Concierge Medicine

The Business Diaries, Part 3

© photo by Bertie

In my last blog, about VIP medicine, I made the argument that there are three types of VIP patients; that their existence is an unavoidable fact; and that rather than trying to deny that fact, better to acknowledge it and be intentional about how VIP medical care works.

I further suggested that perhaps VIP care should be modeled after air travel - where the conveniences and amenities are better in first class, but everyone gets where they are going safely and on time (or not).  

As applied to medicine, this would mean that VIP patients might get better service, nicer rooms, and tastier hospital food (low bar there), but doctors would be expected to deliver the same high quality of care and attention to all their patients, as they are trained to do.

What about your Concierge service? some of you asked, pointedly (thank you GT and EC). Isn’t that VIP care? I’d like to read your take on that….

Fair point. The WFM hybrid concierge model is a form of VIP care. Why did I leave it out?

The answer is prosaic - I wrote the post in response to a specific news article, and by the time that was done it was too many words already. 

That was not only a blunder but also a missed opportunity: to pull back the curtain on the inner workings of running a medical practice - one of my main goals with this blog. 

I will try to correct that today - albeit with too many words. I hope it doesn’t burst any bubbles or tell you more than you want to know. Ignorance may be bliss, but it’s not the point of this blog.

First, a little history.

When Rachel and I founded WFM in 2006, we were working in academic medicine, at the Columbia University Family Medicine Residency Program. I was hired to teach hospital medicine and Rachel to teach obstetrics and Women’s Health, but like everyone else - residents and attendings - we also saw patients at the Family Medicine Health Center - a clinic in Washington Heights.

Like most residency clinics, the patients were underserved and the clinic was under-resourced. While practicing medicine in that environment had its rewards, it also had its frustrations.

I remember idealistic young residents coming to me in their second or third years of training, when an increasing amount of their time was devoted to clinic, with trepidation and apprehension in their voices: “I went into Family Medicine to see ambulatory patients,” they would say, “but now that’s the part of my job I like the least!”

I would reassure them that many of their discontents were intrinsic to being residents and that Federally Qualified Health Centers represented an important but small slice of Family Medicine - after graduation there would be lots of different options and opportunities.

But was this true? Not really. 

Back then, Family Medicine in New York City was mostly FQHC-based. Sure, there were Family Medicine doctors sprinkled here and there, but mostly in Internal Medicine or multispecialty settings, where the holistic, bio-psycho-social model of Family Medicine was neither applied nor understood.

This was a pet peeve of Rachel's and mine. Why was Family Medicine, the all-around best model for delivering primary care (in our unbiased opinions), so common nationwide and yet so pigeonholed in New York? 

We looked around our neighborhood for a Family Medicine practice for our growing family - nothing. We expanded our search to neighboring area codes - nothing. I knew a couple of solo Family docs way downtown, but that was it.

Someone should really start a Family Medicine practice that takes private insurance on the Upper West Side, we would say to each other. So finally, one day we did.

As we suspected, the Family Medicine model made sense to a lot of people. 

They liked having a place to go that could be their first stop for any medical problem - most of the time we could fix it, and if not, we sent them to a handpicked specialist and stayed in the loop. 

They liked being able to bring their kids to the same place they went, and having someone who knew how to put together all the various pieces of the healthcare puzzle in a way that made overall sense. 

They liked that we were independent, and specialized in primary care.

Over time we grew, from 110th street to 70th street to East 87th street and now to Greenpoint, Brooklyn. 

Financially, accepting private insurance was a mixed bag. 

On the plus side, it meant that our patient population was extremely varied, from artists and actors, to professors and students, to doormen and other union workers, to bankers and traders, to internet marketers, advertisers, and the ever-proliferating project managers.

On the minus side, accepting insurance meant we had to run a tight ship. Reimbursement was better than the public plans, but by less than you might think.

