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What Is Concierge Medicine (Direct Primary Care) – Pros & Cons

American healthcare is expensive, inefficient, and often doesn’t produce optimal outcomes. Concierge medicine, also known as direct primary care, helps address all three problems. Direct primary care is a fee-based care model that forges closer connections between patients and providers, encourages preventive and proactive care, reduces bureaucracy and overhead for physicians and health systems, and provides an alternative to increasingly expensive health insurance coverage.

An Imperfect Healthcare Status Quo

Healthcare is a big business in this country. According to the Centers for Medicare and Medicaid, healthcare spending accounted for 17.7% of total U.S. GDP in 2018. That marks a more than threefold increase from 1960, when healthcare spending comprised just 5% of the United States’ gross domestic product (GDP). And it’s far greater than healthcare’s contribution to GDP in other developed countries, where governments take more responsibility for healthcare delivery and aggressively regulate drug, procedure, and consultation pricing.

Per the Kaiser Family Foundation, the American healthcare system directly employs nearly 17 million people: medical practitioners, administrators, insurance specialists, hospital support staff, and others. Other definitions of “healthcare jobs” place the figure even higher.

But U.S. healthcare is also cumbersome and inefficient. Simple but potentially life-saving medicines and procedures are often far too expensive for middle-class, working-age adults – who don’t qualify for Medicare or Medicaid and often don’t carry adequate insurance coverage – to afford out of pocket. These fundamental shortcomings drive down healthcare utilization while increasing complication and mortality rates. They also strain patients’ finances, compelling many to take out unsecured personal loans or rack up credit card debt to cover out of pocket healthcare expenses.

Concierge Medicine: Part of the Solution

Health policy experts broadly agree that American healthcare delivery can and should be improved. However, the controversy surrounding the passage and implementation of the Affordable Care Act (ACA) demonstrates that what’s self-evident in theory is far murkier in practice.

Concierge medicine certainly isn’t without controversy, and it does come with its own share of drawbacks. However, its key benefits – stronger patient-provider connections, affordable primary care services, and less red tape for providers – make it an integral part of the next wave of healthcare innovation.

And it’s becoming increasingly common. According to Medical Economics, as many as 10% of all U.S. primary care providers are actively engaged in concierge arrangements or similar models.

What Is Concierge Medicine?

Concierge medicine is a primary care model in which medical providers, typically family practitioners or internists, charge their patients a monthly, quarterly, or annual retainer (flat fee). Because the retainer is the primary funding mechanism, and insurance and Medicare are generally used secondarily or not at all, direct primary care arrangements are known as such because they cut out the insurance middleman.

However, concierge arrangements don’t meet the legal definition of health insurance under applicable state and federal statutes, including the Affordable Care Act – so concierge patients generally need to carry low-cost, bare-bones health insurance plans to remain compliant with the law and avoid potential tax penalties.

Retainer Costs and Coverage

Concierge retainers cover routine office visits and in-office services, as well as lab work and simple diagnostics (such as x-rays) in some cases, but usually not prescriptions or procedures. Retainer amount depends on provided services, payment frequency, prevailing costs in the local market, panel size (the provider’s active patient population), and possibly demographic factors (such as the patient’s age).

Generally, annual retainer costs range from less than $200 to more than $5,000 per person, though high-end concierge medicine arrangements – in which doctors have only a handful of patients and remain on call 24 hours per day – can cost well over $10,000 per year. Family discounts are common in concierge arrangements, so families’ retainers are often lower than individuals’ retainers on a per-person basis, and many providers operate on a “sliding scale” that’s sensitive to patient income. According to an analysis by the Journal of the American Board of Family Medicine, the average concierge medicine retainer is under $100 per month.

Out-of-Pocket Considerations

On the other hand, concierge retainers typically only cover primary care. Concierge patients must pay out of pocket for hospital services, specialist consultations, prescriptions, and other non-routine medical care not covered by their accompanying catastrophic plans. While it’s difficult to determine needs for such services in advance, patients weighing concierge arrangements against traditional health insurance plans need to estimate what they’ll utilize and determine which option serves them better.

