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Survey shows zero percent pandemic closure rate for membership-based medical practices


24% of concierge practices reported higher revenues in 2020 than any prior year.

A new survey of over 3,500 independent medical practices tells us what physicians in our Castle Connolly Private Health Partners (CCPHP) network have been telling us throughout 2020—the membership model has been instrumental to keeping their doors open during the pandemic.

Many of these physicians with concierge practices are even optimistic about the future.

The 33-question survey was fielded to a diverse universe of approximately 250,000 practitioners by OvationLab, a strategic consulting firm in the health, wellness, and nutrition space through its VirtualPractices.org initiative. The targeted practitioners represented several professional disciplines (e.g. MD, DO, ND, and DC), but all were engaged in high-touch, root cause-oriented medicine such as functional, integrative, and membership-based medical practices. 

The timing of the survey enabled the findings to be compared to other large physician surveys posted over the course of the last 9 months, most notably, the American Physicians Survey that was received by approximately 500,000 physicians in late July.

As of August 2020, according to two surveys, approximately 14.5% of independent physician practices had either temporarily or permanently closed and roughly 7% of the remaining independent physicians anticipated the closure of their practices before the fall of 2021. 

In stark contrast to these numbers are the closure rates observed within the OvationLab sample. Of the roughly 1,000 independently practicing MDs and DOs that responded to the survey the practice closure rate was only 2%.

“The research produced a number of fascinating insights around the key attributes of practices that will be most successful in the COVID era and beyond,” said Tom Blue, co-founder of OvationLab.

The practice attributes that made the most positive difference fell into three key groupings:

  • High-touch, root cause orientation
  • Practice revenue model
  • Virtualization 

The one attribute that the OvationLab cohort shared was a high-touch, root cause orientation in their patient relationships. Possibly as a result of the additional time these physicians are spending with patients, often focused on the intersection of health and lifestyle factors, these patient relationships proved less likely to be disrupted by the pandemic. 

This was certainly the case for Dr. Jeffrey Graf, a CCPHP primary care physician and cardiologist with a membership-based practice in New York City. Thanks to a smaller panel—generally a few hundred patients instead of a couple thousand—concierge physicians like Dr. Graf are able to spend more time with and build deeper relationships with their members. 

“The people in this program are people that I know well and I typically have a long-term relationship with,” said Dr. Graf. “This helps me to understand what these people are really thinking when they’re asking medical questions and to deal with their issues without seeing them in person.”

Dr. Alan Morrison, a CCPHP primary care physician with a concierge practice in Washington, DC, explained why virtualization was key for his business: “My ability to get back to people and respond to them in times like this is totally different than what it used to be, primarily because of the connectivity. The fact that we were ready to go with connectivity and telemedicine from the start, that changed everything.”

Regardless of any other practice characteristic, the practice revenue model proved to have the most dramatic effect on how practices fared in 2020. Four revenue models were well-represented within the physician cohort of the study:

  • Insurance-based fee-for-service
  • Cash-based fee-for-service
  • Membership
  • Bundled programs 

Results for membership-based practices (e.g. concierge and direct primary care) within the cohort included:

  • 0% closure rate
  • 24% reported higher revenues in 2020 than any prior year
  • 40% reported that their revenue had not been impacted by the pandemic

In contrast, 76% of the insurance-based practices in the cohort suffered losses in revenue, and only 5% were able to achieve growth in 2020.

“I’m in practice by myself. I run a business. I have salaries to pay. I have overhead, which is enormous in Manhattan,” explained Dr. Graf. “Financially, this is a disaster. Were it not for the concierge program, I could not survive.”

Dr. Jean Beaton, another CCPHP primary care physician in Washington, DC, and her business partner Dr. Lisa Kaufman, have a unique perspective on this issue, as they had not yet officially transitioned their practice to a membership model when the pandemic hit. “At places like big hospital groups, those physicians are on salary and they’re still getting paid,” said Dr. Kaufman. Our situation is not that. We only get paid if we see patients. So, it’s a scary time for everybody right now.”

The only other practices that were completely protected from closure were those generating the majority of their revenue from the sale of bundled lifestyle medicine programs targeting specific health objectives (i.e. diabetes reversal).

“The performance of membership practices in 2020 speaks shines a light on something that is well understood by these physicians,” said Blue. “The structure of the financial relationship sets the stage for the larger relationship between the practice and the patient. Fee-for-service is transactional. Membership implies a continuous, active relationship.”

Blue continued: “It turns out that a pandemic is a terrible time to fire your doctor, and patients in membership practices gave their doctors time to react and adapt to the crisis. Patients in the fee for service model, to their own detriment in many cases, simply stopped going to the doctor.”

Some may be inclined to attribute the differences to an assumption that the patients willing to pay cash for practice memberships were more educated and affluent than the others, and therefore they were more likely to remain engaged with their medical care. To the contrary, the study revealed that the most fragile practices in the cohort were the cash-based fee-for-service practices. 

“These two practice types cater to a very similar type of patient in terms of demographics and prioritization of health,” said Blue. “Both serve patients who are willing and able to invest their own money in their healthcare, yet the membership practices flourished while the cash-based fee-for-service practices struggled more than any other practice type in the study. The structure of the financial relationship with patients is far more important than most people realize – not only to the health of the practice, but to patient health outcomes as well.”

Dean McElwain is co-founder, president & CEO of Castle Connolly Private Health Partners.

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