From time to time we hear about concierge medicine. It’s always interesting, if a little frustrating, becauseÂ it either polarizes peopleâ€”to some it’s a model of the future; to others, a scourgeâ€”or is met with a long yawn. Maybe it’s my enthusiasm for the larger topic of physician reimbursement, but I always find it’s a model that points to larger, more significant issues that do warrant attention. And this is particularly when someone actually has a number (rarely). It gets to the heart of markets in health care. Some argue they should have the freedom to select this model if they can afford it. And after all, the dirty secret of many more equitable health systems is a certain amount of ‘choice’ that quietly occurs for the affluentâ€”it’s just on a different scale in those countries, and miraculously (mostly) kept in check. But is it the solution to our primary care crisis, really? The American Academy of Family Physicians is pretty cautious about this model and rightly points out the access issues that arise from charging large annual fees.
A key question is, what are the incentives for physicians to take this route? A recent survey suggests 6.8% of physicians would “embrace” direct pay or concierge medicine.Â The article paints a rosy financial future for physicians adopting this practice model. I’m not going to critique the survey methodsâ€” I’ll limit my comments to the substance of one article reporting the finding, but, I do question the significant gains in practice profitability. It is likely only a solution for a tiny group of physicians and patients.
The positive spin on concierge medicine of course, leaves aside the sick and complex patients who might wantâ€”and needâ€”all the time in the world, and numerous visits. I suspect there is a ceiling on ‘unlimited visits’ â€”what would happen to the profitability of a practice when more than one patient makes their 90th appointment in six months?
The profitability of this model can’t only be administrative costsâ€”even though everyone loves to slam insurersâ€”it’s more likely explained by the fact that on average, the services are underutilized due to the average risk profile of the patients. The ‘frequent flyers’ need to be a tiny proportion of the roster for this to work.
Second, a study Sherry Glied and I published last year in Health AffairsÂ quantified the large gap between US primary care physician incomes relative to specialist incomes in other countries.Â But maybe the problem with making a living for primary care and specialty physicians alike is not just overhead, but partly efficiency and scale. Concierge medicine is a response, apparently to the fact that the “business model of the independent or small practice is likely not sustainable and they just having a harder time keep[ing[ the lights on.” We might like the idea of a lone Norman Rockwell physicianÂ (no one talks about the low overhead of a long-suffering wife doubling as receptionist and book-keeper), with his stethoscope in his leather bag, but integration into larger entities is necessary in many areas of the economy.Â Concierge medicine responds to the fact that we don’t always like the depersonalization and bureaucracy of large organizations; but large organizations are often required for efficiency reasons. Investments in information technologyÂ for one, create scale incentives.Â Therefore, it’s not really keeping the lights on, but the fact that a larger practice might better afford those lights.
Like many so-called innovations in health care, and policy more generally, it depends on the risk selection and the assumptions about where the efficiencies are. In K-12 education I think we’ve gotten beyond that; many parents will be skeptical of a new model only tested in high SES areas. But in health care policy, sometimes people extrapolate findings, based on a small healthy subset, to the health care system as a whole.