Download Solo and Small Group Practices

Solo and Small Group Physician Practices in California
Part I: Background
Prepared by Marina Acosta & Chauntrece Washington
January 2015
Introduction
Solo and small group (fewer than 10)1 physician practices are an important piece in California’s healthcare
landscape. They serve as access points for consumers to receive healthcare services, emphasize
relationship-based continuity of care and serve the geographically and socio-economically underserved.
More specifically, solo and small group physicians commonly serve ethnically diverse communities,
presenting patients with culturally sensitive and competent care. In terms of access to care, nearly 70% of
all ambulatory visits are to medical practices with five or fewer physicians, and nearly one-third of U.S.
physicians practice in solo and two-physician practices.2 These statistics indicate the high volume of
individuals that utilize solo and small group physician practices for their healthcare needs. Also, the type
of care provided by private physician practices is built on patient-provider relationships that develop as a
result of ongoing care provided by a single physician. The physician may be more informed of a patient’s
family life and general living environment. Recent studies have illustrated that solo and small group
practitioners have lower re-hospitalization rates than larger practices; the point being that this aspect of
care provided by private physicians may lead to better patient outcomes.3 Finally, solo and small group
practices serve a large portion of underserved Californians. For example, 60% of Medi-Cal consumers
receive care from solo and small group practices and between 49% and 85% of primary care physicians
participate in Medi-Cal (depending on the region).4 Additionally, approximately 15% of rural Medi-Cal
patients seek care from private physicians or physician groups.5 The availability of solo and small group
physicians to Medi-Cal recipients has a large impact and must not be overlooked. It is these
characteristics, as well as access, continuity of care, and a commitment to the underserved that make solo
and small group practices a vital part of California’s healthcare mosaic.
However, it has become increasingly difficult for solo and small group physicians to practice medicine due
to financial barriers, administrative demands and lack of adequate resources. The difficulties associated
with opening and maintaining a practice have led to the downward trend of solo and small group private
physician practices. Responses from graduating medical students show only 1.1% of graduates are
interested in solo practice medicine.6 Also, only 1% of physician job searches were for solo practice
placements.7 This data demonstrates the waning interest in solo physician practice over the years. This
trend will have broad implications for access to care for many individuals.
As the health system continues to evolve, so does the private practice model. Physicians are joining larger
medical practices, closing their practice to specific insurance types (e.g. Medi-Cal), experimenting with
new payment models, and retiring. The issues that solo and small group physicians face must be
addressed in order for these practices to not only remain a feasible option in California’s healthcare
system, but also a source of care that is accessible and affordable for the most vulnerable individuals.
1
Small group physician practices are defined as those with 10 or less physicians.
2Boukus,
E., Cassil, A., & O’Malley, A. (2008). A snapshot of U.S. Physicians: Key findings from the 2008 health tracking
physician survey. Retrieved from http://www.hschange.com/CONTENT/1078/#fig1
3Casalino,
L. P., et al. (2014). Small Primary Care Physician Practices Have Low Rates Of Preventable Hospital Admissions. Health
Affairs, 10-1377. Retrieved from http://www.ncbi.nlm.nih.gov/pubmed/25122562
4California Healthcare Foundation. (2014). Physician participation in Medi-Cal: Ready for the enrollment boom? Retrieved from
http://www.chcf.org/~/media/MEDIA%20LIBRARY%20Files/PDF/P/PDF%20PhysicianParticipationMediCalEnrollmentBoom.pd
f
5California
Healthcare Foundation. (2012). Physician-hospital integration 2012, How health care reform is reshaping
California’s delivery system. Retrieved from
http://www.chcf.org/~/media/MEDIA%20LIBRARY%20Files/PDF/P/PDF%20PhysicianHospIntegration.pdf
6Association of American Medical Colleges. (2014). 2013 Medical school graduation questionnaire. Retrieved from
https://www.aamc.org/download/350998/data/2013gqallschoolssummaryreport.pdf
7Merritt Hawkins. (2012). 2012 Review of Physician Recruiting Incentives. Retrieved from
http://www.merritthawkins.com/uploadedFiles/MerrittHawkins/Pdf/mha2012incentivesurveyPDF.pdf
This report will consist of three parts that identify and discuss challenges for solo and small group
primary care practices that limit their ability to be seen as viable practice models in the current health
care landscape. This brief, part I, will provide an overview of California’s physician practice landscape. In
part II, findings from stakeholder interviews will be covered, revealing the challenges of solo and small
group physician practices. Part III will present ITUP’s recommendations for multilevel approaches to
support the continual existence of the solo and small group practice model.