Insurance Requirements

To satisfy the Affordable Care Act’s individual insurance mandate, concierge and direct primary care arrangements must be paired with low-cost health insurance plans that cover more expensive medical services, such as hospital stays, surgeries, and multi-course treatments.

In many cases, concierge patients looking for low-cost insurance options choose one of two plan types. Patients under 30 are eligible for catastrophic insurance plans: low-premium, high-deductible plans that generally require holders to pay at least 40% of their medical costs out of pocket and don’t include premium subsidies for lower-income patients. Patients over 30 qualify for catastrophic plans under certain limited circumstances, known as hardship exemptions. Per, these include recent bankruptcy, homelessness, domestic violence, and the obligation to care for a seriously ill family member. All other patients are eligible for “bronze” plans, the lowest-priced of the Affordable Care Act’s four “metal” plan categories.

The insurance requirement does add significantly to concierge patients’ financial calculus. According to a 2021 ValuePenguin analysis of health insurance plans across the United States, the average 40-year-old American pays $313 per month for a catastrophic plan and $387 per month for a bronze plan. However, these costs vary widely by location – per ValuePenguin, average monthly premiums for all policyholders cross all plan types range from $712 in West Virginia, to $335 in New Hampshire, to $548 in Missouri.

However, even after factoring in the additional cost of bare-bones insurance plans, low-cost concierge arrangements are often less expensive than more generous health insurance policies, particularly for older individuals who don’t yet qualify for Medicare. They therefore can reduce healthcare costs for healthy adults who don’t take expensive medications or require lots of non-routine care.

Basic Types of Concierge Medicine & Direct Primary Care

Concierge medicine comes in three basic types.

1. Fee For Care (FFC)

The FFC model cuts traditional health insurance out of the equation. Concierge medicine providers following this model generally don’t accept insurance.

Instead, patients pay a flat monthly, quarterly, or annual retainer for office consultations and services, such as blood pressure checks, pelvic exams, and possibly routine lab work (such as cholesterol readings). Patients pay out of pocket for additional services (such as vaccinations, prescription refills, and diagnostic exams) as needed. Patients who can’t afford to pay out of pocket for the retainer, additional services, or both, can use health savings accounts (HSAs) purchased individually or through their employers to partially or fully cover the costs.

In many cases, retainers aren’t tied to specific services – rather, they entitle patients to unlimited care during the applicable period. In some, however, retainers function like a prepaid debit card: providers deduct the cost of each service as it’s provided. If patients exceed the amount of care allowed by the retainer within the period, they need to pay out of pocket for additional services.

FFC arrangements usually entitle patients to same-day (or, for low-retainer plans, same-week) appointments. They often come with remote provider access as well – you can call or text your physician with non-emergency questions at any time and expect a response the next business day (and, for high-end plans, sometimes right away).

Most FFC providers also have far smaller patient panels (regular patient cohorts) than non-concierge providers. Panel size varies widely among concierge providers, but can be as low as 50, sometimes even less for very high-end concierge services. FFC panels are rarely larger than 1,500 patients.

Full-time, insurance-based providers’ panels can have as many as 3,000 to 4,000 patients. That sounds like a lot until you remember that insurance-based primary care providers are often required by their employers to see 25 or more patients per day, whereas direct primary care providers see far fewer.

2. Fee For Extra Care (FFEC)

FFEC providers’ panel sizes are largely similar to FFC providers’. These arrangements also use out of pocket or HSA-paid retainers to cover the cost of agreed-upon suites of in-office services – usually on an unlimited basis, but sometimes on a debited basis with no period-to-period carryover. Unlike FFC arrangements, FFEC arrangements use Medicare or private insurance plans to cover the cost of additional services not included in the retainer suite, such as outpatient procedures and prescription medications.

This is a useful arrangement for Medicare patients, whose government-funded plans typically cover the vast majority of costs for such add-on items and services. It’s also useful for private insurance patients whose plan premiums are substantially lower than what they anticipate spending on additional services. Instead of paying cash out of pocket for the full value of these add-on services, they can use their insurance coverage to offset most of the services’ cost.

