About two years ago, my father-in-law told me that he had begun a concierge relationship with his physician. For an extra fee of about $1,500 per year, he received some additional benefits and the knowledge that his physician would have more time to spend with him, because he had cut down on the number of total patients that he saw. Today, my father-in-law is very happy with the arrangement and doesn’t resent the extra money this costs.
Concierge medicine is not really new, but the concept has been gradually gaining momentum. When I helped set up my first concierge client over ten years ago, there were very few physicians practicing under that model in anywhere the country. Since that time, there has been a surge in demand from both patients and physicians for a stronger and more focused partnership, and concierge medicine seems to fill that need.
What exactly is concierge medicine? Just as the name implies, the concierge physician offers services that are above and beyond those typically offered. Prices differ by physician, and by the type of services actually offered.
Today, approximately 10% of primary care physicians are considering a move to concierge medicine in the next three years. In addition to improving the quality of their relationships with patients, many doctors making the switch to the concierge model also cite more flexibility in their schedules and a less taxing patient load as reasons for exploring this method of care delivery.
There are two popular ways to practice concierge medicine. Under the full opt-out method, the physician does not accept Medicare (you must “opt-out” for this reason), managed care or commercial insurance products, and charges the patient the full cost of providing primary care medicine. Such relationships usually cost $5,000 or more, depending on the age and health status of the patient. The patient pays, usually in advance, and the physician must provide services according to the contract that he or she has with the patient. These practices have high-end amenities that patients enjoy, and the physicians carry a smaller patient load to accommodate the extra services offered. An added benefit is that practice overhead decreases significantly, because there is no need to file insurance paperwork. The physician could potentially eliminate the entire department in his or her practice. No elaborate practice management system is required, either; only an accountant or clerk to send out bills and post payments, and simple business accounting software.
Under an alternative method, the physician continues to participate with insurance companies and Medicare, and the patients pay a fee for non-covered insurance services (i.e., services that the insurance companies do not consider necessary). The fee the physician charges under this method is much lower than the fee charged under the full opt-out method, because insurance will cover sick and some well visits; however, the fee enables the physician to limit the number of patients seen and allows for a better quality of life. Under this model, the insurance department and complex practice management systems must be retained, because claims still need to be filed.
If you are interested in making the move to a concierge medical practice, how do you determine which method would work best for you?
First, you will need to evaluate your existing patient demographics. If you happen to have a wonderful professional reputation and patients who can afford to spend the money and desire more personalized care, then the opt-out method could be the best option for your new business model. If you currently serve more middle and lower income clients, then you may want to think about the alternative method and retain some insurance and Medicare coverages. Obviously, both methods have a degree of risk associated with them, and your success is dependent upon proper planning.
Here are eight points to consider when planning a concierge medicine practice:
- Determine what style of concierge medicine works best for you under your current patient population—opt-out or alternative. You should have a clear vision of the services that you will offer, the number of patients you will accept and will need to be successful, and the price points for services before you begin to market the new model to patients directly.
- Research the demographics of your practice area (think location, location, location).
- Determine patient acceptance. Talk with your patients (the ones who you would most want to retain) and find out if they are open to the concept of paying for concierge services. Several of my clients have employed outside marketers to send letters and follow-up to gauge patient support and acceptance of the concept. This step can take a year to complete.
- Engage an experienced accountant to prepare a budget, design the accounting system and assist in the planning process. The number of patients that you need in order to be successful depends on the type of practice and the amount that you are charging per patient.
- Draft contracts for patients. You should retain an attorney who has had experience with concierge practices.
- Hire a marketing firm or advertising agency. Again, experience in the area will help.
- Begin patient contracting.
- Don’t forget to opt-out of Medicare if that is the course that you are pursuing.