Concierge, Direct Pay, or Hybrid: Is One Right for You?

Leigh Page


April 06, 2016

In This Article

Making Direct Pay Work

The keys to the success in direct pay, Dr Umbehr says, are to keep expenses low, offer patients value for their money, and provide great service.

The Kansas physician says that the expenses for opening a direct-pay practice can be as little as $10,000. You can keep costs down by renting out space from another doctor, buying second-hand equipment, and having no more than one nurse on staff. In addition, Dr Umbehr pays half the usual rate for malpractice insurance because carriers recognize the fact that he has only one fifth of the patients of a traditional practice and has less risk.

When Dr Umbehr started, he touted his unfamiliar mode of practice to churches and civic organizations. But to get people truly interested, he realized he couldn't just talk about the extra attention they'd be getting and how it could improve their health. What interested patients was the extras he offered, such as discounts on drugs, labs, and other services.

"It's so important to offer the extras," he says. "We're adding value." For example, by dispensing medicines in-house, through a service, he has brought down the cost for many medications by 95%, he says.

Dr Umbehr also emphasizes service. "You need to treat your patients like customers," he says. For instance, dealing with patients over the phone is very important in direct pay. "Dale Carnegie said smile when you're talking on the phone because people notice," he says.

Dr Umbehr sells practice management software to about 150 doctors to help them operate direct-pay practices. They pay him $300 a month for the software. Among other things, the software can transfer patients' emails into their electronic medical record and print out labels for drugs dispensed at the practice.

One of the biggest hurdles in starting a direct-pay practice is opting out of Medicare because when you opt out, you can't return for at least 2 years. "Physicians get scared by that," says Philip Eskew, DO, a family physician who is getting ready to open a direct-pay practice in Wyoming. "What if the practice fails? You can't go back."

Dr Eskew, also an attorney who is a leading expert of direct pay, is carefully planning his practice launch. Accumulating enough patients takes time, he says, so he will need to supplement his income by moonlighting. Because he is opting out of Medicare and dropping commercial insurers, most moonlighting jobs won't work for him. He would have to bill those payers. But this isn't the case, he says, with moonlighting in prisons or occupational medicine. Dr Eskew chose prison moonlighting, and he plans to continue working there until his practice is up to speed.


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