Description of the Medi-Cal Program
California is currently experiencing a significant increase in Medi-Cal beneficiaries. Medi-Cal, California’s
Medicaid program, provides healthcare for low income Californians, serving approximately 12 million
individuals statewide.8 The number of Medi-Cal beneficiaries has increased while the number of
commercial health insurance recipients has decreased due in part to the Great Recession.9 The transition
of county beneficiaries from the Low Income Health Program added 630,000 individuals into Medi-Cal
managed care and reduced the numbers of patients in county health programs beginning in 2014.10 The
ACA’s Medicaid expansion in 2014 successfully enrolled approximately 2.2 million individuals in
California, moving many of California’s uninsured into coverage.11 12 The significant increase in Medi-Cal
enrollees has resulted in larger portions of physician reimbursements from the public sector. This trend
has financial implications for physician practices. Payments from Medi-Cal are historically lower than
commercial rates, and consumers with commercial insurance help to offset lower amounts received from
Medi-Cal.13 In order to remain financially viable, physician practices must have a profitable payer mix.14 A
diverse payer mix of both commercial and governmental payers helps accomplish this goal. The growing
number of people with Medi-Cal coverage may unbalance this payer mix for some practitioners unless
Medi-Cal rates increase.
Medi-Cal has also transitioned from traditional fee-for-service (FFS) to managed care.15 The reason for
this transition is two-fold: first, managed care will help to decrease program spending and shift it from the
hospital setting to the doctor’s office, and second, care coordination activities for patients will be an
essential component to better managing this high risk populations’ care.16 The change from FFS to
capitated managed care shifts the incentive away from providers performing many services and being
reimbursed for each, to an environment that incentivizes providing evidence-based healthcare with better
health outcomes in a cost-effective manner. The capitated environment, if done right, will help bring
down costs and improve patient outcomes to better align Medi-Cal with the ACA’s aims.
8California.
Governor’s Budget Summary 2015-2016: May Revise. Retrieved from http://www.ebudget.ca.gov/201516/pdf/BudgetSummary/HealthandHumanServices.pdf
9California
Healthcare Foundation. (2012). Physician-Hospital Integration 2012, How health care reform is reshaping
California’s delivery system. Retrieved from
http://www.chcf.org/~/media/MEDIA%20LIBRARY%20Files/PDF/P/PDF%20PhysicianHospIntegration.pdf
10
LIHP was a bridge program initiated in 2010 to enroll eligible individuals in Medi-Cal before the Patient Protection Affordable
Care Act’s (ACA) 2014 expansion (DHCS, 2011).
11 Department of Health Care Services. (2013). California’s low income health program transitions hundreds of thousands of new
members to Medi-Cal. Retrieved from http://www.dhcs.ca.gov/formsandpubs/publications/opa/Documents/2013/1307%20LIHP%20Medi-Cal%20Expansion%2012-31-13%20Final%20Version.pdf.
12Covered
California. (2014). Retrieved from http://news.coveredca.com/2014/04/covered-californias-historic-firstopen.html
13Rabin, C. R. (2013). Doctors complain they will be paid less by exchange plans. Kaiser Health News. Retrieved from
http://kaiserhealthnews.org/news/doctor-rates-marketplace-insurance-plans/
14Schnake, M. B. (2012). California Primary Care Association 2012 “New CFO” Boot Camp. Medi-Cal FQHC PPS, Medicare
FQHC, and other revenue/reimbursement strategies for Health Centers. Retrieved from
http://www.cpca.org/cpca/assets/File/Learning-Center/Trainings-and-Events/CPCA-CFOConference/2012/CFOBootCamp-Wed-5_2_12-FQHCReimbursementandStrategies.pdf
15Under
managed care, providers must work within a capitated environment. Instead of receiving a payment for every service
provided to a patient, the provider receives a specified amount each month per patient. The patient’s actual cost of healthcare
services per month can either exceed or fall under this set monthly amount.