3. Hybrid

Hybrid-model patients typically rely on Medicare or private insurance plans (of any type, not just catastrophic or bronze) to cover the cost of routine, in-office care and additional services. Their monthly, quarterly, or annual retainers, which are typically much smaller than FFC or FFEC retainers, cover the cost of specialized or value-added services – such as customized health and wellness plans or house calls – that generally aren’t reimbursed under Medicare or private insurance.

There’s usually a limit to what the retainer covers. For instance, a hybrid retainer might cover one session to outline a comprehensive health and wellness plan (outlining healthy behavior adjustments, target weight and blood sugar, and other health indicators) per year, with additional office visits or adjustments to the plan requiring out-of-pocket payments for the provider’s time.

In some cases, providers that offer hybrid concierge arrangements also accept traditional insurance or Medicare patients who don’t pay any retainers at all, and thus don’t get value-added services. For concierge patients, the lower retainer offsets the higher cost of non-catastrophic insurance coverage.

Concierge Medicine History & Examples

In a way, the concept of concierge medicine predates traditional insurance arrangements. Wealthy people have long had intimate relationships with providers – often personal physicians, or physicians who served only a handful of deep-pocketed clients – offering personalized, responsive, often round-the-clock care.

However, modern concierge medicine didn’t come into being until the mid-1990s. Concierge Medicine Today has a great timeline of the industry’s history and development. Highlights include:

  • 1996: Dr. Howard Maron and Scott Hall, FACS, established MD2 in Seattle. Widely believed to be the first modern concierge practice, MD2 is a high-end service that limits its patient panel to 50 families and charges annual retainers of $13,000 or more per person. The company has since opened offices in Oregon, California, Texas, Illinois, New York, and Massachusetts.
  • 2000: Seattle‘s Virginia Mason Medical Center became the first health system to offer concierge services. Also in 2000, Dr. Robert Colton and Bernard Kaminetsky founded MDVIP in Florida. MDVIP is credited with standardizing the concierge model in private-practice settings. The company has a coast-to-coast provider network and works with employers to establish employee health plans that include wellness coaching, extensive diagnostic and lab services, and 24/7 physician access. Procter & Gamble acquired MDVIP in 2009 and sold it in 2014 to a private investor group.
  • 2001: The American Medical Association released the first set of ethical practice guidelines for concierge providers.
  • 2003: Dr. John Blanchard founded the American Society of Concierge Physicians (later the Society for Innovative Practice Design and the American Academy of Private Physicians).
  • 2007: Washington State enacted the first legislation regulating direct primary care practices. Critically, the law rules that concierge arrangements don’t qualify as health insurance.
  • 2010: The American Academy of Family Physicians found that 3% of its members practice “cash-only, direct care, concierge, boutique, or retainer” medicine.
  • 2010-present: A rash of low-cost concierge medicine providers emerged. Many use videoconferencing and telemedicine technology to reach far-flung patients, and lower-cost practitioners (such as physician assistants and nurse practitioners, both of which can prescribe medication and conduct full clinical exams under the supervision of a licensed physician) to control retainers and fees. PlushCare, for instance, charges $99 per visit to patients without health insurance.
  • 2013-14: State legislatures enacted a flurry of laws pertaining to concierge medicine, most reinforcing the ACA’s view that direct care doesn’t constitute insurance on its own, but can be paired with low-cost insurance plans.

Factors Driving Concierge Medicine Adoption

The rise of concierge medicine – evidenced by growing practice counts and swelling patient rolls – is driven by a number of related factors.

The Affordable Care Act

Although concierge patients are required by law to carry bare-bones insurance policies purchased through Affordable Care Act marketplaces or other sources,  doing so is frequently cheaper than carrying more generous traditional health insurance policies, especially for healthy patients. When they need care, healthy people are thus more likely to seek out concierge relationships as affordable alternatives to gold- or silver-plated insurance policies, which they may rarely use.

