Rob Lamberts, MD

I was skeptical. A number of my direct care colleagues had touted the virtues of dispensing medications from the office, but I wasn’t sure. I built a successful practice without dispensing, relying instead on finding inexpensive drugs using services like GoodRx.com and patient assistance programs to get free medications from pharmaceutical companies. Patients were happy, and the practice was growing. It didn’t seem necessary.

But at the urging of those colleagues, I went ahead with medication dispensing about a year ago, and I must admit that I underestimated the impact it has had on my practice. It has become one of the biggest areas of patient satisfaction, as well as a very powerful marketing tool to both draw in new patients and retain my current ones.

To start dispensing, there are a few things that you need to figure out early on:

What the laws are in your state regarding dispensing drugs

Which medications to stock and what to charge

*, with three of them (Texas, Minnesota, and Wyoming) not allowing physician dispensing at all. I am fortunate because Georgia has some of the most lenient dispensing laws for physicians and does not require extra licensure within the practice to dispense. The bottom line here is that your state has specific requirements, some of them significant, that you must follow if you want to legally dispense medications. 

Once the legal hurdles have been crossed, the next step is to find a system that will help you print your labels, track your inventory, and log your prescriptions. There are a number of companies that take this next step out of the process by pre-packaging prescriptions and managing inventory. This does limit options for medication vendors to the one doing the packaging and also decreases flexibility of the number of pills prescribed in prescriptions. Doing a web search on “physician dispensing” will show a number of vendors who will do this for you.

Our office chose a vendor that interfaces with our EHR and our billing system. Check with your EHR vendor to see what solutions are available to you. Our solution allows us to enter prescription in the EHR, go to the dispensing software and print the label, and send it to our billing system. If the prescription brings the inventory down to a set level, it notifies us that we need to order more. It’s quite simple to use and lets us manage an inventory of over 100 drugs.

There are a number of companies that sell wholesale medications, many with free overnight shipping.  In reality, it doesn’t matter where you get your medications as long as they are reputable, reliable, and reasonable in their price.  We have built our list of medications up over time, based on patient demand and on the cost advantage we can give over retail pharmacies.  

So, what to charge for the prescriptions? There are two philosophies in this area: the first is to make a reasonable profit on each medication and have prescriptions themselves as a revenue stream. The second philosophy (the one I follow) is to price prescriptions as low as possible (just to cover cost of prescriptions) and use these low prices as a tool for marketing and patient retention. It is hard for people to leave your practice if they are saving $50 per month on prescriptions.

The greatest benefit for dispensing medications in the office is to give patients something they almost never see in our healthcare system: a bargain. Patients equate inexpensive medications with us caring for their financial needs and will often brag to friends about how inexpensive our prescriptions are.  

Beyond this, it is far more convenient for people to avoid going to the pharmacy, and we don’t have to worry about people not filling their prescriptions. 

There is significant expense when setting up the system to order, dispense, and keep track of these prescriptions. The cost of getting a solid inventory of medications (even though most are inexpensive) is substantial. There is also significant time spent by staff managing this, filling the prescriptions, and ordering new medications.

The good news is that not only are we able to recoup our expenses in this area, we are offering a service that improves patient care, raises satisfaction, and draws new patients into the practice. So, despite my reservations, I now consider medication dispensing one of our greatest services.

* This is subject to change and I was not able to find a consistent list, so please refer to your own state’s pharmacy board for information.

Rob Lamberts, MD, is a board-certified internist and pediatrician who runs Dr. Rob Lamberts, LLC, a direct primary care practice in Augusta, Ga. 

Articles

Here is what you need to know about establishing a medication dispensing service at your practice.

Dispensing medications from the office

The Affordable Care Act was supposed to eliminate the problem of uninsured patients by making affordable insurance available to all Americans.  While the law made an early impact, the cost of even the least comprehensive plans eventually rose out of the affordable range for many people.  The repeal of the ACA individual mandate will likely cause a surge in the number of people not carrying individual policies.  While the biggest impact of this will be in the hospital and specialty areas (where cost is highest), the effect on primary-care practices will be significant.

Working in a direct primary care practice (that does not accept insurance for payment), I have a higher proportion of uninsured patients and  have had to develop strategies of getting care for these patients.  This article will address this issue mainly from a primary -care perspective.

The uninsured patient is at constant risk of developing conditions that could quickly bankrupt them.  This makes the job of the PCP, who has to manage the care in such a way to minimize need for specialists and hospital care, critical to both the health and financial well-being of the patient.  Attention to this real and significant stress will not only help the patient, but will also reassure them that the care they are getting is comprehensive.

Here are some guidelines on handling the uninsured patient in the primary-care setting.

People can’t pay for what they can’t afford.  This seems obvious, but in health care this causes significant stress.  The diabetic who has no medication coverage will usually choose high sugar food over paying $300 per month on a medication that doesn’t change how they feel.  Don’t get frustrated at this fact, it’s just life priorities.  Yes, there are some who would take high sugars over a $20 per month cost, but don’t confuse the two. It is our job as clinicians to offer care that can actually be received by the patient.  Ignoring cost is no different than ignoring a medication's side effects.

