Medical laboratories prepared to receive direct payments for services rendered will have an advantage as more physicians’ practices convert to concierge medicine and stop taking insurance or Medicare
Now, a new payment program called Direct Primary Care (DPC), which is emerging as an alternative to traditional health insurance plans, could further help patients in HDHPs—and the uninsured—afford quality healthcare.
The main difference between DPC and concierge medicine lies in how doctors get compensated. Monthly membership fees are usually the only source of revenue for DPC practices and they do not accept any type of insurance. Concierge practices, on the other hand, bill insurance companies and Medicare for covered medical services and collect membership fees for services that are not covered.
In general, if a third-party payer is not involved, the practice is considered Direct Primary Care.
DPC versus Concierge Medicine: How Do They Compare?
Direct Primary Care is an offshoot of concierge medicine and the two terms are often used interchangeably. Although similar, there are distinct differences between the two models of care.
Concierge medicine was created in the mid 1990’s and was originally used by wealthy patients who were willing to pay a high subscription fee for access to select physicians. However, this model has changed over the years, making concierge medicine economically available to lower income individuals as well.
According to Concierge Medicine Today, the majority of concierge medicine plans cost between $51 and $225 per month in 2017. Eleven percent of concierge plans charge less than $50, and 35% cost more than $226 per month. There are some high-end concierge plans that can cost upwards of $30,000 per year.
Direct Primary Care was started in the mid 2000’s as an insurance-free plan mainly for the uninsured. In 2015, the Journal of the American Board of Family Medicine reported that the average monthly cost for patients on a DPC plan was $93.26 among the 116 practices they surveyed. The range in costs at that time was $26.67 to $562.50 per month. They also found that practices that identified themselves as “Direct Primary Care” charged a lower fee on average than concierge practices.
The patient base also varies between the two types of practices. According to Cypress Concierge Medicine in Nashville, Tenn., DPC physicians usually treat younger patients with an annual household income of less than $50,000, while concierge medicine doctors typically treat patients over the age of 45 who have an annual household income of $75,000 or more.
Physicians in both plans try to limit the number of patients they serve to a few hundred to ensure they can provide the best possible care to their clients.
Physicians Like Direct Primary Care Programs
DPC physicians charge a monthly membership fee for their services based on the patient’s age, the type of practice, and the number of individual family members on the DPC plan. The monthly fee includes routine office visits—usually with no co-pays—and almost constant access to a physician through telemedicine technology.
DPC plans also provide same or next-day appointments for members and offer lower costs for pharmaceuticals and lab tests.
Direct Primary Care programs are attractive to physicians who often feel overworked by too many patients, too much tedious paperwork, too much time dealing with insurance companies and too little time to provide quality care.
“There are thousands of physicians in career crisis who are investigating new ways to practice medicine and in essence, love going to work again,” noted Michael Tetreault, Editor-in-Chief of The DPC Journal.
“I can understand why [direct primary care] would be appealing to some family physicians,” Dennis M. Dimitri, MD (above), Professor and Vice Chair of Family Medicine and Community Health at UMass Memorial Medical Centerand President of the Massachusetts Medical Society, told the Boston Globe. “Many doctors feel terribly burdened by the administrative issues of dealing with insurers, referrals,” he stated. “They are unhappy that all of that gets in the way of them having sufficient time to help their patients the way they want to.” (Photo copyright: Massachusetts Medical Society.)
Jeffrey Gold, MD, a Family Practice specialist in Marblehead, Mass., left his position with a successful physicians group to launch his own DPC practice.
“It’s really blue-collar concierge medicine,” Gold told the Boston Globe. He added that his former practice model “was all about volume and coding and how many people a day you can see.”
“I couldn’t do it anymore,” he admitted. “It was not aligned with how I grew up thinking about medicine.”
DPC/Concierge Practices Expected to Increase in Numbers
With a growing number of patients in high-deductible health plans, concierge medicine and DPC practices are expected to increase in number. According to Direct Primary Care Frontier, an online resource that supports DPC, in 2014 there were only 125 DPC practices in the US. However, by April of 2017, that number had jumped to 620, and as of March 2018, the estimated number of DPC practices was 790.
