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Doctors embracing creative business models to avoid administrative woes

July 26, 2018

By Christopher Wolfington

It is no secret that the United States has one of the most expensive and least efficient medical insurance systems among all developed countries. It is also no secret that the U.S. health care system suffers from significant administrative bloat. Administrative costs occupy a full quarter of U.S. hospitals’ budgets, for instance, and the complexity of administration can lead to millions in lost revenue if mishandled.

The inconvenience of dancing with insurers and constant administrative complications has annoyed many doctors and nurses, too. However, many doctors and nurses are embracing a creative business model to avoid those administrative woes, a model that is both innovative and a bit of a throwback: direct primary care.

Direct primary care has its historical roots in house calls, where doctors physically made their way to patients’ houses. The practice made up a significant minority—40% of all consultations—as recently as the 1940s. It declined as a practice for the obvious reasons that it was cost-inefficient and could only offer a limited variety of treatment options inside homes. But it had a very clear advantage: personalized, personable, convenient care. 

The advent of the internet and the proliferation of cellular devices that allow for calling one’s doctor from almost anywhere in the world have streamlined and made more efficient the modern house call, where patients literally make a video call from their house. However, direct primary care’s main strength is by cutting out the insurance middleman and easily connecting patients with doctors when they need them.

Direct primary care works on what is essentially a subscription model. Patients pay a monthly fee, which varies based on the size and location of the clinic and the variety of services it offers. In return, they get unlimited access to a doctor, discounts on a collection of medical services, and access to medical professionals through email, text, phone, and sometimes even video conference. All of this is done without insurance, meaning vastly reduced administrative overhead for the direct primary care practice and no middleman for the patient between them and their doctor.

No business model is perfect, and direct primary care is no exception. On average, direct primary care physicians only see between 25% and 33% of the number of patients that those in traditional practices do, which threatens to stress an already thin pool of primary care doctors. Furthermore, patients who utilize these practices still need insurance to cover the possibility of a catastrophic health care event. State laws about direct primary care practices vary, with some more lenient than others. 

However, it cannot be denied that direct primary care is an interesting approach that creatively attempts to solve widespread problems, including administrative bloat, in the health care industry. Whether it is ultimately successful or not, the industry could surely use more similarly ambitious ideas.


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