Cost Containment Corner - Subscription medicine is just around the corner

Cost Containment Corner - Subscription medicine is just around the corner

April 25, 2016
Brendan O'Brien
From the April 2016 issue of HealthCare Business News magazine

By: Brendan O’Brien

Recently, recurring revenue models have been gaining traction in an unexpected place: the doctor’s office.Rather than paying for each visit or service, patients pay a retainer fee in exchange for a level of service. Also known as membership medicine, concierge medicine and direct primary care, the model is paid through subscriptions and can decrease costs, increase health outcomes and improve the job satisfaction of doctors. Currently, retainer-based medicine represents only a tiny fraction of physician practices, but it’s quickly catching on and has the potential to disrupt the way health care is purchased. As with any effective recurring revenue arrangement, the success of these programs stems from fostering long-term, mutually rewarding relationships.

The subscription medicine model is appealing because it gives consumers a way to pay for better care incrementally. Rather than paying for each service a doctor performs, patients pay a monthly, quarterly or annual fee in exchange for a wide assortment of enhanced services. Services may include: unlimited office visits; same-day or next-day appointments; personalized service; and greater access to doctors — in person or by phone, email, text and web video.

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What it costs
Concierge medicine is the umbrella term for retainer-based health care. Providers offer a wide range of services at varying fees. For example, rates at MDVIP, the largest network of concierge physicians in the U.S., are around $1,800 per individual per year, slightly above the industry average of $1,200. On the other hand, red carpet “boutique” plans can cost more than $20,000 a year. The subscription fees cover the majority of in-office services, regardless of the number of visits. The visits also last longer because concierge physicians handle far fewer patients than traditional doctors.

Most retainer-based practices accept insurance for additional services like lab tests, X-rays and prescription drugs. Direct primary care (DPC) is the one exception, as these doctors don’t take insurance. Instead, patients have a direct financial arrangement with their doctor — there is no third-party insurance company dictating treatment decisions. However, most DPC patients carry insurance to cover circumstances not covered in their agreement like hospitalizations and surgery. A lower monthly subscription is one of DPC’s major benefits. Because DPC doctors don’t have the overhead of dealing with insurance companies, rates average from $35 to $85 a month.

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