Cultural Shifts

Broad, deep cultural shifts, spurred by technology and other factors, are changing consumers’ relationships with service providers, including healthcare professionals. Younger people (millennials and Gen Z) increasingly expect responsive service as fast as possible. And that’s good news for concierge medicine providers that offer same-day appointments, shorter diagnostic wait times, off-hours consultations, and similar perks.

Primary Care Provider Shortages & More Insured Patients

According to the American Association of Medical Colleges, the United States faces a shortfall of anywhere from 54,100 to 139,000 primary care physicians by 2033. Because people with health insurance are more likely to use primary care providers, this shortage is exacerbated by the dramatic rise in the number of insured Americans due to the ACA. This two-headed trend is sure to worsen the problems with which many primary care patients are familiar: long appointment wait times, perfunctory or rushed service, and lack of deep provider-patient relationships.

It’s also contributing to the rise of so-called mid-level practitioners, such as nurse practitioners (NPs) and physician assistants (PAs). NPs and PAs complete several years of schooling (though not as many as physicians) and are permitted to perform many duties traditionally reserved for physicians, such as conducting full physical exams and prescribing medicine.

Although “nurse-only” practices are increasingly common, most PAs and NPs work under the supervision of a physician. They earn very comfortable livings, but don’t command the same earning power as physicians. However, because they can do pretty much everything primary care physicians can, their bosses don’t have to see their patients regularly. This means that practices utilizing PAs and NPs don’t have to keep as many physicians on staff – and can therefore pass their reduced labor costs onto patients.

Many low-cost concierge practices rely heavily on NPs and PAs. These lower-cost practitioners serve as front-line care providers that can do pretty much everything their physician supervisors can. Their bosses step in only when there’s a complex problem or issue that their support staff can’t resolve.

The lower cost of employing mid-level practitioners allows concierge practices to maintain healthy staff-to-patient rations to deliver personalized care that includes longer consultations and greater familiarity with patients’ unique needs. Without mid-level providers, it’s not at all clear that the low-cost concierge is sustainable or scalable.

Smartphones and the Internet

Modern concierge arrangements wouldn’t be possible without Internet-connected personal electronics. One of the biggest perks of direct primary care relationships is technology-enabled access to providers – patients’ ability to call, text, exchange pictures, and video conference outside of the office (and, often, office hours). Other technologies utilized by concierge providers, such as remote monitoring of homebound patients and telemedicine systems that allow providers to conduct thorough exams across wide distances, also rely on powerful processors and fast Internet connections.

What’s more, there are dozens of smartphone (and desktop) apps designed to help concierge and direct primary care patients and providers. In fact, many concierge providers include the cost of such apps in their retainers – though many apps are free.

Some concierge and direct primary care apps facilitate patient-provider consultations. Others use push notifications, email alerts, and consultations with personal health coaches to help patients manage specific conditions, such as diabetes, or general medication regimens. Still others help providers and patients securely organize and store medical records.

Here are a few popular examples:

  1. Zipnosis. Zipnosis is a 24/7 diagnostic app, available on Android and iPhone, that connects patients with local physicians and mid-level providers for simple, rapid diagnoses and advice. Patients pay a reasonable flat fee to take a detailed questionnaire, which a local clinician then reviews and responds to within one business day. If the diagnosis requires prescription medication or a specialist referral, the clinician writes the script or makes the referral. For direct primary care providers, Zipnosis is both an outsourcing tool that reduces on-call hours and a potential moonlighting opportunity.
  2. PillPack. PillPack is an online pharmacy that fills prescriptions written by physicians and mid-level providers. The company charges its in-house pharmacist staff with transferring existing prescriptions from other pharmacies, filling new ones, contacting doctors for refill instructions, and securely shipping medications. The service is essentially free – patients only pay for the cost of their prescriptions. PillPack’s direct shipping model virtually eliminates unclaimed prescriptions – scripts filled at the pharmacy and never picked up. PillPack is available on iOS and Android.