We leveraged tech wherever we could in order to keep costs down. We had no management layers - just Rachel and me. We kept a close eye on both sides of the profit and loss statement: if a light went out, I changed the bulb.

But even with a lean and efficient management style, there was a limit to what we could do, especially when it came to customer service and administration. 

People complained - not about the medicine but about the phones, about Klara (our messaging platform), about turnaround times, about billing, and about my availability.

It rankled.

I don’t particularly like complaints, especially when I agree with them. Many of these patients were not asking for anything more than what I would if I were in their shoes. I wanted something more to tell them than “sorry, but we can’t afford to provide that level of service.”

One day, one of my patients, a brilliant and cherubic 70-year-old academic, spoke to me frankly. “These things are important to me,” he said. “I understand that insurance won’t pay for them. What I don’t understand is why you won’t let me pay for them myself!”

Another patient of mine, an entrepreneur who built and ran a large retail company, told me something similar. “If you would only let me pay for a higher level of service,” he said, “I would do it in a heartbeat. Why make me look elsewhere?”

Of course, there is a name for this sort of thing: Concierge medicine. It’s a terrible name, elitist and snooty - the only good thing about it is that the euphemisms are worse.

Usually, Concierge is an all-or-nothing deal. When a doctor goes Concierge - as more and more are doing these days - they provide a higher level of access and personalized service for a supplementary fee. 

Many patients decline to pay this fee, and the resulting attrition thins their ranks, but the model works because the remaining patients represent an overall increase in revenue along with a less frenetic lifestyle.

At this point, I must digress to answer a basic question that I’m sure you have: Why should I have to pay extra for the kind of attentive and convenient service that I can get at any decent hotel or restaurant when I pay so much already? 

I pay more to Oxford than I would at the Four Seasons! Shouldn’t that be enough?

I couldn’t agree more - you (and we with our family of 7) are paying an eye-popping amount in premiums and deductibles. But let’s take a closer look at where that money is going.

For every $100 that you pay, here’s how it’s spent: prescription drugs $21.50; in-patient hospital costs $19; out-patient hospital costs $19.80; emergency room costs $3.20; doctor visits $12.10; other outpatient care $6; with the remaining $20 or so going to insurance company overhead and profit.

Let’s take it one step further. Of the $12.10 that goes to doctor visits, how much is going to primary care? The answer is about a quarter, or $3. 

To sum up, out of all the money that you pay for insurance, 80% goes to hospitals, pharma, and profit - with 3% trickling down to primary care.

In other words, when it comes to medical insurance, primary care is practically a rounding error.

But wait, there’s more. 

Of the small pot of money spent by insurance companies on primary care, the lion’s share goes to conglomerates with more negotiating power. 

The difference between what I get paid for a patient visit and what a doctor employed by a hospital, venture-backed, or private equity-owned conglomerate gets paid for the exact same visit can vary by a factor of 2 to 3 (with them getting the larger amount if that wasn’t clear).

That’s one way the deck is stacked against private practice. If a thousand Columbia doctors negotiate together, it’s fair game. But if a thousand independent doctors negotiate together, it’s an antitrust violation.

The other way the deck is stacked against private practice is that our 800 lb. gorilla competitors are content to lose money delivering primary care. Hospitals view primary care as a loss leader, whose main function is to funnel patients to their specialists and generate lucrative procedures.

Deep-pocketed corporations like One Medical, on the other hand - similar to tech companies like Uber - drive competitors out of business by sacrificing profit to growth. One Medical has never made a dime. It lost more than $250 million last year alone and yet new sites keep popping up like mushrooms. For a while I didn’t understand the end-game, but last November they signed a deal to be acquired by Amazon for $3.9 billion. We’ll see how that works out for patients.

So what? you may ask, and play a little violin.  It may not be fair, but neither is life! The doctors seem fine and they have such nice waiting rooms!

Ah yes, they do, but there’s no such thing as a free lunch. When a corporation provides you with a service at a loss, then the service you are getting is a means to an end. 

