I have been asked by many colleagues on Sermo, as well as followers of this blog to post further stats of my practice transition away from third parties.
So here goes....
First some history:
Back in 2007, I was getting fed up with the third party control of healthcare. I had a "normal" heavily HMO and managed care family practice. I was exploring options that I would enjoy more. My daughter thinks I am a good cook, but my back can not handle being on my feet for too long, so becoming a chef was out of the picture.
I had a few other options to remain in family practice.
1) Continue as is, as a solo family practice doc.
2) Join a large family practice group without walls, where the group would share a taxpayer-id and other management resources, and would handle all the contracts with the third parties. Advantages included increased fees from third parties. Disadvantages included having to toe the line of the group practice. As I do not always play well with others, I did not choose this option.
3) I also explored converting my practice to a concierge model. This also had many advantages including a guaranteed salary for three years, less patients seen per day, and no dealings with third parties. Disadvantages included the high membership fees for patients that would scare off 95% of my practice, and possibly brand me as a "country club doctor". While sticks and stones can break my bones, but names can never hurt me, I decided against Concierge as I had developed many strong relationships with my patients and I truly did not want to abandon them, or make my fees out of their reach.
So I then did what I usually always do. I made up my own business model that best fit my own personal healthcare philosophy.
I decided to transition away from all third parties other than Traditional Medicare in January 2008. I also offered prepaid yearly Wellness options, some with no copays, others with small copays, as well as also allowing regular self-pay fee for service. In 2009, I moved all my Wellness Plans to no copays. My Wellness Plan fees average about 30-35% of a Concierge practice. Please make note that I do not offer Concierge services, so I do not charge Concierge fees. There is a Concierge physician in my area who does offer these services and I have referred patients to his practice who are looking for that type of service.
OK.
Enough history..
Here are some stats.
2010- Wellness Plan-Self Pay- Traditional Medicare
2007- Normal Third party dominated practice
1st quarter 2010 revenues are now equal to 2007
1st quarter 2010 expenses are down slightly from 2007. They would be down more, but my type of practice requires more to be budgeted for marketing.
1st quarter 2010 patient visits are just under half of those seen in 2007, so $/patient in 2010 ($125) is over double 2007 ($61).
Now for what I find interesting.
I calculate percetage revenues from three different categories;
1) Wellness Plans
2) Self-pay or fee for service each visit
3) Traditional Medicare and balance billing secondary insurances
Here are the percentages for each 1st quarter period for 2007---2010.
Wellness Plans:
2007 0%, 2008 43%, 2009 53%, 2010 60%
Self-Pay
2007 20%, 2008 23%, 2009 32%, 2010 28%
Medicare-secondary insurance-(third party hmo's, ppo's in 2007 only):
2007 79%, 2008 32%, 2009 15%, 2010 11%
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Other interesting tidbits about my practice.
I presently average about 12-15 patient visits per day.
My 2010 medical billing costs are about 25% of 2007.
I share office space with my spouse, who is a psychiatrist. We share one full-time employee. We have no other staff. We do not need a referral coordinator, nor a medical receptionist. We have a voicemail system. Many patients have my cell phone number for urgent or emergent situations. They have never abused that privilege.
For me, this practice style has been a no brainer, and I do not forsee myself going back to third parties. I will probably end up dropping Medicare participation within the next few years, or sooner dependent upon how bad Obamacare actually turns out.
I hope this post has fueled some thought.
I welcome any comments.
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8 comments:
Dr. H:
Please give me your definition of "Concierge services." You provide superior medical care/same day appointments/cell phone access. Is this not concierge service? You just provide it at reasonable prepaid rates. (I'm a solo FP still in "third party" shackles; but am hoping to follow your lead!)
Concierge Services in my mind entail the following:
1) Concierge Prices of $1500/year or more
2) 24/7 access
3) Hospital care included
4) Housecalls included
5) Going to specialist appointments with patients
6) Handling all their scheduling for medical testing and procedures in and out of office
7) Same day appointments
8) Cell phone access
I am sure there are more....
I do not wish to beholden 24/7 to any party, other than my immediate family. Therefore full concierge services did not fit for me. But picking the aspects that do work for me and my patients, and at reasonable fees, well, that is OK!
DoctorSH, I stumbled upon your posting on Sermo. I commend you for your bold initiative. I am looking to start a similar practice.
How do you handle it when your patients need imaging, medications etc that require prior authorization (if they are submitting bills to insurance or when they've met their high deductible for the year)?
