"Boutique" practices:
Good medicine—or ethical swamp?

Patients want better service, and doctors are willing to oblige—for a fee. But critics charge that pandering to the wealthy is discriminatory.

By Anita J. Slomski
Group Practice Editor

Bob Sage, 70, pays $3,000 a year just for the privilege of being the patient of Seattle internist John Kirkpatrick. Medicare pays Sage's bills; the surcharge grants him more time with Kirkpatrick at appointments, house calls if he needs them, the doctor's cell phone number, free valet parking, and a private waiting room at the clinic.

"When I signed up in January I thought this added service was a bit of a luxury, and I didn't know whether it was worth it," says the former TV-commercial producer and director. "But now I think of it as a necessity."

The longer, more relaxed appointments with Kirkpatrick motivated him to lose 35 pounds, Sage says. Kirkpatrick had advised him to trim down when he was one of the doctor's 3,000 regular patients, but the message didn't penetrate until Sage joined a more exclusive group of 270 patients.

"I have emphysema, and heart problems run in my family, so when Dr. Kirkpatrick told me in detail what happens to my body every time I gain 10 pounds it scared the devil out of me," says Sage. "I also got the feeling that he gave a damn. In 30 years I've never had medical people be so caring and considerate. This is how medicine used to be practiced, before HMOs caused doctors to become overworked and underpaid. Getting this attention is worth $3,000 or more a year."

That's precisely the attitude that Virginia Mason Medical Center, a 390-doctor group practice in Seattle, is counting on. The group started the "extended service" practice in January after a dozen or so patients left for two other practices within a four-block radius that offer personalized physician attention and convenience for $900 to $20,000 per year. Kirkpatrick and internist Bruce Nitsche staff the Lewis and John Dare Center—named after Virginia Mason's early administrators. The center now has 421 patients, who pay $3,000 to $6,000 annually, depending on how many family members are enrolled. The practice will likely cap its patient roster at 600.

Although the two doctors allot an hour for most patient visits, they insist they're not practicing medicine any differently than when they were seeing 25 patients a day as staff doctors at Virginia Mason's regular clinics. "We continue to practice evidence-based medicine and use Virginia Mason's clinical guidelines, so we aren't ordering more tests and doing more procedures," says Nitsche, who has a panel of 134 patients. "But now we have time to figure out what is behind a patient's worry. Maybe a favorite grandmother died of lung cancer, which is why a patient wants frequent lung X-rays. And we also do more of the preventive care ourselves instead of giving a patient a handout or having a nurse talk to him, as we used to do."

The medicine may be the same as their colleagues practice, but the Dare Center doctors' workaday life is certainly different. "I don't have the feeling I'm on a treadmill anymore," says Kirkpatrick, who sees a maximum of eight patients a day. "I don't get home at 8 pm, leaving things unfinished at the office." A half-dozen e-mails from patients and another six or so phone calls round out his day.

Both doctors are available to their patients every day, around the clock. So far that hasn't proved onerous. "Two years ago I would have said being on call like this would be horrible," says Nitsche. "Back then I was on call for my group once a week, but I was covering for 20,000 patients, most of whom I didn't know. Now I have a relationship with a small number of patients, and because they know me, they don't make unnecessary calls." The continual on-call schedule, however, does present "parenting challenges" with his 7- and 9-year-old children, says Nitsche.

Unlike MD², the high-end "boutique" practice in town that charges $20,000 yearly to treat a family, Nitsche and Kirkpatrick won't hop on a plane to see a patient who needs medical attention away from Seattle. They may, however, accompany patients to a specialist's office, although they're careful to note that Dare Center patients don't get preferential treatment from Virginia Mason specialists. Bob Sage was impressed when Kirkpatrick showed up five minutes after he experienced chest pains prior to taking a cardiac stress test. "I didn't ask anyone to contact Dr. Kirkpatrick, but there he was," Sage recalls. "It gives you a warm, fuzzy feeling. When he was my doctor in his old practice, I could never get him on the phone—never."

No get-rich-quick scheme for the doctors

And therein lies the appeal of so-called concierge practices: Patients get the feeling that they're important—not just another body squeezed into their doctor's schedule. Years ago, the upper crust paid for top-drawer treatment at places like the Mayo Clinic, and more recently big-name clinics began charging busy CEOs upward of $2,000 for "executive physicals" complete with gourmet lunches, fax machines, and terry-cloth robes.

