By Dave Farr, VP Business Development, Specialdocs Consultants
Full disclosure, this article was intended to be about how concierge medicine would fare in the face of different healthcare reform efforts. Rewind two months to when the feasibility and implementation of Medicare for All was the central healthcare discussion topic. Simpler times.
Since then, our attention has been seized by more immediate matters. The healthcare environment and our lives, more generally, are much different than they were two months ago. For primary care physicians – already saddled with student debt obligations, volume-based performance measures and incentives, increasing administrative demands, and overall burnout – the spread of COVID-19 has presented additional challenges.
This crisis has been a pressure test for an already precarious primary care system. It has exposed weaknesses in the financial, clinical and operational aspects of primary care, and has left thousands of primary care doctors scrambling to save their practices.
Challenges old and new
Traditional primary care practices, those reliant on insurance payments and patient copays as the primary sources of revenue, were under strain prior to COVID-19. Declining reimbursements from government and commercial payers have been a fact of life for years. Primary care visits for adults ages 18 to 64 are down 24 percent from 2008 to 2016 – largely attributable to patients seeking treatment in urgent care or other settings. Independent practices face nearly constant pressure to survive by either growing their patient populations or affiliating with a hospital system.
Pressure to grow patient populations has placed excessive demands on doctors’ time, leaving insufficient time for valuable doctor-patient interaction and discussion. And larger patient panels come with increased administrative burdens – EMR charting into the evening hours is a requirement for most primary care physicians.
COVID-19 has magnified the flaws of the typical primary care practice, leaving them particularly vulnerable. More than 70 percent of practices have reported a decrease of 50 percent or more in patient volumes. Further, 42 percent of primary care practices report that layoffs or furloughs are creating stress on their practices, and fewer than half of primary care practices feel they have sufficient patient volume to remain open for the next four weeks (46 percent) or enough cash on-hand to stay open for the next four weeks (47 percent).
Despite efforts by Federal and State governments and some commercial insurers to mitigate some of this damage – through accelerated and advance payments, and the suspension of certain telehealth requirements – cash flows for traditional primary care practices are down dramatically.
Independent primary care providers, in particular, find themselves at a critical point: do I join a health system or other large practice, or can I find a different way to maintain independence and run a sustainable primary care practice?
For physicians committed to their independence, the good news is that the same financial, clinical and operational characteristics that made the concierge model strong enough to withstand dramatic healthcare reform have enabled concierge practices to survive the current COVID-19 crisis.
The Specialdocs concierge model in particular continues to attract physicians looking for an alternative to traditional practice. Amidst the COVID-19 outbreak, doctors’ top concerns are adequately helping their patients and finding an economically sustainable way to practice.
Here are key reasons why Specialdocs physicians are successfully enduring ongoing challenges from COVID-19:
Concierge practices are better equipped economically to withstand the current environment due to more reliable and timely cash flows. Membership revenue in the concierge model (membership fees are typically paid annually, semi-annually or quarterly) provides a cushion against a sudden cash crunch. Prepayment of membership revenue (average annual membership fees are between $1,800 and $2,000) gives concierge practices much more visibility into revenue and enables better resource planning and alignment.
In addition, concierge practices produce a loyal patient base – Specialdocs has an average patient membership renewal rate of 96 percent. Unless facing extreme financial hardship, concierge patients are reluctant to leave their physician and find a new, non-concierge provider. The 2008 financial crisis provided a test for concierge physicians, who largely reported normal retention and even growth during the downturn and its aftermath.
The size of patient panels for traditional primary care doctors has also presented clinical difficulties in the current crisis. According to the Medical Group Management Association (MGMA), the average Internal Medicine physician sees 1,425 patients annually, and the average Family Medicine physician sees 1,807. With panels this large, doctors have limited time to engage with patients. Managing patient care, communication and outreach presents significant obstacles – in a 1,600 patient practice, the number of COVID-19 cases and patients with possible symptoms has overwhelmed some practices trying to safely and efficiently treat patients.
Even efforts simply to educate patients on proper procedures to visit the office or procure telehealth are made more difficult when trying to manage 1,600 individuals. All doctors prioritize the health and safety of their patients, and this goal is much more challenging with large panels.
Moreover, the looming primary care physician shortage – the Association of American Medical Colleges predicts a shortage of between 21,100 and 55,200 primary care physicians by 2032 – promises to exacerbate already inflated patient panels.
In contrast, a concierge physician typically has between 250 and 600 patients, making outreach, communication and care delivery much more manageable. Doctors treating elderly patients or patients with chronic conditions have increased time to develop care plans, mitigate risks, and deliver appropriate care. Even with reimbursement for chronic care management, physicians in traditional practices cannot create more time in which to treat complex patients.
Concierge physicians in the Specialdocs Network have promptly and effectively utilized digital communication and telehealth resources to stay in touch with their patients during the COVID-19 emergency, and report high physician and patient satisfaction due to proactive steps possible only with sufficient time for planning and execution.
Operationally, traditional primary care practices are not well positioned to weather a dramatic event like the COVID-19 crisis. According to an MGMA survey, 48 percent of independent physician practices (multiple specialties) indicated that they have temporarily furloughed staff, and 22 percent have permanently laid off staff.
The current emergency will abate, and more normal times will return. But practice and staffing models designed to treat 1,600 patients who visit the office three times per year and generate retrospective insurance payments may not fit the new environment that emerges over the next several months.
Concierge practices, on the other hand, are lean by design. The typical concierge practice with one physician can handle 500 patients with only two or three staff members. Amidst the COVID-19 crisis, no Specialdocs physician practice has had to implement furloughs or staff reductions. Similarly, concierge practice real estate costs are kept low due to smaller patient panels and increased availability of a physician by phone, email or telehealth. As a result, concierge practices face decreased risk of having dormant or excess real estate should another emergency event arise.
The road ahead
The COVID-19 crisis was unprecedented. Its impact has been extreme and is still unfolding. But there is now precedent for a concurrent health and economic crisis. Systems and structures that worked previously – especially if they were on shaky ground to start with – can no longer be depended on to adequately serve patients and the physicians who serve them. Concierge care is an important piece of reshaping the primary care system to work for patients and physicians.
More flexibility, greater stability, personalized care and more satisfied physicians can be a reality. Doctors have the model available that can deliver on these objectives.
Dave Farr is the Vice President of Business Development for Specialdocs Consultants. Dave earned a bachelor’s degree in business administration from the University of Colorado, Boulder, an MBA from the Stephen M. Ross School of Business at University of Michigan and a J.D. from the University of Michigan Law School. He brings almost two decades of healthcare and regulatory knowledge and business development expertise to Specialdocs. Learn more about Dave.