Big name hospital chains from the Cleveland Clinic to Mass General are giving concierge medicine a try as they seek new revenue streams amid lower reimbursement and rising competition.
Cleveland Clinic Florida recently rolled out a concierge medicine program, hoping to attract 300 patients this year with the promise of longer doctor appointments, increased communication and better care coordination.
Other perks include same day/next day appointments and access to specialists both in Florida and at Cleveland Clinic headquarters in Ohio.
For $4,000 a year, members get an annual physical exam, electrocardiogram and blood draw. However, the program does not accept insurance, meaning many additional services must be paid for out of pocket.
The Florida program reflects a growing trend as hospitals look for new revenue streams to fund operations and special projects in the face of lower reimbursements, smaller inpatient volumes and an increased focus on patient-centric care. In December, Moody’s Investor Service downgraded its 2018 outlook for nonprofit and public healthcare systems to negative from stable, due to projections that operating cash flow will decline by 2% to 4% over the next 12 to 18 months.
And there seems to be a growing market of consumers who are willing to pay thousands of dollars up front for enhanced primary care.
“It does make sense as a business strategy,” says Rulon Stacey, managing director at Navigant Consulting. “There are people who will pay for it and there are organizations that will take advantage of it and will see revenue in this area increase incrementally.”
There is not a lot of data indicating how many hospitals offer a concierge program, but it doesn't seem to be a widespread trend. A 2016 survey of 17,000 doctors found about 7% said they practiced some form of concierge medicine and another 9% planned to in the next couple of years.
A growing tool for providers
Concierge medicine is not new. The first program, called MD2, launched in 1996 in Washington state and Oregon. The company promised a provider ratio of 50:1 and charged $13,200 annually for an individual or $20,000 per family. Today, MD2 has locations in Washington, Oregon, California, Illinois, Texas, New York City and the Washington, D.C. area.
Since then, a number of concierge medicine programs have sprung up across the country — among them MDVIP, 1 on 1 MD, Signature MD and One Medical Group.
Forward, a San Francisco-based medical office startup using concierge principles, charges members $149 a month in lieu of insurance and/or a co-pay. The company relies heavily on artificial intelligence and other technology for basic screening and wellness services, including wearable monitoring. A second location recently opened in Los Angeles.
Enhancing patient experience
A little over a year ago, Massachusetts General Hospital waded into concierge medicine. “We were seeing demand. People were asking for it,” says Misty Hathaway, senior director for international and specialized healthcare services and chief marketing officer at the Boston nonprofit.
The primary motivation, though, she concedes, was finding ways to tap into new revenue sources. The entire margin from the concierge practice helps to fund programs like a substance misuse disorders clinic and community initiatives that might not otherwise have the same level of funding.
Concierge members pay $6,000 a year for increased time with their primary doctor, who has 300 to 500 patients versus 1,200 to 3,400 in a standard primary care practice, Hathaway notes. That means more time to return phone calls, review notes, have extended conversations with patients about their lives and coordinate appointments with specialists. All clinical appointments are covered by standard insurance.
“The biggest value is time,” Hathaway tells Healthcare Dive, adding both doctors and patients like the model.
The practice also features 24/7 direct access to their physicians via telephone or email, a stress technician/lifestyle coach and exercise demonstrations — part of the practice’s focus on prevention and wellness. If a member is hospitalized at Mass General, their primary care physician will participate in the hospitalization, increasing continuity of care.
The practice currently has more 300 patients and “continues to grow at a pretty rapid rate,” Hathaway says. “We brought in a second physician in May of last year and now we’re actively recruiting for our third and fourth physicians.”
Hathaway didn't provide details on operating costs, but said the practice is self-supporting and fulfilling its goal as a revenue generator. It is also getting high patient satisfaction scores and a nearly 100% renewal rate for people who started with the practice in late 2016.
Inova Health System’s VIP 360° Concierge primary care practice is also set up to support itself. The eight-year-old practice, based in northern Virginia, offers a physician to patient ratio of 400:1 and concierge perks at a cost of $2,100 per individual or $4,000 for a couple.
Most of the revenues are reinvested, says Craig Cheifetz, medical director of VIP 360°. He sees the nonprofit practice as a nice synergy between service — providing exceptional care — and philanthropy. “There’s often people who have really busy lives who want this level of service and many times they also become donors,” he tells Healthcare Dive.
Current membership stands at about 1,700, but will they add another 2,100 members with an acquisition this spring.
Despite these advantages, there can be challenges to running a good concierge program, Cheifetz notes.
Organizations need to be clear that the practice won’t draw on resources that are used for other patients and both the primary care community and specialists understand what the program is about. They also ensure concierge teams have the right mix of medical knowledge and communication skills, since face time with patients is a big part of the package.
And they need to know the legal and insurance sides of concierge medicine. “There are individuals who think it’s just, oh, you charge a subscription fee and you’re done,” Cheifetz says. “In fact, your subscription fee can’t touch anything that insurance touches because that would be a violation” of law.
A tiered system of care?
While concierge medicine can be a smart way for hospitals to pull in more revenue, it has sparked concerns of a tiered healthcare system that favors the rich.
If the 10,000 people in a community with the most money have exclusive access to the 10 most highly regarded physicians, then that is an ethical concern, says Navigant's Stacey.
“It’s an issue that we will begin to wrestle with more and more, and I don’t know what the answer is,” he tells Healthcare Dive.
Hospitals have been doing this is some form for years with executive programs that include a free physical or a better hospital room or meal plan. It’s not unlike a carmaker adding new bells and whistles that people will pay for to increase product sales.
One of the challenges for Mass General’s program has been around expectations, notes Hathaway. “While the design of the practice is such that you have very direct and immediate access to your primary care physician, that doesn't mean immediate access to everything in Mass General,” she says. “It doesn't mean you jump to the front of the queue in any specialty appointment or that you can always bypass the emergency room.”
Cheifetz agrees. “It can get very dicey if people think that this is for the rich getting richer and the haves and have nots,” he says.
Part of avoiding that path is to keep the concierge practice parallel to the health system it serves. That way resources don’t get diverted from the larger patient population. “That would be a disaster and a mistake,” Cheifetz says. “If you can’t make it alone, you honestly shouldn't do it.”
One other thing worries Stacey. By looking for new revenue streams, such as concierge medicine, hospitals are avoiding the hard choices that will bring long-term financial stability and growth. He points to mergers and acquisitions as another way organizations have attempted to survive or grow market share while not taking steps to decrease their costs.
“If we use [concierge medicine] as an industry like we used mergers and acquisitions … and other strategies, then we won’t solve the inherent problem which is driving variation out of the industry, operating at the most efficient level possible and fully engaging as an entity and not as a bunch of industrial operators,” he says.
Mass General’s Hathaway sees a broader goal for concierge medicine. “We’re anxious to figure out different ways that we can use this practice to understand and build models to provide enhanced care for all patients, to use it as a learning platform,” she says.