No, direct primary care isn’t too expensive

Part of a series.

A common criticism of direct primary care (DPC, membership/retainer/concierge practices) is the added expense: “Isn’t it too expensive?” Ways to think about the cost are to prioritize expenditures and to consider potential savings that make it cost effective.

I gave examples of three direct primary care practices in an earlier post. Here is a recap of costs.

AtlasMD’s annual fee is $600 for a young adult and $1,400 for a family of four; Dr. Neuhofel’s fee is $360 to $600 annually for an individual and $1,200 for a family and Izbicki Family Medicine charge $780 per year per individual. All can be paid monthly.

As Jon Izbicki puts it, “Our monthly fee is less than what it costs to rent a parking space downtown for the month.” Even the more expensive retainer practices are still within reason for many.  $1,500 is about $4 per day; $2,000 is about $5.50. How many people spend that much per day at Starbucks? Or, consider the monthly/annual cost of a smart phone data contract with ATT or Verizon. According to the Wall Street Journal and quoting from a Department of Labor study, the average American family spends $2,237 per year for Internet, pay TV and telephone service. So, perhaps $1,500 or $2,000 — which is certainly real money — is not such an onerous expense when thinking in terms of prioritizing healthcare expenses relative to other expenses. Of course, it is an added expense if you already have typical insurance.

But if you have a high deductible plan with a health savings account (HSA), you can pay for the membership/retainer with tax advantaged dollars and save considerably. And since the PCP will likely help you avoid expensive trips to the specialist, you will save those dollars as well.

I predict that (absent a significant change in insurer behavior) direct primary care will likely be the future of primary care payment. In each of them, it means that the patient will obtain real assistance to first prevent chronic illnesses from occurring; second, episodic care for those issues that pop up during the year; third, careful care of complex chronic illnesses and fourth, thorough coordination of the care of chronic illnesses, all at a reasonable cost which will be transparent. Fifth and importantly, a PCP who has the time to listen — to listen deeply with a return to relationship medicine.

Those who already have typical limited deductible insurance — commercial or Medicare — might argue that these various direct primary care models represent an added expense, not a savings. Correct, although the potential savings can actually be quite substantial. For example, each of the three practices referred to above make generic medications available at wholesale prices; considerable savings for many individuals.

Those who have no insurance — for whatever reason — will find that they can obtain good quality primary care at a reasonable price from one of the direct pay or membership practices. It will cost a lot less than going to an urgent care center or an ER. Recall from my earlier post that Dr. Neuhofel’s practice has more than two thirds with no insurance.

Perhaps Medicare and Medicaid will decide that it makes eminently good sense to pay the retainer for their enrollees and thus ensure that their members gets superior primary care at a reasonable cost and meantime save Medicare and Medicaid enormous total dollars.

This concept applies equally to commercial insurers who have largely avoided paying the retainer. Some are collaborating. The Nevada Health Coop, for example, has a bronze plan in the Nevada exchange that links with Turntable Health, a direct primary care practice. The Coop pays the retainer for the patient out of the premium.

What about employers? Many are converting their health insurance policies to high deductible, often with a deductible as high as $10,000 per person or family per year. For a family with members that have chronic illnesses, the costs of healthcare will be very substantial indeed at this level. Employees will arguably feel that their employer has walked away from them and saddled them with costs that they simply cannot bear. The company can partially offset the inherent anger this generates among its employees by paying the fee for a direct primary care practice. It is especially valuable for the individual with multiple chronic illnesses since quality primary care can mean much better health, many fewer tests, prescriptions, specialist referrals and hospitalizations.

I suspect that employers will be the major reason for direct primary care membership/retainer-based practice growth in the coming years as they will essentially demand that level of service for their employees — and in so doing they will be reducing their company health care costs as a result of high quality primary care.

The exact number of physicians in DPC practices is unclear but an estimate by Concierge Medicine Today in early 2014 pegs the known number at about 4,000 with about 8,000 others doing so but without fanfare.

More doctors will convert once the general population understands the advantages and begins to ask for it. There are many good reasons for an individual to connect with a direct primary care physician: better quality care, a return to relationship medicine and often a significant cost savings despite the fee.

No, direct primary care isnt too expensiveStephen C. Schimpff is a quasi-retired internist, professor of medicine and public policy, former CEO of the University of Maryland Medical Center, senior advisor to Sage Growth Partners and is the author of The Future of Health-Care Delivery: Why It Must Change and How It Will Affect You.

