Like independent direct pay practices, these companies don’t contract with third-party payers, and provide extended appointment times and highly individualized care to patients.
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Parallel with the development of direct pay practices—and often referred to interchangeably with them—has been the development of “concierge” practices. Similar to direct pay, concierge practices feature smaller patient panels and charge patients a monthly membership fee.
Unlike direct pay, however, most concierge practices continue to accept payments from Medicare and commercial insurers. Their monthly membership fees are higher, usually in the hundreds of dollars. In return, patients receive extras such as 24/7 access to their physician and guaranteed same- or next-day appointments.
One physician’s experience
Marty Schulman, MD, decided he wanted to try direct pay after 15 years with a faculty primary care practice at the University of California-San Diego (UCSD). The pressures on him and his colleagues had been steadily mounting, he recalls, to the point where he was expected to see some 20 patients daily while dealing with expanding quantities of paperwork.
Eleven years later, Schulman now operates a direct pay practice out of a one-room office in Cardiff-by-the Sea, California. He works entirely by himself—no staff and no other medical professionals. His patient panel numbers around 200. Without third-party payer contracts, Schulman’s revenue comes from patient membership fees along with per-visit charges.
But since that doesn’t bring in enough to support himself and his family he supplements his income with travel medicine, medical consulting for an eating disorders residential treatment center, and contract work for UCSD.
“Safe to say that if I expanded to working my practice 100% and got to full volume I would make less than the salaries that I see being offered in ads for family medicine positions around the country,” he says.
The trade-off is being able to spend more time with his patients. Most appointments run a minimum of 30 minutes, and he has no qualms about spending up to 90 minutes with a patient when necessary.
“I would be making more money for sure in my old practice, but a lot of patients need more than the 10 or 15 minutes I was able to give them,” he says. “For me it’s worth it to earn less just to be able to practice medicine this way.”
Requirements for success
So what does it take to make a successful transition from a fee-for-service to a direct pay practice? Probably the most important requirement, experts say, is the willingness of patients to go along with the change. Unlike in fee-for-service practices, direct pay patients must pay every month regardless of whether they actually use the practice’s services. That requires a different way of thinking about their care and their care provider, Scherger notes.
“The patient has to really value the direct primary care doctor’s services enough to pay for them,” he says. While the monthly fee is generally on par with what most people pay for cable TV or cell phone service, he adds, “only a certain fraction of the population is willing to make that kind of payment for their doctor to be available at any time and to not be rushed when he treats them.”
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And it’s not just the patients who have to be willing to take a chance, notes Eskew. “The physicians making the jump have to have a high tolerance for risk,” he says. “Not just in terms of willingness to accept a lower salary, at least at first, but unless they’re willing to do a lot of homework and preparation, they could find themselves failing quickly.”
Schulman’s decision to start a direct pay practice was especially risky, in that he started his from scratch rather than converting an existing fee-for-service practice, or convincing patients from his former practice to join him.