Cash-Only Practices: 8 Issues to Consider

Neil Chesanow


May 15, 2014

In This Article

Will You Be Able to Attract Enough Patients?

For concierge doctors, attracting new patients can be a challenge. That's why most concierge practices are hybrid models, Michael Tetreault observes.

Hybrid practices generally take commercial insurance and Medicare for most patients, who pay the usual copays and get the usual 15-minute visits of a traditional practice. But hybrid practices also offer same-day appointments, longer visits, 24/7 cell phone access, and perhaps other concierge amenities to a smaller group of patients, who pay an annual fee for better service.

One concierge consultant, who specializes in hybrid practice start-ups and has assisted in over 200 transitions, estimates that most of his clients' panels consist of about 90% traditional patients and about 10% concierge patients.

Traditional patients always have the option to upgrade to the concierge service. How many patients will actually opt to do this is the question. A hybrid practice lets doctors test the viability of the retainer concept in their panels before committing to a full concierge practice, in which all patients pay an annual fee to be members. If there is enough demand, a doctor can then transition to a full concierge model.

Converting patients from the traditional side of the practice, however, isn't easy.

"There are downsides to a hybrid practice," Tetreault says. "Number one is that a lot of patients will get into a wait-and-see mode. They will say, 'I can still see my doctor. I'm just going to file through insurance. I might have to wait longer to get an appointment, but that's fine.'"

For concierge and direct primary care physicians who don't take insurance, getting traditional patients to make the transition can be even more of a challenge.

"When people are already paying $800 a month for healthcare, it's hard to convince them that they need to pay an extra $80-$150 a month for direct primary care," Bliss says, "unless they have a ton of money."

It usually is well-to-do traditional patients who are "early adopters," becoming the first patients not only of the more expensive concierge practices but also of the less expensive direct primary care practices, he says, although few practices of either type can exist on solely on wealthy patients. The most logical patients for more personalized care today are Baby Boomers with multiple chronic conditions, for whom a 15-minute visit isn't enough.

However, the largest market -- Medicare patients -- is the least likely to appreciate the benefits of retainer medicine, experts say. Many seniors don't understand the concierge or direct primary care concept when doctors and staff try to explain it, or why they should pay extra when they are already paying for Medicare coverage. Many Medicare patients live on a fixed income and can't afford to pay an annual fee, no matter how inexpensive it is.

Only a fraction of your traditional patients will typically join you in a retainer medicine practice, experts caution. It's not unusual for a traditional primary care practice with 5000 patients to have trouble attracting the 300-600 patients needed for a full concierge practice, or the 1000 or so patients needed for a full direct primary care practice. Doctors who open with half-full practices court financial collapse.

"Unrealistic expectations are what I hear in many doctors' comments," Tetreault reports. "Doctors set themselves up for hard times over the next 12-24 months by underestimating the market. We've seen physicians fail because of lack of capital. They think, 'My patients love me. There's no way they're not going to continue to use me after I transition. I'm affordable. How can they not choose this? This is great!'"

One family doctor, who left a primary care group practice to open a solo concierge practice in 2003 -- without a single patient going in (a restrictive covenant prevented him from taking practice patients with him) -- told Medscape that he wiped out his entire savings keeping the practice afloat, and that he finally earned $100,000 in 2012, 9 years after he left traditional practice.


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