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  • Patient Kit

    So, if you predict that the future of payment for (most?) primary care will be DPC, are you also predicting the demise of comprehensive insurance for most people? Are you predicting that most people will only be covered for catastrophic care like surgery or hospitalization? What are you predicting about all of the medical care that falls between primary care and catastrophe? How do you predict that most Americans will access that care?

    • Jason Simpson

      They wont access that care because most doctors wont offer DPC.

      The DPC market is EXTREMELY limited, only a few doctors in each market area can successfully offer services, the rest of doctors will have to deal with all the uninsured, Medicaid, regular insurance folks

      The only reason you have to worry is if 90% of the public chooses to go to a DPC model. That will never happen, because 90% of hte public cant afford it. But even in a hypothetical scenario where 90% of the public can afford DPC and chooses to do so, that means 10% of the population will be left out. That being the case, we are no worse off than we are right now.

  • HJ

    It’s amazing that those pushing the direct care model find a practice in Kansas, take the price for a young adult and claim that fees are small.
    I don’t live in Kansas and a direct practice such as described for $600 a year would cost me over $2000 a year. Find DPC in NYC for a 75 year old and tell me it’s cheap.

    • Patient Kit

      Agreed. Kansas cannot be compared with the Emerald City aka NYC. ;-) And “pushing” is the right word for the hardcore sales pitch that DPC enthusiasts are on.

      • rbthe4th2

        and pushing pushing pushing it they are. They have to sell.

  • Close Call

    Unless you’re on Medicaid, it looks like the cat’s out of the bag.

    Very few young primary care docs want to do traditional private practice – they hear how miserable the old timers are. That means their either:

    1. Working for a large multispecialty group that is able to negotiate the heck out out of insurance contracts, so that a regular office visit can run you up to $100. Not good for people with high deductibles (and the deductibles are just gettin’ higher folks).


    2. They want to go the private practice route, but are getting more and more enamored with direct primary care. The numbers are growing (slowly), and the docs who work in the model are generally happy. (I’ve yet to hear from a truly miserable DPC doc… if you’re out there… lets hear from you!!!).

    DPC is one of those weird beasts that has the potential to snowball. A doc switches to DPC and cuts their panel size down to a third. Suddenly, other doctors offices are flooded with new patients, causing headache and long wait times. The other traditional docs start to feel overwhelmed and looks for ways to change their practice… they see that happy DPC doc down the street and it starts to look pretty good. So they convert their practice…. more patients are cut, and other doctors offices start to fill up… long wait times… antsy patients who are willing to pay a premium for access… and you can see where this is going. More competition actually creates more demand. Wow.

    And no reason to think this would be any different for NPs. They have the same incentives as physicians.

    • Health is Wealth

      Another thing that’s gonna happen is you’re going to get more medical students going for DPC. Won’t happen quickly, but in time as students find out DPC pays as much as some specialties, they’ll give it a shot. Oh, and maybe save the primary care shortage.

      • Patient Kit

        Your most telling words are: “DPC pays as much as some specialties.”. So, is that the real main motivation of most primary care doctors who are gung-ho about DPC?

        • Health is Wealth

          That’s part of it. Lack of paperwork, prior authorizations, and satisfied patients are another. Sorry to disappoint, but income is important to doctors who have paid an average of $300,000 for their medical education.

          • Patient Kit

            I have no issue with doctors being paid good salaries for what they do. I imagine my hospital-based docs are paid quite well. I hope they are. I respect what doctors do and what it took to become a doctor.

            That said, lately, it seems to me like some doctors, not all, but maybe especially those who are DPC enthusiasts, are totally into keeping our healthcare system a profit-driven business. They just want more of that money from that business of treating sick (but preferably uncomplicated) patients coming to them. When I first started posting here at KMD, I didn’t think doctors were greedy. But I’m beginning to wonder whether I was wrong about that. Healthcare shouldn’t be, first and foremost, about the money you can make in it.

            Clearly, we have some major battles ahead in this country over healthcare reform. I just didn’t think it was going to be doctors against patients. Perhaps I was naïve in thinking we are on the same side.

    • Patient Kit

      What do you mean by “Unless you are on Medicaid, it looks like the cat’s out of the bag.”?

      You sound like you think widespread, even dominant, DPC is inevitable and most patients will have no choice but to accept DPC. I disagree. I do not think the majority of American want or will choose DPC. And if you try to force it on patients by getting their employers to switch to less comprehensive insurance that doesn’t cover primary care, you’re going to create a lot of resentment in patients. DPC is sounding more and more like it’s primarily about what’s good for primary care doctors, not what’s good for patients. DPC doctors sound a lot like business/sales people to me.

