Should Medical Practices Charge Subscription Fees?

April 13, 2013
David Doyle

Some physicians, trying to remain independent, are experimenting with subscription-based models of payment.

A recent study by Accenture shows that the number of independent physicians in the United States has dropped from 57 percent in 2000 down to 39 percent in 2012. This trend is expected to continue, with a projected decrease of another 3 percent during 2013.

Physicians cite higher administrative costs and the impending EHR requirements as the two primary reasons for leaving private practice and seeking the security of hospital employment. Physicians who buck this trend and commit to keeping their practices alive are being forced to develop new business models in order to survive.

One such model that’s gaining steam among private practices is the subscription-based model. While similar to concierge medicine, which was introduced in the late ’90s and offered comprehensive medical care for a steep fee of up to $20,000 a year, the subscription-based model is a more affordable, yet less comprehensive plan. Both concierge medicine and the subscription-based model deviate from the financial relationship that depends on a traditional insurance model. However, unlike concierge medicine, the subscription-based model can be used to supplement a patient’s insurance program.

Under the subscription-based model, the patient pays the physician directly; usually there’s an annual membership fee accompanied by a per-visit fee. The annual rate ranges anywhere from $600 to $1,200, with an approximate per-visit charge of $60. Because the annual subscription fee typically includes most, if not all, of a general practitioner’s or a family physician’s care fees for yearly preventative care, the prohibitive costs associated with accessing medical care under a more traditional insurance program are eliminated.

The advantages for patients are obvious: decreased cost per visit, better access to more patient-centric healthcare, and the avoidance of unpredictable premium increases. Likewise, there are numerous benefits for physicians who adopt this unconventional payment method. If you’re a primary care physician, the subscription-based model:

allows you to focus on providing individualized patient care rather than maximizing billing rates to cover patient care;

provides you with a stable income;

enables you to calculate the number of patients needed to obtain a strong bottom line for your office, thereby allowing you to cut back on an excessive case load; and

decreases those costly administrative expenses of insurance billing and reimbursement management.

While all of these factors play a critical role in convincing physicians to adopt the subscription-based model of payment, according to Dr. Kaveh Safavi, managing director of Accenture Health, the top two reasons are the desire to keep their practices independent and the need to either maintain or increase their salaries.

“It’s not a one-size-fits-all model,” Safavi told Kaiser Health News, but he does concede that for patients who are seeking a more personal physician experience and for doctors who desire less overhead, the subscription-based model is a perfect marriage of the two.

“Patients appreciate the opportunity to supplement their existing coverage with premium, subscription-based services, such as same-day appointments and online prescription refills,” Safavi explains.

As the healthcare industry adjusts to the enactment of the Affordable Care Act, many Americans are seeking healthcare solutions outside of the traditional insurance system. That means the subscription-based model may be gaining steam at just the right time, giving both patients and doctors the security they need to survive a tenuous market.