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WATCHDOG.org: Direct primary care offers a market solution to doctor shortages

Savage adds that a market-driven approach could go a lot further than beefed-up government programs to solve the shortage problems.

By   /   October 7, 2016 | | From Watchdog.org

A few weeks ago, patients of Dr. Chad Savage received an alarming email.

The Brighton, Michigan, primary care physician told them that because of skyrocketing medical costs such as “expensive medications, crushing doctor bills and double digit insurance premium increases,” he would have to raise his own office rates. By…. $0.

“Yup! That’s right. Nothing! Zero, nada, zip,” his note said.

As a direct primary care (DPC) physician, Savage — not insurance companies or government regulators — sets his own rates. His patients pay a monthly fee for unlimited access to office visits and free in-office testing and procedures. And getting rid of the middleman cuts patient costs as much as 50 percent.

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Savage told Watchdog.org he adopted the DPC model after 12 years of traditional practice so he could focus on his patients instead of bureaucracy.

“I wanted to work in a system that facilitated being a quality physician, instead of one in which you had to fight against the system to be a quality physician. Direct primary care allows me to do this,” he said.

Pointing to a growing doctor shortage in the nation’s most medically underserved areas, proponents of direct primary care believe it could be the solution. These areas, according to Jay Keese, executive director of the Direct Primary Care Coalition, exemplify a major deterrent to primary care — low reimbursement rates for those on government assistance.


“You go into one of these areas and it’s a Medicaid population or a Medicare-older population. You have to see 30, 40, 50 patients a day to make a living. It’s just a horrible way to make a living,” Keese said.

Not making a dent

The federal Health Resource and Services Administration has identified more than 6,100 primary care health professional shortage areas (HPSAs) across the country.

HPSAs are important. They’re used by the National Health Services Corps, a federal job placement agency for health workers. NHSC programs include full scholarships and student loan repayments for people who work at least two years in HPSAs.

A 2015 NHSC report said its health workforce grew from 181 in the 1970s to 9,600 today, (with 10 million people served.) The NHSC budget has grown as well, being notably infused with $300 million from the 2009 economic stimulus legislation, and $1.5 billion as part of the 2010 health care overhaul.

But the huge influx of cash and workers has not made a significant dent in the number of health professional shortage areas.

HPSA designations are reviewed every three years and can be withdrawn. But that doesn’t happen as often as new designations are granted. Take the top three states for HPSAs – California, Texas and Michigan. From 1980 to 2011, California had 137 designated HPSAs, with 284 withdrawn. From 2011 to 2016, there were around 440 HPSA designations and 163 withdrawn. Texas and Michigan had similar results – 73 and 29 designations to 149 and 135 withdrawals respectively from 1980 to 2011. This compares with 354 designations in Texas and 308 in Michigan from 2011 to 2016, with 149 and 61 withdrawals, respectively.

Government agencies have purportedly been trying fix this problem since the establishment of the NHSC in 1970. But, as funds and job placement programs grew, so did the definition of an HPSA — in both size and scope. For instance, the current 1:3,500 doctor to patient ratio (and smaller in some areas) has shrunk from the original 1-to-4,000 ratio. Also, these areas were once defined geographically by county lines. Now, population sub-groups and certain health care facilities also determine shortage areas. And in the 1990s, the NHSC added mental health providers to the dental and primary care disciplines eligible for its programs.

Yet even the lure of medical school relief has not been enough.

Even though they take in more than half of the nation’s 1 billion doctor office visits each year, just 30 percent of the nation’s physicians practice primary care. And only one in six medical students plan to get into the primary care field.

An Association of American Medical Colleges study predicts a primary doctor shortage of more than 31,000 by 2025. The study cites the increased demand due to a health system that keeps adding more people to public rolls (Medicaid gained 3 million more enrollees in 2015 alone), and the 2010 law, which is expected to drive another 25 million people to primary care providers. Additionally, there is the aging population with greater health care needs. On the supply side there are looming doctor retirements in a diminishing area of medical practice.

Hospital systems are absorbing many of the remaining doctors. The number of hospital-owned primary care practices rose from 10 percent in 2012 to 20 percent in 2014.

DPC PRICING COVER 2-16_LGWith higher Medicare rates and demand for their services, the hospital may not be a bad deal for some doctors. But for others, the loss of autonomy and regulatory burdens further detract from patient care.

Getting off the hamster wheel

And this, Keese says, is where direct primary care is starting to find its niche, not just for established doctors but among medical students who number about a quarter of his coalition’s membership.

“And they’re very jazzed about the idea that they would be able to spend a whole hour with their patients and take the time they need to appropriately use that training they’ve just spent so much time and money getting,” Keese says. “The idea that you can have a better career and not be on the hamster wheel seeing 30 patients a day is a very attractive notion for people to get into the practice.”

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Savage adds that a market-driven approach could go a lot further than beefed-up government programs to solve the shortage problems.

“A physician working in a underserved area or specialty should not be forced to keep prices artificially low, as happens with Medicaid. They should be able to price as the market permits. This may initially, transiently raise prices in that area. However, other physicians, now attracted to better reimbursement rates will flock to those areas, resolving shortages, and ironically also reducing the price for services, allowing the markets reach equilibrium,” he said.

Direct primary care does draw its share of concerns.

One is health care fragmentation. According to one health policy analyst, physicians who opt out of the fee-for-service system become isolated from their peers and cannot participate in government initiatives designed to improve health care quality and efficiency, such as the patient-centered medical home.

Also, DPC does not cover major medical events such as cancer, surgeries or health trauma that requires hospitalization or intensive medical care. DPC physicians typically encourage patients to combine their DPC with high deductible catastrophic plans, but some patients may still not realize the difference. (This health coverage pairing fulfills Obamacare’s standard of full insurance.)

While direct primary care is gaining traction despite those challenges, it might take a while before anyone is able to test a market theory in HPSAs.

Only 16 states have laws allowing direct primary care. Keese’s coalition is working to get other states and Congress to clear regulatory hurdles that prevent DPC from expanding.

As one example, Keese notes the IRS prohibits the use of health savings accounts to pay for direct primary care fees, and his group is working to make a change.

“With the growth in premiums and the growth in HSAs, if direct primary care is incompatible with HSAs, a lot of people — particularly those who work for small businesses that have these high deductible plans — aren’t going to have access to direct primary care,” said Keese. “We’re working with Congress on that with the Primary Care Enhancement Act.”

Another regulatory barrier is how state insurance commissioners define and regulate “health insurance.”

“In some states,” according to Keese, “the insurance commissioner looks at direct primary care and says, ‘hey, you’re charging a monthly fee in exchange for health care services, and by our law, that’s defined as health insurance.’”

Luckily for Savage, that regulatory hurdle does not exist In Michigan, where he continues building his DPC practice. He has 500 patients now, and plans to cap that number at 800.

“I was making more money in the insurance system, but had 3,500 patients. And a whole lot more paperwork,” he said. “I knew that if I stayed in the insurance-based system, I’d never be able to live up to being the doctor I knew I could be.”

SOURCE: http://watchdog.org/278172/direct-primary-care-offers-market-solution-doctor-shortages/

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