The only way primary care can survive

I have a confession to make.  The purpose of a recent blog post was to set up this one.  What I questioned, at that time, is whether the future of primary care will come from outside change (business, politics, or even specialist physicians and administrators) or internally, hence creative destruction versus internal combustion.

When I entered my first primary care practice in 2002, I had great doubts that the traditional model was sustainable.  So I spent the next 12 years studying.  My field research included stints as a hospitalist, corporate medicine doc, private practitioner, and concierge physician.  In the meantime, I became a legal expert, medical director of multiple nursing facilities, took on a job as assistant medical director of hospice and started a palliative care program, and consulted with home health care companies.  Meanwhile I read every white paper, Medical Economics article, and op-ed that I could get my hands on.

Although I have learned many details, I can distill my research into one overwhelming and primary concept.  This secret sauce, I believe, is what will separate the men from the boys, women from the girls.  It is the most basic question that each primary care practice has to ask itself if it wants to survive the slaughter that is surely coming.  But first, a few principles that the reader may or may not agree with.

1. Whether we like it or not, health care’s pound of flesh is coming from physicians and patients.  That’s right, at the end of the day, pharmaceutical companies, insurers, politicians, and administrators will all come out of this catastrophe with healthy bank accounts and bulging pockets.  If you don’t believe this, I can’t help you.  The Medicare data dump and Obamacare’s large out of pocket deductibles are just a  few glaring examples.  I won’t go into depth about this subject because it would require a series of blog posts at minimum.

2. The government and insurers primary goal is to cut costs, not improve care.  Said another way, payers may give extra money for innovative models that reduce health care costs and produce more healthy patients for short term.  But eventually they will stop.  They want their cake and eat it too.  I don’t care if your model creates fifteen percent savings in the future, if it costs the insurers fifteen percent extra up front, it is a zero sum game.  Don’t expect their support in the future.

That being said, the litmus test for any current practice model thus has become overhead.

Let me say this again.

If you want to survive today in primary care medicine you must have an extraordinary low practice overhead.

The government will not pay you more.  Insurers will not pay you more. Patients can afford some concierge and direct pay fees, but don’t expect to be able to leverage them either. (Because they are getting squeezed by health care too.)  And the cost of business and compliance will do nothing but go up in the next decade (inflation, meaningful use, technology, rental fees, etc.)

Primary care doctors who have been drowning for years understand this.  They have one of two options.  They either throw their hands up in the air, and join corporate medicine for stability (the majority) or they begin an alternative low overhead practice (concierge or direct pay).  And mind you, those PCPs who opt for a new model are generally working very lean.

Non primary care doctors trying to enter this space, I believe, have not benefited from the years of being caught under the wheel.  They opt for high overhead, personnel intensive, high flair practices that truly deliver an awesome product.  But my prediction is that they will die an unfortunate and costly death.  Because, in the end, there is no one to pay for it.  Medicare won’t.  The insurers will for a period of time, but not in the end (they want their cake and eat it to).  Patients won’t.  Venture capitalists and tech visionaries may in the short term, but eventually they don’t like losing money either.

That’s why I blended home based practice and nursing home work as the two arms of my new business.  The common thread, of course, is an almost zero overhead.  That is where my experience has led me.

Will change come from outside or from within?

Do you want to know if your practice has there right stuff to survive the turbulent future that primary care faces?  Ask yourself this one question:

How much of every dollar that you make are you paying out to someone else?

Jordan Grumet is an internal medicine physician and founder, CrisisMD.  He blogs at In My Humble Opinion.

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  • Dr. Drake Ramoray

    “Patients can afford some concierge and direct pay fees, but don’t expect to be able to leverage them either. (Because they are getting squeezed by health care too.) And the cost of business and compliance will do nothing but go up in the next decade (inflation, meaningful use, technology, rental fees, etc.)”

    I am not going to wade into the minefield of concierge and direct pay “fees” but I will say this. I think you are grossly underestimating how physicians could provide cheaper care for patients outside of the ACO/PCMH hospital based systems (at least in my field).

    I can perform a thyroid ultrasound in my office (I would argue a better study for thyroid cancer surveillance) and it costs 1/3 (I have seen the bills for what patient’s are left with as their responsibility when performed at the hospital. ). Nuclear medicine studies 1/4.

