By PAUL NATINSKY
When it comes to providing affordable basic healthcare, there is a group of entrepreneurial doctors poised to change the way healthcare is delivered: Direct Primary Care Physicians. These docs provide 80 to 90 percent of the healthcare their patients need for $50 to $70 per month. They offer prescription drugs and laboratory tests for up to 95 percent savings over what patients pay through insurance plans. They help negotiate discounted diagnostics like MRIs and colonoscopies and, in some cases help patients get lower cost visits with specialists. They see about half the patients of their insurance-model colleagues, but spend more time with each patient and offer unlimited visits with no copay or per-visit charge. They accomplish all of this by dealing directly with patients, many of whom have health insurance.
Born in the late 2000s out of frustration over red tape, physician burnout and the urge to take care of patients, Atlas MD in Wichita, Kansas and Qliance Medical Group in Seattle, Washington sparked a national movement that has grown from about 400 practices to close to 1,000 nationally since 2016, according to Paul Thomas, MD, of Plum Health Direct Primary Care in Detroit. Thomas opened his practice, the second in Michigan, in 2016, a year after Michigan groundbreaker Chad Savage, MD, launched YourChoice Direct Care in Brighton.
Atlas, born in 2009 as the brainchild of DPC pioneer Josh Umbehr, MD, is still going strong. Backed by venture capitalists, including Amazon founder Jeff Bezos, Qliance ended its 10-year run with a crash in 2017. The company overreached and lost 13,000 patients when a major subscriber group pulled out—a fate that has befallen other, investor-driven, corporate DPC groups. After the company failed, its physicians experienced a diaspora, in many cases establishing smaller, independent DPC practices.
Waxing on the Qliance failure Thomas said, “I really think that us independent physicians are the heart and soul of the DPC movement.”
In Michigan, according to Thomas, there are eight DPC practices statewide: Plum Health DPC, Detroit; Paradox Health, Rochester Hills; YourChoice Direct Care, Brighton; DPC of West Michigan, Grand Rapids; Family Physicians of St. Joseph, St. Joseph; Benessere Family Wellness, Milford; and Family Doctor Direct, Okemos.
“DPC doctors are operating in a free market and there is definitely a demand from patients who are fed up with long waits to see doctors, high copays, high deductibles and high premiums,” said Thomas. “And they are not getting a ton of value for their healthcare dollar. They are getting very little value for their healthcare dollars in fact.
“DPC is the supply side of that, where you have the opportunity to work with an independent physician who doesn’t make you wait for appointments, who is responsive to text messages and emails—something that an employed or fee-for-service or insurance-based doctor would never do. And we provide it at a reasonable price point. I think that’s attractive to people across all income levels, but especially those folks who are in the low-income area who might be choosing between medication and a doctor’s visit and putting food on the table.”
The key to the DPC model is limiting practices to a sweet spot of about 500 patients per physician, with the idea that three physicians can care for 1,500 patients with the help of only one nurse, according to a 2013 magazine interview with Umbehr. This is in contrast to fee-for-service, insurance-based practices that would require an administrative staff of six or seven to manage the same number of patients, and have patient censuses numbering in the thousands.
For physicians, who often graduate medical school with a quarter of a million dollars or more in debt, starting a practice without contracts from insurers or hospitals and without being empaneled by health plans might seem like a daunting prospect.
“I started from scratch,” said Phil Hellman, MD, of Paradox Health. “I was locked into paying my student loan debt in a 10-year period. I’ve got two kids under 2 years old. I’ve got a wife who stays home with them.” Hellman also has to rent a house because he can’t qualify for a mortgage based on the financials of his fledgling practice, which lacks the secure income contracts with insurers provides. To supplement his income, Hellman works shifts at urgent care centers. “Financially speaking, it’s been tough,” he said.
Hellman has 40 patients signed to memberships at his practice, which charges $50 to $85 per month, depending upon a patient’s age, and $10 to $30 for children. He recently signed a company of 40 employees to memberships, which brought his total to 80 in September after hanging out his shingle in early 2018. Hellman hopes to sign about 800 patients. His practice is likely to contain many families and he figures he’ll need the extra members to account for the discount he provides for children.