16California
Healthcare Foundation. (2005). Medi-Cal beneficiaries with disabilities: Comparing managed care with feefor-service systems. Retrieved from http://www.chcf.org/publications/2005/08/medical-beneficiaries-with-disabilitiescomparing-managed-care-with-feeforservice-systems
2
Part I: Background
Solo and small group physician practices work within particularly narrow capitated amounts in
comparison to federally qualified health centers (FQHCs),17 serving the same Medi-Cal population. Due to
different payment systems, FQHCs receive more revenue than solo and small group physician practices
for their Medi-Cal patients. FQHCs have two streams of funds that are not available to solo and small
group physician practices. These funds come from 1) the Federal Section §330 Public Health Service
(PHS) Act,18 and 2) higher payments due to the Prospective Payment System (PPS).19 For example, the
PPS rate for an established patient visit for FQHCs is approximately $175 in Los Angeles; whereas MediCal reimbursement is only $24 for non-FQHC visits.20 21 The payment rate received by FQHCs is an allinclusive per visit payment that covers a multitude of obligations. As required by the federal government,
FQHC’s must see and treat all patients regardless of their ability to pay, and offer comprehensive services
that range from mental health and substance abuse to women and children services, depending on the
scope of their practice. To ensure proper compensation for these additional services, that solo and small
group physicians may not offer, FQHCs receive additional financial assistance. At the same time, the
additional obligations of FQHCs do not negate the fact that there are very low payment rates for other
Medi-Cal providers. In recent, positive news, the Governor’s May Revision of the budget included $125
million in General Funds for fiscal year 2015-16 for managed care rate increases.22 As the cornerstone of
care in many rural and urban communities, solo and small group physicians would benefit from increased
rates.
Moreover, the financial outlook of solo and small group physician practices is disconcerting. In a 2008
study, 84% of physicians stated that their revenues were stagnant or decreasing.23 Solo and small group
physicians were surveyed, and many consider declining reimbursements as the biggest impediment in
delivering quality medical care to their patients.24
Federally qualified health centers (FQHCs) are a special designation to certain health centers that receive additional funds under
Section 330 of the Public Health Service Act (PHS). FQHCs must serve underserved areas or populations and provide
comprehensive services. Not all community health centers are federally designated as FQHCs.
18Funds from the §330 PHS Act can be used only by FQHCs towards infrastructure, electronic medical records (EMRs) and
telemedicine. Also, the §330 PHS Act specifies that FQHCS receive Medi-Cal PPS rates. PPS rates are per-visit rates designated by
the state that replaces the lower rates from managed care and FFS
17
19Schnake,
M. B. (2012). California Primary Care Association 2012 “New CFO” Boot Camp. Medi-Cal FQHC PPS, Medicare
FQHC, and other revenue/reimbursement strategies for Health Centers. Retrieved from
http://www.cpca.org/cpca/assets/File/Learning-Center/Trainings-and-Events/CPCA-CFOConference/2012/CFOBootCamp-Wed-5_2_12-FQHCReimbursementandStrategies.pdf
20
PPS rate is calculated as follows: Base payment rate x FQHC GAF (Geographic Adjustment Factor). The national payment rate is
$158.85 through December 31, 2015 and the GAF for Los Angeles is 1.100. Thus, $158.85 x 1.100 = 174.735. PPS formula:
http://mmhcs.com/uploads/3/4/4/2/3442962/fqhc_pps_rate_calculations.pdf. National PPS
rate:https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/FQHCPPS/Downloads/FQHC-PPS-FAQs.pdf.
21(DHCS, 2014). Medicaid: http://files.medi-cal.ca.gov/pubsdoco/rates/rates_information.asp?num=22&first=94799&last=99499
(Updated as of 1/15/2015)
State of California, Department of Finance, “FY2015-16 May Revision.” Retrieved from
http://www.ebudget.ca.gov/FullBudgetSummary.pdf
23The Physician Foundation. (2008). The physicians’ perspective: Medical practice in 2008. Retrieved from
http://www.physiciansfoundation.org/uploads/default/PF_Medical_Practice_Report_2008.pdf
22
24
3
Ibid.