This also means that the clinician must understand the difference between recommended and necessary.  Getting a chest x-ray for possible pneumonia may be recommended, but often it’s only necessary to treat with antibiotics.  A person with a possible foot or hand fracture doesn’t always need to go to the ER or even the specialist.  Many fractures can be managed without problem in the primary-care setting and be done at a fraction of the cost. Simply by focusing on those necessary tests and procedures can save significant money.

Medicine is notorious for having opaque pricing, and this often drives people to accessible but often dangerous alternatives to the care we can give.  This may need to be the case with insured patients, as the “cost” of any procedure or medication will depend on negotiated prices and formularies.  But the uninsured (or underinsured) patient does have the advantage of being able to talk price up front. 

For medications, there are several websites that can be used to compare and reduce prices of medications.  GoodRx, the most well-known of these sites (which also has a smartphone app), allows users to put in a drug name and compare prices at local pharmacies.  The prices given are actually discounted prices, negotiated and agreed upon by both the pharmacy and GoodRx.  We check GoodRx whenever prescribing anything for an uninsured patient, either to find them the cheapest pharmacy or to see if the medication can be afforded at all.  It’s often very eye-opening to see just how expensive even generic medications can be.  There are other websites/apps that do the same, such as Blink Health or LowestMed.  Encourage your patients to download one or all of these apps to keep prices low.

Prices are seldom affordable for brand-name medications, but pharmaceutical companies have fairly liberal policies for giving medications away for people with low to moderate income.  My staff uses Needymeds to search across multiple drug companies’ programs for free drugs.  Once the staff becomes familiar with the requirements and the mechanics of filling out the forms, the process can be quite fast and people can get the medications needed to manage their diseases. 

Shopping for prices is not limited to medications.  We have found low prices for radiology tests ($250 CT scans, $550 MRI scans), cardiac testing ($100 stress tests, $150 echocardiograms), and recently found a gynecologist that did colposcopies for $150 cash (plus $88 for biopsy).  All we did for this was to call around and ask the various facilities for their cash prices.  Yes, it’s really that easy.

There are obviously times when cost has to be ignored.  A person with appendicitis or sepsis doesn’t have the option to shop for care.  They simply have to get care now and worry about cost later.  Fortunately, most hospitals will negotiate down prices substantially after the patient is discharged.  Plus, there is grant money available to most hospitals for the care of the indigent and uninsured patients.  The social workers in these facilities will do whatever is necessary to get the patient some sort of funding for their care.  The financial reward for doing so is huge.

The care of the uninsured patient is certainly more challenging in many ways.  It causes great frustration when a person needs care they simply cannot afford.  But there are ways to address that cost and doing so can definitely be seen as part of the process of giving care.  People are more than just physical bodies, and should be considered on all levels, including economic.  Caring for people’s financial health may lead to better overall health, as they get care they can afford and are willing to follow through.  Doing so will not only make things better for the patients, but it will win their gratitude and trust, both of which are key to a healthy therapeutic partnership.

If you have any comments on this article email editor@physicianspractice.com. We'll publish the best ones!

With more patients likely to be uninsured due to the individual mandate repeal, here are creative ways of providing cost effective primary care. 

Giving Primary Care to the Uninsured Patient

There are two things that set direct primary care apart from other types of practice: payment by patients instead of third-party payers, and monthly payment instead of fee-for-service. These differences account for the notable difference in focus and atmosphere, allowing longer appointments, open scheduling, and a shift from in-office care to care via phone calls or text messaging.  These two features are the definition of DPC.

Despite this clear definition, however, there are still significant decisions to make when it comes to setting up a practice in this model. Because of this, there are significant differences between DPC practices. These decisions include:

• Should there be a copay for office visits?

• What services (if any) should be charged to the patient (beyond the monthly fee)?

 Here's how I approached these decisions:

 The limit that has been set for practices being defined as Direct Primary Care has been set at $100 per month.  I am not sure who defined it this way, but it is rare for practices to even approach that number (mine range from $35 to $65 per month).  

Where this number is set will significantly affect the type of patient attracted to the practice.  Setting prices higher (obviously) tends to select against the poorer patients.  But the less obvious effect of higher prices is to select a sicker, needier population. The average 25-year-old may be willing to pay $30/month for care, but $75 per month would scare away all but the sickest in that age bracket.  In essence, setting prices too high can select out the very patient you want to attract: the healthy person who uses you only on occasion.  

This doesn't seem to be the case as people get older and see a greater need for access to care, which is why most DPC practices tier their prices based on age.  Younger, healthier people don't anticipate needing care, but will embrace it if it's cheap enough.  Older (or sicker) people, on the other hand, will value care enough to pay more.  This has led some to charge extra for certain disease states or lifestyle choices (smokers, obese people, diabetics, etc.).  I didn't do that, partly because I wanted to keep things simple and partly because it seemed to push away those people who need me the most.

