Concierge medical care in the U.S. used to be pretty straightforward -- pay a fairly substantial annual membership fee, usually $1,500 or more, and get a lengthy annual physical, same-day visits, health coaching, and 24/7 cellphone access to your physician -- or get dropped from the practice.
That model of care continues, but it's no longer the only player in the concierge game. Today,"hybrid" models, direct primary care practices, and other models for primary care have disrupted what was once a market with very few competitors.
The most well-known concierge company, and one of the oldest, is MDVIP, which started in 2000 in Boca Raton, Florida, and now has almost 950 physicians in 43 states. Physicians who signed up with MDVIP -- the company says it doesn't accept everyone who wants to sign up, but instead screens them to make sure their practice is a good fit -- agree to reduce the size of their patient panel substantially, usually to anywhere from 300 to 600 patients. Patients who stay with an MDVIP practice agree to pay the annual fee, which started at $1,500 but has increased to $1,650-$1,800.
"We're trying to be conservative because we know it's an incremental out-of-pocket spend for consumers," Bret Jorgensen, the company's CEO, said in a phone interview. "We try to be affordable, personalized healthcare instead of 'wealth care.'"
Competition for "All-or-None" Model
The MDVIP model, which includes all the benefits mentioned above, produces excellent outcomes, according to Jorgensen. "Not only do we cut out 80% of hospitalizations, when they do go [to the hospital] and they get discharged, the doctor knows that, and knows the post-discharge instructions." As a result, he says, "we have a 95% reduction in readmission rates. All of those things taken together help doctors avoid a whole bunch of costs."
But the MDVIP model won't work for many physician practices, said Wayne Lipton, a former MDVIP employee who is now CEO of Concierge Choice Physicians, in Rockville Centre, New York. "Their model was an 'all-or-none' approach to medicine, where the doctor would say to their patients, 'You have to join this program and pay the fee, and if you don't join, we'll kick you out of the practice.' Internally [we] referred to this as the 'gun-to-the-head' model."
So Lipton proposed a "hybrid" model, "where the doctors would offer concierge [care] as a choice rather than a requirement," he explained during a phone interview at which a public relations person was present. "I felt this would be much fairer to patients and be a better tool for the company, but I was told that wasn't what they wanted to do, and I subsequently left in 2005 to start my own company."
The hybrid approach "was a very big change in care but it meant that doctors weren't as cold-hearted as to say, 'You have to pay or get out,'" he continued, adding that the number of people who joined under this model was smaller -- 100 to 150 rather than 250 or 300. "But it didn't require the doctors to make significant changes to their practices, and it allowed patients to think about it and maybe do it as they got older."
Better for Larger Groups
The hybrid model worked better in larger groups, especially because the first doctor in a group to do it wasn't considered an outcast because he or she would still keep seeing non-member patients. And it worked for specialties other than primary care -- including cardiology, endocrinology, and rheumatology. "I think that was a major change," Lipton said.
To accommodate the concierge patients, each practice sets up a specific time during the day for seeing only concierge members; during that time, the physician only sees one to two patients per hour in order to give extra time per visit. A separate phone number is set up just for concierge patients, and the doctor's cellphone number is given out for after-hours phone calls. "We're able to give the same benefits [as MDVIP] to a much smaller number of patients," Lipton said.
By segregating the visit time, they were able to establish enough time for traditional patients to be seen "at four patients per hour or whatever rate the doctor was seeing people before," said Lipton. He disagreed with the idea that the hybrid model was promoting two-tiered medical care.
"It isn't two-tiered care when the same doctor is seeing you that was seeing you before, [although] maybe some patients get more services and a higher convenience level. But the medicine the doctor delivers -- there's a consistency to that level of care, which is not impacted by the difference between 7 minutes of face time and 15-20 minutes of face time. It [just] makes people feel more comfortable, more engaged, and [better] enjoy that relationship."
Like MDVIP, Concierge Choice's member fee, which usually ranges from $1,600 to $2,500 annually, includes a 1-hour comprehensive exam plus access to those longer appointments. Concierge Choice is in 24 states, although Lipton declined to say how many practices they served except that it is in "under 1,000 practices nationally." Any follow-up patient visits are covered either by private insurance, public programs like Medicare, or out of pocket if the patient doesn't have other insurance.
