Or, so you think.
You read about some brave doctor switching to a Direct Primary Care (“DPC”) practice or come across the apparent success of Qliance, Iora Health and others, and you think “that could be me!”
Finally, you can practice medicine the way you always wanted instead of being dictated to by insurance companies.
The news articles make it appear that this giant opportunity awaits any primary care physician who is willing to take the risk.
Your heart rate quickens, dollar signs appear in your head, and you easily begin identifying potential customers: from current patients to the employer down the street. Heck, even the health insurance exchanges (public and private) are an option with an insurance wraparound!
You conclude, “This is perfect!”
The pitfalls are numerous and unanticipated.
Believe me, I know. For two years, my colleagues and I at BlueSky Health pursued a Direct Primary Care model (at our Howell, MI location). That process gave me a much better understanding of what it will take to create successful DPC practices.
Make no mistake, DPC is one of the best opportunities we have to truly change healthcare. There is a positive way forward which I will eventually describe. But, let me first address some barriers that need to be overcome.
We ran headfirst into a mountain of legal regulations: How do you legally structure your DPC practice? Can the money flow directly in to the PLLC or PC? Are you then acting as an insurance company? And, what about Medicare? Are you going to continue to accept Medicare? If so, is the government going to come after you? Ok, you decided to opt out of Medicare, but what about your existing insurance contracts? Could switching to a DPC model violate the terms of those agreements? If so, will you have to “fire” all of your existing patients that will not transition to DPC?
The cost of gaining suitable answers to all of these questions approached 5 figures.
Furthermore, contrary to popular rumor, an HSA, HRA or FSA cannot be used to pay for DPC fees. That is why Sen. Orrin Hatch (R-UT), Rep. Erik Paulsen (R-MN), and others have been pushing to explicitly include DPC as a qualified medical expense since 2011 (unfortunately unsuccessfully). Additionally, if DPC is paid for by an employer, does it violate High Deductible Health Plan (HDHP) regulations? Did you even know such HDHP regulations exist?
Many of the regulations pertaining to DPC are as clear as mud, which creates a level of risk that most physicians would rather not bear. In fact, we broke off potential partnership talks with a newly formed national DPC company simply because they had poor answers to many of these legal questions.
Many of the legal issues can be managed with the proper preparation and structure. Forthright Health has first-hand knowledge of many of the legal issues and provides legal support to each participating physician.Example
Let’s move past the legal issues. Now, the question becomes: how are you going to attract customers? (And, yes, in a DPC arrangement, patients become customers and begin to demand a higher level of customer service)
May I ask, as a physician, have you ever sold anything before? What do you know about marketing?
There is no doubt that you are smart and can probably figure it out, but do you have time to market while dedicating time to your patients?
These are simple questions, but the answers are complicated and nuanced. You might think DPC makes perfect sense and will sell itself (the articles you read certainly make it seem that way). But to the general public who do not have your healthcare background, and who often confuse health insurance with healthcare delivery, DPC is not as easy of a sell as you think. (A ~$100 per month price is complete sticker-shock for 98% of the population)
It is extremely difficult to pursue a retail model and try to convert one practice at a time, one patient at a time to DPC. We need to take advantage of existing healthcare distribution channels and open the marketplace up to a new healthcare delivery model. Forthright Health will handle this process for participating physicians.Example
THE INDIVIDUAL PATIENT
We all know that the average patient today receives sub-optimal care. It takes two weeks or longer to get an appointment, patients must miss work, and wait 30 minutes for a 7 minute face-to-face visit with an overworked physician.
Sounds like a big problem that needs fixing, right?
All great products are solutions that fix a problem. But before someone will shell out money for a fix, they first need to recognize and believe that they have a problem.
Sadly, the general public has been taken advantage of in such a severe way by our current healthcare system that they no longer believe that there could be a better way; they have been beaten down and abused.
In fact, I had someone tell me that experiencing terrible care and customer service is not a problem because “that’s just the way it is everywhere.” Besides, most people will tell you that they rarely go to the doctor, and when they do, they can easily visit an urgent care.
Naturally you’ll press them further and ask “what about no more waits, online and 24/7 access all for $50-$100 per month?” “No thanks” they’ll say. “I have health insurance and I only pay $10-40 copays per visit right now, even with my high deductible plan. Why should I pay ‘extra’ for DPC?”
