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Friday Feb 22, 2019

Take Note of Growing Demand for Subscription Services

Although it's never easy to put an exact time -- or even a date -- on the beginning of a movement, the subscription economy often finds its origin story in late 1999, when Netflix abandoned its pay-per-use model and switched to a monthly fee. With that shift, Netflix disrupted the entertainment industry and forced innovation -- and bankruptcy -- in companies that once sat fat and happy atop the entertainment industry.

[Allison Edwards, M.D. and young patient]

Here I am with one of my young patients. I have no doubt that my decision to pursue a direct primary care practice model has given me more time for special interactive moments like this one.

Sometime in the decade that followed, a smattering of doctors across the nation started to think like Netflix: What if patients could access health care in an unlimited manner for a flat monthly fee? What if, as Netflix had proven with its annihilation of Blockbuster, fee-for-service wasn't what people wanted?

These primary care physicians did a little math, settled on a monthly price point, left their six-figure salaries, stopped billing insurance for their work and set out to prove a methodology.

By 2010, the movement had a name: direct primary care (DPC). Soon after, Phil Eskew (a masochist's masochist with an M.B.A., J.D., and D.O.) attached a definition to the name:(c.ymcdn.com) A DPC practice must "1) charge a periodic fee, 2) not bill any third parties on a fee-for-service basis, and 3) any per-visit charge must be less than the monthly equivalent of the periodic fee."

With a clear definition, the movement organized and grew. In 2013, the AAFP adopted policy supporting the burgeoning movement. The Direct Primary Care Coalition,(www.dpcare.org) a lobbying organization that supports DPC-friendly legislation on federal and state levels, came next; the Direct Primary Care Alliance,(www.dpcalliance.org) the first physician-led, physician-run trade group to support practicing DPC doctors, was born in early 2018. And a national movement deserves a national event, which is why you will find me in Chicago June 28-30 for the Direct Primary Care Summit,(www.dpcsummit.org) which the AAFP is co-hosting with the Family Medicine Education Consortium and the American College of Osteopathic Family Physicians.

(It behooves me to pause here to clear up some terminology: Direct primary care is often clumped in with concierge medicine, which has been around a bit longer. But concierge medicine is different from DPC in that: 1) it is, on average, more expensive and 2) most concierge practices charge a robust monthly or annual retainer fee and bill insurance. As noted previously, DPC doctors don't bill third parties for services.)

With all the attention and growth, it was only a matter of time before direct primary care started showing up in mainstream media. Although local press outlets cover the opening of solo practices on a regular basis (I get a weekly Google alert with a smattering of feel-good, local grand opening announcements), DPC scored a big win from Consumer Reports in November when the publication declared the model to be one of five "Smart Money Moves for 2019."(www.consumerreports.org) The article shared something that DPC doctors -- and our patients -- have understood for a while: "Joining a DPC could cost less than using the coverage provided by a traditional insurance plan. Just be sure you're also covered by a comprehensive plan for more extensive care, should you need it."

That report came a day before one of my colleagues, Lee Gross, M.D., testified last year during a Senate Committee on Health, Education, Labor and Pensions hearing on health care costs.(www.help.senate.gov) He followed up his testimony with an opinion piece in the Washington Examiner(www.washingtonexaminer.com) in which he noted: "We don't expect our homeowner's insurance to pay for blown light bulbs or routine maintenance. Imagine how complex and expensive it would be to purchase gasoline if we used our auto insurance to pay for fuel. This is what we expect from our health insurance, yet we are surprised that it is expensive, inefficient and impersonal."

The subscription economy aims to please its customers in a way that traditional transactions don't. Health care has found its enduring player for such an economy with direct primary care, which offers lower costs and less complexity for the consumer.

The modern subscription economy,(www.investors.com) as a whole, forces enterprises to refocus on their customer. The old subscription mentality -- such as gyms banking on customers who would pay without actually participating -- has been replaced with a mentality that prioritizes giving the customer a personalized, unique experience. It's a customer-first mentality. In direct primary care, it's a patient-first mentality. Physicians and policy wonks have been pushing for a patient-centered approach to primary care for years without quite getting there; direct primary care is how we can finally take definitive strides toward this goal.

Moreover, DPC is starting to serve a larger and larger need in the health care realm. This new year brings the end of the individual mandate to have health insurance; more people will undoubtedly elect to forgo insurance. Of those who are still insured, more and more are switching to (or being forced into) higher-deductible, lower-premium plans and feeling the full cost -- out-of-pocket -- of every health care interaction.

In a sense, we're getting to a point where it doesn't matter if you have health insurance or not; you're likely paying the full price for a majority of the routine, nonemergent health care costs you encounter. And some of the emergent ones, as well.

The next few years will undoubtedly show sharp growth in direct primary care and other enterprises serving patients who are either without health insurance or do not want to use their health insurance to obtain health care. This growth will certainly be painful, and it will inevitably push us to talk about how we, as a society, want to provide health care in the most equitable and ethical way.

Above everything, as others in the subscription economy have shown, this movement will force the institutions that profit most from health care -- an industry that makes up almost 20 percent of our GDP -- to adjust. In a cash-pay economy, many new (and not-so-new)(www.reuters.com) pharmaceuticals are unaffordable. Specialty care -- at five to six times the cost of primary care -- becomes more elective, and primary care physicians are incentivized to flex and broaden their scope back to what it was a generation or two ago. Hospitals that have been on a merger-and-acquisition spree(www.nytimes.com) may find that their pricing, customer service and even simple things such as parking no longer appeal to customers.

The subscription economy puts the focus back on the customer as the center of the business model, and direct primary care does the same. The cash-pay market will be the biggest disruption health care sees in the next decade, and the Powers That Be in health care should take note, lest they go the way of Blockbuster.

Allison Edwards, M.D., founded and cares for patients at Kansas City Direct Primary Care;(www.kansascitydirectprimarycare.com) provides locums coverage at rural hospitals with Docs Who Care in Missouri, Kansas and Colorado; and is volunteer faculty at both the University of Colorado and the University of Kansas. You can follow her on Twitter @KansasCityDPC.(twitter.com)

Read other Fresh Perspectives posts by this blogger.

Posted at 03:11PM Feb 22, 2019 by Allison Edwards, M.D.

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