Brendan O'Brien
Cost Containment Corner - Subscription medicine is just around the corner
April 25, 2016
By: Brendan O’Brien
Recently, recurring revenue models have been gaining traction in an unexpected place: the doctor’s office.Rather than paying for each visit or service, patients pay a retainer fee in exchange for a level of service. Also known as membership medicine, concierge medicine and direct primary care, the model is paid through subscriptions and can decrease costs, increase health outcomes and improve the job satisfaction of doctors. Currently, retainer-based medicine represents only a tiny fraction of physician practices, but it’s quickly catching on and has the potential to disrupt the way health care is purchased. As with any effective recurring revenue arrangement, the success of these programs stems from fostering long-term, mutually rewarding relationships.
The subscription medicine model is appealing because it gives consumers a way to pay for better care incrementally. Rather than paying for each service a doctor performs, patients pay a monthly, quarterly or annual fee in exchange for a wide assortment of enhanced services. Services may include: unlimited office visits; same-day or next-day appointments; personalized service; and greater access to doctors — in person or by phone, email, text and web video.
What it costs
Concierge medicine is the umbrella term for retainer-based health care. Providers offer a wide range of services at varying fees. For example, rates at MDVIP, the largest network of concierge physicians in the U.S., are around $1,800 per individual per year, slightly above the industry average of $1,200. On the other hand, red carpet “boutique” plans can cost more than $20,000 a year. The subscription fees cover the majority of in-office services, regardless of the number of visits. The visits also last longer because concierge physicians handle far fewer patients than traditional doctors.
Most retainer-based practices accept insurance for additional services like lab tests, X-rays and prescription drugs. Direct primary care (DPC) is the one exception, as these doctors don’t take insurance. Instead, patients have a direct financial arrangement with their doctor — there is no third-party insurance company dictating treatment decisions. However, most DPC patients carry insurance to cover circumstances not covered in their agreement like hospitalizations and surgery. A lower monthly subscription is one of DPC’s major benefits. Because DPC doctors don’t have the overhead of dealing with insurance companies, rates average from $35 to $85 a month.
Why subscription medicine works
Like all successful recurring revenue models, concierge medicine works because it delivers tangible benefits that build over time with both patients and doctors. Patient benefits. In a time of sky-high deductibles, many people avoid trips to the doctor because they can’t afford to pay outof- pocket. They often put off going until they have to, and end up sicker as a result. That’s not the case with retainer-based medicine. Patients can see their doctor as often as they wish for just $35 to $100 a month — and not just when sick. Regular checkups help patients avoid getting sick in the first place. As a consequence, preventive care is one of the key benefits of concierge practices. In fact, by keeping patients healthier and out of hospitals, membership medicine can reduce costs as much as 20 percent, according to a 2015 study by Qliance, a Seattle-based DPC provider.
Provider benefits. In traditional primary care, doctors are compensated for the services they provide. It’s a system that rewards high patient volumes. But as a result, many doctors in standard practice are spread thin. They may handle 2,500 to 4,000 patients yearly, spending an average of only 15 minutes with each. In comparison, physicians with MDVIP see an average of 500 patients yearly. Because concierge doctors derive most of their income from subscriptions instead of services, they can spend more time providing quality care to patients and giving each one their full attention. They even have time to work with patients between visits to help them reach their goals, resulting in more satisfying outcomes for both patients and their doctors.
There are approximately 6,500 concierge practitioners in the U.S., a gain of nearly 50 percent since 2012, according to the American Academy of Private Physicians. The disruptive trend is poised to accelerate. Today’s patients, particularly younger generations, are more involved in their health care and more likely to rely on preventive measures to stay healthy at a price they can afford. Over-scheduled doctors are increasingly eager for new ways to serve patients at a more manageable pace. And health providers and insurers are beginning to see the financial wisdom of preventive medicine and wellness initiatives. For many with vested interests in better health outcomes, subscription medicine just may prove to be the right prescription at the right time.
About the author: Brendan O’Brien, co-founder of Aria Systems, introduced the world to cloud billing — before the concept of “cloud” even emerged. A frequent speaker on IoT subjects, O’Brien is also at the forefront of the recurring-revenue revolution that is empowering enterprises by securing predictive revenue streams while improving business processes.