      • Close Call

        Of course it’s good for primary care doctors! It brings them back to what they do best – taking care of patients.

        Getting to spend more time with your patients, being more available to your patients, doing a video consult with your patient instead of having them take a half day off of work. All bad things, right?

        And I totally think patients will have a choice. You can see a large multispecialty group or you can see someone in private practice… but it won’t be your typical private practice… those are slowly going away. The good ones will be more like DPC practices.

        • Patient Kit

          So, basically, the future you see for primary care in the US is anyone who wants to see a private practice primary care doc will have to pay cash?

          • Close Call

            Yep! Cash directly from the patient or cash from the employer. But many people are paying cash anyways, in the form of super high deductibles.

            If you don’t have cash to pay, or you’re not employed… don’t worry, you still have very good options!

            But it’s hard to make the argument that a traditional insurance based private practice is superior to a DPC practice for patient care.

          • Patient Kit

            So, once you’ve forced everyone into your preferred DPC/catastrophic only insurance model, who is going to pay for specialists and all the medical care that falls between primary care and catastrophic care?

          • rbthe4th2

            That’s where it is going. The PCP’s dont make what the specialists do and this is how they think they can get it. I would say that people aren’t going to be able to pay for it. They haven’t said anything about those who close shop because the money wasn’t there.

  • Margalit Gur-Arie

    This prediction assumes that insurance companies are asleep at the wheel. They are not. If so called DPC turns out to reduce overall costs of care, I don’t see any reason why big insurers cannot contract with primary care practices along the same subscription based capitated lines.
    In which case, we will see a strong return to managed care HMO style, with the contracted DPC provider as the gatekeeper. Couple that with the new and improved narrow networks and we have the nineties making a comeback on steroids.
    At some point, DPC panels will start to get larger with the help of technology, telehealth, and non-physician providers, and other than not having to submit claims for individual services, we will be back to square one, albeit a much smaller square at that. Alternatively, if DPC insists on maintaining smaller panels, the overflow can head down to WPC (Walmart Primary Care).
    True direct cash practices will remain boutiques (not necessarily expensive ones, but really good ones) for people who know better, and have a few extra dollars in their pocket.

  • HJ

    Please post names of practices and their costs…

  • Patient Kit

    According to a Gallup poll, 44.5% of Americans receive their health insurance via their employer and that number has been steadily decreasing. Also, high income Americans are, by far, most likely to have health insurance through their employer. Are they DPC’s prime market target? I would be livid if my employer unilaterally changed my plan from comprehensive to DPC/catastrophic.

    But hey! Maybe we can channel all the growing patient anger into some kind of healthcare reform movement that makes medical care for all Americans a priority. DPC for some Americans so DPC doctors can make as much money as specialists could be a good catalyst to ignite that brewing patient anger.

  • Patient Kit

    Well, if your vision is ALL primary care in the US should be direct pay/cash only, I think our insurance should cover all of our speciallists and patients should be free to bypass primary care completely and go straight to specialists. Nobody should need a referral for a specialist. Cut out the middleman of primary care.

    • Lisa

      I think my insurance allows me to self refer to in network specialists. I know I no longer need a referral for a PT or OT.

  • David Engel

    Based on my conversations with doctors across the country, patients often forget that the whole purpose of insurance is to take fees and NOT pay claims. Ironically, insurance companies are are somehow able to convince patients to get mad at the doctor when their lousy insurance plans require patients to pay out of pocket.

    The way forward? I think Dr. Schimpff’s statement about employers converting health insurance policies to high deductible AND subsidizing the fee for a direct primary care practice is a long-term solution that will benefit patients, providers and employers.

    Thank you, Dr. Schimpff for this very well-written article; I’ve shared it on our Review Concierge Facebook page.

    • Lisa

      You neglect to mention that under the ACA, insurance companies have to spend 80% (85% in large markets) of premium dollars on medical care. I had four claims processed by insurance co last month, all within days of the service. I don’t think the business of insurance companies is to take fees and not to pay claims; it is to spread financial risks.

      The DPC model combined with high deductible insurance is a path to medical bankruptcy if you need specialist care. And I am becoming convinced that it is a way to shift money to primary care doctors, which may be a good thing. But it will not benefit most patients financially. I think for most patients who are financially strapped, as most of the middle class is today, the additional cost will not be worth it.

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