Advantages of Concierge Medicine

1. Increased Access for Patients

With smaller patient panels, direct primary care providers are far more accessible to patients – both electronically and in person – than their traditional peers. They also have shorter wait times for office visits (many offer same-day appointments) and fewer backlogs for lab and diagnostic work. Shorter diagnostic turnarounds can measurably reduce patient stress.

For instance, the results of biopsies on potentially cancerous lesions often take weeks to arrive when obtained through traditional, insurance-based practices or hospitals. Concierge patients, who generally endure shorter wait times for such high-stakes tests, are likely to suffer less uncertainty-related stress by getting conclusive results sooner.

2. Better Continuity of Care

Direct primary care’s smaller patient panels, shorter wait times, and more attentive practitioners make it easier for patients to establish continuity of care – to see the same primary care provider over the course of numerous office visits, establishing a long-term relationship built on trust and mutual respect.

Simply having a dedicated primary care provider is correlated with improved health outcomes, because patients are more likely to show up for appointments and follow advice from providers they know and trust. For instance, a Residency Research Network of South Texas study (per NIH) found that type 2 diabetes patients with dedicated primary care providers manage their conditions better than patients without dedicated primary care providers.

3. More Attentive, Personalized Service

With fewer patients to see overall and on a daily basis, concierge providers can spend more time with each individual patient. According to Medical Economics, direct concierge providers spend at least 30 minutes with patients per consultation, more than double what insurance-based providers typically spend on routine visits. This is a welcome relief for patients used to rushed office visits that don’t allow enough time to cover every issue in detail (or even get to some issues).

And whereas traditional providers often have too many patients to keep straight, concierge providers – particularly at the high end – actually get to know patients by more than the numbers on their charts. Given the intimacy of the provider-patient relationship, it’s impossible to overstate the value of feeling comfortable in the presence of your doctor.

4. Less Overhead & Greater Simplicity for Doctors

Traditional medical practices and health systems have to deal with the byzantine requirements of the modern insurance industry. Even small practices need to employ full-time staffers to keep tens of thousands of billing codes straight, or work with expensive outside companies to bill properly and ensure they’re paid for services rendered. Larger health systems employ whole teams of billing and coding specialists to deal with private insurers and Medicare. To put it mildly, billing and administration collectively comprise a huge chunk of healthcare providers’ overhead.

By contrast, concierge providers that hew exclusively to the FFC model don’t have to deal with insurance at all. Concierge providers that offer FFEC or hybrid arrangements do need to work with insurers and Medicare, but not to the extent of practices and systems that base their entire care model around insurance. In any case, they can pass the savings from lower overhead onto customers via lower retainers or out-of-pocket add-on fees.

5. Improved Image & Reputation for Doctors & Health Systems

Many patients have ambivalent relationships with their primary care providers. On the one hand, they recognize their doctors’ expertise and trust them to provide quality care. On the other, they’re often distressed by what seems like a quantity-over-quality approach to care (and billings) in primary care and other medical specialties. In fact, in a 2008 NIH study, sicker patients requiring more care actually report higher satisfaction levels than healthier patients requiring less care, largely because the sicker patients spend more time with their doctors and form closer relationships.

But the concierge model encourages closer patient-provider relationships for all patients, not just the ones who need lots of care. This facilitates deeper understanding, comfort, and good feeling between patients and providers, boosting the medical community’s image and reputation. While that’s clearly a boon for providers, it’s also good news for patients at large, as people who trust their doctors and like spending time with them are more likely to approach them proactively rather than wait until a medical problem can no longer be ignored.

Disadvantages of Concierge Medicine

1. The Best Arrangements Are Prohibitively Expensive

If you want a direct primary care provider who has only a handful of other patients, is available 24/7, and is willing to more or less serve as your personal health coach, you’re going to pay handsomely for it – to the tune of $10,000 or more per year, plus any out-of-pocket expenses not covered by the retainer. That’s substantially more than healthy adults pay even for generous health insurance policies, according to the National Conference of State Legislatures (though family policies can and do cost more, up to about $20,000 on average).

