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Friday, May 16, 2014

Doing More With Less

When I tell people that I am leaving a group practice to start a fixed monthly cost membership practice that will only cost them $50 per month, and they will never have any other costs for my services no matter how often I see them, their brow invariably tightens.  "How can you afford to do that?" they always ask, either genuinely concerned for my well-being or worried about my sanity.   "How can I afford not to?" I always reply. And after I explain it, they are usually left concluding the same.

Direct patient care practices come in various shapes and sizes, but they do lend themselves nicely to the micro practice model.  The overhead expenses in a DPC practice are inherently so low that the provider can run the practice with few staff and in small spaces.  In the fee-for-service model the provider collects about 70 cents on the dollar after contractual adjustments, then after overhead expenses of 50-60%  (often 70% with increasing requirements for extra staff and care coordinators), the net reimbursement can be as low as 25-30 cents on the dollar.  Contrast that with a DPC practice where 97 cents on the dollar can be collected, and with overhead of  20-25%, the net collection is in the range of 75 cents on the dollar.  So yes, I can afford to have a DPC micro practice, with 1/4 to 1/3 of the patient panel that I have currently.  What really matters, however, is the quality, access and affordability to which my patients will have access.  I will be able to do much more for my patients with much less. 

My direct patient care practice, River Jordan Direct Family Medicine (rjdirectfammed.md), will open its doors on July 28, 2014.  I am subleasing space from a specialist in an agreement that allows for low rent initially, and it will increase as my practice grows.  I will have just one staff member until I enroll my first 100 or 200 patients; only then will I need a full time medical assistant. My electronic medical record is free. I am not paying anyone else to "manage" the monthly payments, although there are several companies who cater to DPC docs by offering low cost solutions using gym membership software that has been modified for medical practices. I am going to use Quickbooks for this initially. I am using a medical supply company that caters to DPC docs by giving group purchasing power among all docs around the country who are in the micro practice model. So you can see that an entire industry is developing to support physicians who are going into business by themselves in a micro practice model.  For my part, I am catering to patients who have high deductible plans by compiling a list of low cost options for labs and radiology services, as well as cash pricing from specialists. "Consumer-driven" healthcare is a great idea, but unless patients have the ability to know what they are getting with their healthcare dollar, savings will not occur. We can't wait for the system to cater to cash pricing options; it is going to ride the fee-for-service wave as long as it can with little motivation to change quickly. So DPC docs offering low cost primary care, and helping patients find lower cost options for their additional care, will disrupt the system from the bottom up. The evolving support for the micro practice model allows physicians to do just that, and pass the saving to our patients. Once we bring employers into the model in larger proportions, we will be successful in disrupting the system.

I start July 28 with a member count of zero. Please check back regularly for a status update!


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