Although there is always competition in this space, it largely comes not from other companies "but, sadly, when an individual doctor or group says, 'I think we can do this ourselves.' They're usually journeying into areas where they're not experts, and they make a lot of mistakes," Lipton said. Concierge Choice, like MDVIP, charges a per-member fee for its services and performs marketing and accounting services for its clients, as well as staff training.
MDVIP sees issues with a hybrid model, Jorgensen said. "We think there are legal challenges to giving different [levels of] care to people giving different amounts [of money]," he said. "We're not comfortable with having people in waiting room getting treated very differently, so we've taken a purer approach to our model."
Using Ancillary Providers
Another concierge company, SignatureMD, also offers offers its physician clients a segmented, or "dynamic," model in which the physician focuses his or her time and attention on program members and hires a physician extender to manage non-member patients. "Our other big differentiator as a company is that we view the physician as the client rather than the end consumer or patient," said Matt Jacobson, SignatureMD's CEO, in Santa Monica, California"About 15% of our doctors are full conversions with no non-member patients; they average about 400 patients per physician."
The rest, he says, are in what the company calls a "dynamic" model in which the physician focuses his or her time on the practice's 200-500 member patients, and the rest are mostly seen by a physician extender like a physician assistant or nurse practitioner, with the doctor available for complex or urgent situations. "Many patients don't have an incentive to convert to the concierge model, and typically the nurse practitioner can handle 90% of the medical encounters with non-member patients."
When he first looked at establishing a concierge care business, Jacobson said, "I found that the full conversion model had two major flaws: it required doctors to take significant risk in converting their practice -- if they converted to full conversion and didn't hit their numbers, they couldn't put the toothpaste back in the tube, and second, it required physicians to terminate patients knowing that they were heading into the most severe primary care shortage we ever heard of. That's the reason we moved our branding from 'segmented' to 'dynamic' conversions -- after 1, 2, or 3 years with a segmented model, a physician might say 'I want to simplify my life,' and can transfer to full conversion at any time."
As to the revenue potential, say a physician starts with 2,000 patients and decides to do a full conversion in which 300 of them convert to concierge care. Practices generally charge membership fees of anywhere from $1,500 up to almost $3,000, "with the sweet spot in the $1,700-$2,000 range," said Jacobson. "You earn [about] $400,000 in membership fees and maybe $100,000 in [regular] fee-for-service, which is probably about where you started," and the doctor can expect to add more members over time as patients get older and need more care.
In most practices, no additional staff is required either, Jacobson pointed out. "Five to 7 years ago, probably 80% of doctors didn't have nurse practitioners. Today that's flipped; 80% to 90% have nurse practitioners, and many are underutilized, so there's no additional cost to the program ... So you have added $250,000 up to $7500,000 of incremental revenue without having to add to your expense line." And this model "gets around the moral issues physicians may or may not have about terminating patients."
Jacobson did not elaborate on the services physicians offer to members, except to say they're customized for each practice and "proprietary to our company." He added, however, that "we are not selling access and we are not selling [an annual] physical; that's not a recommended service offering in my opinion."
Choosing the Right Clients
Like other concierge care companies, SignatureMD doesn't accept every practice that applies, Jacobson said. "The vast majority of applicants don't have the right patient demographics or the right physician acumen or bedside manner. Measuring quality amongst physicans in delivery of care is incredibly complex, and I don't know if even the largest medical institutions have mastered that. What we're doing is measuring the patient loyalty, the patient affinity toward their doctor, and [the doctor's] nature, as well as the demographics of the patients in terms of age, socioeconomics, and education levels."
Another model for paying for primary care is "direct primary care," in which patients pay a set monthly fee -- usually around $50-$80 per month -- to receive all their primary care services. "Direct primary care is not really competition for us [except that] maybe it gives the doctor an alternative income stream," said MDVIP's Jorgensen. "The direct primary care models tend to be a little more focused on a younger crowd, and more employer-centric." He noted that while some states have passed legislation favorable to this model, "it hasn't quite been figured out yet," especially since many health insurers don't work with it.
But Jacobson sees direct primary care as a potential line of business for his company. "When direct primary care is legal in 50 states and insurers start compensating patients for being in direct primary care practices, we're ready to add that to our line of business," he said.