Now, though, in a backlash against managed care, the middle class is lobbying for better medical service—which on its face is absurd, says Aaron Katz, health care analyst at the University of Washington School of Public Health and Community Medicine. "We spend the most money of any country by far on medical care," he says. "Why should individuals have to spend an additional $3,000 to get what most people think they should already be getting: good access to doctors for appropriate care?"

Virginia Mason, which already offers executive physicals for $600 to $1,000, formed a planning committee of patients who said they were accustomed to paying for higher service in other areas of their lives and would be willing to do the same to have more access to their doctors. "This is a program for patients who value their time," says Virginia Mason vice president Patti Crome. "Consumers today are very savvy, so we have to come up with innovative programs to meet their demand."

But the patients who signed up for the Dare program proved to be a surprise. "The average age of our patients is between 65 and 70," says Kirkpatrick. "We thought we'd get more businessmen who didn't have time to wait in a doctor's office. We do have some of them, as well as young dot-com people. But I think older patients long for the doctor who really knows them. They all remember the name of their doctor who made house calls." Nearly three-quarters of Dare Center patients are between 51 and 80; the oldest is 99. Men make up 58 percent of the patient population.

Seventy-eight-year-old Martha Gordon, who recently had a total hip replacement, became a Dare Center patient because of the added security it brings her. "I live on an island, and if I fall or need a helicopter to take me to Seattle because of a stroke or heart attack, Dr. Nitsche will see to all the details," she says.

House calls benefit the doctors as well as the patients. Nitsche visited an 85-year-old who has a beloved wild blackberry farm. "I was able to get a better feel for this patient by looking at the field he has tilled for 18 years," says Nitsche. "He goes into that field every day, and in a few years he won't be able to. I now know what a blow it will be to that guy." Kirkpatrick uses house calls to uncover slip-and-fall hazards for elderly patients. "It is very useful to see the patient in his home environment," he says. Nitsche has made a total of 45 to 50 house calls since January; Kirkpatrick has made approximately 25.

Although the retainer Dare Center patients pay would make for a handsome salary for the two doctors, the revenue goes directly to Virginia Mason Medical Center. "The doctors aren't getting rich off this program," says Crome. "They get paid on the same formula as other primary care doctors."

The Dare Center's competition is two practices that started a few years earlier. Two members of a group of four internists formed MD² in 1996. A year later, the remaining two internists launched Seattle Medical Associates, which charges $75 a month per patient. MD² would not speak with Medical Economics. Neither would another carriage-trade practice in Chevy Chase, MD, which touts its preventive medicine, genetics testing, and ability to detect disease before it occurs—for an annual fee of $2,750 to $5,000.

A way to see the doctor every day

Unlike Virginia Mason, where patients use their insurance to pay for doctor visits, Seattle Medical Associates' fee of $900 a year covers unlimited doctor visits and procedures—such as blood tests, X-rays, sigmoidoscopies, and treadmill exercise tests—done by the two internists. But patients still must carry insurance to cover specialty care and hospitalizations.

The fact that Garrison Bliss and Mitchell Karton don't accept insurance in their practice has nothing to do with a philosophical beef against insurance companies. "We are still on many preferred provider lists so that we can make referrals to specialists," says Karton. "We charge the $75 a month so patients will see us when they are sick and healthy. We don't want them to avoid annual physical exams because they are worried about paying fee-for-service."

Although a $10 copay wouldn't realistically keep many patients out of the doctor's office, Bliss says the $900 removes "symbolic barriers. We want to avoid nickel and diming our patients," he says.

Unlimited medical care may sound like a dream come true for some patients and, consequently, a nightmare for physicians. "Patients can come in every day if they want, but most of them tire of us quickly because we aren't that interesting," laughs Bliss. He doesn't have "overutilizers" in his practice. "This notion of overutilization came about in response to physicians who were too busy to take care of very anxious patients or those with somatic complaints," he says. "So 'utilizers' became 'overutilizers.' If I have anxious patients, I make appointments for them once a week until they start feeling better. Then they'll cut back on their own."

Adds Karton: "No patient has the attitude that since he's paying so much money he'll make me his boy and ring the bell constantly. When you earn someone's trust and he knows you are available, he tends to need you less and protect you more."

