Policy Diagnosis: Direct Primary Care Helps Patients, Doctors, and the Health Care System

Published April 6, 2016

Editor’s Note: Fifteen U.S. states have active laws respecting patients and physicians who enter private agreements under a payment model called direct primary care. To help educate patients, doctors, and lawmakers about this form of service delivery, Health Care News Managing Editor Michael Hamilton interviewed Hal Scherz, M.D., founder of Docs4PatientCare, a think tank run exclusively by practicing physicians.

Hamilton: Health insurance is a looming financial and emotional burden for many people. How does direct primary care help patients put health insurance in its proper place?

Scherz: Direct primary care is meant to take care of the 80 percent of services people get on a regular basis from a doctor—everyday stuff. Insurance is to cover expensive stuff. It should be like your auto insurance policy. Auto insurers aren’t paying for your oil changes, windshield wipers, or car washes, but for serious problems.

Hamilton: Some people assume direct primary care is the same as concierge medicine. How do they differ?

Scherz: People can get health care four main ways: through third-party health insurers, cash practices, concierge practices, and direct primary care. Concierge practices typically cater to the more affluent sector of our society—people who want enhanced access to their doctor 24/7/365. It runs about $1,500 to $5,000 annually. The doctor will still bill your insurance for whatever he or she does. All concierge medicine means is “access.”

Direct primary care is completely different, and it’s meant for the everyday person out there. It’s an arrangement patients have with their doctors, so they give their doctors a fee on a monthly basis. It varies from $55 to $120 a month—less, in most cases, than the cost of somebody’s monthly cell phone bill. In exchange, doctors agree to give them a certain number of visits, basic laboratory tests, basic x-ray or ultrasound tests, and other services.

Hamilton: Can you give our readers a real-world example of how direct primary care works in practice?

Scherz: At Epiphany Health, outside Sarasota, Florida, run by Dr. Lee Gross, board president of Docs4PatientCare, patients pay $80 a month, get 25 visits a year, [including] basic blood and urine testing, a chest X-ray, an EKG, and a stress test. Women get mammograms. They do basic, in-office, minor procedures. Anything that exceeds the 25 visits comes with a modest fee.

For anything that can’t be delivered in Gross’ office, he’s been able to negotiate rates with the local x-ray facility, laboratory facility, and with specialists who will see patients for an incredibly modest cash fee.

Hamilton: Can someone on Medicaid benefit from direct primary care?

Scherz: Dr. Gross started his direct primary care practice because no doctors in his area were taking Medicaid patients, because Medicaid pays doctors so poorly.

These individuals went to Dr. Gross and said, “Can I pay cash?” He gave them a big discount. They told their buddies at work, and before you knew it, there were 10 people from the same place of business he was taking care of. Well, wouldn’t you know it, the boss came to Dr. Gross and said, “Look, you’re taking care of 10 of my employees. I would like to cover their health care. Tell me how we can make an arrangement for me to be able to do that.”

That’s how Epiphany Health was born. It was one of the first direct primary care practices.

Hamilton: Your Medicaid patient example illustrates how direct primary care increases patient access to affordable health care. Does direct primary care also improve health care quality?

Scherz: Direct primary care practices typically restrict the number of visits or the number of patients. The typical doctor sees between 2,000 and 3,000 patients. That’s why when patients go to the doctor they’re only getting seven or eight minutes with their doctor and often not even seeing their doctor but seeing the nurse practitioner or the physician assistant.

In a direct primary care practice, the doctors limit their number of patients to about 700 to 1,000. Direct primary care doctors can spend 45 minutes with their patients.

Hamilton: How can direct primary care providers afford those lighter patient loads?

Scherz: Because they have a predictable income stream from member-subscribers. They don’t have to deal with the whims of third parties, like the insurance companies that randomly decrease the amount of money they pay doctors who see patients with insurance. Nor must they deal with the government, which I have seen withhold payments to doctors for as long as three to six months.

Hamilton: How does a direct primary care provider’s financial approach translate into better patient care?

Scherz: Direct primary care providers don’t have to hire someone to collect money from a third party, bill it, collect it, and chase the bills the insurance companies aren’t paying. They have less overhead [and] more money in the practice than most of these doctors, and they put that money back into the practice for their patients. They hire a nurse to check on them and make sure they’re taking their medications or coming in for a blood-pressure check. They hire life coaches to help them figure out a diet and exercise plan. I mean, this is the kind of stuff that people need and want. It’s good for everybody, and it’s good for the system.

Michael Hamilton ([email protected]) is The Heartland Institute’s research fellow for health care issues and managing editor of Health Care News.

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