Direct Practice Medicine

Better outcomes, lower costs

Jordan Shlain

Jordan Shlain

Medical Director Current Health USA.

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Direct Practice Medicine (DPM) is a new model for healthcare that emphasises a deepening of the doctor-patient relationship. It eliminates the disruptive impact of set pricing of healthcare services, and the control of reimbursements by third-party payers. DPM aligns the medical and fiscal interests of doctor and patient, fostering a trusted relationship that increases the opportunities for improving health outcomes.

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While times and technology have changed dramatically in the last 50 years, the basic practice of medicine has remained the same through generations. A doctor is still a medical problem solver armed with three primary tools: knowledge, experience and technology. More importantly, even while the tools have evolved from penicillin and X-rays, to multi-drug regimens and PET scans, the pre-eminent criterion for successful medicine has nothing at all to do with technology, or even physician-training. The most critical criterion of good medicine is time. More specifically, it is the units of time that a patient spends with his or her physician. In trying to improve my own clinical practice, I have given a name to this criterion. I call it the ‘healthcare minute.’ My premise is that simply by attending to the ‘healthcare minute’ we can do more to enhance outcomes than when we throw more money, or even the most innovative technologies, at the problem.

The value of the ‘healthcare minute’ has been squeezed to near irrelevance over the last several decades, in three ways:

  1. • The third-party payer system has eliminated individual accountability for healthcare costs;
  2. • set-pricing mechanisms in the payment system have removed free-market transparency; and
  3. • medical advances have, paradoxically, created a population that lives longer through more illnesses, magnifying the demand for healthcare minutes. Trouble is, there are a finite number of minutes in each day.

The perfect storm in healthcare

Of these three factors, the set pricing of healthcare services may be the most perverse. Begun in 1965 as part of the National Social Security Act, the federal pricing model was intended to streamline billing systems fraught with variability and herd the cottage industry of doctors into a coherent framework. Logically, premium prices went to the most urgent, complicated and risky medical procedures —services that almost always take place in the late stages of care. In the pricing standards, however, too little consideration was given to the value of the services provided by the doctor responsible for the patient’s complete illness and wellness profile: the primary care physician.

Using Medicare as their guide, private payers similarly allocated their premium reimbursement dollars to specialists and sub-specialists who perform urgent or late-stage procedures. The unforeseen consequence of this was that it marginalized the very physicians who deliver the early, comprehensive services that should make costly, late-stage medical procedures unnecessary in the first place. [This is why, according to the annual Physician Fee Schedule Survey performed by the trade journal Physicians’ Practice the average reimbursement for an office visit with an existing patient was just US$ 71.67 in 2008—down from Tk in 1965. It is barely enough to cover office overhead. Compare this to the average pacemaker procedure, which is reimbursed at US$ 3,500.]

Unable to bill competitively due to set-pricing, and watching as their reimbursement rates from private payers continued to shrank, primary care physicians are left with just one option to keep their practices solvent: see more patients. This is how the precious ‘healthcare minute’ was unintentionally sacrificed to the costly ‘healthcare procedure.’ Forced to see as many patients in a single day as possible, primary care physicians have begun spending only enough time with each, to determine just which higher-cost specialist must see them next. Primary care physicians today refer approximately 50 per cent of their patients to specialists —up from just 20 per cent three decades ago. Stuck on the “referral treadmill,” doctors have reluctantly whittled down their average medical office visit to a mere seven minutes.

The real costs to the healthcare system of displacing 30 per cent more patients from early stage care, which costs less, to late stage care, which costs more, is enormous. What is worse, as late stage care grows bloated with patients, more and more resources are siphoned from primary care. This is a positive feedback loop with negative consequences that is slowly starving the physicians best-positioned to improve overall health outcomes.

Can’t we do better than this? Isn’t there a model that efficiently allocates resources, while also prioritising the early inputs that provide the most value in the healthcare delivery chain? And what do patients really want, anyway? How many people would opt for bypass surgery, if the alternative were simply more time spent with their internist earlier in life?

I contend that most patients would opt for a deeper relationship with their doctor, given the choice.

Most patients want the comfort of close counsel, and information-rich advice on how to be healthy. When things go wrong, they want compassion, responsiveness, and confident crisis management. It is time for physicians—especially young physicians, who lack the burden of entrenched interests or history—to turn the 20th Century model on its ear. Rather than minimising office visits with internists and family practitioners, we should be minimising visits to specialists. Instead of maximising late-stage procedures, we should be maximising the ‘healthcare minute’ shared by doctor and patient at the entry point of the medical ecosystem. This is the model of Direct Practice Medicine. I believe it can achieve the changes that providers and patients both want: increase access; decrease costs; and improve overall outcomes.

The Economics of Direct Practice vs. Managed Care / 20th Century Care

In business, the open market determines the value of goods and services. In its current state, the healthcare market is anything but open. In fact, it is like a black hole. As a consumer culture, it is hard to appreciate the value of something without knowing its cost. Very few could report the actual cost, in inflation-adjusted dollars, of our annual physical exam, much less the cost of an inpatient colonoscopy. Direct Practice brings some fiscal rationale to healthcare in two ways. One, it offers pricing transparency. Two it empowers a patient to determine precisely what market value he wishes to place on his healthcare. The benefit of this new sense of ownership is a more committed patient. An individual who is willing to invest discretionary income on their health needs will be more committed to improving his or her health outcomes ultimately, their asset. An individual willing to invest discretionary income in their health and wellness, is also a person willing to invest more time in his care. Show me a person who invests in more healthcare minutes, and I’ll show dramatically improved health outcomes.

The math in the healthcare minute

The power of Direct Medicine, of course, is in the minutes—or rather, the math behind the minutes. I illustrate this by first drilling down into the standard, and very hurried visit, of a traditional clinician.

