Thomas LaGrelius, a family physician in Torrance, Calif., first realized the potential of concierge medicine 25 years ago after becoming fed up with the restrictions imposed by third-party insurers and cutting his ties with Blue Cross/Blue Shield — at the time his largest insurance contract. He had feared a revenue shortfall after a third of his BC/BS patients left to avoid out-of-network fees but by year's end, he actually had an improvement in his bottom line.
"Two-thirds of those patients stayed with my practice and the revenue from that group for the year was 50 percent higher than my total revenue from BC/BS the previous year," says LaGrelius, owner of SkyPark Preferred Family Care, his family medicine clinic. "I saw then that it was possible to spend more time with fewer patients, without lowering my income."
LaGrelius began his career at a large medical group and over the next 20 years worked as a solo practitioner and manager of several independent medical groups. However, he became discouraged by the restrictions on practice and large discounts mandated by health maintenance and preferred provider organizations. He switched to an all-cash practice for a few years, which cuts out insurers and requires patients to pay upon receipt of services, then eventually settled on a retainer-based practice, in which patients often retain traditional insurance but pay an additional fee for expanded care and individualized attention.
For the past 10 years, he has run a concierge family practice specializing in geriatric care that employs one other full-time physician and five support staff. The best part of it, he says, is having more time to focus on patient care without spending all of his time in the office.
"The decision to go retainer 10 years ago was mostly based on the fact that I wanted a practice limited to a few hundred patients per doctor, all of whom get optimal care," he says. "The advantage of seeing a concierge doctor is that we are actually happy because we are not spreading ourselves too thin."
MAKING THE SWITCH
Physicians who consider transitioning to concierge medicine often worry that an abrupt switch will trigger an exodus of patients who balk at paying the retainer fee. However, LaGrelius recommends jumping in with both feet.
"My transition was abrupt on Jan. 1, 2006," he says. "Switching gradually sounds tempting because it allows you to get your feet wet without making a full commitment, but the reality is that neither you nor the patients end up happy."
Under a hybrid model, patients have the option of paying an annual fee for enhanced services or continuing on a fee-for-service basis. The goal is to grow the retainer side of the practice over time but that doesn't often happen, says LaGrelius.
"As a physician you want everyone in the practice to get the same level of care," he says. "But the patients already in your practice have little motivation to shell out a membership fee because they are already getting many of the services for free."
At the same time, patients who pay the fee may feel shortchanged as the physician continues to juggle the needs of thousands of patients. In contrast, all patients in a full concierge practice pay a fee, ensuring a steady revenue stream and allowing the physician to accept fewer patients.
In a full concierge practice, patients typically continue their coverage through Medicare or private insurers. Currently, patients with federal health savings accounts (HSAs) paired with high-deductible plans who live in California and many other states are prohibited from using their HSAs to pay their membership fees because direct primary-care practices (those that charge monthly or annual fees) are currently defined as health plans rather than medical services.