Is a Direct Pay Medical Practice Right for You?

Lea Chatham November 5th, 2013

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There is no doubt that working with health insurance payers is challenging. But does it make sense to go it alone and set up a practice that depends solely on direct payments from patients? What does a direct pay medical practice look like and is it right for you?

According to a recent survey from Physicians Practice, sponsored by Kareo, of over 1,000 providers, nearly 10% were already doing direct pay or planning to switch. Another 43% have considered the model but have not made plans to change. The American Academy of Private Physicians says that last year the number of providers doing direct pay or concierge medicine grew by 25%.

A direct pay practice is generally a practice that offers care to patients who pay their costs out of pocket. The practice does not have insurance contracts or bill insurance—that includes both public and private payers. Essentially, patients are paying for the convenience of personalized care and easy access to their provider. The middle man payer is eliminated from the equation and providers set their rates themselves. Providers who have taken this route say that it frees them from all the time spent on billing and allows them to focus more on patient care.

There are different approaches to the direct pay model. Some providers choose to focus on patients who will pay more for convenience and access. Others opt to focus on markets where there are a lot of uninsured patients who are attracted to a practice that may offer lower cost care but require it to be paid directly.

“Whichever approach you choose, you are becoming a more consumer driven practice,” says Dr. Tom Giannulli, MD, Chief medical Information Officer at Kareo and a practicing physician. “When patients are footing the bill, they have higher expectations. So to be effective, the physician has to meet a higher level of personalized, patient-centric care.”

That patient-centric care may include a higher level of accessibility, a more technology-driven environment, a welcoming patient-friendly office, more focus on customer service, etc. “You really have to be a top notch practice to entice patients who are paying for their own care,” adds Giannulli. “It isn’t for everyone.”

Some of these practice features may also help to keep costs down, making it more realistic to offer services on a direct pay basis. For example, a practice that uses seamlessly integrated practice management, billing, and EHR can expect to see lower costs for supplies and office space and a potential increase in collections of close to 10% according to MGMA.

If you are considering this model or another more consumer-centric payment structure, you really do have to turn your practice into a best practice.

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