Can You Start a Concierge Medical Practice from Scratch?

November 19, 2014

Opening a concierge medical practice with no established patient base is challenging, but it's not impossible. Here's how one doctor did it.

It's not easy to open a new practice, but opening one that appeals to a smaller group of patients, such as a concierge practice, is even more difficult. Harder still, is opening a concierge practice with no patient base on which to build.

In March 2003, that's exactly what emergency medicine and ambulatory internal medicine physicians Jordan Lipton and his colleague Linda Perry, attempted to do. They opened Signature Healthcare, a Charlotte, N.C.-based concierge practice, in which patients pay an additional fee for extra perks, such as more time with the physicians and guaranteed same-day and next-day appointments.

Though Lipton and Perry had more than a decade of experience in emergency medicine and urgent care between them, the transient nature of those practice environments meant they had very few loyal patients to bring with them to the new practice. In fact, when they first opened their doors to Signature Healthcare, just two patients had signed on.

Today, their practice is thriving with approximately 1,100 patients, five physicians, and two practice locations. Here, Lipton shares more about why they opened the practice, how they did it, and the biggest lessons they learned.

Many motivations

Several factors drove Lipton's desire to go concierge, including dissatisfaction with the hospital system with which he was employed (the hospital was pressuring him to bill higher for services than he felt was warranted), and his belief that care could be provided a better way. Still, it wasn't clear what way would be better for patients - and for him - until a conversation he had with one of his ER patients.

"That night in the emergency department, [my patient] said, 'You know, you should think about doing something that my father-in-law is a patient of, it just started in Florida,'" says Lipton. The patient, of course, was referring to a concierge practice, and Lipton found the idea appealing. "I thought about it, I sort of put together some numbers in my head, and I thought this could probably work, and I could probably take great care of patients without having to be dictated to about how I should bill, and how I should code, and what's necessary to the bottom line, as opposed to what's necessary to the patient," says Lipton.

He brought the idea up to Perry, who was working with him at the time, but neither physician was sure they were ready to take on the risks of opening a concierge practice. Still, when their hospital system employer decided to outsource its emergency service contract to a private group, which would require renegotiating employment contracts, Perry and Lipton decided it was time to move on.

An uphill battle

To get started with their new venture, Lipton and Perry hired a consultant with previous experience helping physicians open private practices. "He was a great resource for the first year as we got all of our licensing and accreditation … for the practice," says Lipton. "Also, my partner's husband is a business person. He did the business stuff, crunched the numbers, and told us what we needed to be doing, just so we didn't go completely broke."

Still, opening the concierge practice, and keeping it open, was not easy. "The biggest struggle, of course, was financial because we didn't have a patient base that we could draw from," says Lipton, "... We generally worked five days a week in the office and then every other weekend we worked three eight-to-12 hour shifts in the emergency department to pay the bills."

When they weren't working in the emergency department, and when things were slow at the practice, Lipton and Perry volunteered at a local free clinic. Volunteering was important to them, but it also helped them spread awareness about their practice and build relationships with some of the clinic's contributors, says Lipton. "We told people, 'We need you to refer your friends, family, and business colleagues.'"

The physicians also sponsored public radio and various charities, participated in print media interviews, and advertised in some of Charlotte's print publications.

Still, most of their patients (then and now) were gained through patient referrals. "If you take good care of people, and you work hard, and you do the right thing for the patient - not really paying attention to what might be better for the bottom line - then you will grow," says Lipton.

Growing and expanding

Six months after opening the practice, Lipton and Perry added another physician to their ranks. This helped ease the burden on them, as they were able to better distribute call and debt associated with the new practice.

"At the end of 12 months, we were [in debt] at least over half a million dollars without having paid ourselves," says Lipton. "... We have a very nice facility ... and we pay our staff very well because that means they like to come to work, and they like to take care of people, etc., but we only had about 75 patients by the end of the first year."

Still, the physicians soldiered on. And as word spread about the practice, more patients kept coming. "The fourth doctor that we added, Dr. Silverman, whom we added only four years ago, he acquired 300 patients within three years, which is a great comparison of how we, between [the] three of us, only acquired 75 patients within a year," says Lipton. "Now we've gotten that sort of snowball effect, and we've proven to people that we will take good care of you and you should refer people to us."

How it works

To most physicians in the traditional fee-for-service environment, 300 patients don't sound like a lot. But that's exactly the point in concierge: Keep patient volume down so that patients can receive more personalized care. In fact, Signature Healthcare promises patients that each doctor will acquire no more than 350 patients.

In exchange for that more personal approach, patients pay annual fees ranging from $1,500 to $3,500, depending on whether it's a corporate contract, the age of the patient, and the number of family members affiliated with the practice. The practice also accepts most insurance plans.

The concierge perks include 24/7 access to physicians, guaranteed same-day or next-day appointments, coordination of care with specialists, a personal preventative care plan, and phone care when appropriate. For a full list of services, visit bit.ly/signature-services.

Those additional perks lead to better patient outcomes, says Lipton, adding that the practice has an 80 percent lower hospitalization rate per capita, than most other practices in the state. "One patient every six months will be in the hospital, that's it, and that includes my elderly multi-medical-problem patients," says Lipton. "We do everything to keep them out of the hospital."

The practice also does everything it can to keep patients' healthcare costs down, says Lipton. Rather than asking patients with high- or low-blood pressure to come in every six months to get their blood pressure checked and medication refilled, for instance, the physicians allow patients to check their blood pressure at home.

"If their blood pressure is checked at home and it's good, then we will refill [their medication] without making them come in, so we can get another $75 copay or $75 charge," he says. "That translates into our healthcare billings … revenue being exceedingly low compared to the membership revenue, so our healthcare billings revenue is about 20 percent of our total revenue."

Costs versus benefits

While Lipton's practice is doing well financially overall, he cautions that opening a concierge practice is not as financially rewarding as many might assume.

"For the last two years, and remember that's after 11 years [in practice], our incomes are higher than they would have been, probably, if we would have stayed at the hospital system," he says. "But up until then, for the first five years [in concierge practice], we definitely made a lot less, and in fact, the first three years we lost money."

Lipton acknowledges that physicians who have a strong established patient following prior to opening a concierge practice might have an easier adjustment. Still, he says, "If somebody thinks about concierge medicine [as a way] to make more money and work less, then they're definitely doing the wrong thing."

That doesn't necessarily mean physicians interested in concierge should write it off. They just need to make sure they are doing it for the right reasons, says Lipton. "I could have made a lot more money working for the hospital and worked fewer hours, but my hours are much more enjoyable [now]."

The practice breakdown

Concierge practices are popping up all over the country, and come in all shapes and sizes - from solo practices to large physician groups. Here's a closer look at one successful practice: Signature Healthcare, a five-physician practice in Charlotte, N.C., which opened its doors about a decade ago.

The physicians: Signature Healthcare's physicians have a variety of specialties, including emergency medicine, family medicine, internal medicine, and ambulatory medicine. Many of them are double board certified.

The patients: While the physicians have diverse backgrounds, so do the patients. Their ages range from 15 to 105, and they are attracted to the practice for various reasons, says Jordan Lipton, one of the practice's physicians. Still, he says, "Our average patient is probably a busy executive, who just doesn't have time to deal with the usual healthcare system and wants to be taken care of, if it's appropriate, over the phone." Other large patient groups include "the worried well" - patients who are seeking a more preventative, holistic approach, and patients with multiple health problems, says Lipton.

Aubrey Westgate is senior editor for Physicians Practice. She can be reached at aubrey.westgate@ubm.com.