Concierge Practices Even for Doctors Who Don't Like the Idea

Neil Chesanow

Disclosures

January 09, 2014

In This Article

Practice Fees and Revenues

To be a member of Skypark Preferred Family Care, patients 18-45 years old pay $1050 a year, those 46 and over pay $2100, adult couples pay $3000, single parents pay $2300, and families pay $4200.

With a panel of 600 patients, some of whom are nonpaying members, "I'm probably earning 50% more than I was in the previous practice," LaGrelius says.

"I'm working just as hard," he adds, "but I'm working differently. Back in the old days, there was a line in my waiting room. Now my waiting room is empty."

He estimates that 80% of his revenue now comes from annual fees.

This is as it should be for a full concierge model to succeed financially, says Roberta Greenspan of Specialdocs. Nevertheless, some clients are disconcerted to discover that only a relatively small portion of the revenue in a full concierge practice, even one that takes commercial insurance and Medicare, is derived from copays and reimbursements, as it was in a conventional practice.

"Physicians need to switch mental gears from depending on office visit fee collections as the majority of their revenue stream to recognizing that in a transitioned practice, the majority of their revenue stream is derived from annual fees," Greenspan says. "Generally, 80%-85% of all revenues in a well-transitioned practice should be derived from annual fees."

But it isn't just fees that can boost revenues. In a full concierge practice, a patient panel may be reduced by 75% or more. Thus, fewer staffers and less office space are often needed. Downsizing both can significantly reduce practice overhead.

"If a physician's revenues in a traditional solo practice are about $600,000 with an overhead factor of 65%, this results in a practice net of $210,000," Greenspan says, laying out the math. "By transitioning to a personalized care/concierge model, even if revenues remain the same but the overhead factor is reduced to, say, 55%, this will result in a practice net of $270,000, a significant increase."

Well and good, but concierge physicians tend to have an independent streak, even when they hire experts to advise them. LaGrelius is one of them. His staff all spent many years with the practice; he had no intention of letting any of them go, even though it might have improved his profit picture. He had 4 staffers when he saw a panel of 1500 patients. He still has 4 staffers.

"I promised my staff that they would have better lives, better working conditions, they would all get raises, and none of them would be let go," he says.

With 900 fewer patients, they still have enough to do?

"Oh, they're busy," LaGrelius says, "but in a very happy, cheerful, relaxed way. They're not running around like chickens with their heads cut off. They are busy but never rushed."

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