Similarly, in 2010, there were between 2,400 and 5,000 concierge medical practices in the US, and by 2014, that number had increased to 12,000, according to the American Journal of Medicine.
Like concierge medicine, Direct Primary Care clients present a relatively new method for clinical laboratories to succeed and be profitable. Because there is no need to be in insurance networks—and patients pay cash for lab tests—DPC patients may prove to be an excellent source of business for medical laboratories that can adapt to DPC practices.
If insurance plans are removed from the billing cycle for primary care, it’s not clear how clinical laboratories will be reimbursed for their services
Direct Primary Care (DPC) is gaining popularity in the United States. This emerging movement enables primary care providers to bill patients directly for services rendered, bypassing traditional health plans. On a large scale, employers can contract with primary care practices directly for their employees’ primary care coverage. The idea is to lower healthcare costs. But what exactly is DPC and how are clinical laboratories affected by it?
In operation, direct primary care is similar to concierge medicine, where a patient pays an annual retainer for direct access to a specific healthcare provider. DPC practices offer members unlimited, on-demand visits to primary care physicians for a flat, monthly fee.
The DPC movement has its own lobbying group—the Direct Primary Care Coalition—which supports physicians who opt to practice direct primary care. According to the group’s website, there are currently about 1,000 DPC practices in 48 states which serve over 300,000 patients.
DPC has gained Senatorial support. In December, Senators Bill Cassidy, MD (R-LA), Doug Jones (D-AL), Jerry Moran (R-KS) and Jeanne Shaheen (D-NH) introduced legislation to “lower the cost of healthcare and expand patients’ access to their primary care providers.”
Their bill (H.R. 3708), titled the “Primary Care Enhancement Act of 2019,” would amend the Internal Revenue Code of 1986 to “allow individuals with direct primary care service arrangements to remain eligible individuals for purposes of health savings accounts, and for other purposes.”
A press release announcing the Senate version of the bill (S. 2999), described DPC as a model that “encourages patients to develop personal relationships with their primary care physician, including extending access to care beyond office visits and business hours and through telemedicine. It focuses on prevention and primary care, relying less on specialist and hospital referrals. It is a growing model used by more than 1,000 practices across 48 states and the District of Columbia.”
The press release also states, “DPC models replace copays and deductibles with flat, affordable monthly fees. Current law makes DPC incompatible with health savings accounts (HSAs) paired with high-deductible health plans (HDHPs).”
Direct Primary Care in Practice
Physicians seem to like the DPC model. It frees them, they
say, from the unnecessary interference of insurance providers, the burdens of excessive
paperwork, and ever-increasing administration costs, while allowing them to
have a better patient-doctor relationship.
“I know all my patients by name. I have time for them,” Matthew Abinante, DO, told The DO, a journal of the American Osteopathic Association (AOA). “I probably interact with about 20 patients a day when you factor in the electronic communication.”
Abinante is a board-certified family physician. He practices at Elevated Health, a direct primary care practice in Huntington Beach, CA. Patients pay an average of $75 per month for membership. This fee includes unlimited same day/next day appointments and the ability to talk to a doctor via telephone, e-mail, text, or video chat—24/7.
Matthew Abinante, DO, is shown above treating a patient at Elevated Health, a DPC practice in California. “Our goal is to keep you as healthy as possible, while saving you time and money. We remove the barriers of traditional insurance and provide you with a modern take on the personal, old-fashioned care missing in today’s healthcare industry,” he said. (Photo copyright: Elevated Health.)
At Elevated Health, some minor clinical laboratory tests and
procedures are included in the monthly fee. They include:
Other medical laboratory testing, imaging, and medications
are available to patients at contracted wholesale prices, which are quoted up
front. This is consistent with the trend for price transparency in healthcare.
“What everyone really needs to know is that patients do get better care when their doctor is more satisfied with what they’re doing. And that takes time. What the [fee-for-service] system cannot provide us is time with the patient,” Tiffanny Blythe, DO, told The DO. Blythe runs Blue Lotus Family Medicine, a DPC practice in Kansas City, MO.