2. Needs to Be Paired with Low-Cost Insurance for ACA Compliance

Concierge medicine novices often assume that concierge retainers are equivalent to health insurance premiums for ACA compliance purposes. Unfortunately, they’re not. To avoid ACA tax penalties, concierge patients need to carry a catastrophic plan if eligible or bronze health insurance policy on top of their direct primary care arrangements.

According to ValuePenguin’s analysis, the average U.S. monthly catastrophic plan premium for a 40-year-old in 2021 was $313. The average monthly premium for higher-priced plans can be twice or three times that amount.

Of course, actual out-of-pocket premium costs vary by location, year, insurer, and federal subsidies. Most people earning less than four times the federal poverty level are eligible for subsidies proportionate to their income.

Regardless of the final out-of-pocket premium cost, catastrophic and bronze policies add significant costs for concierge patients. Make sure you factor that in as you evaluate the relative cost of traditional, insurance-based primary care and direct, retainer-based primary care.

3. Traditional Insurance Usually Doesn’t Cover Retainer Costs

Traditional health insurance policies, whether bare-bones or generous, generally don’t cover the cost of concierge retainers. If you want to save for the cost of your retainer over time or use pre-tax dollars (wages or salary) to pay for your retainer, you likely need a health savings account or flexible spending account (FSA). Some health insurance policies are compatible with HSAs, such as Medical Mutual’s HSA-compatible plans, and employer-sponsored benefit packages often include HSA or FSA options (or both).

These issues can get complicated. If you’re not sure how to maximize the dollars you’ve earmarked for healthcare or simply need to determine which option makes the most sense given your employment situation and healthcare needs, speak with an insurance agent or employee benefits specialist.

4. Unreasonable Patient Expectations

While patients lucky enough to have (and afford) gold-plated concierge arrangements have physicians or competent mid-level practitioners at their beck and call 24/7, mass-market direct primary care patients don’t have these privileges. However, it’s common for mass-market patients to mistakenly assume that they’re entitled to call or text their physicians at all hours. When they’re ignored or sent to voicemail, they wonder why – and their satisfaction with the arrangement declines accordingly.

Relatedly, direct primary care patients sometimes expect closer doctor-patient relationships and enhanced access to produce unrealistic health outcomes. There’s a legitimate case to be made that because they don’t feel like cogs in an impersonal healthcare system’s wheel, concierge patients are more likely to heed their providers’ advice and make better health choices, which can then lead to better long-term outcomes. However, concierge physicians can’t simply wave a curing wand and obviate unfavorable genetics, years of poor health decisions, or simple bad luck.

5. Thin Concierge Coverage in Many Areas

Although more direct primary care providers are coming onboard every year, concierge medicine remains niche-bound. Traditional, insurance-based primary care remains the norm in the United States. This means that patients in some geographical areas – particularly rural regions that are already medically under-served – are likely to have trouble connecting with concierge providers that fit their budget and care preferences.

I used to live in a rural region in which most primary care doctors (including my own) worked for a insurance-based health system. The area’s lone direct primary care provider, an independent practice with a handful of licensed physicians, charged a reasonable annual retainer. But the practice hewed to a naturalistic, nontraditional style of medicine that appealed to some patients and alienated others. Patients interested in concierge medicine generally, but not convinced by this practice’s methods, didn’t have a nearby alternative.

Final Word

Even as concierge medicine changes the face of the American healthcare industry, similarly efficient solutions are doing the same for other hidebound industries. In fact, concierge medicine is just one example of a much broader economic shift made possible by dramatic technological changes.

Personalized, on-demand service of the sort available through concierge medicine apps and arrangements is now available in virtually every economic niche. Amazon and other online retailers offer same-day delivery (one-hour delivery for Amazon Prime customers in larger population centers) of almost anything you could want. Ridesharing apps like Uber and Lyft put personal drivers at your fingertips in minutes. Automated investment platforms employ sophisticated algorithms to achieve returns comparable to the average human advisor’s – at a fraction of the cost.

Amazingly, future innovations promise to render these now-exciting solutions quaint before long. For those without a vested interest in old, inefficient ways of getting things done, the future looks very bright indeed.

Have you ever used a concierge medicine app or service?

Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he's not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.

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