Janet Colwell

As many as 12,000 physicians in the United States now operate concierge practices, according to recent research conducted by 

, a national trade publication. The estimate is based on interviews with physicians, consultants, and investors since there is no definitive national database of concierge activity, says Michael Tetreault, the publication's editor.

Generally, a concierge practice is one that charges patients an annual fee or retainer in exchange for enhanced services that aren't typically covered under traditional insurance plans. Beyond that, concierge practices can vary widely in their structure, payment requirements, and menu of services.

Practice sizes range from 100 to 1,000 patients per physician compared with 3,000 or more at a traditional practice, according to Tetreault. Most concierge practices bill patients' insurance for routine services and charge an additional fee in the range of $1,500 to $1,800 per year for 24/7 access to providers, longer appointments, and extra services, such as house calls.

The 2014 Survey of America's Physicians, conducted by healthcare search firm Merritt Hawkins, suggests that a significant percentage of physicians are interested in pursuing the concierge model. Findings from the survey include:

• Seven percent of physicians said they are already practicing concierge/direct pay medicine while more than 13 percent said they plan to transition at some point in their careers.

• Younger physicians are more likely to consider concierge. Of those age 45 or younger, 17 percent said they plan to transition in whole or in part, compared with 11 percent among those age 46 or older.

• Physicians who convert to concierge from traditional practice typically retain about 25 percent of their existing patients.

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Once thought of as elitist, more physicians are considering converting to concierge practice. Here are the numbers.

Concierge Medicine Is Growing

When general internist Edward Espinosa began his career at Piedmont Hospital in Atlanta nine years ago, he planned to eventually transition from hospital- to office-based practice. However, the more he learned about the frustrations of the traditional fee-for-service environment, the less confident he became about taking that path.

"The hospital was willing to set me up in a clinic but then I found out that I would need to see 25 patients a day," says Espinosa, 43, who now runs Buckhead Concierge Internal Medicine in Atlanta. "It defeated the reason I wanted to practice outpatient medicine in the first place, which was to decrease my volume of patients and be less impersonal and rushed."

He did some research into alternative practice models and zeroed in on concierge medicine, where patients pay an annual fee or retainer in exchange for enhanced care and expanded access to providers. The model has gained popularity in recent years, according to the 

 conducted by executive search firm Merritt Hawkins, which reports that about 7 percent of all physicians currently practice some form of concierge or direct-pay medicine while 13 percent have plans to do so at some point in their careers.

For Espinosa, building a concierge practice from the ground up represented a huge challenge. However, he saw it as the best path to long-term financial stability and career satisfaction.

"Concierge medicine seemed like something that I could continue into my retirement years and still enjoy," he says. "I went into medicine because I like caring for people and I felt like I couldn't do that well in an environment where it's all about volume."

In between his shifts as a hospitalist, Espinosa talked to friends who were running successful concierge practices in California. He also conducted extensive market research and hired a consultant to help him develop a business plan.

Location is the most important initial consideration, he says. He eventually decided on the Buckhead section of Atlanta, a relatively affluent and vibrant neighborhood with the potential to support a membership-based practice.

While encouraged by the success of other concierge practices, he was cognizant of the unique challenges of his situation. Most physicians who transition to concierge already run established traditional practices and are able to immediately convert a percentage of those patients into paying members. However, Espinosa started from scratch when he opened Buckhead Concierge in 2008.

To stay afloat, Espinosa continued to work full-time at the hospital, while maintaining a part-time schedule at his new office. The traditional seven days on/seven days off hospitalist schedule facilitated the arrangement, allowing him to keep regular outpatient office hours during his weeks away from the hospital.

He maintained that schedule for several years as he gradually ramped up to 50 patients over the first two years. Some of his first patients were those he had cared for as a hospitalist or patients referred by hospital colleagues.

The most effective marketing was through word-of-mouth, he says. The concierge concept was relatively new at the time and its message resonated with people who were frustrated with their current providers and looking for alternatives.

"Many people said they had no meaningful relationship with their physician, had to wait a long time for appointments, and often didn't even get their phone calls returned," he says. "What we heard over and over was that their current care was impersonal, and those frustrations were a major factor in growing our practice."

Gradually, Espinosa began reducing his hospitalist shifts and adding office hours as he reached 150 patients in his fourth year - halfway to his goal. He also added staff, including two nurse practitioners, one front-desk administrator, and one floater who helps wherever needed.