Part I: Background
Source: The Physician Foundation. (2008). The physicians’ perspective: Medical practice in 2008. Retrieved from
http://www.physiciansfoundation.org/uploads/default/PF_Medical_Practice_Report_2008.pdf
Post-ACA implementation, there are more individuals enrolled in Medi-Cal managed care, yet the
reimbursement amounts for Medi-Cal providers, based on 2012 data, is 51% of the Medicare payment
rates (less than the national average, 66%).25 Reimbursement rates are the foundation on which private
physicians are able to maintain their practice. This means physicians will see more patients through this
program without adequate reimbursements. Hence, declining trends of reimbursement rates have the
potential to put the financial health of solo and small group practices in jeopardy.
Description of Healthcare Information Technology Use
Investment in electronic medical records (EMR) is an important component in healthcare and has been
supported financially by the federal government. The 2009 American Reinvestment and Recovery Act
(ARRA) provided the largest opportunity for solo and small group practices to invest in this technology.
Specifically, ARRA created the Health Information Technology for Economic and Clinical Health
(HITECH) Act. The HITECH Act provides $30 billion for investment in EMRs, specifically incentives to
physicians, for health information technology (HIT) implementation.26 The program provides incentives
for achieving meaningful use in each of three stages, Meaningful Use 1, 2, and 3. Each stage has different
criteria that build upon the last, becoming more complex and integrated. When a physician is certified in
a stage, incentives are then distributed. As of April 2013, approximately 300,000 physicians have received
incentive payments.27 Additionally, it was estimated that this legislation would lead to 90% of physicians
shifting from chart records to EMRs.28 The creation of the HITECH Act through ARRA shows the
commitment of the federal government to encouraging the implementation and use of HIT.
Thus far, the HITECH Act has been very successful, but current funds only support a narrow population
of solo and small group physicians. Funds also only cover the first stage of meaningful use, with all funds
set to end in 2015. Due to the fact that Medicare and Medicaid sponsor HITECH, a strict criterion has
been set for physicians to qualify for incentives. For example, office-based primary care physicians must
have at least a 30% Medicaid patient volume to receive the maximum amount of incentives ($63,750).29
However, only 12% of solo practices have a Medicaid panel of 30% or more. Therefore, the number of
practices that can take advantage of these incentives is limited. Additionally, there are no funds to assist
providers in purchasing meaningful use stage 2 software or assistance in reaching this more complicated
25California
HealthCare Foundation. (2013) Medi-Cal facts and figures: A program transforms. Retrieved from
http://www.chcf.org/~/media/MEDIA%20LIBRARY%20Files/PDF/M/PDF%20MediCalFactsAndFigures2013.pdf.
26Redhead, C. S. (2009). The Health Information Technology for Economic and Clinical Health (HITECH) Act. Congressional
Research Service. Retrieved from http://assets.opencrs.com/rpts/R40161_20090223.pdf
27U.S.
Department of Health & Human Services. (2013). Physician EHR Incentive Payments. Retrieved from
http://www.hhs.gov/news/press/2013pres/05/20130522a.html
28Redhead,
C. S. (2009). The Health Information Technology for Economic and Clinical Health (HITECH) Act. Congressional
Research Service. Retrieved from http://assets.opencrs.com/rpts/R40161_20090223.pdf
29EHR Incentive Program.(2011).Electronic Health Record (EHR) Incentive Program FAQs. Retrieved from
https://www.cms.gov/Regulations-and-Guidance/Legislation/EHRIncentivePrograms/downloads/faqsremediatedandrevised.pdf
4
Part I: Background
stage. The cost of implementing more sophisticated software is substantial, and few physician practices
can even take advantage of the federal incentives offered for investment in EMR systems.
