Direct Primary Care Holds Solutions for Hawaii’s Graying, Poor

Published May 4, 2016

Citing concern for the state’s growing elderly and poor populations, Hawaii lawmakers have passed legislation asking the Department of Commerce and Consumer Affairs to research whether certain non-traditional health care models offer solutions for these increasingly underserved patient groups.

House Concurrent Resolution 157, sponsored by Speaker Joseph Souki (D-Kahakuloa) and other Democrats, cites “some concerns regarding the overall affordability of concierge medicine, including the impact it may have on Medicaid and Medicare patients.” Other language in the bill appears to group under the “concierge medicine” label a health care service and payment model distinct from concierge: direct primary care.

Concierge medicine, which costs patients $1,500 to $5,000 per year, in addition to billing insurance, has little to offer elderly and poor patients on fixed incomes and federally or state-funded health insurance. By contrast, direct primary care could prove a wellspring for Hawaii’s graying and low-income patients.

Despite confusing these services, HCR 157 signals lawmakers have accurately diagnosed Hawaiians’ long-term need for affordable, accessible, high-quality health care—and more physicians willing to provide such care. Passing legislation protecting and encouraging direct primary care providers to enter Hawaii’s health care marketplace could help meet these needs.

Direct primary care physicians operate under a distinct service model that allows them to charge lower rates than traditional providers and devote more time to patient care. Providers offer patients a suite of preventive care services, including a guaranteed number of office visits, x-rays, and certain labs, in exchange for a monthly membership fee ranging from $50 to $120. When members require services that fall outside the scope of their private doctor-patient agreement, direct primary care providers frequently negotiate discounts with area specialists.

Membership fees establish a predictable income stream for practices, which enables direct primary providers to maintain panels—groups of regularly serviced patients—of around 1,000 patients. These physicians say their patients enjoy 45-minute doctor visits. Contrast this with the 7-minute factory line model, with which most Americans are familiar, that traditional practices must impose on their 2,500-patient panel visits in order to stay profitable.

Direct primary care’s unique service model is made possible in part by its distinct payment model. By billing patients directly instead of through a third-party insurance company, doctors can reduce their overhead by 20–40 percent and reinvest those savings into better patient care, such as by devoting more time to patients or hiring additional health care professionals as opposed to administrative staff.

Medicare patients, whose health care costs are covered by the federal government, evidently perceive value in spending some of their own money to access exceptionally attentive physicians at relatively low costs. Direct primary care offers seniors a positive alternative to Medicare, Dr. Richard Armstrong, treasurer of the Docs4PatientCare Foundation, told Health Care News on May 5. “There is no prohibition to a Medicare-aged patient buying a direct primary care membership,” Armstrong said. “Our foundation president, Dr. Lee Gross, has a direct primary care practice in North Port, Florida, and he has Medicare patients. He just doesn’t bill Medicare.”

If direct primary care creates value for Florida’s Medicare patients, Hawaii’s could likewise benefit. Florida’s Medicare population exceeds Hawaii’s as a share of each state’s total population and is growing at even faster rates. Between 2011 and 2015, Florida’s population share of Medicare beneficiaries increased from 18 percent to 20 percent, while Hawaii’s increased from 16 percent to 17 percent, according to the Henry J. Kaiser Family Foundation.

Persons aged 60 or older constitute 18.7 percent of Hawaii’s population and will increase to 27 percent by 2030, HCR 157 states. Persons aged 85 and older are on track to increase by 175 percent between 2000 and 2030, a period in which Hawaii’s total population is expected to increase by 21 percent, according to the bill’s text.

In addition to serving Hawaii’s Medicare population, direct primary care can expand access to affordable care for Hawaii’s Medicaid and Children’s Health Insurance Program populations, which had swelled to 338,000 patients by December 2015, according to HCR 157. Qliance, a group of direct primary care providers in Washington State, ran a pilot program in 2013 and 2014 that included more than 15,000 Medicaid patients and demonstrated a 20-percent reduction in Medicaid patients’ health care costs.

Hawaii’s Medicaid patients and taxpayers could reap similar benefits if officeholders resist poisoning the well for innovative health care providers. As Armstrong told The Heartland Institute during an April 28 Health Care News Podcast, “Nobody wants to spend a lot of money and set up a brand new practice of medicine and then have the state sweep in and say, oh, here, we are going to regulate you.”

As HCR 157 makes clear, Hawaii’s surging elderly and poor populations obligate officials to search for creative ways to expand access to affordable, high-quality health care. Lawmakers should take care not to quash direct primary care’s natural incentives for providers to offer such care and for patients to find it.