices adopted it, it would reduce patients’ access to care.

“If these physicians really cut their panel size dramatically, you say, ‘What if all primary care doctors did that?’” Bodenheimer notes. “The capacity for primary care practices to meet demand would be much less than it is now—and it’s already too low.”

In Lamberts’ view, however, “access is in the eye of the beholder. If your access is to a doctor who sees 30 patients a day, and you get five minutes of their time and you wait two hours, that’s true. We can’t give all those people a sliver of our time like they do. But my patients have far more access to me.”

 

 

References:

  1. Direct Primary Care. AAFP website. https://www.aafp.org/practice-management/payment/dpc.html.

  2. Haefner M. 7 things to know about the rise of fee-based direct primary care. Becker’s Hospital Review. March 19, 2018. https://www.beckershospitalreview.com/hospital-physician-relationships/7-things-to-know-about-the-rise-of-fee-based-direct-primary-care.html.

  3. Corba KL, Watson M. Direct primary care may be the link to the ‘fourth aim’ of healthcare. Medical Economics. July 10, 2018. https://www.medicaleconomics.com/business/direct- primary-care-may-be-link-fourth-aim-healthcare.

 

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Excerpted from Physician Led Healthcare Reform: A New Approach to Medicare for All, by Ken Terry.

 

 

 

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