The average person doesn’t understand healthcare and they don’t have time to figure it out. Any new delivery model must fit in easily with what they already know. It must be packaged in a way that makes sense and does not cause extra work or expense.Example
HEALTH INSURANCE EXCHANGE
Well, then, if potential customers deem DPC as “extra”, then to get over this barrier it is simply a matter of coupling DPC with a high-deductible wraparound plan, right?
But, how are you going to do that? How are you going to get on the exchange? You have one clinic in one location, how is that going to sell and scale on a state-wide exchange? Most importantly, what carrier is going to partner with you and your tiny clinic?
We need size, scale and footprint to not only be listed on an Exchange, but also gain credibility from wraparound carriers.Example
OK, so selling to individuals and getting on the exchange might be a challenge, but surely DPC is a great deal for employers, isn’t it?
Sure it is, but, first off, we have to be aware that there are two types of employers – the fully insured and the self-funded. In my experience, self-funded employers see the value of DPC because they have been paying claims for years without receiving much value in return, but the fully insured employers will not go near DPC.
FULLY INSURED EMPLOYERS
Overwhelmingly, fully insured employers are up to their ears in PPACA (“Obamacare”) issues. They do not want to hear about anything else that might create further complication. Besides, they have longstanding relationships with benefit brokers and insurance salespeople who annually quote them the lowest rates from a few carriers. They buy “off the shelf” Blue Cross Blue Shield plans every year. Yes, the rates continue to go up, but, fully insured employers either tighten the belt and absorb the increases because “that’s just the way it is”, or they simply adjust the employee cost-sharing levels.
Meanwhile, the broker, whom the employer has had a long-term relationship with, makes money on a percentage of the overall premium, thus having no real interest in changing the way they have happily done business for years.
Finally, an employer of 100 employees is going to look at DPC, do the math in their heads, and say “$5k-$10k is an awful lot of money to spend every month solely on primary care. Why don’t I just take that money and throw it in an HRA or HSA for the employee and they can do with it what they want?”
If you look at the success stories of Qliance and Iora Health, you will find most of their patients come from self-funded employer arrangements. This customer segment is the most receptive to DPC.
Similarly to DPC, self-funded employers have grasped the on-site clinic model for years.
Self-Funded employers demand a high level of sophistication. They too have a relationship they rely on, but now, the benefit broker is generally called a “consultant” whose compensation is not solely based on commission. If you are going to pitch to self-funded employers, you will need to have answers to questions like: What is your disease management program? How are you going to share data?
Right now, self-funded employers spend about $300 per year on primary care per employee, how are you going to convince them to pay double or triple that?
Most prominently, such employers will say “I have employees located all over, how are you going to service them with your one location?”
Furthermore, the self-funded employer sales process is long, thorough, tedious, and can last for a number of years. As an average practice, do you have the time and cash-flow to see it through?
Self-Funded Employers can be the drivers of change. Ever increasing rates will force Fully Insured Employers to either eventually turn to self-funding or look to the exchanges. Both Self-Funded Employers and the Exchanges are going to demand a large footprint of physicians in order to service the beneficiaries. That is why Forthright Health is working to create and manage such regional networks.Example
Despite my dour writing thus far, do not be discouraged. DPC is still the best opportunity we have to fix our healthcare system.
It is time to free physicians from the shackles of a bureaucratic insurance system and allow providers to care for patients in the best way possible. Only then will we be able to improve patient experience, access and quality while reducing the need for high cost ER, hospitalization and specialist care.
We can overcome the legal, marketing and selling issues. There is strength in numbers.
Together, we can do it!
There is a clear path in which we can all succeed. We need to join together to streamline legal compliance, provide the critical mass necessary to attract insurance wraparound partners, and achieve a footprint large enough to service multiple employers.
That is why I have formed a new company called Forthright Health.
Forthright Health is a unifying body where physicians with a shared philosophy can overcome many of the barriers I describe.
It is open to all primary care physicians – independent, group practices, hospital employed, etc.
Initially starting at a regional level, this unique system will provide the scale necessary to contract with any employer and achieve wraparound insurance partnerships. In addition to legal and marketing support, the newest technology and practice management tools can be tested and procured, and data can be shared in productive ways.
We have an obligation to seize this opportunity. Together, we can make a collective effort with Forthright Health removing many of the tasks that make DPC difficult. As a physician, the process should be as painless as possible, freeing you to focus your effort on your patients and achieving positive outcomes.
Will you join with Forthright Health and seize this opportunity?
I am sure you have many more questions. Please get in touch with me and let’s have a conversation.
I look forward to meeting you,
CEO, Forthright Health