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Why Concierge Medicine Will Get Bigger

Why concierge medicine will get bigger. Practices could shield patients from health-care turmoil

By Elizabeth O’Brien

If you’ve joined a concierge medical practice, recent trends in the worlds of health care and insurance may have you feeling good about your decision. If you haven’t signed up with one of these practices—also called “boutique,” “personalized” or “private-physician” practices—some of those same trends may lead you to consider it down the road.

Certainly, plenty of baby boomers have done the math and deemed the investment worthy. In the typical concierge experience, a primary-care doctor accepts insurance for routine services but also charges a non-reimbursable fee that pays for amenities like 24/7 access to the doctor, same-day appointments, longer appointment times and a greater degree of personalized attention. The annual fee for such practices currently averages about $1,800.

Now that the business model has been around for a while, more patients are saying that it involves less stress than a traditional medical practice. What’s more, two recent studies that tried to measure the health impact of one popular concierge model found its patients had lower hospitalization rates and other benefits.

The approach has its critics, with some arguing that concierge medicine exacerbates the disparities in care between the haves and have-nots. But for people with the resources to afford it, the boutique-practice model clearly has a growing appeal.

While the number of concierge doctors remains small, it’s growing at a rapid clip. In the U.S., there were about 4,400 private physicians in 2012, a 25% increase from 2011, according to the American Academy of Private Physicians. That’s out of some 600,000 practicing doctors nationwide. At an average of roughly 350 patients per concierge doctor, that means more than 1.5 million Americans are under the care of a physician who provides an additional level of service in exchange for a fee.

Concierge medicine’s perceived advantages will only grow in the coming years, experts say, as the traditional health-care system becomes even more strained. The full implementation of the Affordable Care Act next year is expected to bring more than 20 million formerly uninsured patients into the health-care system through 2022, exacerbating an existing physician shortage.

What’s more, proposed changes to Medicare could cut doctors’ reimbursements, further squeezing their revenue. Concierge doctors make the case that their fee cushions them, and by extension their patients, from these changes looming on the health-care horizon.

A buffer from Medicare cuts

That’s an argument that could be particularly persuasive to those approaching retirement—and Medicare eligibility. As one of the biggest recipients of federal tax dollars—the government spent $486 billion on Medicare in 2011, according to the Center on Budget and Policy Priorities—Medicare is vulnerable to cuts as part of any congressional effort to trim the budget deficit.

Proposed changes to the program include raising the eligibility age and implementing more income-based pricing. The government could also decide to reimburse doctors even less for their services. As it stands, Medicare these days usually pays doctors only enough to meet their overhead—that is, to pay the rent, support staff and other expenses—with little left over for the doctors’ salary, said Jeffrey Milburn, a consultant in the Health Care Consulting Group of the Medical Group Management Association, a trade group for medical practice managers.

Many concierge doctors accept Medicare, but they say they don’t rely on it to meet their costs. That’s a good position to be in, said Dr. Gary W. Dorshimer, who recently switched his practice at the University of Pennsylvania Health System over to a concierge system. The annual $2,500 fee he charges his patients will help offset any cuts in Medicare reimbursement, he noted.

Penny DelGaudio, 69, a Medicare recipient and longtime patient of Dr. Dorshimer’s, decided to make the transition with him. “I don’t consider myself wealthy,” said DelGaudio, a real estate agent in Medford, N.J. But she and her husband decided the $5,000 annual cost for the two of them was worth it, for the increased access to the doctor, shorter wait times, and insulation from future health-care changes.

Recently, some in the industry say, personalized-medicine patients have also been insulated from health-care inflation, at least when it comes to their annual retainer. Fees have been “incredibly stable,” according to the American Academy of Private Physicians, and the industry’s largest network, MDVIP, a unit of Procter & Gamble, has kept its fees essentially flat since 2007. (Patients’ insurance premiums, of course, have generally risen over the same period.)

Spending more to buy face time

Concierge practices rely on a simple equation: more money for the doctor equals more time for the patient. Many private doctors have rosters of as few as 300, compared with 2,000-plus in a traditional practice. While most boutique-medicine doctors say they’re open to more patients, experts say they’ll typically cap their practice at 500 or 600.

The upshot: Instead of rushing through a 10-minute visit, private doctors can spend a half-hour or more with their patients. Many private doctors offer an extensive annual physical that can last a few hours.

That’s a change in approach that many doctors would like to see become more widespread. Experts say that traditional medicine has become reactive, treating patients in discrete episodes only after something goes wrong. Few blame the doctors themselves for the current system—they’re under strain from rising costs and falling insurance reimbursements.

