Modern Family Doctor Visit

American healthcare is in crisis!

Your patients are facing higher medical expenses than they ever have before. In fact, according to a study put out by the Kaiser Family Foundation, the average family pays $16,000 per year in health insurance premiums. On top of that, many families face deductibles in the $3,000 to $5,000 range per person, with few able to cover the gap.

As a result, primary care practices are incurring heavy levels of non-collectable debt, and the percentage is climbing every year. According to MGMA research, average bad debt per FTE physician was $12,679 as of 2010, the most recent data available. According to our calculations, average days in A/R for fee-for-service (FFS) practices currently stand at about 45, average reimbursement rate is 68% and overhead averages 70%. It’s hard to avoid the conclusion that FFS practices are in trouble if something doesn’t change.

Fortunately, a primary care payment model is re-emerging which reduces expenses for patients dramatically and puts practices on a cash-only / direct pay basis that completely takes fee-for-service insurance out the picture. No more billing and coding. No more being bullied over pre-approvals and claims. The model, direct primary care, turns primary care practices into cash-positive businesses that work for patients and physicians.

Below, we spell out exactly how one family saved 56% on their annual healthcare costs when their primary care physician moved from FFS medicine to DPC. As you’ll see, not only did the family save lots of money, practice overhead fell from 70% to 40%, days in A/R to essentially zero and because the practice is paid directly, reimbursement is effectively 100%.

The Dunphys – FFS

The Dunphy family is a typical “modern day family” of five living in suburban Los Angeles. The Dunphys are: Phil (father – age 41), Claire (mother – age 40), Haley (daughter – age 18), Alex (daughter – age 16), and Luke (son – age 15). Claire works for her father who is the owner of Pritchett’s Closets and Blinds. Phil is a successful real estate broker. For the most part, the Dunphys are pretty healthy. Each family member gets a yearly physical exam and visits the doctor (on average) twice a year.

For their day-to-day healthcare, the Dunphys see Dr. Taber, a busy suburban Los Angeles family practitioner. When the Dunphys need to schedule an appointment, it takes 19.8 days (on average) for them to be seen from the time the appointment is made. When they are seen, Dr. Taber spends 15 minutes in the exam room during their well visits and 10 minutes during their sick visits. Each member of the family receives a yearly physical exam. The Dunphys spent a total of $552 for the well and sick office visits. In addition, the Dunphys spent a total of $3,169 for their prescriptions. The Dunphys are insured by Surf’s Up Insurance Company of California and Dr. Taber is in their network. The Dunphy family’s insurer offers a standard high-deductible plan (Table 1). A total out-of-pocket yearly expense for the Dunphys (including insurance premiums) is $16,227.

The Dunphys are concerned about their healthcare costs. The Dunphys are pretty healthy (except for minor seasonal allergies) and yet they are accruing a lot of costs. These costs are causing a financial strain for the family.

The Direct Primary Care Switch

Fortunately for the Dunphys, Dr. Taber has switched from a FFS practice to a direct primary care model (an affordable direct pay model), which should substantially lower their costs while at the same time dramatically improve the financial health of Dr. Taber’s practice.

Direct primary care (DPC) is a payment model where patients pay their primary care physician directly without using their insurance. Under this model, patients pay an affordable monthly fee (ranges from $10 – $100). As a benefit of being part of Dr. Taber’s DPC practice, the Dunphys specifically experience the following: unlimited visits (no cost per visit fee /co-pay), longer visit time with physician (50 minutes+ each visit), same day or next day appointments, unlimited access to Dr. Taber (24/7 access via e-mail, text, video chat via telemedicine platform on computer and smart phone), and huge savings on lab tests and prescriptions (Table 2).

Alex and Luke saved 84% on office visits (average family office visit savings: 74.7%). Haley saved 94% on her prescriptions (average family prescription savings: 82.36%). Phil saved 79.4% on lab fees (average family lab savings: 50.5%. The Dunphys’ overall medical savings is 56%.

As you can see, transitioning from FFS to DPC offers tremendous benefits to both medical practices and patients. While the transition takes thought and care, ultimately the patients get greater access to care while spending a lot less on the services they receive. Doctors, meanwhile, get to practice their own way again — no more daily battles with insurance companies and the freedom to spend time with patients as they see fit. Direct primary care offers a new mode of primary care which works for patients and doctors, and it’s time that PCPs get involved.

(Authors Note: The family in the article is fake. They are based on characters of the same name on the hit ABC show “Modern Family” and are used for illustrative purposes only. The tables listed above can be viewed by clicking here.)