When Direct Primary Care Does Not Work
The DPC model has been tried before. In 2010, a DPC provider called Qliance was formed primarily on investment capital from Jeff Bezos of Amazon. The goal was to free doctors and patients from the constraints of traditional health insurance.
Qliance opened several clinics in the Seattle area and by
2014 had nearly 50,000 DPC patients—including employees of Expedia and Comcast. It also had a contract to
provide primary care services with a state Medicaid insurer. Nevertheless, Qliance
closed in 2017.
“We would open up a clinic and add a bunch of docs before we had enough patients to pay for it,” Nick Hanauer, a Seattle venture capitalist and investor in Qliance, told STAT.
“It’s just hard to get the customers because you had to
break the paradigm that was in everyone’s heads about how healthcare had to
work, and you had to disrupt the relationships people had with their insurance
companies,” Hanauer explained.
“Somebody with more economic power than we had could do
this—and should,” he added.
Not All Physicians Support Direct Primary Care
Since the DPC model is so new, there is little research or statistics to confirm it will have a positive effect on healthcare outcomes or lower healthcare costs. Some healthcare professionals have reservations about direct primary care. Their concerns include the potential for less oversight of practitioners and the possibility that patients will slight themselves regarding insurance coverage.
“What we don’t hear about are the people who need more than can cover and what happens to them when they fall into that gap,” Carolyn Engelhard, a health policy analyst and Assistant Professor at the University of Virginia School of Medicine. “We don’t know if they just don’t get care or then enter the traditional healthcare system and start over.”
There are also concerns that DPC plans could draw a large
percentage of healthier patients, which could raise costs for those in
traditional insurance plans, and that it may be more difficult for DPC patients
to gain access to needed specialists and other services.
“Healthcare is fragmented, and if we continue to have little
carve-outs so some [doctors] can practice medicine the way they want, it is not
helping to make the system more responsive and integrated,” Engelhard added.
Nonetheless, both Direct Primary Care and Concierge Medicine
are growing in popularity in the US. And because it’s unclear how clinical
laboratories would interact with or bill DPC practices, clinical laboratory
leaders should keep a close eye on this trend.
As more patients opt for these models of care, healthcare
organizations, pathology groups, and clinical laboratories will have to create
ways to adapt. Since DPC practices are out of most networks, clinical labs may
have to bill patients directly for their services. Not all clinical labs are
prepared to do that, and those that are could experience a slowdown in the
payment process. Labs may also have to contract with physicians to provide
testing services on a pre-determined wholesale cost basis.
In another example of giving consumers more direct access to medical laboratory tests, Walmart believes that convenience and lower prices can help it capture market share
Retail giants continue to add healthcare services—including medical laboratory testing—to their wares. It’s a trend that pressures hospital systems, clinical laboratories, pathology groups, and primary care providers to compete for customers. And, while in most instances competition is good, many local and rural healthcare providers cannot reduce their costs enough to be competitive and stay in business.
This is true at Walmart (NYSE:WMT), which recently opened its second “Health Center” in Georgia and announced prices for general healthcare services 30% to 50% below what medical providers typically charge, reported Modern Healthcare.
The services offered at the new Walmart Health Center in Calhoun, a suburb of Atlanta, include:
Primary care
Dental
Counseling
Clinical laboratory testing
X-rays
Health screening
Optometry
Hearing
Fitness and nutrition
Health insurance education and enrollment
A Walmart news release states, “This state-of-the-art facility provides quality, affordable and accessible healthcare for members of the Calhoun community so they can get the right care at the right time … in one facility at affordable, transparent pricing regardless of a patient’s insurance status.”
The fact that Walmart posts “Labs” on the Health Center’s outdoor sign may indicate the retail giant considers easy access to clinical laboratory testing a selling point that will draw customers.
