- The state of being a member
- The total number of members in a group
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 the discerning patient evaluating these practices is left with determining the relative value of this new Direct Practice concept, and having passed that test, determining which type of practice model actually makes sense to them (All inclusive or Fee for Service). Lets look at these questions in order using a traditional 4 person family with an annual all-in health care spend 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 unbelieveable 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.
Will discuss the All-Inclusive vs. Fee for Service next . . .
3 comments on “Membership-based Practices: Does It Have It’s Privileges or is it just for The Privileged?”
Your benchmarking of Milliman baselines to typical plan options available characterization has meaning from the point of view of employer sponsored health insurance vs. a direct practice alternative. But what about those without health insurance?
The self employed, and those working for smaller employers who do not extend comprehensive medical coverage, or those who are dependents of someone who is working, but not at an employer extending dependent health benefits, are in the “coverage gap” at the moment.
How can similar metrics of value for direct, boutique or concierge medical practices be illustrated?
I just discovered and have enjoyed reading your blog! Keep up the good work.
Hi Scott —
Two questions for you:
1) (my cynicism shows through…) Do you believe that employers will really pass on the savings in insurance when they no longer are paying for the coverage? I’m skeptical that the employee will get the entire $15,000.
2) Is this new model likely to take root in small and rural markets? Can physicians generate enough of a customer base to succeed?
Two things about health insurance work against the subscriber. First, companies used health insurance as a tool to attract employees. This created an environment where people now expect to receive health insurance from their employer instead of buying it just like every other type of insurance.
Secondly, if your boss picks the health insurance that you can purchase then you have less choices. Even more progressive companies only have 2 or 3 choices. Therefore, the general population has little to no knowledge of how insurance works. Health insurance companies have propagated this by producing commercials where “good” insurance allows people to walk in and plop their card down, receive service, and walk out. This power through ignorance now pits the payer versus the provider with the subscriber as the pawn.
This is an excellent example for the population. Once the individual abdicates responsibility their financial security, you can’t complain with the results or the quality of what you get for the money.