In the current US healthcare system, the average doctor has at least 2,000 and as many as 4,000 patients. This is why most doctors see 32 patients a day—and why the average clinical exam has been compressed to just seven minutes. What is often left out of this calculus, is that a doctor must review each patient’s chart before the exam, plus conduct follow-up paperwork—including calls to relevant specialists, and order prescriptions or lab tests. Charting and follow up requires about 20 minutes per patient, so even a seven minute exam can be as long as 35 minutes in total. Given that some patients require more comprehensive exams requiring even longer, to do a thorough job, a good doctor should see no more than 12 patients in an eight hour day.

Furthermore, at any given time, two per cent of a physician’s patient panel will be ill. Therefore, a practice with 3,000 patients, 60 will be sick at any time. We would never expect a high school teacher to effectively tutor 60 students at one time. Few consumers would knowingly pay to be just one of 60 people competing for their doctor’s time and expertise. In the Direct Practice model there is no such competition.

Introducing CurrentHealth

In 2009 my partners and I initiated a US$ 50-a-month membership program called CurrentHealth . Practicing medicine is historically a labour intensive endeavour. It takes one doctor and about 2.5 office support staff to schedule, conduct and manage a single office. To leverage so much overhead, and minimize the average cost per office visit, it is easier to ramp up the “throughput” of patients than it is to cut down staff – just one more reason why doctors try to see so many patients each day. In this scenario, outcomes suffer.

As an innovator, CurrentHealth offers patients open access through a variety of communication channels aimed at increasing value and reducing inefficiency. The Internet, e-mail, and SMS are all available options for contacting CurrentHealth doctors and our office 24 hours a day, seven days a week. Our patients can follow their medical progress with the latest communications tools, including Twitter and texting or emailing with their physician.

We believe the CurrentHealth model is scalable and can be replicated in most any market, including the Asian market – so long as patients value their health and doctors can practice in an economic framework where the health minute is prioritised. Starbucks and Apple have succeeded at branding a consumer experience across geographies. Why not in healthcare? Data is beginning to Also in the US, the Society of the Innovative Practice of Medical Design is a relatively new organization that aggregates direct practice doctors. In five short years, their membership is well into hundreds and growing everyday.

The patient experience

If a Direct Practice doctor is not living up to his promise of service and quality, the patient community will learn about it. In the world of Twitter (CurrentHealth), Facebook (Current Health Medical Group), Myspace, Yelp, and Healthgrades, a practice cannot afford to say one thing and do another. There are too many eyes and too much connectivity that will expose and chip away at inadequacies. Physicians have a great opportunity to step up and deliver a new brand of healthcare. To reiterate, this is nothing new rather a return to medicine’s roots. It’s all about patient care, the patient experience and the doctor-patient relationship. The direct practice model elevates the patient experience and improves outcomes.

The new model for 21st century medicine

To be fair [be fair or clear, not both], Direct Practice Medicine is not for everyone. It especially suits those who desire medical care that is competent, lean and engaging. Direct Practice appeals to patients who wish to invest in a system that rewards the doctor-patient relationship and improved health outcomes over transactions and marginal cost-savings.

Of course there are those in any society who will not wish to, or will not be able to, opt into a private system like Direct Practice Medicine. However, contrary to popular belief, this new model can scale to serve the needs of all kinds of patients. QuickHealth in San Francisco offers US$ 49-office visits and caters to the un-employed.

I believe that any healthcare system must have, at its core, a provision for a safety net to protect those who are stricken with unforeseen illnesses of especially high costs. But if we are to reform the healthcare system, at large, we must encourage—and enable—innovative thinking on the edges, too. By emphasizing the doctor-patient relationship, and eliminating the disruptive impacts of set pricing and third-party payers, Direct Practice Medicine offers one such opportunity for innovation. If we can succeed at aligning our fiscal and medical interests, and once again foster the trusted relationship between doctor and patient, Direct Practice Medicine will increase our opportunities for improving health outcomes. I believe that doctors, and patients, will follow.

Now let’s place this value proposition in a larger context: in the throws of a global recession, where your stock portfolio or your real estate holdings have all lost value, your most precious asset is surely your health. Most of us don’t think about our health as a depreciating asset, but it takes just one moment of living in medical peril to come to the realization that your health is an asset worth protecting. In this context I believe most patients would agree that investing a little extra money in their ongoing health makes sense.

Introducing Direct Practice Medicine

Practice Medicine emphasises a deepening of the doctor-patient relationship. It is based on a principle of mutually aligned incentives. The doctor commits to delivering a higher level of service, chiefly demonstrated by the hours spent with the patient, and other intellectual resources made available by the doctor. The patient promises to adhere to preventative medical regimens, and agrees to pay—up front—fees commensurate with the time and resources expended by the physician.

This implies that the patient values his or her health as an asset, takes responsibility for the management and growth of this asset, and is willing to pay for the professional advice and insights of a trusted adviser. Freed of the bureaucracy of third-party payers, formerly risk-averse physicians will suddenly become more enterprising, migrate to the latest technologies, adopt new clinical practices and deliver personalised services in more creative ways.

In these ways, Direct Practice eliminates the disruptive impact of set pricing. It dispenses with reimbursements of third-party middlemen. It aligns the medical and fiscal interests of doctor and patient.

Author Bio

Jordan Shlain is a pioneer in the evolving field of ‘direct practice’ medicine. He is board certified in Internal Medicine, lectures at University of California Berkeley on Healthcare Economics and is the medical director for the leader in direct practice medicine (www.currenthealth.md). He sits on the local San Francisco Medical Society board of directors as well as the national concierge physicians’ association. He is married to a Swiss and has three children. TWITTER: Follow his updates at http://twitter.com/CurrentHealth.

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