Regional Extension Centers (RECs) created in 2009 with ARRA have been successful in assisting with the
implementation of EMR systems in California. RECs have worked with over 10,000 providers to choose,
implement, and attain Meaningful Use 1 with 66% of them receiving incentive funds for attesting to
Meaningful Use 1.30 Most importantly, practices that work with RECs are twice as likely to receive
incentives as practices that implement systems without REC assistance.31 These statistics demonstrate the
success of RECs over the past five years and are evidence of their support in expansion of HIT.
Description of Independent Physician Associations
In California, a large number of solo physicians contract with Independent Physician Associations (IPA).32
In California almost five million HMO enrollees are served by 152 IPAs, which on average, have about
500 physicians in their network.34 35 IPAs act as an intermediary between health plans and private
practitioners. A cited benefit is that physicians receive higher reimbursement rates with an IPA due to
their negotiating power.36 As a result, IPAs play a fundamental role when discussing solo and small group
physician practices because of their size and negotiating power.
33
However, IPAs have varying degrees of efficiency. IPAs are overseen by health plans and are delegated
many functions which include completing prior authorizations, providing trainings and clinical guidance,
and leading quality improvement efforts for their physicians. Health plans are then overseen by the
Department of Managed Health Care (DMHC) and are ultimately held responsible for the quality of IPAs
and their associated physician networks. Therefore, health plans must extensively audit IPAs to ensure
compliance with regulations.
According to the literature, high performing physician groups in California include Hill Physicians
Medical Group, Brown and Toland, and HealthCare Partners.37 As high functioning IPAs, they have
improved quality and reduced costs. Specifically, they are labeled as high performing because they
provide a Health Information Technology (HIT) platform, effectively and efficiently manage medical
claims, administer clinical protocols, and provide consulting and support services to their physicians.38
Additionally, a case study of HealthCare Partners showed that they utilize Regional Accountability Teams,
which receive and address physician grievances. These teams are held accountable for the quality of care
30DeSalvo,
K & Lynch, K. (2014). Advancing adoption, interoperability and transformation, regional extension centers
surpass 100,000 providers to stage 1 meaningful use. Health IT Buzz. Retrieved form http://www.healthit.gov/buzzblog/regional-extension-centers/advancing-adoption-interoperability-transformation-regional-extension-centers-surpass100000-providers-stage-1-meaningful/
31
Ibid
An IPA is a legal entity, governed by a board of physicians who contract with health plans and hospitals. It is made up of a network
of physicians. Solo practitioners then contract with the larger IPA. Family medicine solo practitioners are usually paid on a capitated
rate, while specialist physicians are paid on a fee-for-service payment structure.
33The IPA model came about as a result of the State’s ban on the corporate practice of medicine.
32
34Independent
Practice Association Physician Groups in California. (1998). Independent Physician Associations. Retrieved
from
http://www.lytespeed.net/CE_Books/AMHealth/health_maintenance_organizations____the_hmo/independent_practice
_associations.htm
35Integrated Healthcare Association. (2010). Accountable Care Organizations in California: Lessons for the National
Debate on Delivery System Reform. Retrieved from
http://www.iha.org/pdfs_documents/home/ACO_whitepaper_final.pdf
36Groves, N. (2013). Collaboration is key to small practice survival. Medical Economics. Retrieved from
http://medicaleconomics.modernmedicine.com/medical-economics/content/tags/antitrust/collaboration-key-smallpractice-survivial?page=full
37Emswiler, T. & Nichols, L. M. (2009). Hill Physicians Medical Group: Independent physicians working to improve quality
and reduce costs. The Commonwealth Fund. Retrieved from
http://www.commonwealthfund.org/~/media/files/publications/case-study/2009/march/hill-physicians-medicalgroup/1247_emswiler_hill_case_study_rev.pdf
38Goldsmith,
J.(2012). The future of medical practice: Creating options for practicing physicians to control their professional
density. The Physician Foundation. Retrieved from
http://www.physiciansfoundation.org/uploads/default/Physicians_Foundation_Future_of_Medical_Practices.pdf
5
Part I: Background
provided by physician practices under their supervision.39 It is these aspects, clinical and administrative
excellence, which differentiate between high and low performing IPAs.
