While the historical pathway for a physician to move into the concierge medicine model was to work with a management company to convert their existing, independent practice, things have changed.
Many physicians are interested in transitioning to concierge medicine due to today’s volume based, administratively burdened, low satisfaction practice environment. While the historical pathway for a physician to move into the concierge medicine model was to work with a management company to convert their existing, independent practice, things have changed. Independent practices still are converting and doing so remains a great option for the right physician in the right market. As we all know, practice models and physician career choices have evolved and more physicians than ever are now working as employees of hospitals, health systems or payers. That doesn’t mean that employed physicians cannot make the change to a concierge model. Medical Economics® sat down with Terry Bauer, CEO of Specialdocs Consultants, to discuss the different paths that physicians from their respective employment situations can explore for practicing as a concierge physician. The transcript below was edited for length and clarity.
Medical Economics: How would you define concierge medicine?
Terry Bauer: I would define it simply by saying that physicians elect to reduce their patient panels to much more manageable sizes so they can provide the care their patients deserve. Patients who join the practice pay a membership fee either annually, semiannually or quarterly. In exchange for that membership fee, the patients maintain (or gain) that deep, intimate relationship with their doctor, receive the ability to schedule same-day or next-day appointments and have longer, more comprehensive office visits and annual exams. The practice size typically is reduced from 2,000 to 3,000 patients to 300 to 500. The practice becomes more manageable at that size, and as our affiliated doctors tell us, they have the time to think, plan, dig deeper with their patients and really focus on health, wellness and disease management, not just the symptom of the day.
Medical Economics: Let’s talk about the different ways that a physician can move from their current practice status or employment situation to a concierge model. I think the historical approach is that a physician in an independent practice decides to explore a conversion to a concierge model. What are some of the other pathways that physicians can take toward a concierge career?
Terry Bauer: In the past, an independent physician practice would make the decision to change, select a company to support them and then together plan a 90 - 120-day conversion process. The market has changed dramatically in the last five years, and depending on the study you read, between 70% and 75% of physicians are now employed by hospitals, health systems or payers. Many of these doctors elected to become employed or join a larger entity in order to mitigate financial risk and their administrative responsibilities. Unfortunately, they find that the “grass is not necessarily greener.” These entities buy practices or employ physicians because they hope to profit either directly or through downstream revenue. But it turns out that volume escalation is still crucial and the administrative burden remains similar. We are seeing a rapidly growing interest in concierge medicine from doctors who are employed in some capacity and who now have a burning desire to become independent either for the first time or once again.
Medical Economics: Let’s go through these scenarios in more detail. We’ll start with the traditional way: transitioning an independent, fee-for-service practice to a concierge model. What are the factors that physicians in this situation should consider as they make the move to concierge?
Terry Bauer: There are several. And, importantly, I would say first, it’s not for every physician. We receive dozens of inquiries every week from doctors all over the U.S. and engage with between 5% to 8% of them. The ideal candidate is a doctor who’s in internal medicine, family practice or another specialty where there is an ongoing physician-patient relationship. Being located in a market where they’ve been practicing for at least five years is also key. Once they have a following of patients and longer-term relationships, they develop a depth of intimacy with their patients. Also important is that the market where they practice has a median household income above a certain level — and let me add that this is not just for wealthy people. A median household income above $75,000 and median household net worth of $250,000 has proven to be sufficient for patients to make this valuable investment in their health. I don’t want anyone thinking this is only for people in Beverly Hills or New York City. So if it’s the right doctor, in the right market, with the right specialty, today physicians must also have high patient ratings on Google and Healthgrades.
Due diligence by both the doctor and the concierge medicine management company must be completed and if everything meets expectations; a detailed plan must be constructed. It takes between 90 and 120 days from the signing of the agreement to the time the concierge practice opens. There are many steps before launch including … ongoing patient communication and engagement, developing a customized website, creating a crystal clear message, confirming a vision for the practice, and training the staff.
Medical Economics: Let’s talk about the second path, that of an employed doctor. If you are one of these physicians, what’s the first thing you should do? How should you approach it?
Terry Bauer: For all doctors evaluating this opportunity, it’s important to know that it’s a significant change. Each physician should do their market research and look at their individual employment contract with the hospital, health system or the payer. They need to know if there are restrictive covenants, specifically non-compete and non-solicitation provisions. To my knowledge, there are only two states in the country, Massachusetts and California, where non-competes are unenforceable. Many physicians have heard that the U. S. Department of Labor and the Biden administration are talking about outlawing non-competes, but who knows if or when that may happen.
Once those employment agreements are closely scrutinized, it may be possible to negotiate the restrictive covenants. In many cases, we have been able to assist our physician clients work their way through these negotiations.
If those provisions can be eliminated or changed, then the question becomes, can the physician run an independent practice and a new business? If they’ve never run a business before, they need to understand that there is a good deal of heavy lifting to complete. The physicians have to find an office space, negotiate a lease, design the office, develop practice guidelines, become recredentialed, hire a staff, acquire systems and supplies amongst other key initiatives. Some doctors, given the detailed and specific guidance and support we provide, take action and get things done. Others have difficulties with this because they’ve never experienced it previously, so our team is there every step of the way to ensure success.
Medical Economics: There are a couple of different options for an employed doctor who doesn’t have an existing business that they own to transition. One was to join an existing concierge practice and the other was to take over a practice from a retiring physician. Can you go through both of those options?
Terry Bauer: Joining an existing concierge practice can be very low risk and highly rewarding for a physician who wants to become a concierge doctor. This is primarily because most of these practices are already very successful and their patient panels are full. These doctors and their practices have great reputations in their marketplace. The office is already fully functioning and usually the concierge doctors who recruit a new doctor have a patient member waiting list, so there’s a built-in patient panel for the new physician. There can be a long process of interviewing to ensure it’s a cultural and a relationship fit. But if it all works out, the new physician joins and they have an “instant” concierge practice and a low risk/high reward engagement.
To be clear, there are not a lot of these options in the marketplace nationally. There may be 10 to 20 of those opportunities a year with our clients. We have several right now and we are actively recruiting to fill these roles.
Another great option is to acquire a concierge practice because of a planned concierge physician retirement. In these situations, we try and identify the right candidate to acquire the practice. We then conduct a thorough due diligence and reference checking process and put the financial models together. We make certain that the doctor who’s retiring has a fair value in mind for their practice. Then the negotiations of the terms and conditions are agreed to.
There’s always a transition period between the time the retiring doctor ultimately departs and the new doctor is on their own. We prepare and implement a comprehensive plan for patient member retention. I am proud to say that we see these retention rates in the first year of more than 90%. Thereafter, these practices really begin to grow. This is because the retiring doctor has likely not actively accepted new patients to their existing practices and there’s pent up demand in that location.
Medical Economics: Any final thoughts to share with physicians?
Terry Bauer: What’s most important is for the physician to truly evaluate why they’re considering this model. Is it because they want to spend much more time with their patients? Is it because they want to improve their work-life balance? Is it to extend their careers? Is it to be more fulfilled in their profession? These are all great reasons and for physicians who have these objectives, they should explore how this model could work for them.