Recent articles on “direct pay" medical practices have been generating considerable interest of late. While some writers erroneously refer to it as “concierge care,” I believe that they are missing critical differences between the two. In addition, both models have different strengths and weaknesses that are important, but may not always be readily apparent.
The direct pay model. Direct pay, in its simplest form, is a model where practices simply do not participate in insurance and government plans. Historically this has been limited to select specialist practices and even fewer primary-care practices. Another version of direct pay, the one recently in the news, is essentially a private insurance plan for primary care, an annual fee (that may be age-adjusted for the differences in utilization) to deliver all primary care. This approach fixes the cost of primary care to the patient and to the physician regardless of the number of visits for the patient. For the physician, it is just like any other capitation payment except it takes out the middleman (the insurance company or government). With enough patients, the income of the physician is much more predictable.
The concierge model. The common elements in concierge practices include more time with the provider, one-on-one personalized care, greater availability, and enhanced connectivity. This is not always the case in the direct pay model. While some concierge programs include all or almost all services as part of their annual fee, and while some do not accept third-party plans, the dominant approach marries the best of capitation and fee for service while allowing for compatibility with most insurances and government plans. The annual fee in most concierge programs is for a limited amount of non-covered services. Additional visits and services are covered by plans or, sometimes, out-of-pocket.
Key differences between the models. In full concierge care, the goal is to limit the number of patients to allow for more time and personal care. Fees are usually over $1,000 per year. Patients, who cannot afford the fee, cannot participate. The model, therefore limits the patient pool to those who have greater need and can afford the program.
In direct pay, since the average visit rate for primary care is about 2.7 visits a year, the fees can be much lower to get the same kind of service that has existed before in high volume practices for about $300+ a year.
Full concierge models generally attract older patients who are managing more complex issues and who have more disposable income than the general public. Direct pay models also attract those who utilize more. Anyone who only goes once a year or less would be less likely to go to a direct-pay physician. And those who visit often save money so they would be more likely to consider direct pay.
One of the issues with direct pay, however, is where the line is drawn for what is covered and what is not under this plan. Does it cover shots, tests, vaccines, etc.? Another is the problem of going in and out of the program. Why not join for a short period of time and rejoin later to save money? In addition, many patients rely on the benefits that come from Medicare or their insurance. Direct pay can, in many instances, negate those benefits unless there is an out-of-network benefit. Medicare does not do this in this model. Lastly, how do you move from an existing traditional practice into direct pay without taking significant risks?
The hybrid concierge model. Hybrid models have both traditional patients and patients who pay a fee for enhanced services. Usually the traditional patients outnumber the concierge patients. Unlike direct pay, hybrids allow practices to participate in insurance and government plans to the degree that is best for them and their patients. Patients who cannot afford the program do not have to leave the practice. Patients who value the elements of concierge care can choose to have them. The patients in the practice continue to represent a wide variety of ages, socioeconomics, and degrees of severity of illness.
Key similarities. The singular common element in all three models is an annual fee that goes directly from the patient to the physician. Beyond that, there can be large differences between a concierge program or a hybrid concierge program and a direct pay program, dependent in large part on how the model is set up by the physician. For example, the concierge program may provide an enhanced physical or a direct line to the physician.
Which model is best for your practice — and your patients? Only you can answer that question, but look carefully at pros and cons, as well as the risks and benefits for you and your patients.