Recently, recurring revenue models have been gaining traction in an unexpected place: the doctor’s office.Rather than paying for each visit or service, patients pay a retainer fee in exchange for a level of service. Also known as membership medicine, concierge medicine and direct primary care, the model is paid through subscriptions and can decrease costs, increase health outcomes and improve the job satisfaction of doctors. Currently, retainer-based medicine represents only a tiny fraction of physician practices, but it’s quickly catching on and has the potential to disrupt the way health care is purchased. As with any effective recurring revenue arrangement, the success of these programs stems from fostering long-term, mutually rewarding relationships.
The subscription medicine model is appealing because it gives consumers a way to pay for better care incrementally. Rather than paying for each service a doctor performs, patients pay a monthly, quarterly or annual fee in exchange for a wide assortment of enhanced services. Services may include: unlimited office visits; same-day or next-day appointments; personalized service; and greater access to doctors — in person or by phone, email, text and web video.
What it costs
Concierge medicine is the umbrella term for retainer-based health care. Providers offer a wide range of services at varying fees. For example, rates at MDVIP, the largest network of concierge physicians in the U.S., are around $1,800 per individual per year, slightly above the industry average of $1,200. On the other hand, red carpet “boutique” plans can cost more than $20,000 a year. The subscription fees cover the majority of in-office services, regardless of the number of visits. The visits also last longer because concierge physicians handle far fewer patients than traditional doctors.
Most retainer-based practices accept insurance for additional services like lab tests, X-rays and prescription drugs. Direct primary care (DPC) is the one exception, as these doctors don’t take insurance. Instead, patients have a direct financial arrangement with their doctor — there is no third-party insurance company dictating treatment decisions. However, most DPC patients carry insurance to cover circumstances not covered in their agreement like hospitalizations and surgery. A lower monthly subscription is one of DPC’s major benefits. Because DPC doctors don’t have the overhead of dealing with insurance companies, rates average from $35 to $85 a month.
Why subscription medicine works
Like all successful recurring revenue models, concierge medicine works because it delivers tangible benefits that build over time with both patients and doctors. Patient benefits. In a time of sky-high deductibles, many people avoid trips to the doctor because they can’t afford to pay outof- pocket. They often put off going until they have to, and end up sicker as a result. That’s not the case with retainer-based medicine. Patients can see their doctor as often as they wish for just $35 to $100 a month — and not just when sick. Regular checkups help patients avoid getting sick in the first place. As a consequence, preventive care is one of the key benefits of concierge practices. In fact, by keeping patients healthier and out of hospitals, membership medicine can reduce costs as much as 20 percent, according to a 2015 study by Qliance, a Seattle-based DPC provider.
Provider benefits. In traditional primary care, doctors are compensated for the services they provide. It’s a system that rewards high patient volumes. But as a result, many doctors in standard practice are spread thin. They may handle 2,500 to 4,000 patients yearly, spending an average of only 15 minutes with each. In comparison, physicians with MDVIP see an average of 500 patients yearly. Because concierge doctors derive most of their income from subscriptions instead of services, they can spend more time providing quality care to patients and giving each one their full attention. They even have time to work with patients between visits to help them reach their goals, resulting in more satisfying outcomes for both patients and their doctors.
There are approximately 6,500 concierge practitioners in the U.S., a gain of nearly 50 percent since 2012, according to the American Academy of Private Physicians. The disruptive trend is poised to accelerate. Today’s patients, particularly younger generations, are more involved in their health care and more likely to rely on preventive measures to stay healthy at a price they can afford. Over-scheduled doctors are increasingly eager for new ways to serve patients at a more manageable pace. And health providers and insurers are beginning to see the financial wisdom of preventive medicine and wellness initiatives. For many with vested interests in better health outcomes, subscription medicine just may prove to be the right prescription at the right time.
About the author: Brendan O’Brien, co-founder of Aria Systems, introduced the world to cloud billing — before the concept of “cloud” even emerged. A frequent speaker on IoT subjects, O’Brien is also at the forefront of the recurring-revenue revolution that is empowering enterprises by securing predictive revenue streams while improving business processes.