Small practice evolution: Making the switch to concierge medicine

May 2, 2008

Want to spend more time with your patients? Consider a retainer practice.

"I blew up a successful practice," says Pitts-burgh pediatrician Scott Serbin.

Serbin once had 3,000 patients, an outward sign of success. Yet like other doctors seeing more and more patients in response to rising overhead and stingy health plan fees, Serbin was dissatisfied.

"It was chaotic," says Serbin, "At day's end, I told myself that I did the best I could under the circumstances, but I knew I could have done better if I had more time. I wanted to say, 'I did a good job,' period."

"We sit and talk," says Serbin. "It's like day and night."

By all accounts, only 500 to 1,000 doctors nationwide operate concierge practices, also known as direct, VIP, boutique, or retainer practices. The last term refers to the annual fee at the heart of concierge medicine, typically for services that go beyond what Medicare or private insurance covers. The small market niche isn't surprising for a model that began by catering to patients who could afford annual fees as high as $15,000. However, the number of concierge doctors, who are typically soloists, could increase dramatically as retainer fees drop to middle-class levels.

A new practice in Washington state called Qliance charges adults in their 40s only $768 per year. When coupled with a high-deductible health plan to cover hospitalization, medications, and specialist care, concierge medicine can start to look almost populist.

"We believe direct practices can be medical homes for 80 percent of Americans," says Tom LaGrelius, a solo concierge FP in Torrance, CA. LaGrelius is president of the Society for Innovative Medical Practice Design, an association for concierge doctors.

Unraveling your current practice to become a concierge doctor, however, isn't for the faint of heart. We'll explore the benefits (and drawbacks) of this type of practice, help you decide if you're a candidate, and tell you what steps to take to make the switch.

What concierge medicine promises

Tom LaGrelius says nine out of 10 concierge doctors operate like he does: Their yearly retainer covers services that Medicare and private insurers generally don't, such as comprehensive annual physicals, guaranteed same-day appointments, 24/7 access by cell phone, home or work-site visits, even accompanying patients to specialists' offices. Such doctors continue to bill third-party payers for the services their policies reimburse. The other 10 percent have totally dropped out of Medicare and private insurance; their annual fees cover everything they do.

Concierge practices generally have 300 to 600 patients per doctor, and it's this small caseload that translates into numerous benefits for all concerned. There's time to talk to a patient about diet. Time to follow up with a phone call the day after a visit. Time to research someone's condition. More than anything, concierge doctors talk about really knowing their patients.

"Rapport is so important for healing," says FP David Katzman, who tends 600 patients in St. Louis. "That's hard to achieve in a traditional practice." Tom LaGrelius, who also has 600 patients, says, "I know their medical histories by heart."

The economic promise of concierge medicine is that you can make more money seeing fewer patients. Multiplying 600 patients by, say, $1,000 yields annual revenue of $600,000, handsome for primary care by anyone's standards. Katzman and LaGrelius say this promise has come true for them, but then, their practices filled up almost immediately. Not so for Scott Serbin, who wants to top out at 400 patients: "The first year was a bloodbath. I expect that in 2008 I'll be back to where I was income-wise before I started concierge medicine," he says.

Would this model work for you?

The need for a panel of long-term patients essentially limits concierge practice to primary care. Nobody's going to keep an orthopedist on retainer year after year, although LaGrelius envisions specialists like cardiologists and endocrinologists making a go of it.

The concierge model favors doctors in affluent communities, but as retainer fees decrease, patients needn't be superwealthy. On the other hand, "Medicaid and concierge medicine are mutually exclusive," says Roberta Greenspan, president of a Chicago consulting firm called Specialdocs that's devoted to concierge medicine.

The model also favors veteran doctors who've built up a large traditional practice with some 2,000 to 3,000 patients. Starting without this base is riskier, but St. Louis FP Elizabeth Laffey did just that in July 2005 and is going strong, although she's only at the 100-patient mark and earning 30 percent less than she did before starting her concierge practice.

Congeniality is crucial. "You need the kind of personality for hand-holding and the extra 10 minutes of chit-chat, when patients often reveal something about their problems," Greenspan observes. And forget about old formalities. "Patients call me by my first name" says Laffey. "When you see a patient at her house at 2 a.m., the professional walls begin to crumble."

Even with all the right qualifications, you may find concierge medicine daunting. Making the switch requires upfront money for legal fees, a mass mailing to recruit patients, employee re-education (smile!), and, often, office remodeling to create a warmer decor (gray walls and steel cabinets won't cut it, says Greenspan). Transfusion, a Cleveland company that sets up doctors in concierge practices, puts the average initial investment at $75,000, although some doctors spend far less. And while your patient schedule is blessedly lighter-typically 10 a day-a new customer-service ethos has its own stresses, notes David Katzman. "It's more important to call patients back immediately, get them into the office quickly, and be on time," he says. "If I fall behind 10 to 15 minutes, I feel bad."

A bigger drawback is saying good-bye to longtime patients who choose not to stay on, or can't. To reduce the pain, Katzman initially carried forward between 10 and 15 percent of his caseload as "scholarship patients," particularly those in the middle of treatment for a serious illness. Today, he waives his fee for almost 10 percent of his patients, about the same percentage as doctors affiliated with the concierge management firm MDVIP, according to company CEO Edward Goldman.

Scholarships notwithstanding, concierge doctors end up shedding most of their patients, exposing themselves to the charge of elitism. "Some people in the medical community look down on this," says Katzman. "It's nothing they say, just a feeling I pick up."

Proponents point to the clean bill of ethical health the AMA has given concierge medicine, contingent on practitioners rendering charity care and not touting their services as superior. Sticking to the latter condition is hard for Tom LaGrelius, though. "We all know we provide better care," he asserts.