How about referrals? If some patients are still using their insurance (just not for you), many require a referral from an in-network PCP, right? I've heard the same for ording labs & imaging under some policies.
Do you do in-house labs? If so, separate charge for those?
Are you charging any hourly rate or just per appointment charge? Any charge per afterhours call?
Extended or weekend hours?
These are all issues I've been considering, so I'm curious how you've approached them.
Thanks,
-MRH
MRH:
Good questions:
1) We handle all the precerts and preauths for our patient's, as long as we are the one ordering the tests. By not accepting third party insurance, you must become an advocate for your patient's , and fight the third parties when they are delaying or hindering care. You do this because it is the right thing to do for your patient, and builds further trust in the doctor patient relationship.
As for HMO referrals, you need to find a local doc who is willing to handle these for you. You would be surprised how many docs are willing to serve in this capacity, as long as the HMO continues to pay them under capitation. Just never, ever offer another doc any monetary incentive for this service. That is most likely illegal.
When you are paid by the patient, give them an itemized bill with coding to help them get reimbursed.
In-house labs are up to you. some may be worth it, others not. I pretty much limit myself to urine dips, strep tests, ekgs, spiros, and some injections. I have cut back on my immunizations as most get wasted in the fridge before they are used. And most vaccinations are available to patients through their prescription or medical benefits and can be obtained by them at their local pharmacy.
As for charges, you need to come up with what works for you. I have a hybrid practice of payment at time of each service, or a retainer concept with a one-time yearly charge , or monthly auto payments with a one year minimum.
DoctorSH
I am transitioning to a cash practice. My first step was to opt of Medicare in October 2009. Medicare patients accounted for 50% of my schedule at the time, but only 17% of my income. As you can imagine, I felt like I was drowning. I sent my Medicare patients a letter explaining my reasons and offered them two options: pay-as-you-go option with a fee per visit based on time and complexity of the visit, and a prepaid option with many concierge features (such as cell phone access, same day visits, etc). Only a handful chose the prepaid option, but about 50% of my patients stayed and opted to just pay for the visits at the time of service. I've been able to reduce staff (and therefore overhead) and am in much better financial shape now, and more importantly, enjoy my work a lot more. I just dropped out of Aetna and Cigna, and will be dropping United in October. I plan to drop other plans over the next 18 months until I am off of everything.
My question is this: what percentage of your patients that choose the prepaid option have insurance, and how many don't? I am thinking I would get more of the prepaid patients if I lowered the fee (currently $995 a year) to about half of that. Along with the reduced fee would be a reduced level of service, of course. What do you think?
One other question:
In your wellness programs, does the annual fee cover the cost of all office visits, regardless of the number of times the patient is seen?
One other question about the prepaid option: are insured patients able to submit their bills to insurance. If so, how does that work when they have a monthly payment?
Dale:
"what percentage of your patients that choose the prepaid option have insurance, and how many don't? I am thinking I would get more of the prepaid patients if I lowered the fee (currently $995 a year) to about half of that. Along with the reduced fee would be a reduced level of service, of course. What do you think? "
My estimate is 90% of my "prepaid" patients have insurance, which they use for services outside my office.
My initial transition year had a $300 yearly fee with $25 copays + discounts on procedures. The other options were a prepaid at $750, selfpay each visit and Traditional Medicare.
I ended the $25 copay, lowered the prepaid to about $500 the following year, and my practice responded nicely.
In fact I see my prepaid patients less now, than I did when they had a copay.
Prepaid and retainer are pretty much the same thing. Yes, it covers all visits, essentially my time. But as you already noticed, overhead goes down dramatically. I share an office with my wife, a psychiatrist, and we have one full-time employee. No need for anyone else at this point.
Patients can submit for reimbursement. But I will only give receipts for office evaluations up to the total amount I received frompatient. Once they hit the retainer fee, I will not generate any further receipts for reimbursement.
As far as reduced level of service, be careful. Cell phone access and emails create goodwill between you and your practice. This will create a buzz that distinguished you and your office from physicians stuck in the third party system.
BTW, my transition is the opposite of yours. I gave up everything except Traditional Medicare, which will be the next to go once I am able to discuss it further with the seniors in my practice.
Continued Good Luck with your transition, and remember, if your patients are paying you directly, you work for them, and you advocate for them, or else they will look elsewhere. Advocating for your patients is most likely the reason you went into medicine in the first place!
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