When Bliss and Karton first announced their "membership practice," they lost approximately three-quarters of their patients. The defections occurred even though the doctors offered discounted fees to financially pressed patients. (About 15 percent of patients received discounts.) Eventually, however, patients drifted back to the practice, so that the doctors are treating about a third of their original patients—and they have a waiting list of 100 people.

Each doctor has about 800 patients. "We decided that we couldn't take care of more patients than that if we wanted to promise same-day appointments, one- to two-hour physicals, waits no longer than 10 minutes, and phone calls returned within an hour," says Karton.

And as patient advocates, Karton and Bliss see nothing wrong with trying to get their patients to the head of the line when it comes to referrals to specialists. "We'll call a specialist who has no room on his schedule for six weeks, and by being pushy, naggy, and difficult, we may get him to see our patient during his lunch hour," says Bliss. "Doctors tolerate this from us because they know we are trying to give good care to our patients."

So how has their own clinical care changed now that they can give patients more attention? Diagnoses come more easily and faster, admits Bliss. "We have time to review each problem with the patient so she doesn't have to come back again and again before we do a workup." He relates the story of a young, athletic woman who had been to four other doctors about shortness of breath when she exercised. "Because her tests kept coming back negative, she was beginning to think her problems were psychological," says Bliss. "More than once, I started from the beginning with her history. It has taken several hours, but we now think she has an interstitial pulmonary problem, and she is working with a very good pulmonologist."

Had he continued to treat the 30 to 40 patients a day expected by the managed care company that owned his former group, Karton is sure his clinical care would have been compromised. "Before, it took a hell of a lot more work to put the clinical pieces together because we were mostly putting out fires due to the volume of patients we had to see. We didn't miss things, but only because we were still young and energetic. Fortunately, we changed our practice before we hurt anyone. But I have no doubt that would have happened eventually. Our patients today don't have to worry that we have multiple masters."

Reducing their patient load from 2,500 to 800 certainly hasn't hurt the doctors' incomes. Bliss and Karton say they are now making one and a half times what they made previously, and they are much happier. "We anticipated that it would be good, but we didn't think it would be this good financially, socially, and spiritually," says Karton.

Overhead is higher than most internal medicine practices because Karton and Bliss have more laboratory, X-ray, and other equipment than the typical primary care doctor. Also, they pay their eight employees—only two are full time—full benefits and higher than average salaries. But because their income per patient is greater than that of most internists and they don't have costs associated with insurance billing, Bliss and Karton consider their expenses to be reasonable.

Although they're delighted with their practice now, creating it took two years of evenings and weekends and lots of worrying. Because they couldn't find a bank to back their new model of practice, Bliss and Karton each put up about $150,000 of their own money to pay start-up costs. They also had to convince every insurance company and the insurance commissioner that they weren't scamming patients. And they had ethical discussions with each other about not wanting to reject patients who weren't rich. "When we started, we had many concerns, such as whether we would alienate our patients and other doctors, and that the practice would fail financially," says Bliss. "But we found it to be the perfect route back to medicine."

So perfect, in fact, that Bliss and Karton are currently consulting with doctors in Texas and Virginia who have expressed interest in setting up similar practices.

Is unfettered capitalism appropriate for health care?

That boutique practices are gaining popularity isn't sitting right with some ethicists and physician groups.

"It's typical of the American system that people will reinvent something, give it a new name, and charge you 20 times as much," says FP Richard Roberts, president-elect of the American Academy of Family Physicians and a professor of family medicine at the University of Wisconsin Medical School in Madison. "My patients have my home phone number, I make house calls and go to nursing homes, and I've sat in a schoolroom for an hour to watch a kid I think might have attention deficit disorder. It's a bit of puffery for boutique players to give the illusion that they are doing something unique when lots of physicians do the same thing at much less cost. I see 25 to 30 patients a day, and I may be getting $20 per member per month to offer the same services."

Although he doesn't begrudge doctors for being entrepreneurial and finding a more satisfying way to practice, Roberts says he's discomfited by the growing gap between the haves, who can buy better care, and the have nots. "I wouldn't mind people buying extra stuff if we didn't already have lots of folks not getting basic care," he says. "I thought our medical system was about health, not wealth."

