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Why Physicians Are Embracing DPC Practices


Direct primary care practices are growing in popularity, according to this year's GAP Survey. Why is that the case?

After 11 years as part of a group family practice, Michael Iannotti had earned top marks from payers for his ability to demonstrate quality measures, but was frustrated that not everyone in the group shared his zeal for documentation.

"Physicians don't like all these new quality metrics, and the hospitals and government agencies that hire the physicians aren't good at it, either, so they end up losing a lot of money on employed physicians," he says. "I decided to create my own practice and participate proactively to get my quality measures to where they needed to be," he says.

Iannotti also knew that eventually he wanted to own his own medical building and didn't particularly care for the one he was practicing in, so the Lafayette, Colo.-based family practitioner decided to go solo last year. Not only did he go solo, but this fall he's launching a concierge practice in addition to his separate fee-for-service aesthetics practice.

More and more physicians can relate to the need for reinventing the primary-care model. In the most recent Great American Physician (GAP) survey, more than two-thirds of the 1,314 physician respondents say they would consider switching to a direct-pay practice that doesn't accept insurance, they already have switched, or are planning to make the change.

A year earlier, responding to a similar but not identical question, 43.2 percent said they were considering a direct-pay practice and 10.3 percent said they were planning to switch or already had.

The surge is exacerbating an already serious shortage of primary-care physicians in employed situations and traditional fee-for-service practices, says Jim Stone, president of The Medicus Firm, a Dallas-based physician staffing and recruiting firm.

When a physician decides to open a concierge or direct-pay practice, it typically involves slicing off a small portion of patients, creating a service void that either a hospital or practice must back-fill, Stone says. He says his firm has also been hired directly by physicians transitioning to DPC to find physicians willing to take custody of medical records and bring in patients not coming to the new practice.

"In internal medicine we used to have a third of residents go on to specialize in pulmonology or other fields and two-thirds went into practice. Now, the reverse is true and we further slice up the primary-care area with hospitalist, concierge, or other non-traditional models, so it's gone from bad to worse [with regard to the shortage of primary-care physicians]," he says.


Physicians working in these new models, however, say they are thrilled to be more in control of their practices, are making more money than in their previous practice or expect to shortly, and are hearing from patients that they love the change.

"I'm no longer beholden to the 'meaningless abuse' model of checking boxes" to fill out payer codes, says Denver family physician Michael Keller, referring tongue-in-cheek to his thoughts on Meaningful Use standards. "It really frees you up again to enjoy the practice."

At a July conference in Kansas City on direct primary care, hosted by the American Academy of Family Physicians, keynote speaker and a DPC family practitioner Julie Gunther noticed many attendees were physicians still part of traditional practices and only beginning to contemplate making a change. Typically, DPC practices charge monthly fees that cover most primary-care services and they don't take insurance, as opposed to some concierge services that combine fees and third-party payments.

So, during some downtime the first night of the event, she grabbed a microphone and asked two other DPC doctors to join her for an informal Q&A session.

"We had 40 doctors sitting there for three hours," she says. "We finally had to cut it off. There are some hitches in the giddy-up, but what we do is so simple and sometimes [physicians] are made to think this is so complex. It's amazing what you can do with a stethoscope, an iPhone, and a brain. And it's neat to see these docs have micro-epiphanies, realizing they can be the kind of doctor they want to be."

Though Iannotti's model is more complex, combining some aspects of traditional insurance payers, concierge, and direct pay, the sentiment of finding a more fulfilling practice type reflects his professional and personal goals.

"First and foremost, I wasn't satisfied professionally with my income or my job," he says. "I wanted life for my kids, my patients, and me to be better. I wanted money to eventually be able to send my kids to college, time to play a round of golf twice a month, and a better environment for my practice and my patients. All of that played a role" in his decision to start a new practice, he says.


For Gunther, dissatisfaction and burnout also drove her decision to make a change two years ago. While employed, she recalls one particularly grueling day when she saw 17 new patients. There was also the day when a trusted, highly skilled nurse quit to join a much slower-paced practice, and was later replaced by a very inexperienced nurse.

