Membership Medicine: The Emerging Model Coming Out Against Health Insurance

More and more direct primary care clinics are shifting from traditional health insurance to membership medicine.

For a modest monthly fee, members are offered unlimited office visits, as well as discounts for both medications and lab tests. This business model of medicine, called direct primary care (DPC), is a counter-response to the soaring costs of health insurance.

It’s not completely new.

The model loosely follows the principles of concierge medicine, a highly controversial practice that allows patients to pay their doctors up-front for more personalized medical care at a price most people can’t afford.

Unlike DPC, concierge medicine patients are billed twice: once in a traditional fee-for-service fashion and once for the membership fee. Indeed, some DPC patients with chronic illnesses such as diabetes, heart disease or cancer choose to keep their high-deductible insurance plans in case of big-ticket items such as surgeries.

However, for basic primary health care needs, which account for 80% of medical needs, DPC covers them all-from sore throats, blood pressure management and Pap tests to skin biopsies, abscess drainage, or diabetic management.

It does so without the hassle of filing insurance claims, a major culprit of physicians’ bureaucracy burnout.

For a fraction of what traditional insurance charge, it seems that DPC has found a way to solve the issue of price transparency, or the lack thereof, in health care. “Surprise bills” are a widespread problem and an Achilles heel of the health insurance industry. For years, patients have complained about being billed for things they assumed their insurance would cover.

In a nutshell, here’s what makes membership medicine so appealing to doctors and patients alike:

• More one-on-one time with doctors. Since there is little paperwork involved and fewer patients per physician
• They are affordable. Monthly membership fees can be less than $100. For those who simply cannot afford insurance, DPC offers medical care that suits every pocket
• It eases the load on the entire health care system. DPC patients make 65% fewer ER visits and have 35% fewer hospitalizations than traditional patients
• A low overhead. The typical DPC practice operates with one or two physicians, a receptionist and a nurse

As with any experimental model, critics have been quick to challenge its efficiency. Some cautioned that patients might end up overpaying. Others wondered if it could contribute to a shortage of primary care physicians or an imbalance in the individual insurance market, making it more expensive for those who continue to buy it.

All in all, it’s hard to say whether this model of medical care will turn out to be successful.

Predictions are favorable, though. There are currently almost 800 small independent practices across the country, according to Dr. Philip Eskew, a direct primary care physician and attorney in Wyoming who tracks the industry.

“As long as people care about price and quality, it should keep growing,” said Eskew.

Still, transitioning to a direct pay practice is not cheap for a physician. So what can be done to maintain your businesses practitioners?

As CEOs in healthcare, one way you can retain talent is by giving back doctors’ time. Hire a third party to deal with bureaucracy so doctors can really focus on their patients.

Why not tap into the huge market of insured patients? Bring in digital strategy experts to help you better understand their behaviour via analytics and then tailor your services to their needs and budgets. Work with your billing departments to create a comprehensive list of prices so patients know exactly what they are getting.

Instead of being alarmed by this trend’s steady climb, see it as an opportunity. This is the time to spur innovation in your company.