The good news for Hellman and his peers is that the startup cost and monthly overhead for DPC practices is very low. Hellman said his biggest expense was splurging on a $1,500 power chair complete with stirrups that allows him to perform vasectomies and gynecological exams. He sublets space from a chiropractor for less than $1,000 per month, pays $300 for an electronic medical records software subscription and doles out $270 for medical liability insurance. “Otherwise, I already owned the stethoscope and otoscope and ophthalmoscope—that stuff you have to buy in medical school. So, it’s like an opportunity to finally start using it. It’s been collecting dust through the years,” said Hellman.
Paul Thomas at Plum Health DPC in Detroit also launched his practice immediately after completing his residency. He also worked urgent care shifts to get by at the beginning, dropping the extra work when he reached 125 patients. At press time, Thomas is up to 480 patients. Thomas, too, practices in a non-traditional setting, the old 3rd Detroit Police Precinct on the border of Corktown and Mexican Town in Southwest Detroit. As of early August, Thomas had signed 345 patients and is looking for new, more spacious digs.
While some DPC physicians were attracted to the new care model right out of medical school, others followed different paths, often turning to direct primary care after being frustrated by the bureaucracy and lack of autonomy they say is characteristic of insurance-based practices.
Chad Savage, who is 44, founded YourChoice Direct Care in Brighton in 2015, but he had been practicing medicine since 2003.
“I was very blessed. I enjoyed a decent position within the hospital but my goal was to give good patient care and I think it was getting more bureaucratic and less patient based,” he said about his job as an employed physician with St. John Providence.
Savage said he thought things were getting better with the onset of healthcare reform around 2009 and the advent of Patient Centered Medical Homes, which are insurance reimbursement schemes designed to promote team care for patients while measuring quality statistically. The difficulty, said Savage, is that the guidelines regarding the number of patients physicians are expected to see per day under the PCMH model is coupled with service and data reporting requirements that are “absolutely ridiculous and unworkable.”
For example, Savage said his practice was expected to provide physical exams for each of its 3,000 patients in a year’s time, a process which, if the practice did nothing else, would take about 10 months to complete. Making matters worse, the practice was expected to block off 50 percent of its appointment schedule for emergency visits. Savage said these policies have many physicians weighing the choice of checking boxes for activities they haven’t performed or facing reimbursement penalties for failing to meet the PCMH criteria.
By 2012, Savage began looking for another way to practice. After becoming aware of the DPC model he began to study it. Once he was convinced he was onto something, he began talking to his colleagues about direct primary care. “A lot of people understood the problems I was combatting, but felt it was futile to combat them,” said Savage.
He made the jump in 2015 and said he has never looked back, although the path was not easy.
Savage sent letters to all of his 3,000 patients before making the jump, offering to continue to care for them under his new practice model or provide the option of staying in his old practice with different physicians. He expected 1,500 to follow him on his journey, he found only 250 fellow travelers. “It was kind of an ego hit, but in retrospect I understand why that was,” he said.
Three-plus years in, Savage has 700 patients and a waiting list. He couldn’t be happier. He’s making a little less money, but said he is able to provide the type of quality care he didn’t feel was possible under the traditional insurance model. Patients don’t yell at him about insurance coverage issues and are happy with the service they get and the prices they pay, he said.
Perhaps surprisingly, many DPC practice patient rolls are dominated by insured patients.
“My practice is the prime example of that,” said Hellman, 31, of Paradox Health. Before starting his Rochester Hills practice in March, Hellman worked in Oregon. “A guy from my practice in Oregon left my practice and set up shop in my little town of 8,000. He transferred his practice over, he had been practicing for 20 years, had 4,500 patients. He had 200 patients come with him and filled to 800 in about nine months.