Routinely, the practice ran out of supplies that weren't reordered until she made a fuss. She even changed a few light bulbs in the office. Finally, she decided that if she was going to have to do all this herself anyway, she should take charge. "When someone explained that if I would just take insurance out of the mix, then I was able to see a path where I believed I could do it," she says.

Before jumping ship like Gunther, however, physicians need to be aware of some barriers to entry and some significant risks:

• It can be hard to break away. While many legal experts today say non-compete agreements aren't holding up in court, it can still take resources to fight the battle, says Gunther, who had to give four months' notice when she left her traditional practice. So first, realize the process of shifting gears could take some time, during which you may need to moonlight or seek some other temporary income stream.

• It can be risky. Walking away from a guaranteed or RVU-based salary takes some guts, so being at least a little risk tolerant is essential, experts say. At the time she launched her direct-pay practice two years ago, Gunther still had about $170,000 in medical school loans left to pay. Today, that's down to about $100,000.

On top of loans, there is the common need to borrow funds to start a practice. Gunther was able to secure a Small Business Administration loan to buy her office building, which she's partially renting out to other professionals while she builds out her practice.

To mitigate risk if funds are extremely tight, she says, consider starting out small by renting space in a medical complex and moonlighting to supplement income for a while.

• The hours can still be long. While direct-pay practices typically reduce a physician's panel size, they don't necessarily create bankers' hours. Most DPC practices strive to offer same-day or nearly same-day appointments, and many offer weekend and evening hours.

Keller, who switched to a direct-pay practice, Summit Primary Care, in October 2015, says he's on call 24/7 and schedules patients six days a week, including two evenings.

"The difference today is that I'm seeing six to 12 patients a day, not 30," he says. "It's much more manageable." He also says his practice growth rate was roughly twice what he expected when he started it. About 10 months into the venture, he had more than 600 patients, but says non-emergency after-hours calls are rare because patients typically feel they are getting all their questions answered in their office visits. Keller charges $89 a month for adult patients that are 27 and older, and $59 a month for younger patients.

• Watching overhead is a must. Unlike Iannotti, Keller focuses exclusively on the direct-pay model, so he doesn't have to pay for any staff time to work with insurance companies. His wife, Audrey, works for the practice as a part-time practice manager and he employs a medical assistant who helps him room patients, among other routine tasks. When not with a patient, however, it is typically Keller at the front desk greeting people who come into the office.

"I've found patients really like that," he says. "You have to keep overhead down."

Gunther bought her office building and employed a second physician for the practice before taking a salary for herself, but says both moves have already paid off because the building has appreciated and the other physician is picking up the patient load she can't handle right now.

Meanwhile, she watches the smaller expenses closely. She purchased office equipment at discount retailers, for example, and counsels physicians who can't afford to purchase their buildings to shorten their leases from three years to one or two.

"There are opportunities to just hemorrhage money doing this,'' Gunther says, so take a pass on equipment leases if it's something you can purchase cheaply at a warehouse store.

• Detailed charting won't be left behind. Despite the considerable reduction in staff time devoted to billing third-party payers for services, physicians can't throw away those EHRs, experts say.

"I'm meticulous about charting and want complete family histories in the record, both for medical and legal reasons," says Keller. "But without having to worry about checking boxes on ICD-10 codes, I get a thorough note that clearly says what is happening with the patient."

• It could take a while. Physicians switching to a direct-pay model need to be aware that fast growth doesn't always occur, says Gunther. "I had a business person tell me half of all businesses fail in the first year and that if you make it through the third year, you'll probably make it," she says. "So I tell physicians to plan for three years how they are going to survive if the business isn't profitable. Having that in place decreases the startup stress and the likelihood you'll scalp your mission to make more money, which can compromise you."


Janet Kidd Stewartis a contributing writer for Physicians Practice. She may be reached at editor@physicianspractice.com

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