    I have patients who I see already without insurance on a cash pay basis who we used to have them have their labs done at the hospital. Several over the last couple of months who have been in good standing and always pay their bills have requested that we do them in house because
    they cost 1.5x as much when done at the hospital.

    The absence of the facility fee alone (something only hospitals and hospital owned practices can charge) would greatly reduce the cost of healthcare to the patient.

    I intend to start a low cost endocrine only (no diabetes) direct pay practice in the future, no retainer/concierge fees, a la cart menu pricing. You need a thyroid ultrasound $175 (Cost you over $500 at the hospital after billed to your insurance) etc. And, I can keep my prices low becuase I’m not going to be wasting time and money on meaningful use, government mandates, attempting to get paid from third party payors, or clicking meaningless boxes on a CMS approved EMR.

    Admittedly I’m not talking about a primary care practice, but you are making a lot of assumptions in your framework for primary care that include a lot of overhead that really isn’t necessary if you stop taking insurance.

  • Patient Kit

    As a patient, if the only choices you’re really going to give me are Corp Med or concierge/direct pay, well then, I guess Corp Med it is.

    • Kristy Sokoloski

      I agree with you on this Kit. My PCP is part of a clinic that I had been to for years before it became part of corporate level in 2008 (when I came back to that clinic, a long story about why I was without a PCP for 7 years). Now, it’s part of Corp Med and accepts my insurance. So like you, if it is going to come down to an issue of which I will be choosing, it will be Corp Med for me and my relative because otherwise we will not be able to get to our PCP or our other specialists (and yes, they are part of Corp Med now too).

      • Chiked

        Just so long as you understand that despite the slogans and monikers, they are a corporation first, hospital second or maybe third. When I am sick, I need someone or someplace that treats me as a person and not by protocol.

        • Patient Kit

          I understand the serious issues for both doctors and patients working for and being treated by Corp Med. I’ve said many times here on KMD that I think the US healthcare system will be in deep trouble as long as it is primarily a profit-driven big business.

          That said, I have to admit that I’ve recently received some of the best medical care I’ve ever had from docs who work for a hospital that is part of a major hospital system (Corp Med). Perhaps I’ve just been very lucky. Perhaps I’ve had an angel on my shoulder. I do know that many Americans won’t have the option to opt out of Corp Med if direct pay becomes the only other option. I suppose I can opt out of most primary care and try to self-treat the simpler stuff. But I can’t opt out of oncology or orthopedics when I have cancer or a fractured femur or ruptured Achilles tendon.

          • Chiked

            Define “best medical care”. My mum is a long time corp med user and has been on eight different medications for the past ten years. Initially it was just one but every visit seemed to add one more. Not one of her conditions has ever improved. Yet she LOVES her doctor. Thinks she would not be around if it were not for him. I hope your definition of best medical care is different.

          • Dr. Drake Ramoray

            I bet your mom’s docs Press-Ganey survey says he’s awesome

          • Chiked

            Definitely. Not only that she refers her friends even family members to him.

    • Suzi Q 38

      If my deductible is high, why not try a concierge/direct pay if I don’t reach my deductible anyway?
      I could higher a concierge doctor, then if I need more specialized care, use my insurance….would that work?

  • QQQ

    I hope the primary care does survive! Its a great area and many feel the same way I do!

  • Dr. Drake Ramoray

    I certainly don’t dispute your points about everyone affording care. There is already a severe shortage of Endocrinologists (there are only about 6,000 of us in the whole country and not all of those primarily see patients), so I suppose that you could suggest that I would be worsening that shortage. Endocrine only practices (not necessarily direct pay) now account for roughly 10% of private endocrine practices. As CMS and the insurance companies ratchet up the restrictions and prior-authorizations for diabetes care and then threaten to pay us based on outcomes we are either outright ceasing to see patients with diabetes or hiring an army of nurse practioners/PA’s to see them. And yes, I am fed up with the third party payer model.

    As for the children, to true. And the shortage in pediatric Endocrinology is worse. Weight time in my area to see a pediatric endocrinologist is 4-6 mos.

    • Mike Henderson

      Those who refuse to participate in a highly dysfunctional system aren’t contributing to its deterioration. They are refusing to enable it to continue. By pursuing the right choices, you are helping, hopefully, return the practice of medicine where it should be.

