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BILLING & COLLECTIONS

Concierge medicine – coming on strong

– a MOM mini seminar –

Direct care, boutique medicine, retainer medicine – by whatever name, concierge medicine is a patient-physician arrangement where the patient pays an annual fee or retainer, the physician reduces the patient population from several thousand to an average of 300 to 600, and patients get personal 24-hour access to the physician and, among other things, appointments that usually run from 30 to 60 minutes.

For some physicians, concierge has become an attractive alternative to decreasing reimbursement, the need to see more patients to maintain revenues, and growing government regulations. And projections are that the concept will expand considerably within the next few years.

Here Neil R. Hoyt outlines the basics of the system. Hoyt is vice-president of practice conversions for Paragon Private Health, a concierge practice management company in New York City.

$10,000 then; $1,800 now

Concierge medicine began in 1996.

In the beginning, it was criticized as elitist, or medicine reserved for those who could afford the extra expense of an annual retainer. And the original retainers were high – as much as $10,000.

In the last five years, however, concierge has become considerably less expensive. The average annual fee is now from $1,500 to $1,800, and a few practices have reduced that to only a few hundred dollars. As a result, patients of all incomes participate. According to one study, about half of concierge patients have annual incomes under $100,000.

Growth is continuous.

More than 4,000 physicians are now in concierge medicine, and projections are that within five years 6.8% of primary care physicians – or another 17,000 – will move to it. Overall, 9.6% of physicians who own their practices say they plan to convert to concierge within the next three years.

There is also growing corporate interest in it. Proctor & Gamble now owns MDVIP, the largest concierge group in the country, and Google Ventures as well as venture capital firms owned by Michael Dell of Dell Inc. and by Amazon.com’s CEO Jeff Bezos have also invested in concierge practices – an indication that the corporate community views it as available and profitable approach to health care.

Benefits on both sides of the care

Concierge medicine has advantages for doctors as well as patients, Hoyt says.

On the physician side, it improves and often ends many of the challenges offices are now facing, the most obvious being low reimbursement, heavy schedules, higher costs, and a lot of paperwork. The average primary care physician, he says, currently spends as much as 22% of every day doing nonclinical paperwork.

But mostly, it ends the need to see a large number of patients to make up for the low reimbursement. For a traditional primary care practice, the average patient number is 2,200; with a concierge model, that number runs from 300 to 600.

On the patient side, the system means 24-hour personal contact with the physician, more thorough care, and more preventive care.

There’s also the convenience of time. In a traditional practice, the average patient wait is 63 minutes past the appointment hour, and the average time with the physician is six minutes. With concierge medicine, waits are minimal, and visits last from 30 to 60 minutes

Managementwise, things stay somewhat the same. The physician – or group or partnership – maintains ownership of the practice, and in most cases there is no reduction in staff.

Not just primary care

Most concierge practices focus on primary care, with about 77% of them in internal medicine and 20% in family practice.

But specialties are beginning to move in, Hoyt says. Any specialty such as pediatrics or cardiology or gynecology that has continuously returning patients can adapt to it.

Total concierge versus a hybrid

A doctor can move 100% to concierge practice or take a hybrid approach where the practice offers the system to all its patients and those who choose not to make the move stay on in the traditional mode.

The hybrid approach can be successful with groups and hospital systems where some physicians convert and others don’t. That allows the practice to reach the entire patient market via full-time concierge physicians as well as full-time traditional physicians.

The hybrid approach can also be applied to a small or solo practice. In that case, the office sets aside a few hours a day to see the concierge patients and makes greater use of physician assistants and nurse practitioners for the traditional patients.

However, Hoyt says, for a small practice, “the negatives outweigh the positives.” It’s difficult to get enough patients into the concierge model to make the program worthwhile.

The dual operation also creates more work for staff.

And worse, the patients who remain with the traditional care tend to resent the arrangement, because they see it “as a caste system.”

24/7, but no abuse

A major patient attraction of concierge care is that the doctors give patients their cell phone numbers and personal e-mail addresses and are available 24 hours a day.

And that leads to the obvious question of whether patients abuse that privilege.

The answer is no, Hoyt says. The industry estimate is that physicians get only about one after-hours call a week.

One reason is that concierge medicine emphasizes preventive care, and that reduces the number of emergencies. Another is that patients can always get same-day or next-day appointments and so hold off on the late-night calls. And obviously, the reduced number of patients means a reduced number of calls.

He also notes that on-call coverage by other physicians is the same in concierge as in traditional practices.