“By offering clinical laboratory testing in support of primary care and urgent care, Walmart may be able to lower prices for lab tests in any market that it enters,” said Robert Michel, Editor-in-Chief of Dark Daily and its sister publication The Dark Report, and President of The Dark Intelligence Group.
The sign above on the exterior of Walmart Health Centers lists the services offered. By advertising “Labs” Walmart is confirming that growing numbers of consumers want to order their own lab tests and that the availability of lab tests gives its medical clinic a competitive advantage. (Photo copyright: Modern Healthcare.)
Healthcare Transparency and Lower Prices
The 1,500 square-foot free-standing Walmart Health Centers offer more services than the in-store Care Clinics installed in other Walmarts throughout Georgia, South Carolina, and Texas. For its healthcare services, Walmart established partnerships with “on-the-ground” health providers to offer affordable services.
“We have taken advantage of every lever that we can to bring the price of doing all of this down more than any hospital or group practice could humanly do. Our goal, just like in the stores, is to get the prices as low as we can,” Sean Slovenski, Senior Vice President and President of Walmart Health and Wellness, told Bloomberg Businessweek.
Some of the clinical laboratory prices prominently posted in the building and noted on the Health Center online price list include:
Meanwhile, the average cost to visit a primary care doctor is $106, according to Health Care Cost Institute data cited by Business Insider, which noted that Walmart’s rates “could be a steep mountain for traditional providers to climb.”
However, Rob Schreiner, Executive Vice President of WellStar Health System in Northern Georgia told Modern Healthcare that “Walmart will offer a cheaper alternative for working-class families who may not have health insurance and may not have an established relationship with a primary care provider.”
Convenient Access to Quality Healthcare Services a Major Draw
At a freestanding Walmart Health Center, people can park near the entrance and walk a few steps to the entrance, rather than traversing aisles to a Care Clinic inside a Walmart Supercenter. And for many customers, finding a Walmart Health Center may not be as complicated or stressful as visiting doctors’ offices.
That seems to be Walmart’s goal—not simply using the Health Centers to increase traffic in its stores, Slovenski said. “We are trying to solve problems for our customers. We already have the volume,” he told Forbes. “We have the locations and the right people. We are creating a supercenter for basic healthcare services.”
Walmart’s arrangement with local healthcare providers differs from traditional primary care clinics staffed by doctors who are practice owners, or who are employed by nearby hospitals and health systems.
“The whole design of the clinic is curious to most of the doctors here [in Dallas, Ga.],” Jeffrey Tharp, MD, Chief Medicine Division Officer, WellStar Medical Group, told Modern Healthcare. “We are advocating integration into our network, for instance with patients who need a cardiologist coming from Walmart to WellStar.”
Clinical laboratory leaders may want to explore partnerships with Walmart and other retailers that are developing healthcare centers to deliver primary care services in places where masses of people shop for everyday items. Especially given that these big-box retailers remain open during healthcare crises like the COVID-19 pandemic.
However, research published in JAMA Internal Medicine suggests outpatients with primary care doctors have better healthcare experiences and receive “significantly more” high-value care. These findings come on the heels of a Kaiser Family Foundation (KFF) Health Tracking Poll which revealed that 26% of 1,200 adults surveyed did not have primary care physicians. And of the millennials polled (ages 18-29), nearly half (45%) had no primary care provider.
Why is this important? High-value care include many
diagnostic and preventative screenings that involve clinical laboratory
testing, such as colorectal and mammography cancer screenings, diabetes, and
genetic counseling.
And, this is where clinical laboratories can help.
In the Millennial’s World, Convenience Is King
Millennials are Americans born between the early 1980s to
late 1990s (AKA, Gen Y). And, as Dark
Daily reported, they value convenience, saving money, and connectivity.
Things they reportedly do not associate with traditional primary care
physicians.
According to the KFF poll:
45% of 18 to 29-year-olds,
28% of 30 to 49-year-olds,
18% of 50 to 64-year-olds, and
12% of those age 65 and older, have no
relationship with a primary care provider.
Thus, it’s not just millennials who are not seeing primary
care doctors. They are just the largest age group.