Bedside manner is always important but even more so when hiring in a concierge practice, he notes. He looks for extremely customer-focused employees who will reassure patients that they "have a meaningful relationship with our practice."

It took seven years to grow his patient panel to 300, but the practice now enjoys steady growth. Espinosa has a waiting list for new patients and plans to hire another physician within the next year.

Patients who join Buckhead Concierge pay a membership fee of $1,500 per year, which covers an expanded menu of services and 24/7 access to providers. The practice also accepts all major insurance plans and handles billing for services covered under patients' plans.

At first, the practice asked for the annual fee upfront but many patients were put off by the prospect of making such a large commitment, says Espinosa. He now uses an automated recurring billing service, which has relieved the front desk of the burden of monitoring collections and ensured a steady revenue stream.

"Automated monthly billing changed things drastically for the better," he says. "It made it easier for patients to join and created a more predictable financial model for our practice."

The biggest administrative headache now is billing insurers and tracking reimbursements, he says. However, the practice has continued to offer it as an added service for patients.

"We've gone back and forth about whether it's worth it because there's so much work involved with getting reimbursement from commercial insurers and Medicare," he says. "But we haven't dropped it because our patients want things to happen in a streamlined fashion."

Initially, Espinosa participated in Medicare's Meaningful Use program and other insurer incentive programs but opted out due to the heavy administrative burden.

"We're using our technology in a very robust way but we were running into all kinds of speed bumps and roadblocks with Meaningful Use in terms of how they wanted things measured," says Espinosa, who uses an EHR and runs a paperless office. "We had to assess how much time this was requiring compared with how much money we could actually get, and from our standpoint it wasn't worth it."

In recent months, handling growth has become the biggest challenge, he says.

"It's a healthy, busy practice now and we want to continue to provide the level of service people expect," says Espinosa. "That requires us to sometimes pull back and resist growing so fast that our customer service would suffer."

On a typical day, Espinosa sees between seven and 10 patients, traveling between his office, the hospital, and patients' homes. That leaves enough flexibility in his schedule to handle emergencies without having to cancel scheduled appointments.

For example, one of his patients came in recently with symptoms of dehydration and a urinary tract infection. He was able to see her in the office that afternoon and administer intravenous fluids and antibiotics, potentially preventing a trip to the emergency department.

If a patient is in the hospital, Espinosa connects with the attending physician and helps coordinate care by transferring patient records and following the patient's progress throughout his stay.

He then schedules a follow-up visit at his office within three days of discharge and keeps close tabs on the patient's progress. His EHR system is compatible with the systems used at three major Atlanta-area hospitals, allowing him to easily pull up discharge summaries.

"I have a very close follow-up with our patients to prevent unnecessary readmissions," he says. "We are tracking our readmission rates and seeing much better results than national averages, and that's because we have the time and flexibility in our schedule to provide that extra service."

Espinosa started Atlanta-based Buckhead Concierge Internal Medicine from scratch when he decided to switch from hospital to outpatient practice. He offers the following advice for others looking to make the transition:

 Perform an extensive demographic analysis of the zip codes you're considering before signing a lease, says Espinosa. Many successful practices are located in affluent, urban neighborhoods that can support growth.

 Talking to other physicians with established concierge practices can help you avoid common mistakes, he says. You might also consider hiring a consultant to help with initial setup.

 It took seven years for Espinosa to reach his goal of signing on 300 patients. To survive financially, he continued to work at the hospital until his new practice took off.

 "You should have a clear business plan before you spend a penny on converting," says Espinosa. "You need to understand the financial model and come up with realistic numbers for your expected growth."

is a West Hartford, Conn.-based freelance writer specializing in healthcare. With more than 20 years' experience as a journalist, she writes frequently about clinical and practice management issues for several national publications. She can be reached at 

This article was originally published in the May 2016 issue of

To be successful, develop a sound business plan with realistic goals and be patient while the business ramps up.

Making the Switch From Hospital to Concierge Practice

People age 50 and older make up an increasing share of patients at most concierge practices, according to a survey by the Concierge Medicine Research Collective. As a result, concierge practices tend to be concentrated in states with higher populations of older adults, including Florida and California. The analysis also found that the majority of practices saw revenues steadily improve between 2009 and 2013.

• Just over 70 percent of all concierge medicine and direct primary-care physicians are doing "better" financially in 2013 than in 2008, while 24 percent indicated "no change" and 13 percent indicated they were doing "worse."

