Concierge Medicine: How to Escape From a Dysfunctional Medical System

March 9, 2010 in Health Care "Reform", Health Policy by RangelMD

Another day, another primary care medical practice converts to an annual, cash only subscription model. But now instead of calling it a Cadillac plan, the Omaha media have graduated concierge medicine (the traditional designation) to that of the Mercedes style medical practice. Apparently, the 2009 collapse of the US auto industry is really taking its toll on US brand name analogies.

Just what is an annual, cash only subscription model, medical practice?  Basically, instead of paying each time the patient sees the doctor, they pay an annual fee that covers office visits, phone calls, paperwork, a 27/7 available physician, and certain office procedures depending on the plan. Since very few medical insurances will pay for such a radially different practice model, most patients pay the annual fee in cash . . like a gym membership.

Crazy, huh? No, not really. Concierge medicine is a million times more logical and sensible from an economic standpoint than the current confusing and massively bureaucratically over-burdened insurance-driven primary care medical system.

Imagine a world where every primary care practice followed this model. Patients would know well in advance, the exact prices and services offered by each practice prior to signing up and these prices and services could vary widely as primary care practices compete with each other. It’s like. . you know . . capitalism, the same system that allows us to choose the cheapest and best quality toilet paper instead of having to stand in line to for hours to accept government issued paper that does the job but feels like sandpaper.

In contrast, the current insurance-driven model is truly insane as many have pointed out. Neither the patients (consumers) nor the doctors (producers) are aware of the true costs of health care delivery since insurance covers most costs at the point of care. Third party players (insurance companies) are usually the only ones who get paid directly by the patient while  the  providers are paid under completely separate arrangements and circumstances. In this crazy system the consumer rarely directly pays the seller and so neither knows the true costs and neither are really responsive to nor feel responsible for such basic business concepts as service, customer satisfaction, and the effects of their economic choices on overall costs.

Additionally, the insurance-dominated current system that only pays whenever a physician has eyeballs on the patient, has all but ruined the practice of primary care medicine. In most cases, doctors are unable to directly adjust their fees to match overhead costs and falling reimbursements so they overbook their daily schedules with dozens of patients to avoid operating at a loss. This is a disaster for patients with multiple complex medical problems for whom a 15 minute visit every few weeks or months is laughingly inadequate. It’s like trying to get your entire house painted in 15 minute allotments every few weeks or months. It’s insanity.

Typical packed waiting room. All these patients have been scheduled for the 9-10 am slots. Wait until the 10-11 am crowd arrives!

And when doctors overbook and see a ton of complex medical patients a day, they build up a “panel” of literally thousands of patients that they currently care for. But the care and needs of complex medical patients does not conveniently start and stop within that brief 15 minute visit.  This is a 24/7 need. Acute illnesses suddenly occur and must be addressed. Patients call for everything from refills authorizations on medications to paperwork that needs to be filled out to a million different concerns about medications and symptoms. The more patients in a physician’s panel, the higher the volume this “extra-visit” traffic will be. This further cuts down on the time that the physician is able to spend with patients and none of this necessary care is reimbursable as decreed by the insurance Gods.

Neither reimbursable is all the ton of time and paperwork and overhead costs in the form of additional employees or lost employee productivity in order to deal with the bureaucratic demands of medical insurance. There are many examples. For instance. While imaging centers or specialists, or medical equipment companies directly benefit from referrals for services that usually pay far higher than the reimbursement levels for primary care, the onus still falls directly on the primary care provider to fill out all the paperwork and haggle with the insurance company to get the authorization for the referral. All of this work is necessary and none of it is reimbursable.

The current system is a vicious cycle where the costs of doing business become more than the reimbursements. Physicians end up working harder for less and the more they work, the less they make.  If the rates of  reimbursements and  unfunded bureaucratic costs can’t be improved then the only thing left to squeeze is the very thing that shouldn’t be; quality time spent directly on patient care. This is what is driving many primary care providers (and all but a small minority of medical students) away from primary care.

Enter concierge medicine. Contrary to popular belief (liberal and media), physicians do not change to this practice model to become rich. They change in order to return to giving quality care and good service to patients while preserving their own sanity. There are several key steps in adopting this new model.

  1. Increase reimbursement for primary care. Again, contrary to popular belief, insurance companies and Medicare, pay VERY low rates to primary care providers to take care of very sick and complex medical patients when compared to almost all other facets of the health care system. How low? How about less than what most Americans pay per year for cable TV ! ! ! !

    The average American cable TV subscriber pays $900-1200 A YEAR for crap like MTV’s Jersey Shore. Currently there are over 175 million US subscribers to cable TV. In contrast, Medicare usually pays $57-86 per patient visit for those with multiple complex medical problems (Diabetes, hypertension, arthritis, heart disease, stoke, etc).  The average patient 45 years or older (those likely to have the most medical problems) visits the doctor 4.7 times per year. This amounts to about $300-$400 total per patient per year (slightly more for those with private insurance).

  2. Reduce the total patient panel. Improved income from annual subscription fees allows the practice to maintain the same income with far fewer patients.
  3. Increase time spent on actual patient care. The elimination of a significant amount of bureaucratic insurance paperwork by changing to a annual fee structure and a much smaller patient panel and the associated demands of extra-visit duties allows physicians to schedule far fewer patient visits per day and be able to spend more time on actual patient care whether it is per in -office visit, phone messages, or after hour contacts.

One of the main reasons why the traditional insurance model and primary care do not mesh is that while insurance is purchased as financial protection against something you do NOT expect to happen, primary care is a service that most Americans DO expect to need in one form or another at some point as they get older. Using the insurance model as a way to pay for primary care makes about as much sense as getting insurance against hunger just in case you need to eat.

Insurance companies are starting to understand that primary care is far more than a drug refill service and minor emergency stop for ankle sprains and nose bleeds. Close management of multiple complex chronic medical problems from diabetes, to asthma, to arthritis, as well as preventive care has the potential to reduce future costs by reducing the risk of complications and poor health outcomes as well as reducing emergency room visits and hospitalizations. A few medical insurance plans will pay $100 to $150 extra for an “annual” physical. The problem is that this is still too little (still far less than cable TV) and clings to the old and tired pay per visit model.

Maybe someday in the near future, insurance companies will come around and start offering their own concierge plans to justify their ever rising rates.

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