When this many people skip visits to primary care doctors, medical
laboratories may see a marked decline in test volume. Furthermore, shifting
consumer preferences and priorities means clinical laboratories need to reach
out and serve all healthcare consumers, not just millennials, in new and
creative ways.
“We all need care that is coordinated and longitudinal,” Michael Munger, MD, FAAFP, a family physician in Overland Park, Ks., and President of the American Academy of Family Physicians, told the Washington Post. “Regardless of how healthy you are, you need someone who knows you.” (Photo copyright: American Academy of Family Physicians.)
Consider Changes in
Lab Business Model
Dark Daily advises
clinical laboratory leaders to consider changes in how they do business to
better serve busy consumers. Here are a few ways to appeal to people of all
ages who seek value, fast service, and connectivity:
Offer walk-in testing with no appointments.
Create easy-to-navigate online scheduling tools.
Enable patients to request tests without doctors’ orders as the lab’s market allows.
Make results quickly available and in easy-to-understand reports.
Post test results online for patients to securely access in patient portals.
Make it easy to interact with personnel or receive information through lab websites.
Use social media to promote the lab and respond to online reviews.
Younger Americans Do
Not Perceive Value of Primary Care
The JAMA researchers studied 49,286 adults with primary care and 21,133
adults without primary care between 2012 and 2014. The methodology entailed:
39 clinical quality measures,
Seven patient experience measures, and
10 clinical quality composites (six high-value
and four low-value services).
“Americans with primary care received significantly more
high-value care, received slightly more low-value care, and reported
significantly better healthcare access and experience,” the JAMA authors
wrote.
Healthcare Dive notes that the JAMA study may be the first time researchers have substantiated the higher value of primary care, which generally provides services for:
Cancer screening (colorectal and mammography),
Diagnostic and preventive testing,
Diabetes care, and
Counseling.
“Poor primary care supply or access may be hurdles, or some
Americans do not perceive the potential value of primary care, particularly if
they are younger … and healthier,” the JAMA
researchers noted.
The study found that “Only 60% of outpatient antibiotic
prescriptions dispensed in the United States are written in traditional
ambulatory care settings [defined as medical offices and emergency departments].
Growing markets, including urgent care centers and retail clinics, may
contribute to the remaining 40%.”
A Washington Post analysis of this JAMA study reports that “nearly half of patients who sought treatment at an urgent-care clinic for a cold, the flu, or a similar respiratory ailment left with an unnecessary and potentially harmful prescription for antibiotics, compared with 17% of those seen in a doctor’s office.”
This drives home the importance of having a primary care
doctor.
“Antibiotics are useless against viruses and may expose patients to severe side effects with just a single dose,” notes Kevin Fleming, Chief Executive Officer of Loyale Healthcare, a healthcare financial technology company, in its analysis of the earlier JAMA study. “Care that’s delivered on a per-event basis by an array of unrelated providers can’t match the continuity of care that is achievable when a patient receives holistic care within the context of a longer-term physician relationship,” he concluded.
Clinical laboratory leaders and pathologists are advised to
regularly engage with primary care physicians—not just oncologists and other
specialists—and keep them informed on what the lab is doing to better attract
millennials and develop long-term relationships with them based on their values.
Experts say Amazon could be planning a roll-out of healthcare services to its Prime members and others
Clinical laboratory leaders will want to note that the Telehealth and home healthcare industries have expanded with the launch of Amazon Care, a virtual medical clinic and home care services program from global retailer Amazon.com, Inc. (NASDAQ:AMZN).
Amazon is piloting Amazon Care as a benefit for its 53,000
Seattle-area employees and their families, according to published reports. Could
this indicate the world’s largest online retailer is moving into the primary
care space? If so, clinical laboratory leaders will want to follow this
development closely, because the program will need clinical laboratory support.
Amazon has successfully disrupted multiple industries in its
corporate life and some experts speculate Amazon may be using its own employees
to design a new medical delivery model for national roll-out.