You will always be better off with a doctor who has the liberty to refer you wherever they want, without the pressure to generate procedures, and without being under the thumb of administrators who have to answer to investors. Ulterior motives and good medicine don’t mix.

There is so much more to say but I digress from my digression!

The point is, if you view that negotiated premium as a “bonus” of sorts and subtract it out, then the amount allocated by insurance to independent primary care practices is not $3 out of every $100, but rather $2 or less.

Now, you can argue that primary care should be better reimbursed. Or you can argue that it shouldn’t be reimbursed at all. But you can’t argue that $2 should pay for more than it does.

Are you starting to see why everyone is going Concierge? 

So why not go full Concierge like so many of our peers? Because we don’t want to narrow ourselves down and lose the diversity of our patient population. 

It makes little sense for actors or students - who are basically healthy and need us mainly for annual checkups and maybe a sore throat or a groin pull - to pay for Concierge. And we like taking care of those patients.

What to do?

One of the advantages of being independent is the freedom to think outside of the box. In the end, we created a hybrid model. We asked ourselves, what are the main benefits people are asking for, and what is the least we can charge to pay for those benefits? 

It comes down to streamlined access - both to the practice and to me, the doctor with the most experience and longevity. 

We hired a highly competent person, who could know each Concierge patient individually, and be a human point of contact between them and the practice. I freed up time and added designated appointments to my schedule. 

What about the other patients? 

For the most part, nothing much changed. I still spend the same number of hours a day as before seeing my regular patients. My wait time is long, but that was increasingly the case; many patients don’t mind waiting for routine visits and are willing to see another provider if it’s urgent. 

On that point, we personally vet, hire, and train all the other providers, and work as a team. I am available 24/7 to them for any questions or concerns, and make sure that they are not afraid to call or text. In many cases - whether based on personality or area of clinical interest - they are anyways the better match for certain patients.

But patients who want more now have another option, which feels both good to be able to say and good to be able to provide. 

How much should it cost?

Based on the additional salary, time, and other expenses, we calculated that $250 per patient per month was the right number. We started at $100 per month for the first 100 patients with a plan to ramp up in stages as we ironed out the kinks (it’s now $150 per month, which can come from an HSA).

Is that too much or too little? It depends on whom you ask. 

The other day a salesman for one of the companies that helps doctors transition to Concierge (there are several such companies - I think this one was Sollis Health, or MDVIP, or PartnerMD, or Signature MD, who can remember?) walked into my office with a sales pitch. 

“Thanks anyway,” I said, “but we have a hybrid Concierge model.”

“How much do you charge?” he asked. I told him. 

He stared at me. “You are giving it away,” he said flatly. 

“Actually,” I said, “I’m charging what it costs.”

Of course, for many patients that is still beyond their budget, which I fully understand. All patients will continue to get better care at WFM than anywhere else that takes insurance.

Does our hybrid model meet the standard I set for ideal VIP care? 

On the one hand, I still spend time with each patient according to their needs, and every patient in my exam room gets my full, undivided care and attention. So yes, in that way it fits the model. 

On the other hand, improved access means better continuity, and one of the principles of Family Medicine is that continuity leads to better care. So no, in that way it does not fit the model.

It’s a work in progress.

I’d say the system succeeds for at least 80% of patients - all of the Concierge patients, and most of the other patients. For the remaining 20%, it’s a struggle to balance their needs and desires with what we are able to provide, and we are always looking for ways to improve.

For example, creating a better mechanism for follow-up of ongoing or acute issues with the same doctor using telemedicine for same-day visits.

In a way, it’s like being at Columbia all over again. We chafe at the constraints of the system and want the freedom to do more.

Yet there is one lesson that every small business owner quickly learns: freedom comes with trade-offs when you have to pay the bills.

There will always be a delta - varying by orders of magnitude and tens of thousands of dollars depending on where you go - between the best care insurance will pay for and the best care money can buy.

We aim to provide both, at as low a delta as we can afford.