• Nearly 70 percent of current U.S. concierge medicine and direct primary-care physicians are internal medicine specialists. The second most popular specialty is family practice.

• The combined average annual income of a typical concierge medicine and direct-care patient is between $50,000 and $200,000 per year.

• The average annual compensation/salary of a concierge doctor is between $100,000 and $300,000 per year.

• The typical age of a concierge doctor is between 40 years old and 59 years old.

• A concierge medicine doctor who provides 24/7 cell phone access receives the majority (83 percent) of phone calls from patients during normal business hours, Monday through Friday.

• Most concierge doctors and direct primary-care physicians treat six to eight patients per day.

• More than 70 percent of concierge and direct primary-care doctors spend between 30 minutes to 60 minutes per office visit.

The Concierge Medicine Research Collective recently conducted a survey to find out what is the makeup of a concierge practice. Here are the results. 

A Snapshot of a Typical Concierge Care Practice

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."

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.

However, rules governing HSAs may change soon if the Senate approves the Primary Care Enhancement Act, which proposes redefining direct primary-care practices as medical home services that qualify as health expenses under the tax code. Several states have already passed their own legislation making direct primary care distinct from insurance products.

Lagrelius bills Medicare directly for covered services and assists patients with getting reimbursed by private insurers for out-of-network services. Currently, fee-for-service reimbursements account for about 25 percent of his income while the bulk of his revenue comes from retainer fees. Membership is restricted to about 600 patients per physician.

The membership fee covers all office-based services that are not covered by insurance plans. In addition, patients have cell phone access to their physicians at all times and can make same-day or next-day appointments.

LaGrelius initially charged an across-the-board annual fee of $1,800 per patient but has since adopted a sliding scale ranging from $700 per year for patients under age 35 to $2,100 for those over age 45, which make up the majority of his practice. Patients under age 35 receive detailed wellness exams every three years; those between ages 36 and 45 every two years; and those over 45 every year.

Although he does not participate in private insurance plans, LaGrelius chose to continue as a participating provider in Medicare because it places fewer restrictions on his practice, such as which medications are covered and where patients receive outside services.

One of the biggest challenges of transitioning to concierge medicine is convincing patients to make the switch. Anticipating that, LaGrelius invested in a conversion consultant, a significant investment but one that he considers key to his later success.

"The year I converted was extremely busy," he says. "Not only did I have to run my practice but I had to sell the idea of concierge medicine to 600 of my existing patients and make sure the ones who left had care."

LaGrelius sent letters to all 7,000 patients in his files telling them about the redesigned practice and that it would be limited to 600 patients. By the launch date, about 500 had enrolled. For the others, he offered help finding new providers, facilitated record transfers, and provided emergency care until they were established at other practices.

In addition, LaGrelius met personally with every patient who visited the office during the months leading up to the transition. He made sure that patients fully understood the cost of membership and what would be covered if they joined.

Although it was a huge investment of time and money, getting expert advice and prioritizing communication with patients laid the groundwork for his eventual success, he says. It allowed him to start with a loyal base of patients and grow the practice through word of mouth.

"My practice is always busy and we usually have a waiting list," he says. "I'm thinking of bringing on a third partner over the next couple of years."

Thomas LaGrelius, a family physician in Torrance, Calif., made a successful transition to a concierge practice 10 years ago. He also helped found the American Academy of Private Physicians, a professional society that provides resources and advocacy for concierge and direct-care practices. He offered the following tips to others considering a switch to a concierge model:

• Use a consultant. It requires an upfront investment, but going at it alone could become overwhelming.

• Don't try running a hybrid practice. People won't buy the cow when they think they can get the milk for free.

• Make sure all your patients who don't join are transitioned to another doctor and receive emergency care in the interim.

• Staff is critical. Hire the best and pay them well.

• Offer 24/7 phone access. Remember that your relationships with patients are what make your practice successful.

is a West Hartford, Conn.-based freelance writer specializing in healthcare. With more than 20 years experience as a journalist, she writes frequently about clinical and practice management issues for several national health industry publications. She can be reached at 

This article was originally published in the February 2016 issue of

Thomas LaGrelius, a family physician in Torrance, Calif., made the switch to concierge care 10 years ago and hasn't looked back since. 

Author | Janet Colwell

Articles

Concierge Medicine Is Growing

Making the Switch From Hospital to Concierge Practice

A Snapshot of a Typical Concierge Care Practice

Successfully Switching to Concierge Care in California