Last week I discussed the concierge health care delivery model and I included both the pros and cons. One of the glaring problems is that it creates a two-tiered health care system. This system allows physicians to partially eliminate working with third-party payers, eliminating the insurance related paperwork, including the coding and billing as well as keeping the revenues, reducing overhead and spending more time with our patients.

Frank Cellia in his report in the Duke Medicine, August 2014 issue of Clinical Practice Today, discussed the newer concierge model called “direct primary care” or DPC, which is a subspecies of the retainer-based medicine that could offer physicians the benefits and offer concierge type medicine for the masses and not just for the rich. How does this system differ from the true concierge model? Also, can this model be scaled and applicable to the national level in the diverse markets and patient populations?

A study done by the California HealthCare Foundation in 2013 stated that DPC practice models are already caring for approximately 500,000 patients across the country. It seems that some of these practices have succeeded in cutting costs, improving outcomes, and offering patients and physicians a more rewarding experience.

So, what is the difference between the true concierge model and the DPC model?

The DPC model asks patients to pay a flat monthly or annual fee. These fees are typically much lower than what is seen with the standard concierge models. The example fees are about $40-$60 per month for adults and often less for children. The patients receive an enhanced array of services, such as 24/7 physician access, extended visits, email communication, and in some cases, house calls. They refuse third-party insurance including Medicare and Medicaid, which is their most distinguishing characteristic. This model is a non-frill, meat-and-potatoes type of operations, but do expand upon the primary care’s traditional role, sometimes offering wholesales pharmaceuticals, laboratory testing, x-rays, EKG’s and minor procedures.

How do we distinguish this delivery model from the concierge model? The practices using this model for their practices do not take third-party insurance including Medicare and Medicaid. For example, one practice charges $600 per year for an adult. If you have an average practice where the physician cares for 600 patients this equates to $360,000 in gross revenue for each physician in a practice. As you add more and more practitioners the overhead decreases and in fact you can see the overhead going from the usual overhead in a practice of 50%-70% with electronic medical records to 10%-20%. This is a real game changer!

Most of the practice’s patients usually keep some form of insurance for catastrophic conditions, such as heart failure, heart attacks or cancer, which remains the domain of the specialists. The patients in the “Direct Primary Care” (DPC) model can visit as often as they like and drop out and rejoin any time, without incurring any penalty and regardless of pre-existing conditions. Many of the conditions and procedures that are usually seen in the emergency rooms can be handled in the offices under the DPC model as well as providing lab testing and often wholesale drugs at cost. There is a tremendous savings by removing the primary care from the insurance world, both by eliminating the paperwork and in the downstream services such as emergency and specialty care. This model may in fact be a solution that may help cut down on the rising health care costs and administrative requirements on the national level.

The most frequent criticism of this model as a widespread health care model is that it would create, as in the concierge model, a doctor shortage, especially as the ACA/Obamacare, add an additional 31 million new patients into the system. However, looking at efficiencies, by decreasing the need for emergency and specialty care, that manpower efficiencies will bridge the gap. But in the real world, I’m not so sure that DPC will world on a national level, but still could provide better care and allow selective physicians to deliver this improved care.

Another challenge is that Medicare patients are another big challenge because these patients spend a lifetime paying into the system and the idea of having extra, unanticipated expenses for primary care would frustrate many seniors and with many seniors on limited incomes, may not have the extra money for the DPC out-of-pocket monthly expenses.

I believe that there are still other challenges and that if the DPC system saves paperwork that this system may work. However, I also believe that the major savings in expenses in the health care delivery model may relate to physician competence. If they deliver good care, this saves money, no matter which delivery model health care is practiced under. In fact, one of the objectives of the ACA or Obamacare relates to the quality care delivery system, which should save money for the healthcare system.