Payment Innovation: Access Healthcare Direct Payment Model

Brian Forrest, M.D., didn't want to practice family medicine in a system where receptionists ask "Who's your insurance provider?" before asking "Why do you need to see the doctor?" but instead of leaving the system, he changed it, and the result is a cash-only, no-insurance practice that earns more and charges far less than the traditional model.

By Brian Forrest, M.D.

“You're crazy! That’ll never work!” is what many people said when I told them my plan to try a new practice model in which I would have no contracts or billing with insurance companies. That's why I opened on April Fools Day just like another company that nobody said had a chance because there would never be a personal computer in every household. But Apple did okay.
 
It used to be that when you called a doctor’s office, the first thing they asked was, "Why do you need to see the doctor?"  Now when you call a physician’s office, the first thing they ask is the name of your insurance provider.  What an indictment on what has happened to our profession. Maybe this is why, according to a recent study in Medical Economics, 34% of physicians are planning to leave medicine in the next 10 years.
 
But you don’t have to leave. There are ways to put the patient-doctor relationship first. Billing and filing claims should be our lowest priority. 
In 1999, entering my second year of residency, I realized that I did not like the fact that certain patients were less welcome at doctors’ offices if they did not have the "right insurance." I did not like the fact that the uninsured patients often had to pay a higher rate for the same service because language in physicians' insurance contracts required that. I also was not crazy about the idea of an expectation that physicians see 30 or more patients per day. So rather than stay on the hamster wheel and accept the status quo – or, as we are seeing so many physicians do today, leave medicine all together – I decided to consider the practice of medicine from a new perspective. How could a practice be both financially viable for the physician and affordable for the patient while allowing ample time for visits? For me, the answer was to devise a new payment model, which I call the Access Healthcare Direct Payment Model.
 
The seeds for developing this model were planted before I even finished residency. I had customized an elective through which I observed office flow, billing, and collections in local primary care offices in North Carolina’s Triad region. What I discovered was eye-opening. In the large medical practices in the area, the overhead cost of collecting payments was as much as the payments themselves. The average amount that the practices collected per patient they saw was only $39, but the total overhead for some fiscal quarters was as high as $50 per patient visit. This is the basic equation that is making it so difficult to make a living in primary care. The traditional practice model requires an average of 4.5 full-time employees per physician, so a lot of revenue must be generated to pay for staff primarily dedicated to billing, coding, and working with payers to get reimbursement rather than actual patient care.  My hypothesis was that if you did away with that part of the overhead, passed the savings along to the patient, and then spent more time with them since you no longer had to to be so volume-driven, you could improve quality and reduce cost. A lot of people at the time thought it was insane not to take insurance, and crazier still to charge less, but it worked.  
 
Over my first five years practicing this way, I discovered that I could charge 80% less than traditional offices, spend more time with patients, and actually have a net income that was much higher than than I would have made in the traditional model. To give an idea, it was nearly double what one of my residency classmates was making at the same time in a traditional practice seeing 30 or more patients per day.  
 
My overhead for my first year in practice was only around $50,000. This is 80% less than traditional overhead because my model required less than one full-time employee versus 4.5 in the traditional model.  I could charge patients from a transparent à la carte services menu posted in the waiting room or have them pay a monthly fee of $25 to $39 per month and provide all of their primary care for a fraction of the typical fee-for-service cost. For example, a diabetic patient will get all his care for $39 per month plus a small per visit fee, which has ranged from $5 to $20 per visit over the years.
 
When I started Access Healthcare, a direct-pay practice almost 11 years ago, my reasons were simple: spend more time with my patients, provide better care, and live a better life. With the new requirements and regulations of the Affordable Care Act, and with physicians facing financial stress from reduced reimbursements and increasing Medicare recovery audits, interest in direct payment practice models is escalating.
 
I have helped hundreds of physicians around the country to move towards a direct primary care model. I am currently planning to expand a network to over 580 locations with practices in 48 states. Companies are coming to us asking to buy direct primary care plans, called Medical Home Memberships, for their employees. For under $50 per employee per month, I can provide full scope primary care with outcomes reporting to employers in areas like blood pressure control and hospitalization rates. We are in the top 5% nationally for control of hypertension, lipids, diabetes, and hospitalization rates based on an independent ongoing 3rd-party audit of our charts, which resulted in our being designated as one of 33 Cardiovascular Centers of Excellence in the US. I am working with several other leaders in direct primary care models from around the country to host a Direct Primary Care Summit this fall focused on various iterations, common modalities, and transformation.
 
Everyone agrees that health care needs better quality, lower costs, and improved access. Through disruptive innovation, we have been able to accomplish all three. As Einstein said, "The definition of insanity is continuing to do the same thing over and over while expecting different results." So I guess I wasn't that crazy after all. Now I can enjoy the practice of truly patient-centered medicine and am planning to show a lot more physicians how to do the same.
 
Brian Forrest, M.D., is a pioneer in direct-pay primary care and membership model medicine. He has practiced exclusively in that model for 11 years and helped physicians nationwide transition to third-party-billing-free practices. Named one of Triangle Business Journal’s 40 under 40, Dr. Forrest serves as Board Chair of the N.C. Academy of Family Physicians. He is an Adjunct Associate Professor in the Department of Family Medicine at UNC Chapel Hill and precepts for the BCBSNC Family Medicine Scholars Program.  

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Posted by Sonya Collins on Jan 17, 2013 10:35 AM US/Eastern
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