Direct Primary Care, also called ‘concierge’ or ‘retainer’ medicine, is a rapidly growing model of medical practice that is based on a direct pay relationship between doctors and patients that does not include government programs or insurance companies.
Medicare, Medicaid, and health insurance companies have turned the US health care system into a nightmare that is bad for both doctors and patients. Billing payors accounts for 40% of a medical practice’s overhead. The ratio of doctors to other medical system staff in the US is 1 to 16. Of the 16 staff, 6 are in direct patient care (nurses, nurses aides, therapists, etc), while the other 10 are administrators and managers. In this environment the doctor has to provide enough services to earn a living and then make an additional $823,000 to pay labor costs of the support staff. (The $823,000 is for labor costs only; office and equipment overhead cost more.)
The patients are troubled by inconveniently scheduled appointments, long wait times and impossible billing issues as doctors struggle to see and bill enough patients to support the system. A conservative estimate is that an average US physician needs 17.4 hours to complete a day’s worth of work. In a well publicized survey, the majority of physicians describe their morale as negative, and nearly a third are planning an exit from the profession during prime working age.
Enter Direct Primary Care. This Time magazine article does an excellent job describing the service and is definitely worth reading. This service was previously called ‘concierge’ or ‘retainer’ medicine, implying that it was only for the wealthy, but it has become clear that this service is very affordable. It may seem shocking that attentive, thoughtful and unrushed primary care medicine actually costs only $800-$1500 per year, but that is the market rate for a satisfied patient and a happy doctor. It is amazing what happens when $823,000 per year, imposed on a doctor-patient relationship from the outside, is discarded. A reader of my previous blog post regarding the costs of MaineCare expansion commented that she was disappointed that that taxpayers were paying medical bills for the 43% of MaineCare recipients who smoke tobacco. I cannot resist pointing out that smoking one pack per day at $2400 per year costs 2 to 3 times more than the Direct Primary Care service in the above article.
One still needs medical insurance for the unexpected, costly conditions that some, but not the majority, of the insured will develop. That is what real insurance is for--the unexpected. Since most people would like to have or should have a doctor, it does not make sense to buy insurance for the routine, expected and predictable costs that come with routine medical care.
Finally, we will certainly hear complaints from central planners that Direct Primary Care Practices that have 600 patients per doctor, instead of the usual 3000 patients per doctor, will worsen the already existing doctor shortage. The bottleneck in US physician training is at the residency training level. Originally, hospitals trained medical school graduates in exchange for work. The word ‘resident’ came into use when hospitals started providing housing to doctors in training in exchange for cheap labor. When the costs of post graduate training rose, Medicare started paying hospitals to train residents. The number of doctors that the federal government is paying to train is currently about 115,000 per year. This funding has been frozen at the current level by the Balanced Budget Act of 1997. In the 1960s, the federal government monopolized post graduate medical education, and more recently, the government has failed to make any adjustments for the increasing demand for trained physicians. Thus, any shortage of physicians is not due to the development of Direct Primary Care or increased number of insured by the ACA but rather due to the government’s failure to fund its post graduate medical education monopoly.
This blog post is about how market forces created Direct Primary Care, a new form of payment for medical services that is cheaper and better for both patients and doctors. Open minds and free markets work! Register to vote as a Libertarian and get involved in our movement!