The American College of Physicians-American Society of Internal Medicine also doesn't cotton well to physicians who limit their practice to patients who can afford their retainers. "We think practices that charge for access and treat one category of patient to the exclusion of another undercut professionalism and trust," says Lois Snyder, director of the association's center for ethics and professionalism.

The view that medical care is not a public good but rather a commodity with different levels of quality based on price troubles ethicist Virginia Sharpe, deputy director of the Hastings Center, a bioethics think tank in Garrison, NY. "Medical education is heavily subsidized by the citizens of the United States," she says. "Therefore, everyone should have access to that knowledge because it's not proprietary. We all know that the current health care system doesn't adequately serve the uninsured or the underinsured patient. And increasingly, it poorly serves insured patients because care is rationed by inconvenience. But giving greater advantage to people who can pay more simply deepens the flaws in the system—it doesn't fix them. If we had high standards of care available to everyone, these premium services would be less morally offensive."

Preferential medical care has always been part of medicine, counters Virginia Mason's John Kirkpatrick. "Wives and families of physicians have had a side door to health care, and no one has ever questioned that," he contends. "And we've had a multi-tiered system for many years. You can buy a bare-bones HMO policy where everything has to be approved by the primary care doctor. Or you can pay more money and choose your own specialists. Our program is a step beyond that: By spending more money, you buy more time and attention from a physician."

Kirkpatrick's colleague Bruce Nitsche says he understands the criticism of his new practice, but dismisses the notion that medicine is ethically pure: "A lot of unethical things go on in medicine. Look at how HMOs tell doctors what they can and cannot do. The entire health care system has some questionable parts to it."

Virginia Mason vice president Patti Crome, in maintaining that the clinic's patients all receive the same quality health care, compares the premium service given to Dare Center patients to the difference between flying first class and coach. "Both passengers arrive at their destination at the same time," she says. "The difference in service is simply the reality of our capitalistic system."

While not faulting Virginia Mason for tapping into a new revenue-producing market, the University of Washington's Aaron Katz questions the assertion that clinical quality is identical whether the doctor spends eight minutes with a patient or 60 minutes. "If I'm flying across the country squeezed in a sardine-size seat, rather than sitting in first class, there is a difference in my ability to function when I get off the plane," Katz says. "Is the desired outcome in medicine just getting to the destination, or is it functionality? Patients judge quality by the amount of time physicians spend with them, whether their questions get answered, and the degree to which they participated in decisions about their treatment and health. These are not amenities that are unrelated to a patient's well-being."

Defending their practice, Bliss and Karton say they didn't exclude any of their previous patients who couldn't pay the $900 annual fee. "Besides, our fee is equivalent to a cable bill or a latte a day," says Karton. "We haven't opened a carriage-trade practice."

Giving patients what they pay for

The issue for doctors is not whether it's ethical to charge premium prices for additional service, but rather how much they give back gratis, says internist Jacob Teitelbaum of Annapolis, MD. Teitelbaum, who specializes in treating chronic fatigue syndrome, charges $5,800 for an initial four- to five-hour exam, and $660 an hour for follow-up care. Those fees enable him to make $150,000 a year seeing patients five days a month. The rest of the time, he says, he lectures to patients and physicians and conducts research at his office. "The research and teaching are my ways of giving back; these activities benefit hundreds of thousands of indigent patients," he says. "Why should all doctors practice at the lowest common denominator so no one gets adequate health care?"

Teitelbaum, who estimates he has treated more than 2,000 patients with chronic fatigue syndrome, encourages other physicians to forgo insurance and charge an hourly rate that allows them to see patients a maximum of 28 hours a week. A longer workweek causes burnout, rendering the physician ineffective, he believes. "There are enough patients who are very sick and looking for doctors to listen to their questions and talk to them."

Internist Robert Gleser of Denver found a way to spend more time with his primary care patients by adding other cash services, such as acupuncture and alternative medicine, physicals for executives and pilots, and a travel clinic. "Because of these other revenue sources, I was able to refuse capitation," says Gleser. "I didn't want to be in the cattle medicine business, spending no more than five minutes with each patient. Instead, I have a lot of fun doing acupuncture for half a day and being a primary care doc for the other half. I think I'm able to help people a lot more now than when I was just doing primary care."

