I have watched the meteoric rise of popular term “Medical Home.” While I personally dislike this phrase, it has caught on in the popular vernacular and looks like it is here to stay. In conjunction with the rise of the term is the growing popularity of a practice model that includes a higher level of service on a membership basis. It is essentially, next-generation concierge medicine, but now being promoted under the more politically correct banner of “direct practice.” Multiple variations of the model exist, from an all-inclusive single fee to a membership structure that retains a fee for service financial arrangement.
So discerning patients evaluating these practices are forced to determine the relative value of this new direct practice concept, and having passed that test, determine which type of practice model actually makes sense to them (All inclusive or Fee-for-Service). Lets look at these questions using a traditional four-person family with an annual all-in health care spending of $15,000 (consistent with Milliman’s 2008 numbers).
First, the value of a direct practice to a regular insured person receiving a very rich high premium, low-deductible benefit package from their employer. In this arrangement, the worker typically pays about 20% of the cost of care, and so the resulting split is employer paying $12,000 (premium) and the employee coming “out of pocket” $3,000 (co-pay, co-insurances, etc). In this setting the insurance options are set, and the employee chooses from the menu. Within this menu, there is typically a PPO option which is often selected because it provides significant flexibility in choosing a provider/specialist. However, you are stuck with selecting a provider from the directory, stuck in the current 2 hour wait room, 10-12 minute physician visit, and getting the same old no value added consumer health experience. This heavily subsidized model (paying $3,000 for a $15,000 benefit) of health care is going away rapidly, and Americans will continue to feel the pinch as the cost shifting pendulum continues to swing toward consumers.
Contrast this with the individual who views their health as an asset that needs to be invested in over the long haul. This individual will have already transitioned to a low-premium, high-deductible health plan so that the same $15,000 can be spent much differently: $3,500 for the premium, $7,500 for the deductible, and the remaining balance of $4,000 being made available to purchase additional health services. Even if fully maxing out the insurance benefit (remember that any part of your deductible that you don’t use can be saved in your tax advantaged health savings account), this $4,000 is available to optimize care for the family. What is the most effective way that it could be spent?
While every individual will have different priorities, I would suggest that these extra dollars could create significant value by enrolling in a direct practice relationship with a primary care physician. In this arrangement, the member would have 24×7 access to the physician, see the physician in an office/home/virtual setting, have care coordinated across medical conditions and across care environments, proactive preventive measures being actively undertaken, medical advocacy support, and someone whom you absolutely trust who can help you navigate your health. Essentially, a personal medical director, working with your personal medical staff, to ensure that your personal health objectives are met. An unbelievable value (outcome/price) to help you manage your most valuable asset.
Is this really possible? Do these numbers really jive? Is this type of individual consumer experience really available? It absolutely is. They absolutely do. It is absolutely coming. Membership based practices really do have their privileges and those privileges are going to rapidly be extended to the masses.