So, what to charge? I started low, increased my price by $5/month already (with no pushback from my patients), and anticipate doing a similar increase in the near future. I do think it's smart to keep prices low for people under 30 (and maybe 40) to attract a large base of healthier people. That being said, with 700 patients in my practice, a $5 increase nets a $3500 monthly increase in revenue, which is substantial.

Some see a co-pay for office visits as a way to increase revenue. This is not a good way to make more money. The vast majority of my revenue will be from monthly payments, and this revenue comes in whether or not I see people in my office. One of the most welcome changes in DPC is the fact that I am content when my office is empty, as I earn just as much and have openings for people with urgent problems. This access to me is important to my patients.

Some argue for a co-pay to discourage overuse. I have been open for nearly five years and have 700 patients, and I have not seen a problem with overuse. Besides I see underuse as more of a problem than overuse in our system. People only see the doctor when they are "sick enough," and often let problems go far too long before reaching out for care. I want them to reach out to me earlier (preferably via messaging) and have them avoid illness (and the expense that goes along with it).  My patients want this too.

The bottom line: Co-pays don't serve a valuable purpose, and instead discourage the access to care that is so central to DPC.

Setting prices for procedures, labs, and medications dispensed in the office is actually pretty straightforward.  Keep prices as low as possible, but cover your costs. Patients are very willing to pay $4 for a CBC or $1 for a month of blood pressure pills (which is our cost), and will brag to their friends for this low cost. Charging significantly more would not only hurt the word-of-mouth marketing done by our patients, but it would add very little to the monthly revenue. It is simply not worth it.

Your goal should always be to maximize the revenue from monthly fees.  Set all of your other fees with that in mind.  Hit the right numbers and you can not only enjoy medicine again, but you can make a pretty good income as you do so.

There are significant decisions a physician must make when setting up a DPC practice. Here are a few you must decide. 

Reasonable Charges for a DPC Practice 

I was pretty much on my own four years ago, when I first started my direct care practice.  Fortunately, with the increasing popularity of this practice model, many tools have emerged that make the transition much easier.  To successfully run a direct care practice, the practice needs to do the following

• Manage memberships and handle monthly subscription billing

• Communicate effectively and securely with patients

Below is a list of online resources for each of these areas.  The danger of making a list is that I am largely influenced by what I use, which may not be the best tools for every user.  To even things out, I'll mention my approach to these tools and list some of the tools used by my direct care colleagues.  Here's my list:

One of my favorite things about direct care is that I chart for patient care, not billing. I don't have to bury important information in all the computerized nonsense put there to justify billing.  It's quite liberating.  So, in choosing a record, I look for three main things: reasonable cost, ease of input, and ease of finding important information.  The systems that meet these criteria are pretty much all online charting systems, and each has its own pros and cons.

 ) - Focuses on direct care practices and has built in messaging/billing

 ) - Free, not real robust, but did I mention that it's free?

) - Built by direct care physician.  Also does membership management and has integrated communication tools.

Billing systems are the heart of the business, and the business model is at the heart of what makes direct care so much better.  You want a system built for direct care that is easy to use and powerful.

 ) - I use this.  It is easy to use, powerful, and it integrates well with the other tools.

 ) - As stated above, this system combines EMR and billing

If the billing system is the heart of direct care, communication is the soul.  

 is the thing my patients are most hungry for, and there are several good tools for this:

 ) - I use this one.  Integrates well with the other tools I use and can do video visits, virtual care, and mass messaging.

Patients are often trying to communicate via email or text messaging, but there are several reasons I discourage this (besides the obvious HIPAA risk).  First, email messages get buried in the rest of my email (and so messages are missed), and second, it is difficult to put these messages and their replies into the medical record.

There are two main options in setting up a phone system:

• Not having a phone system at all, instead using Google Voice (or comparable system) and cell phones to manage patient communication.

• Use a VOIP system which allows a small practice to set up a traditional phone system for a relatively low cost.  This is what we do, using RingCentral (

This last category is broad, and I'll just share three tools I use, but be aware this is a significantly truncated list.

 ) - Allows patients to input health data and manage medication reminders.

 ) - Gives practices access to online consultations with physicians from nearly all specialties and get a "curbside" consult.  This is amazingly powerful and lets me save time, money, and give much better care.

 ) – Learn from those doing it in real life.  This is a community built both to make it easier for new direct care physicians and to raise the ceiling for experience physicians.

There's a lot there, and there are many out there who are interested in helping docs interested in making the jump.  The good news is that these tools can make that jump a lot less scary.

If you are interested in starting a direct care practice, here are a few tools that will be of assistance to you for documentation, billing, and more.

Author | Rob Lamberts, MD

Articles

Dispensing medications from the office

Giving Primary Care to the Uninsured Patient

Reasonable Charges for a DPC Practice

Best Online Tools for a Subscription Practice