“The incentives now are for piecework and symptomatic care,” said Robert Williams, director of Deloitte’s life sciences and health-care consulting practice. The Affordable Care Act aims to change this, but systemwide changes have only just begun.

Additional time means concierge doctors can focus more on education and prevention, proponents say. William F. Hoover, a retired police officer with the Port Authority of New York & New Jersey now living in Las Vegas, credits his concierge doctor with changing his lifestyle. Hoover ate the heavy, meat-and-potatoes meals of his childhood until his doctor, Candice Tung, introduced him and his wife to quinoa and other healthy foods that have helped him lose weight and keep his diabetes in check. “It’s a pain in the butt trying to stay healthy at 65,” he said, and it helps to have an ally like Dr. Tung, who is affiliated with MDVIP.

MDVIP is the country’s largest network of private physicians, with about 560 affiliated doctors and 200,000 patients in more than 40 states and Washington, D.C. The company has reported revenue growth of approximately 20% per year over the past 3 years, according to a spokeswoman. Since 2007, the number of doctors and patients is up 200%, according to CEO Dan Hecht. “The more chaotic it is in health care, the more changes, the more desirable it is to have confidence in the doctor/patient relationship,” Hecht said.

Parsing the health studies

According to two recent studies financed by MDVIP, its system improves its patients’ health outcomes. The company recently published a study in The American Journal of Managed Care that found a 79% reduction in hospital admissions for Medicare patients in MDVIP-affiliated practices, compared with those in traditional practices, and a 72% decrease for those with commercial insurance in MDVIP-affiliated practices between the ages of 35 and 64. Another study, published recently in the International Journal of Person Centered Medicine, found that MDVIP patients better managed their chronic conditions. For example, 83% of MDVIP patients with diabetes had good blood pressure control, versus 50% to 65% in the national benchmark.

While those studies were peer reviewed, the data was compiled and analyzed by the company’s medical director and other company employees and affiliates—and some experts have questioned MDVIP’s methodology. For starters, critics said that the company should have engaged a third party to study its effectiveness, instead of undertaking the study on its own.

Others wondered whether MDVIP’s studies did enough to minimize “selection bias.” MDVIP patients—who pay an annual fee of $1,500 to $1,800—are more affluent than the population at large. That means they may also be more educated and likely to follow a doctor’s instructions. In other words, these patients might be less hospitalized than the general population anyway, regardless of who provides their primary care, said Dr. Albert Wu, a practicing internist and professor at the Johns Hopkins Bloomberg School of Public Health.

While the data did not allow MDVIP researchers to formally control for selection bias, “the bias is very minimal,” Hecht said, adding that the fact that the studies were published in peer-reviewed journals spoke to their rigorous methodologies.

Wrestling with ‘elitist’ label

Other critics say concierge practices are elitist. And even supporters of the approach worry that the spread of personalized practices will only worsen the country’s primary-care physician shortage, by making some doctors inaccessible to middle- and lower-income families. ( To read a doctor’s essay about the drawbacks of concierge medicine for middle-income patients, click here .)

Some private physicians counter that they were burned out before they went the concierge route, and they might not have remained in medicine if they didn’t have that option. “It’s helped extend my career,” UPenn’s Dr. Dorshimer said. Johns Hopkins’ Dr. Wu said the country already has a multitiered health-care system, with some people on government insurance, some on private insurance, and others served by veteran’s plans or community clinics. There is not always a stark divide between haves and have notes, Dr. Wu said, while the Affordable Care Act will create many more patients who “have some.”

MDVIP executives and others balk at the term “concierge” medicine, saying their service is more inclusive than the image of CEOs in robes and slippers evoked by the term. Indeed, other models offer what some call “concierge light.” The network One Medical Group, currently available in 5 major cities, charges just $200 annually for longer doctor visits, minimal wait time, iPhone appointment scheduling and prescription refills and other amenities. The group has slashed overhead by increasing its use of technology and cutting down on support staff. Doctors weigh in patients and take their vital statistics, which provides a good opportunity for both sides to catch up, said Dr. Tom Lee, One Medical’s CEO, who holds both an MD and an MBA. “Because we’ve re-engineered our practice, we can weather most reimbursement storms,” Lee said.

Scott Breslar, 55, a restaurateur in Morris, Ill., says he understands why the concierge concept is expanding. He credits Dr. John Saran, his MDVIP-affiliated physician, with helping him manage complex health conditions, including major surgeries. “It’s painful to shell out $1,500 per year,” Breslar said. “But it’s an insurance policy, and you know exactly what you’re getting.”