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?