How concierge medicine and hospital medical groups can align

Over the past five years, the nation’s hospitals and health systems have been on a buying spree.

Their target: physician practices. A report from the Physicians Advocacy Institute shows that nearly four of 10 physicians are now employed by, and one out of four practices owned by, a hospital system.

The reasons why are clear; vertically integrated systems are more efficient, secure higher reimbursement and can better meet the mandates of emerging value-based reimbursement programs. There have been challenges. Profit margins for hospitals are slim, meaning often services are cut, and lower level providers brought in to manage costs. Plus, physicians used to autonomy have pushed back on efforts to control their actions, making it difficult to align goals. And patients are increasingly dissatisfied with a system, that while more efficient, often depersonalizes care and minimizes relationships.

A number of strategies to address these challenges have been explored. One often overlooked is the addition of concierge medicine. As hospitals look to grow, and as they acquire practices with existing concierge programs, it becomes more critical that they understand the different types of models, how they work and that leadership fully considers pros, cons, and opportunities.

Concierge Medicine Today
While such programs do exist, the majority of concierge medicine programs are far removed from the stereotypical image of a wealthy urbanite. Today there are a wide range of prices, options, and features. Direct Pay and cash-only programs include some perks such as same-day scheduling, are low-cost, and can work in larger markets. Most direct pay programs strive to keep a full patient panel. However, because these programs don’t take insurance, the model does not work for hospitals, especially those emphasizing integration and focused on strong relationships with payers. Traditional concierge program can pose problems for hospitals as well because the reduced patient panel conflicts with the hospital business model, which is to ensure referrals, maintain payer relationships, and keep patients within the system.

A more recent twist on concierge medicine is called the hybrid. Over the past five years, dozens of hospital systems have purchased practices that included physicians offering a hybrid concierge program. In this model, physicians continue to see all patients and offer the concierge option to those patients, typically less than 10 percent of the total practice, who want the programs’ services and benefits.

In return, patients secure a range of non-covered services, including an in-depth personalized annual exam, convenient scheduling, and direct contact information for the physician. Plus, the model is one of the few that enables the physician to have time for more hands-on patient and care coordination. Physicians typically set aside a few hours a day, a few days a week to care for their concierge patients. Hybrid models are also designed to be compatible with insurance and Medicare.

These choice-based programs appeal to a wide range of patients, not just the “wealthy. The stereotypical image of concierge medicine is as a service for high-end metropolitan areas or retirement enclaves. However, the fastest growing market for concierge is in semi-rural and smaller markets, where community hospital systems play a key role. Internal surveys show the top reason patients choose concierge is not for perks, but to keep their relationship with their chosen physician. Those types of relationships are especially important for hospitals in smaller markets to nurture.

Pros and Cons for Hospitals
Hospitals that have purchased groups offering more flexible models such as the hybrid report minimal issues when blending the model with existing groups, and note there have been numerous benefits, including:
- Enhanced revenue from private-pay patients. The revenue generated from concierge will vary based on the size of the program and the percentage retained by the provider. Well-structured concierge programs have no risk to the physician or hospital system. They offer the ability to increase practice revenue up to 25 percent and reduce the need to focus on external programs and services.
- Market differentiation. In competitive hospital markets, a concierge program helps hospitals distinguish their services from competitors. It offers benefits attractive to patients, including the ability to maintain or build a relationship with the physician of their choice.
- Improved patient satisfaction. Concierge patients are among the most satisfied in the marketplace; that satisfaction translates into better performance metrics.
- Creates greater patient loyalty. Patients who choose to pay to see the physician of their choice are also loyal to the hospital system affiliated with that physician. Patients stay in the hospital system for specialists and other services.
- Reduced risk. Concierge physicians are typically among the highest performing and most experienced. For hospitals, that translates into a better risk profile and lower malpractice premiums.

One of the cons of concierge and direct pay programs is related to insurance. Many insurers will drop physicians who offer closed-model programs. This directly infringes not only on hospital revenue and relationships but also on referral programs and therefore the ability to keep patients within the hospital system. Because hybrid programs take insurance, including Medicare, referral programs are preserved, and hospitals and physicians maintain the assurance of a steady source of reimbursement.

Some are concerned that concierge medicine creates a tiered approach to healthcare. A better way to consider this point is to look at the issue of choice for both patients and physicians. First, the care provided by physicians will always be the same, whether a traditional or concierge patient. The services provided vary, as they do with virtually every option available to consumers. The key is this a choice-based option that enables patients to secure the health services they can’t get with traditional health programs and are willing to pay for to secure.

There’s also concern about concierge medicine exacerbating the physician shortage. Concierge is very much a niche service, less than 3 percent of all physicians participate in any type of program. Hybrid models enable physicians to care for all patients and even traditional models are extending the careers of physicians who for personal reasons were considering leaving medicine.

What makes an effective program?
Concierge medicine continues to adapt to meet marketplace demands. One change is that it is no longer just for primary care physicians or internists. Increasingly non-invasive cardiologists, gastroenterologists, endocrinology, rheumatology, and other physicians that provide a high percentage of core services to patients are adapting concierge models.

However, not just any physician can succeed with a concierge program. The most successful programs start with established and well-liked physicians. Concierge programs are most attractive to patients over 45, who visit their physician more than three times/year. The programs are also popular with adults who are looking for more personalized care for elderly parents. Hospitals will also want to rely on experienced concierge medicine practice managers that can assist with billing and practice marketing, including patient retention (which is already high, most concierge programs keep their patients).

Considering Concierge Medicine
Our nation’s healthcare leaders continue to seek out public and private delivery options that improve care, performance and financial strength.

Healthcare is not a one-size fit all option. Physicians, patients, and even hospital systems want options that work best for their unique situations. As hospitals continue to purchase medical groups and look for ways to strengthen and differentiate those they operate, concierge medicine is a strategy to consider to attain the performance and financial goals needed in today’s marketplace.

The views, opinions and positions expressed within these guest posts are those of the author alone and do not represent those of Becker's Hospital Review/Becker's Healthcare. The accuracy, completeness and validity of any statements made within this article are not guaranteed. We accept no liability for any errors, omissions or representations. The copyright of this content belongs to the author and any liability with regards to infringement of intellectual property rights remains with them.

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