      • Dr. Drake Ramoray

        I don’t share your optimism. I think once a critical mass of doctorcs going direct pay is reached that having hospital privileges will become mandatory for doctors (like a lot of the abortion legislative attempts in the south) which then makes us subject to all of their rules, mandates, and bylaws, or seeing Medicaid and Medicare will become required for licensure. I am just hoping I can stave it off long enough to retire.

    • Bradford Lacy

      Dr. Romoray you make strong points and I have read some of your comments on other articles so I understand your frustrations. Here is what I am trying to comprehend. If I have a high deductible plan (which I actually do) and I come to your practice paying you cash until my deductible is reached, how do those cash payments affect your reimbursements? Do you still have to haggle with an insurance company or do you receive full compensation?

      • Dr. Drake Ramoray

        Thank you for your reply and question. In this scenario I would see full payment (with my practice a lower charge than elsewhere), but because I’m not filing with your insurance my charges would not be applied to your deductible despite the cost to you.

        Yes, this sounds bad and with the insurance marker even a few years ago there probably wouldn’t be a lot of demand for such a practice. But as payments get ratcheted down to docs and we are compelled to see more patients, there will be a demand for docs who actually spend time with patients. More importantly with very high deductibles (many of my current patients have 5k, 7.5k, or 10k deductibles that they will never meet the patient may still come out ahead.

  • Dr. Drake Ramoray

    You are correct, I know this. Which is exactly why I’m looking to exit the system. I will remain independent of corp med at the minimum, even if it means a 50% reduction in pay. One of the reasons I don’t start a direct pay practice now is that I want to get my bills and lifestyle in order to live on 50% pay. I will not surrender my autonomy or the ability to do what is right for my patients at any cost.

    Do the insurance companies or government care if I am eventually forced out of medicine, of course not as I think part of the plan is to replace docs with PAs anyway. Everything that is happening is by design. I will quit medicine before working for corp med again, thus the time to get my house in order.

  • SteveCaley

    Healthcare will end, in any meaningful way of defining it. Healthcare in America will just imitate healthcare in Lesotho. Wealthy big-men in Lesotho have their own doctors and clinics. All the rest… well, they are in the Internet age, god bless them all.

    • SteveCaley

      News from Maseru:
      This report offers a comprehensive case study detailing the design and launch of an innovative partnership to dramatically improve delivery of healthcare in Lesotho in southern Africa.

      The Lesotho public-private investment partnership (PPIP) is the first partnership of its kind in Africa, and the first in a lower-income country. It brought together the Lesotho government and a consortium of private partners to not only rebuild the national referral hospital and associated clinics in the capital city of Maseru, but also engages the private consortium to manage delivery of hospital and clinic services over an 18-year contract period.

      The case study chronicles the decisions that led to the initiation of the PPIP, describes the design and contracting phases, and summarises experience and early lessons from the project, from groundbreaking through the first year of operation. The project has demonstrated an ability to dramatically improve the volume, breadth, quality and efficiency of healthcare.

      And the opinion from Oxfam:

      The International Finance Corporation (IFC), the private sector investment arm of the World Bank Group, advised the Lesotho government on the negotiation of the contract with the private partner. The promise to the Government of Lesotho was that the new hospital would deliver high-quality healthcare services for the same annual cost as the old public hospital.
      This was the promise but our video shows why the figures just don’t stack up.

      Life expectancies – 49y male, 52y female
      Per capita healthcare expenditures: $227/year
      The trend is towards first-world medicine for the cash-paying customers, and third-world medicine for the non-cash-paying customers. The poor in Lesotho have 21st century care with full choice of coverage – if they can pay for it.
      As this model continues to hit in the US, it will make for COPIOUS cost-savings.

  • SteveCaley

    Ah, but someone does care. If you are a tiny fish taking 1¢ profit on the dollars earned by the big fish, they will find you and take your penny. THEY care. That is my concern about concierge medicine. It’s just not cricket for BigMed to crush the independent provider unfairly, it’s simply not. Hasn’t stopped them yet.

  • ninguem

    Maybe primary care shouldn’t survive.

    What would happen?

    We’re about to find out I suppose.

    • buzzkillerjsmith

      I’m ready for it. Cup of strong coffee, fuzzy slippers, barcalounger. Let’s watch the show!

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