“He was doing extremely well really quick. He had everything figured out right away. I talked to him and asked him if I should do this, and he said, ‘Do it yesterday.’ I thought I would fill up like he filled up. The problem is he’s in a town where he is taking care of a lot of blue collar manual laborers with no insurance. So he is a huge value to them.
“I’m in Rochester Hills. My biggest problem is everybody has insurance. Even when I try to go after the small business owners, they’ve got it figured out already where the wife has a job with the city or is a nurse or whatever, so they get insurance through their spouse.”
In contrast, Belen Amat, MD’s Grand Rapids practice cares for a patient population that is about 80 percent uninsured and Hispanic.
When she formed DPC of West Michigan she had been practicing for seven years at a practice owned by a major health system. She said she started to burn out after about two years.
“My schedule (was) decided by somebody who is not clinical, so you have to see a patient every 15 minutes—doesn’t matter the complexity, the social issues, psych issues—you have 15 minutes. You have five other people waiting to see you and you’re already a half hour behind,” said Amat. She also struggled with the lack of control she had over personnel working in her office. “The bigger the system, the less the physician has anything to do with the daily planning, the hiring and firing, the scheduling, how things are done in the office.”
Once Amat became aware of the DPC model by reading articles that described alternative approaches to practice, she attended a DPC conference and became excited about the idea of converting her practice.
But, the pressures of her daily grind at a busy insurance-based practice slowed her study of the new model and sapped the energy she would need. “It’s hard because you are like a prisoner. You just don’t see a way out.”
When she finally decided to take the plunge, she moved into a smaller house, downgraded to a less expensive car and adopted an austere budget for about a year in preparation for her transition.
DPC of West Michigan is about a year old and now has about 220 patients. Amat hopes to grow it to about 400 patients so she can earn a living and have time to engage in other pursuits, such as advocating for patients and doctors’ rights and doing some writing.
Much like Hellman, her practice has grown in a direction she didn’t expect. Immediately after renting a small office in a professional building, Amat joined the local chamber of commerce, which held a press conference for her. The area’s Hispanic media—radio, newspapers and magazines—showed up and wrote and broadcasted stories about her fledgling practice.
“I did not see it coming,” said Amat who is from Mexico and speaks Spanish. “I never thought it would be a big hit with the Hispanic community. I never thought of just marketing, targeting the Hispanic community as one of those ‘duh’ moments.”
Paul Thomas, 30, was as frustrated as his DPC colleagues with the traditional practice options available to him. “There are so many different forces pushing doctors away from fee-for-service primary care medicine. The amount of regulation and the amount of reporting—especially on metrics that don’t really matter—is frustrating for physicians.”
But it is not simply frustration that is increasingly driving primary care docs toward the DPC model. “I think there is some entrepreneurial buzz in the air,” said Thomas, who provides business growth consultation to other DPC practices.
Even with relatively low startup costs of $10,000 to $20,000, most physicians—especially younger ones—are facing mountain of medical school debt. After a decade of school and residency training in addition to a huge loan burden, it takes a special breed to move to a care model that requires further sacrifices and substantial risk.
All of the DPC practices we spoke to make extensive use of social media, speaking opportunities, community events and other guerilla marketing opportunities. Their practices, perhaps not coincidentally, tend to grow like a solid social media campaign—slow at first, gaining momentum as word gets out, and relying on word-of-mouth and steady community engagement.
There are mixed views on whether DPC practices can, or should, scale. The challenge is in maintaining the credo and fulfilling the DPC value proposition, keeping membership, lab and prescription fees low and physicians extremely accessible.
To some extent, the model is self-limiting. Josh Umbehr forecasted that 500 patients per physician would be best fit, and that increasingly seems to be the target number among the physicians we interviewed.
Bad experiences, such as the Qliance failure, have made DPC docs leery of granting practice-crushing leverage to any large group seeking membership. The physicians appearing in this story see a growing market in small employers who don’t offer traditional health insurance, but see the bread and butter of their practices being individuals who supplement their existing insurance-based care and those who cannot afford traditional insurance.
This story first appeared in Venture Michigan Magazine.