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What is your view of the growing practice of docs converting their offices to retainer practices where a patient pays a yearly fee. Is this the new wave of the future.
CambieMD
CambieMD
Botique medicine or retainer practices
- Thread starter CambieMD
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Its not the new wave of the future. Only a very small % of the population can afford or will choose to do that. That part of hte market operates stricly along free market lines, and its also saturated.
I think that for Internists it can be a better way to get extra cash in. If an internist charges 1,000 per patient and say gets 400-500 patients then thats half a mil in the bag.
On the other hand that can lead to troubles. Establishing a boutique firm has certain pre-reqs. The physician has to have a good reputation amongst fairly well off or very well off patients. Also it means extremely busy days. The doctors who have boutique firms promise that they can get a patient in the same or next day and 24/7 call directly to their home or cell phone numbers.
How much is sanity worth these days again?
On the other hand that can lead to troubles. Establishing a boutique firm has certain pre-reqs. The physician has to have a good reputation amongst fairly well off or very well off patients. Also it means extremely busy days. The doctors who have boutique firms promise that they can get a patient in the same or next day and 24/7 call directly to their home or cell phone numbers.
How much is sanity worth these days again?
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(Just a med student but...)
Analytically, it sounds like a do-it-yourself capitation scheme without insurance middleman.
When HMO's underwrite capitation contract, they contract physicians on a per-member-per-month payment basis in return for a basket of services. If members underutilize, you earn. If members overutilize, you lose. As a result, insurance companies need to be real careful as to risk category of who enrolls in these services. It's a good idea for young people (healthy) and a bad idea for old people (use a lot of med services). Insurance companies can get around this by diversifying their patient base by contracting with companies and enrolling many members en masse. This diversifies their risk to an "expected/predictable" level and are able to track that experience over time in their databases (this is the job of the actuary).
So... when your small group practice tries to price a patient (for example) for a boutique/retainer, you are taking on the job of an actuary/insurance company. You are assuming that you have enough information to predict utilization rate of that one patient AND how much those services are worth. How do you know that $1000 is the right price? How do you know that you're not enrolling 400 healthy patients and not 400 sick patients... remember, you are providing all of their medical care for a fixed price (that is capitation). You need to be confident that you can enroll a lot of patients to diversify your risk and you better have a good computerized tracking system that can tell you how you're doing and when you need to change your rates. However, you may have problems enrolling that many patients, so you might have to compete with insurance companies based on price.
If you look at it from a patient's point of view, why would a patient pay you a fixed price for services if he knew that he only sees you once a year. Obviously the people who clearly benefit from these arrangements are those with a crapload of medical problems. From their point of view, something like this would be more economical than paying the insurance company, provided that you quote them a rate that they can't refuse to switch. So then you end up getting sick patients for a lower price... we call this "adverse selection". And once sick patients know that you're on retainer, the smart ones will call you all the time and use you as much as possible... "moral hazard".
It seems to make sense only if you already have experience with the patients you enroll AND are able to predict their future utilization rates. It also only makes sense if you're in a market where health insurance offered to employees/retirees are unreasonable based on those patient's utilization. Personally, I would leave the business of underwriting insurance to those who do it professionally. But I'm only a med student and I'm almost always wrong.
Analytically, it sounds like a do-it-yourself capitation scheme without insurance middleman.
When HMO's underwrite capitation contract, they contract physicians on a per-member-per-month payment basis in return for a basket of services. If members underutilize, you earn. If members overutilize, you lose. As a result, insurance companies need to be real careful as to risk category of who enrolls in these services. It's a good idea for young people (healthy) and a bad idea for old people (use a lot of med services). Insurance companies can get around this by diversifying their patient base by contracting with companies and enrolling many members en masse. This diversifies their risk to an "expected/predictable" level and are able to track that experience over time in their databases (this is the job of the actuary).
So... when your small group practice tries to price a patient (for example) for a boutique/retainer, you are taking on the job of an actuary/insurance company. You are assuming that you have enough information to predict utilization rate of that one patient AND how much those services are worth. How do you know that $1000 is the right price? How do you know that you're not enrolling 400 healthy patients and not 400 sick patients... remember, you are providing all of their medical care for a fixed price (that is capitation). You need to be confident that you can enroll a lot of patients to diversify your risk and you better have a good computerized tracking system that can tell you how you're doing and when you need to change your rates. However, you may have problems enrolling that many patients, so you might have to compete with insurance companies based on price.
If you look at it from a patient's point of view, why would a patient pay you a fixed price for services if he knew that he only sees you once a year. Obviously the people who clearly benefit from these arrangements are those with a crapload of medical problems. From their point of view, something like this would be more economical than paying the insurance company, provided that you quote them a rate that they can't refuse to switch. So then you end up getting sick patients for a lower price... we call this "adverse selection". And once sick patients know that you're on retainer, the smart ones will call you all the time and use you as much as possible... "moral hazard".
It seems to make sense only if you already have experience with the patients you enroll AND are able to predict their future utilization rates. It also only makes sense if you're in a market where health insurance offered to employees/retirees are unreasonable based on those patient's utilization. Personally, I would leave the business of underwriting insurance to those who do it professionally. But I'm only a med student and I'm almost always wrong.
D
deleted6669
my understanding of these practices is that the $1000 or whatever only covers visits. if they have labs/xrays/admissions/procedures they pay extra. the retainer just guarantees that you are at their beck and call 24/7 for consultations/rxs/etc."
boutique doctor awoken from sleep at home:
"yes ms smith I know it is 2 am on a saturday but I will meet you at the office right now to discuss your toenail fungus"
boutique doctor awoken from sleep at home:
"yes ms smith I know it is 2 am on a saturday but I will meet you at the office right now to discuss your toenail fungus"
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the feeling of entitlement by these patients is a bit much for my taste.
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I have a couple of friends in Seattle who do this and it's been nothing but lucrative for them. Yes they are busy but they have "selected" their patients for the strangest criteria: Beautiful mansions that they don't mind make house calls to, beautiful suburb, beautiful family (with eligible daughters), etc.
They are definitely busy but after 5 years with a group practice in Los Angeles, they have found a very comfortable niche and have made good friends of most of their patients. Some are now even business partners.
You have to start by building your reputation but "recruiting" your patients will determine how much of a headache you will or will not accrue.
While they do get called every night, it's almost always like a close friend calling them and sometimes they bring an overnight bag to some of their housecalls simply because they know their patient won't let them drive so late at night.
Bottom line is you need to do as much research on your patients as they will do on you.
They are definitely busy but after 5 years with a group practice in Los Angeles, they have found a very comfortable niche and have made good friends of most of their patients. Some are now even business partners.
You have to start by building your reputation but "recruiting" your patients will determine how much of a headache you will or will not accrue.
While they do get called every night, it's almost always like a close friend calling them and sometimes they bring an overnight bag to some of their housecalls simply because they know their patient won't let them drive so late at night.
Bottom line is you need to do as much research on your patients as they will do on you.