Description of Administrative Strains
All physicians must perform administrative tasks that complement their clinical work. Owning a private
practice requires even more administrative responsibilities that infringe on other resources and activities,
mostly time spent with patients. Researchers found that administrative responsibilities constitute onesixth of physicians’ time (approximately 8.7 hours per week), and practices with a high reliance on EMR
systems spend more time dedicated to administrative duties.40
It is important to note that small physician groups spent less time (16.3%) per week on administrative
duties than solo (18.1%) and larger group practices with more than 100 physicians (19.7%). The reason for
this difference between solo and small group physicians was unexplored. Yet, overall it was found that the
more time spent on administrative work, the less satisfied physicians were with their careers.
The financial impact of the time spent on administrative duties is also considerable. In another study by
Himmelstein and Woolhandler, it was found that the U.S. spends 31% of healthcare expenditures on
administrative overhead.41 Specifically for solo physician practices, the lack of standardized forms from
payers and complex bureaucracy accounts for nearly four times more administrative costs than solo
physicians in Canada.42 Furthermore, as the number of physicians in a practice increase, the average cost
of interacting with health plans per physician decreases.43
In the past, to help improve economies of scale, practices have sought practice management
arrangements. The literature identifies two main forms of models, Management Service Organizations
(MSOs) and Physician Practice Management Companies (PPMCs). Both arrangement models are
purported to decrease administrative burdens for physicians by taking on the administration,
management, and contracting functions of a practice.44 This leaves physicians free to manage the clinical
portion of their practice. Although MSOs and PPMCs appear to be very similar, researchers argue that
there is one distinction. Typically, PPMCs acquire all tangible assets of a practice except for real estate,
and assumes the practice’s equipment leases.45 If this occurs, physicians receive a substantial payment for
bought assets, and the ability to lease back equipment from their affiliated PPMC.46 This affiliation not
only provides administrative support and discounted equipment prices for smaller practices, but
investment capital to support ongoing functioning.47 In a tight fiscal climate, a significant amount of
money could be saved by reducing the amount of staff and time spent on administrative requirements in
private physician practices.
39Gbemudu
et al.(2012). Healthcare Partners: Building on a foundation of global risk management to accountable care. The
Commonwealth Fund. Retrieved from http://www.commonwealthfund.org/publications/case-studies/2012/jan/healthcarepartners
40Woolhandler,
S., & Himmelstein, D. U. (2014). Administrative Work Consumes One-Sixth of US Physicians' Working
Hours and Lowers Their Career Satisfaction. International Journal of Health Services, 44(4), 635-642. Retrieved from
http://org.salsalabs.com/o/307/images/Physician%20admin%20time_IJHS.pdf
41Woolhandler,
S., Campbell, T., & Himmelstein, D. U. (2003). Costs of health care administration in the United States and
Canada. New England Journal of Medicine, 349(8), 768-775. Retrieved from http://www.pnhp.org/publications/nejmadmin.pdf
42Morra,
D., Nicholson, S., Levinson, W., Gans, D. N., Hammons, T., & Casalino, L. P. (2011). US physician practices versus
Canadians: spending nearly four times as much money interacting with payers. Health Affairs, 30(8), 1443-1450. Retrieved
from http://content.healthaffairs.org/content/30/8/1443.short
43Casalino,
L. P., Nicholson, S., Gans, D. N., Hammons, T., Morra, D., Karrison, T., & Levinson, W. (2009). What does it cost
physician practices to interact with health insurance plans?. Health Affairs, 28(4), w533-w543. Retrieved from
http://content.healthaffairs.org/content/28/4/w533.short
44 Carson, Robert. (1998). Physician Practice Management Companies: Too good to be true? Family Practice Management.
Retrieved from http://www.aafp.org/fpm/1998/0400/p44.html.
45 Ibid.
46 Anderson, J. and Cullin Hughes (2014). Physician practice management arrangements: State fee-splitting prohibitions and the
corporate practice of medicine. Retrieved from
https://www.healthlawyers.org/Events/Programs/Materials/Documents/IHC14/polsinelli.pdf.
