There’s a great deal of misunderstanding and even misinformation about direct primary care (DPC). It is often confused with higher cost “concierge” or “boutique” practices, and hence is seen as elitist, unaffordable, and consequently something that has only a future as a niche version of care.
So let me clarify things by once again stating what DPC is:
- Primary care that excludes third-party payments. No money is accepted from insurance companies or other third-party payers. Payment comes either from the patient or by an employer who offers the care to its employees.
- Payments are made on a monthly, quarterly, or yearly basis, with that charge usually being under $100 per patient per month (generally in the $50 per month range). Some offices charge a small copay for office visits, but most do not.
In my office, we charge between $35 and $70 per month, depending on age. There are no charges for office visits.
Both of these differences are a huge departure from the status quo of medicine, and both have a huge effect on the quality and cost of the care given. All of those effects would be too much to explain in depth in a single article, so this month I will focus on the implications of direct patient payment, and next month will discuss the monthly payment.
Before moving on, let me address a common misconception: DPC is not meant to replace insurance, nor does the model in any way encourage patients to drop their insurance. People need a way to pay for the high-cost areas of care, such as surgery and hospitalizations. DPC doesn’t try to address paying those costs, but instead focuses on decreasing their need by focusing on health and prevention. While that may sound like typical preventive medicine jargon, it really is in the best interest of the DPC practice to keep patients healthy and reduce the need for catastrophic care.
Using automobile insurance as a parallel, health insurance has done the equivalent of paying for oil changes, tires, and other car repairs in addition to covering collision and liability. But the consumer is already motivated to do those things and will pay out of pocket to maintain their car so as to avoid needing to use their auto insurance at all. Additionally, paying for tires, oil changes, etc., allows these things to have artificially set prices which are unreasonably high (since it’s covered by insurance) and so the cost of routine maintenance goes up.
So, what are the implications of rejecting insurance payment?
There is an increased focus on reducing the cost of care.
My patients are paying me, so I am very conscious of trying to give them their money’s worth. If I can give them value (a concept that has become foreign to healthcare), patients are happy with my care and will continue to stay in my practice. It’s in my business’ best interest to do this, so we do a number of things to save patients’ money:
- We offer very low-cost lab testing (using “client billing”), saving people 75 percent or more on labs.
- We dispense medications in the office (legal in most states), also saving people 75 percent or more, and offering a huge convenience to the patient.
- We find the lowest cost for procedures, X-rays, and specialist services. While many of these are covered by insurance, most people have higher deductibles, so the lower cash prices are very valuable to them (not to mention the value to the uninsured).
None of these give significant direct income to the practice, but they all make patients much more reluctant to leave. In truth, these things end up being our biggest marketing tool, as patients frequently brag to friends and family about their doctor “who saves me money.”