Gleser accepts insurance for his primary care services because he doesn't think an all-cash practice is financially viable. "I don't want to be on retainer for 10 families at $10,000 each. I'm more interested in healing people," he says.

The practice's 16 staff members include two other internists, a nonphysician acupuncturist, two massage therapists, a chiropractor, a physical therapist, and a psychologist. Business is so good the practice is hiring another physician and chiropractor. Gleser estimates that more than 40 percent of the practice's revenue comes from alternative medicine treatments, most of which aren't covered by insurance. Patients spend $500-plus on these treatments yearly, says Gleser.

Like others who have niche practices, Gleser and his partners spent "a lot of bucks" on the waiting room of their 9,500-square-foot building. But the practice was aiming for tranquility rather than luxury. So based on advice from a feng shui consultant, walls and sconces are painted in colors corresponding to the elemental cycles of Chinese energy, the carpet motif was specially designed, and mirrors are strategically placed. "This isn't your average stiff doctor's office," says Gleser.

Internist and gastroenterologist Herbert Rubin of Beverly Hills is one doctor who does think he can make it financially by having a cash-only practice. As of January, he stopped accepting insurance. Although about 10 percent of his patients went elsewhere—"My Medicare patients thought I was betraying their entitlement and they left for ideological reasons"—Rubin says he's making more money now because he charges more. "Of course my patients get more time and attention from me; they're now paying customers," says Rubin. "They get what they pay for when they choose managed care, and they get what they pay for when they get me. My attitude is that I'm the best doctor in the country, and I give them great medical care."

Although the doctors we spoke to for this article said not all their patients are wealthy, consultants say that a physician who starts a niche practice needs a patient population with an average household income of at least $75,000, as well as the patient loyalty that comes from a well-established practice. And even then, be prepared for mass defections. "You'll probably have to give up about 50 percent of your patients, and I don't know many doctors willing to do that," says internist Paul Reich, a consultant with Scheur Management Group in Newton, MA. "Also, it requires a certain personality to take care of wealthy patients. I don't think this idea will spread like wildfire."

Others say that health-obsessed baby boomers will drive the popularity of boutique practices. "Baby boomers have never adhered to the status quo, they have money, and they want to do things their way," says Michael J. Pulaski, CEO of Peachtree Orthopaedic Clinic in Atlanta. "They know that employers who buy their insurance want to give them cheap medical care, whereas they, as consumers, want the best."

Doctors don't have to restrict their practice to the wealthy, however, says Pulaski, who did a study of medical niche marketing. "In the morning, treat those patients with HMO coverage and in the afternoon, treat your paying patients. Give them what they pay for. The HMO patient gets the drug treatment with side effects for a cardiac arrhythmia because that's what the plan authorized, and the afternoon patient gets the $50,000 electrophysiological implant because that's what he's willing to spend to get a normal life."

The spread of boutique practices is likely to be determined by the number of companies that opt for a defined-contribution plan in which they give employees $5,000 a year to purchase the health plan of their choice. "If several employers do this, then we'll see a whole lot of doctors competing on value-added services," says Maureen Swan, a principal at The Med-Trend Group, a consulting firm in Minneapolis "But it will have to be Nordstrom-quality service for people to pay $6,000 or more. And you can't have these patients sitting in the same office with the same old magazines and with kids sneezing on them. You simply can't provide all these extra things under an insurance model—it just isn't going to happen." The Med-Trend Group assists doctors and hospitals in creating value-added services, such as doing executive physicals and selling retail products.

Doctors can easily add such services without retooling their entire practices, says Swan. For example, patients might be willing to pay a pediatrician an extra $200 a year to get immunization reminders and to be more accessible by phone. "Or maybe your market won't support a $2,100 executive physical, but it might support an $800 well-woman checkup that is more than just a Pap smear," she says. "If the patient wants the extras and is willing to pay for peace of mind, why not?"

And then there is the doctor's state of mind. Spending more time with fewer patients is a much more satisfying way to practice, says Seattle Medical Associates' Mitchell Karton. "There is a collegial feeling that doctors and patients are working together, whereas formerly we all felt devalued, invisible, and a generic part of a bigger system. We feel we've created a first-rate practice with all the things a patient should have."

 

. "Boutique" practices: Good medicine--or ethical swamp? Medical Economics Jul. 24, 2000;77:52.