47 Ibid.
6
Part I: Background
Alternative Financial Models
Although the primary financial model for physician practices includes a third party payer, cash payments
are becoming a more common practice. For practices with patients at mid to high-income levels, and/or
uninsured individuals, cash payments are a feasible option. Also, due to many of the challenges expressed
thorough out this report, experimenting with cash payments models hold appeal financially and
administratively for smaller practices. Three alternative financial models to be discussed include
discounted/ sliding fee scale programs, concierge medicine, and direct primary care.
Discounted and sliding fee programs offer services at a reduced price based on a patient’s
income level. According to a fee schedule created by the medical practice, patients would be
responsible for some percentage of their medical costs.48 These programs are typical in
community clinic settings.
• Concierge medicine practices charge quarterly or annual prices to keep physicians on retainer.
Depending on office amenities and services provided, subscription prices may range from
$1,200 to $20,000 annually.49 Some common services provided include 24/7 cell-phone and
email access, house calls, same-day or next-day appointments, no wait time at office visits,
longer patient visits (30-60 minutes), and consultations during hospital stays. For more
expensive packages, spa-like treatments, opulent waiting rooms, and the ability to request that
your physician travel along on vacations may be offered.50 Traditionally, this model is cash
only, but there are instances of hybrid models where physicians accept both insurance and
cash payment from their concierge patients or their practice has both concierge only patients
and insurance only patients. These programs are growing in high-income communities.
• Direct primary care (DPC) is similar to concierge medicine, but the target population is
middle-income individuals instead of the affluent. On average, costs range from $50 to $100
per month per patient.51 Because of the reduced price tag, the services provided are commonly
focused on preventive and primary care only, leaving out aesthetic services included in the
concierge model. Twenty-four hour access to providers, and house visits may or may not be
included. Similar to the concierge model, there is no set practice style. While some physicians
may not give out their mobile phone number, others may. There is a lot of cross over between
these two models but the main distinction is the lower price tag and a monthly subscription
that offers patients the option to discontinue additional services if the financial burden
becomes too great.52
•
All three programs present opportunities and concerns. Many physicians view cash payments favorably
because they eliminate the middleman, lower overhead costs, and reduce administrative burdens like
coding and documentation. When compared with discounted or sliding-scale payments, concierge and
DPC allow for smaller patient panels and more time spent with patients during office visits. Concerns
include lack of monitoring and oversight by an outside entity, the existing physician shortage, costly outof-pocket costs for patients when advanced testing or specialty care is needed. As health care continues to
reform, we must continue to keep the most vulnerable in mind, and ensure that they continue to have
access to affordable health care.
Summary
As indicated, researchers are increasingly aware of the challenges experienced with the private practice
model. In the past, physicians that chose a solo or small group practice model did so for the sense of
autonomy and the ability to form a kinship with their community. Although new medical graduates might
48
Examples of discounted programs for independent practices were scare in the literature. Therefore, the standard sliding fee
schedule created by the Department of Health and Human Services for FQHCs is used as an example. Hypothetically, if a sliding fee
program was available to individuals below 200% of the Federal Poverty Level (FPL), a family of four with an annual income of
$41,738 (175% FPL based on 2014 guidelines) would be responsible for 60% of their medical costs.
49 Chesanow, N. (2014). Cash-Only Practices: 8 Issues to Consider. Retrieved from http://www.medscape.com/viewarticle/824543.
50 Ibid
51 California HealthCare Foundation. (2013). On retainer: Direct Primary Care practices bypass insurance. Retrieved from
http://www.chcf.org/publications/2013/04/retainer-direct-primary-care.
52 Chesanow, N. (2014). Cash-Only Practices: 8 Issues to Consider. Retrieved from http://www.medscape.com/viewarticle/824543.
7
Part I: Background
wish for the same, there are new challenges that act as deterrents. As outlined in this brief, the healthcare
system has evolved and continues to be in a state of change. More Medi-Cal beneficiaries are enrolled in
managed care plans than FFS, health plans contract with IPAs instead of directly contracting with
physicians, utilizing HIT has become a requirement, and administrative demands continue to increase. In
light of these factors, it is unsurprising that the solo private practice model is no longer favored. Part II of
this report further explores many of the difficulties impacting solo and small group practices by
summarizing key themes identified through stakeholder interviews.
8
Part I: Background