Some Hospitals Launch Concierge Care Clinics to Raise Revenue, Generating both Controversy and Opportunity for Medical Laboratories
Critics are quick to note that this creates a disparity in how patients access healthcare services
Independent concierge care (AKA concierge medicine) is available to anyone willing to pay the additional costs, which are over and above any health insurance. In a concierge care medical practice, patients pay an annual retainer fee to gain increased access to doctors, specialists, and services, such as faster TATs on clinical laboratory testing.
Depending on the program, concierge care also can offer patients a range of “improved” healthcare benefits, including same-day appointments, extended appointment times, around-the-clock telehealth services, and the experience of receiving care from a physician with a smaller patient roster and in a more personalized manner.
Clinical laboratories and anatomic pathology groups might also find benefit from the concierge care model. Though some concierge providers bill insurance, most work on a cash basis with payment due upfront for services. This ensures prompt payment for any medical laboratory testing provided, reduces administrative overhead, and eliminates the need to deal with payers.
Concierge Medicine Is Not Just for the Wealthy Anymore
Since its inception, concierge care has been considered a luxury available to only financially well-off patients. However, that may soon change. Several major health systems and hospitals are piloting scaled-back versions of concierge care aimed at both middle- and upper-class consumers. However, the programs are not without critics and have elicited both positive and negative responses from healthcare providers.
According to Modern Healthcare, hospitals and health systems currently testing concierge care programs include:
- Mayo Clinic in Rochester, Minn.;
- Stanford Health Care in Palo Alto, Calif.; and,
- Massachusetts General Hospital in Boston.
Patients with busy schedules or chronic conditions may see the biggest gains from investing in concierge care. The added flexibility and increased access might allow them to take advantage of care options more frequently. Physicians being able to take their time during consultations and more closely focus on specific concerns is also seen as a benefit to patients.
However, Modern Healthcare points out that patients are not the only ones to see benefits from this arrangement.
“Doctors who have switched to concierge-style medicine sing its praises, claiming the smaller patient panel allows the doctor to build relationships with patients and spend more time on preventive medicine,” Modern Healthcare noted.
In 2016, Dark Daily reported on similar findings from the American Academy of Private Physicians (AAPP). They noted that the average primary care physician in the US maintained between 2,000 and 4,000 patients using the traditional care model. In contrast, the AAPP found concierge physicians maintained on average only 600 patients. (See, “Concierge Medicine Increases in Popularity as More Consumers Opt for This Care Model; Will Clinical Laboratories Exploit This Business Opportunity?” May 6, 2016.)
Concierge Care: Controversial Approach or Major Boon to Hospitals?
Since its debut in the 1990s, concierge care has faced scrutiny and opposition from those who feel it discriminates against those who cannot afford retainer premiums and out-of-pocket expenses.
One health system that has drawn such criticism is Michigan Medicine (MM), which is owned by the University of Michigan. As reported by the Detroit Free Press, in a letter to hospital administration, 200 of MM’s own doctors and staff expressed their feelings about the concierge care program, stating, “Victors Care purports to offer ‘better’ healthcare to those with enough money to pay a large access fee. The University of Michigan is a public institution and our commitment is to serve the public, not a private few. We do not feel this is the role of a state university and are unable to justify this to the patients and families we serve.”
Tom Cassels, a consulting partner with the Advisory Board Company, told Modern Healthcare, “It’s a cultural learning curve, because most not-for-profit health systems are geared toward providing the same level of service to everyone in their community. The fundamental model of concierge medicine is to price-discriminate.”
However, media coverage also highlights how the hospitals creating concierge care services are using the financial benefits to help offset the cost of low-margin services or provide care to low-income patients who wouldn’t otherwise have access to care.
Misty Hathaway, Senior Director of the Center for Specialized Services at Mass General, explained to Modern Healthcare that since their physicians are salaried, margins from concierge services can help support “things like our substance abuse program, or other parts of primary care where the margin is a little bit harder to achieve.”
Despite the ethical debates, use of concierge care services continues to gain momentum as middle and upper-class patients find the increased quality of care a worthy value proposition. As more options emerge at major healthcare centers, medical laboratories and other service providers might find that this trend also offers an opportunity to increase revenue with a minimal impact on administrative and billing costs.