The S&P report goes on to state, “In as little as five years, the Seattle-based e-commerce company could interlink its system of capabilities and assets to launch various healthcare products, insurance plans, virtual care services, and digital health monitoring to a broader population. The rollout would be part of a larger plan by Amazon to deliver convenient, cost-effective access to care and medications across the U.S., likely tied to Amazon’s Prime membership program, according to experts.”
Modern Healthcare reported that Amazon Care services include telemedicine and home visits to employees enrolled in an Amazon health insurance plan.
Experts contacted by S&P Global Market Intelligence
suggest Amazon:
Plans a “suite of customized health plans and
services for businesses and consumers;”
May offer health services to its five million
seller business and more than 100 million Amazon Prime members; and
Sees healthcare as a growing market and wants
greater involvement in it.
How Amazon Care Works
Amazon Care offers online, virtual care through a
downloadable mobile device application (app) as well as in-person home care for
certain medical needs, such as:
Colds, allergies, infections, and minor injury;
Preventative consults, vaccines, and lab tests;
Sexual health services; and
General health inquiries.
Becker’s Hospital Review reported that once a participant downloads the Amazon Care app to a smartphone or tablet and signs up for the program, he or she can:
Communicate with healthcare providers via text
or video;
Plan personal visits if needed;
Set payment methods in their user profile; and
Receive a “potential diagnosis” and treatment
plan.
The graphic above is taken from the S&P Global Market Intelligence report, which states, “Amazon is one of several tech firms vying for a share of the healthcare market where national spending is expected to reach $6.0 trillion by 2027, up from $3.6 trillion in 2018, according to the Centers for Medicare and Medicaid Services.” (Graphic copyright: S&P Global Market Intelligence.)
“The service eliminates travel and wait time, connecting employees and their family members to a physician or nurse practitioner through live chat or voice,” an Amazon spokesperson told CNBC, “with the option for in-person follow-up services from a registered nurse ranging from immunizations to instant strep throat detection.”
The “mobile health nurse” may also collect clinical laboratory
specimens, the Verge
reported.
Amazon has partnered with Oasis Medical Group, a family primary care practice in Seattle, to provide healthcare services for Amazon Care patients.
Paving the Way to Amazon Care
The Healthcare Financial Management Association (HFMA) compares Amazon’s piloting of Amazon Care to similar healthcare projects that studied population health by first involving employee health plans.
HFMA’s analysis noted that Amazon Care is similar to Haven, a patient advocate organization based in Boston and New York that was created in 2018 by Amazon, JPMorgan Chase, and Berkshire Hathaway to lower healthcare costs and improve outcomes for participating companies.
Tech Crunch reported that in 2018 Amazon also purchased PillPack for nearly $1 billion and integrated its prescription delivery services into Amazon Care.
More recently, Amazon acquired Health Navigator and plans to bring those offerings to Amazon Care as well, CNBC reported. Founded in 2014, Health Navigator provides caregivers with symptom-checking tools that enable remote diagnoses.
Should Telemedicine Firms Be Nervous?
Dark Daily recently reported on Doctor on Demand’s launch of its own virtual healthcare telehealth platform called Synapse. The e-briefing also covered Doctor on Demand’s partnership with Humana (NYSE:HUM) to provide virtual primary care services to the insurer’s health plan members, including online doctor visits at no charge and standard medical laboratory tests for a $5 copayment.
So, should telemedicine firms be concerned about Amazon competing in their marketplace? Business Insider predicts Amazon will need time to beef up its medical resources to serve people online and in-person through Amazon Care.
But that’s the point of Amazon’s pilot, isn’t it? What comes
from it will be interesting to watch.
“Meanwhile, telemedicine firms can ink strategic
partnerships and strengthen their existing payer relationships to safeguard
against Amazon’s surge into the space,” Business Insider advised.
It remains to be seen how medical laboratory testing and reports
would fit into an expanded Amazon Care health network. Or, how clinical laboratories
will get “in-network” with Amazon Care, as it grows to serve customers beyond
Amazon’s employees.
As Dark Daily recently advised, medical laboratory leaders will want to ensure their lab’s inclusion in virtual care networks, which someday may include Amazon Care.
