Austin Schanzenbach, July 10, 2017
Let’s imagine a scenario where you no longer need to use insurance for health care. No more calling on pre-approval for services or fighting over the phone with monotone customer service reps over denied claims. No more lack of transparency on the price of services or procedures. No more worrying whether your insurance covers a service or procedure. No more paranoia over losing your subsidized insurance if you get laid off. Imagine being able to sit with a doctor for more than ten minutes and feeling like they have the time and patience to really understand your needs and are not compelled to shuffle you out the door to meet their patient quota. Imagine an affordable, transparent, monthly rate to pay for health care.
This all sounds rather hypothetical, huh? Would you be surprised to find out that this sort of health care model not only already exists but that it is growing? It is called the Direct Primary Care model and it is the free market healthcare solution the country needs more of.
The average physician works 1.5 times as many hours as the average American.
Doctor’s Are Burned Out
A survey of over 17,000 doctors indicates that physician career satisfaction is on the decline. There is an increasing trend of physicians cutting back hours, switching to part-time work and switching to non-clinical employment. With a medical system expecting a 90,000 doctor shortage by 2025, this could spell disaster for the current healthcare model. But is anyone surprised by this?
The average physician works 1.5 times as many hours as the average American, must undergo eight years of higher education and four years of mandated residency requirements. When they finally get the chance to practice on their own, they are often relegated to joining hospitals in order to start paying off the loan debt they acquired while in school. In the typical hospital setting, a physician needs to see an overwhelming amount of patients and bill for the maximum amount of potential reimbursement to maintain a profitable operation.
If you really want to get a physician fired up, ask them about the amount of time they spend charting vs. how much time they get to spend face-to-face understanding and caring for their patients. Ultimately, you’re left with a system that undermines the doctor-patient relationship and makes for unfulfilling medical practice.
DPC usually foregoes insurance in favor of using a subscription-based model.
There’s a Different Way
Enter the Direct Primary Care (DPC) model. For physicians who are willing to take a risk on finding a more fulfilling way to practice, the DPC model has shown promise. What is the DPC model, exactly? The DPC model usually foregoes or accepts insurance on a limited basis in favor of using a subscription-based model. For instance, a DPC model may charge $70 a month for an adult to belong to a practice and receive access to a physician. The practice typically offers all or most primary care services and grants same day or next day appointments for urgent situations; some even offer 24/7 access via phone call, text or email.
The subscription method eliminates the necessity for co-pays and provides a relatively stable operating income that isn’t subject to the uncertainty of insurance reimbursement. Because of that stable operating income, physicians can balance the number of patients needed to be profitable with the amount of time spent face-to-face with patients. This balance has increased the duration of patient visits from 13-16 minutes in standard doctor visits, to 30-60 minutes in DPC models.
Along with increased visit lengths, physicians have the time and inclination to use telemedicine technology with DPC patients. Telemedicine can offer instant face-to-face access to a physician via FaceTime, Skype, or other similar video software. This grants a great deal of flexibility to patients and physicians which can reduce otherwise unnecessary expenses.
DPC clinics also offer extraordinarily low prices on medication by negotiating directly with wholesale prescription companies at bargain prices, with limited markups, if any are even present at all. Following that same philosophy, DPC clinics can negotiate directly with labs and provide blood tests and panels at a fraction of what it costs using an insurance model. Imaging, monitoring, and diagnostic tests that you would find in a primary care setting such as X-rays, EKG’s or MRI’s would also come at an enormous discount.
Not all insurance is bad; in fact, insurance is good, even necessary if it is provided correctly.
Why does imaging technology like an MRI still cost $1,000 when LASIK eye surgery is down to almost $2,000 (or cheaper) per eye? One is unfortunately imprisoned in the insurance model, while the other is not covered by insurance, which exposes it to the competitive world of free markets. A technology like LASIK eye surgery has seen double-digit percent decreases in cost due to a lack of artificial competition barriers created by the insurance model. In comparison, most medical services subjected to the insurance industry have seen double-digit percent increases in cost.
As more DPC clinics start up, it will only serve to increase competition among health care providers which will drive down costs and improve services for patients. Not to mention, patients will no longer have their choices limited to whichever provider happens to be in their network.
Heck, at monthly subscription rates ranging from as little as $10 for youth and $60 for adults, that is attractive for even low-income earners.
There Is Still a Place for Insurance
People with rising health insurance premiums feel trapped and defeated.
Not all insurance is bad; in fact, insurance is good, even necessary if it is provided correctly. We don’t buy car insurance to cover oil changes, tires, and windshield wipers. Just like we shouldn’t have to buy health insurance to cover the incalculable number of routine procedures we may need to see a healthcare provider for. However, we do buy car insurance for so-called “catastrophic events,” situations like car crashes and rollovers.
Health insurance still makes sense when used to provide protection against catastrophic events. Cancer, heart attacks, surgeries, etc. are all expensive diseases or procedures that we could protect ourselves against with catastrophic health insurance plans. These would ideally come with a high deductible and only needed for major healthcare procedures or events.
Using the DPC model to reduce the cost of routine primary care services while having patients protect themselves with catastrophic insurance plans is a realistic way to normalize the healthcare market that has seen dramatic inflation from the ACA and decades of businesses using tax breaks to subsidize healthcare plans for their employees.
The largest obstacle that is preventing the DPC model from taking off is simply the lack of DPC clinics available. As of 2016, there were only about 345 DPC clinics in practice. Not surprising, considering the risk involved for a physician to take a guaranteed job at a hospital and start up their own, unconventional clinic, that requires recruiting their own patients. However, there may not be a better time for the DPC model to blossom with the ongoing dismay of the current health insurance system.
People with rising health insurance premiums feel trapped, defeated, ready to accept a single-payer system or whatever failure of a plan the government suits try to ramrod through the House and Senate. People need to know that there is another option that makes sense, and physicians need to know that people are willing to try something different.
There may always be a need for Medicare and Medicaid-type models, but DPC allows a significant percentage of the country to get most of their health care services at an affordable rate that is protected from regulatory inflation via free market forces. More freedom, more choices, lower costs, improved health care. That sounds an awful lot like making health care great again without any executive orders, 3,000-page bills or political grandstanding.
Sign me up.
Austin Schanzenbach is a Health Administrator on a Native American Reservation in the Midwest.