A retainer and transparent fees

On the money side are the retainer or annual fee and the individual fees for services.

As for the retainer, the average is $1,800 per patient. Usually, that has to be paid up front, though some offices allow two payments or quarterly payments. And some practices – albeit not many – accept monthly payments.

The office should have most of its money in at the go-live date. That provides enough capital to cover the initial operations. If there are 300 patients at $1,800, for example, the office opens with $540,000 on hand.

As for the fees, it’s fee-for-service on everything. And the doctor “should be completely transparent with the pricing” so patients know ahead of time what kind of costs and services they can expect.

Most offices give prospective patients a menu of services plus the associated fee amounts.

Insurance: none, a little, or a lot

Whether the practice accepts insurance is the physician’s choice, Hoyt says, “and it’s all over the board.”

Some offices don’t deal with insurance at all. They simply give patients their superbills and other documentation and let them do their own filing.

Most, however, do accept insurance and file the claims, though the doctor is almost always an out-of-network provider.

Insurance can be all, nothing, or anything in between. The office can accept Medicare or not. It can accept some insurance but not others. It’s the practice’s choice.

A long and complicated conversion

For offices looking to make the conversation, Hoyt’s advice is “don’t go it alone.”

There’s far more to the job than just telling patients about the shift and collecting the money. It’s extensive work, “and there’s an art and a science to it.” Most offices need a conversion company to orchestrate the process.

Once the move is made, “there is no second chance,” he cautions. If the transition isn’t done right, the physician can end up with zero patients and zero business. “Some physicians have lost their practices altogether.”

Sometimes there’s a legal snag. Sometimes the marketing is inadequate. But whatever the reason, if the goal is to get 300 of the current patients to join the concierge practice and only 70 do so, there’s no getting the old patients back. “They have already found new medical homes.” They’re gone for good.

A three-to six-month process

A conversion requires from three to six months of preparation, Hoyt says.

It starts with an evaluation of the practice to see if a move is even feasible. Only about 20% of practices his company evaluates are in a position to take on concierge, he says. The patient demographics may not adapt to it. Even the physicians’ attitude can make a difference.

Also required is extensive marketing.

The office has to explain to patients what’s going on with health care costs and services and how the changeover is a benefit to them. It has to outline the cost and illustrate the value they will receive for the retainer. And it has to set out the number of patients it will accept and explain that patients will be accepted on a first-come, first-served basis.

Along with that is education for both physicians and staff so they can explain the changeover to patients and answer questions.

And there are legal concerns.

The main concern is patient abandonment. The office has to be sure its patients who don’t make the move are able to get care elsewhere.

Another serious legal point is the contract restrictions the doctor may be under.

“Physicians often don’t know their contracts,” he says. Doctors have left group practices for concierge medicine without having their contracts reviewed only to find too late that they are under noncomplete agreements and have no right to the patient data or can’t market to their previous patients. And they have had to surrender their concierge patients to the group.

He cites one physician with 3,000 patients who left a group without realizing he could not market to them and wound up with only 43 patients in the concierge practice.

Along with those concerns, the model has to get approval from the state insurance commissioner. Otherwise, the retainer could be considered insurance and the doctor could be found to be providing insurance in violation of state law.

How much does it cost?

If the office opts to use a conversion company, the cost is generally a percentage of the annual retainer fee for each patient, Hoyt says. The amount varies, but the industry standard is 33%. Along with that is a contractual time period, most commonly for 10 years.

Thus, if the annual fee is $1,800, the company might charge $600 per patient every year for 10 years.

He points out, however, that office and company don’t necessarily make a complete split at the end of the contract period, because the company provides a lot of services the office may want to continue, not the least of which is marketing to the current patients for renewals, to new patients to make up for those lost to attrition, and to other offices for referrals.

The office may also want to continue some of the company’s support services such as billing and collection assistance or contract negotiations.

Does the manager’s job change?

Perhaps the prime attraction of concierge medicine is that it opens up more time for patient care and, in turn, creates an even work/life balance for the doctor.

What about the manager and staff?

It does the same for them, Hoyt says. “Their world improves dramatically.”

The office still needs the same number of staff. But the work takes on a focus of patient service and satisfaction instead of a paper chase. “It becomes normal as they’ve never seen before.”

The company doesn’t manage the practice but observes and makes recommendations for billing and customer service and practice management software and what the correspondence should look like “and even how to move the furniture around” to make the office customer friendly.

The conversion company takes care of the concierge-related revenues, but for the most part, staff retain their current duties – in manageable form.

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