Direct Primary Care, Healthcare Costs, and Financial Independence

Disclosure:  I currently do not have any financial interest in any direct primary care businesses and have no plans to do so.  This may change in the upcoming years.  I simply find the model interesting and provocative as a healthcare consumer and a physician.

healthcare costs, the great unknown

I was reading TPP’s financial interview #13 and found another mention of how healthcare costs are a great unknown in planning for retirement/financial independence.  We all know healthcare in this country is too expensive and is getting more so.  Physicians should know more than most.

What has struck me is how limited the conversation tends to be: Healthcare costs are hard to predict and are the big question mark in retirement financial planning.  End of discussion.  I have not read any discussions on creative ways to mitigate this other than funding a Health Savings Account (HSA) to the hilt.

direct primary care could play a role

Direct Primary Care (DPC) is an emerging model of delivering primary care on a monthly prescription basis.  For a discreet set of primary care services a patient pays a monthly subscription fee (usually <$100), which covers all of those services.  Some additional services may be provided at cost or at a discount.  This varies practice to practice.

Most importantly, however, is the fact that DPC practices have a much smaller patient to physician ratio.  Usually 600:1, compared to 1,200-2,000:1 in traditional practices.  This means more time with the physician.  PCPs can save A LOT of money if they have the time to think through problems.

A well-trained internist should be able to handle the vast majority of nephrology, cardiology, and endocrinology without a referral – if they have enough time.  Anything task physicians do less frequently requires more time. Our current system incentives PCPs to refer as much as possible, because it saves the physician’s time, not the patient’s healthcare dollar.

Essentially, for those covered services, you are able to have a predictable monthly fixed cost for the length of the contract (likely to increase with inflation, etc).  To me, this seems preferable to the morass of opacities that is current health insurance and hospital billing.

Isn’t it appealing to avoid dealing with insurance companies for 80% of your healthcare?

DPC vs Concierge medicine

Many have critiqued DPC as “concierge medicine.”  This is unfair. Most specifically, concierge doctors tend to charge a monthly fee on top of what they bill insurance for increased access to the physician.  DPC charges the fee in lieu of charging insurance, getting rid of the middle man and increasing efficiency.

From a policy perspective, the one critique of DPC I feel has merit is DPC practitioners have “healthier” patients.  DPC proponents argue they have data showing their patients are just as chronically ill as the average primary care practice.  This may be true, but DPC patients are inherently more engaged in their healthcare.

Simply by taking the time to find an alternative model to obtaining primary care and putting some monthly income towards it, patients prove they value healthcare more than average.  Engagement in one’s healthcare is eminently more important in health outcomes than number of diagnoses.

brass tacks – DPC does not do everything traditional health insurance does
  1.  DPC does not fully replace insurance: Since DPC only covers primary care, you still should have some sort of health insurance.  Usually, this means purchasing a  catastrophic or high deductible policy.  On the other hand, health insurance is actually insurance (something paid for and hoped goes unused) and not coverage (something paid for and used as much as possible).
  2. DPC would not help a family afford expensive medications: For any diagnosis requiring a large number of branded medications, or even one or two monoclonal antibodies, DPC might not be sufficient.
  3. HSAs cannot fund DPC payments, though this might change.  If it does change, DPC would become a much more appealing option for higher earners.
  4. DPC practices are still emerging, they are not available in all locations.
  5. Obstetrics, for young families this is the most likely large healthcare expenditure.  Most DPC practices are unlikely to provide that service.
the pursuit of the perfect is the enemy of the good

Is DPC going to solve all of our systemic and personal healthcare issues?  Of course not.  At this point, any innovative model that saves cost and increases quality is worth discussing.

Especially for relatively healthy early retiree families, I think it is worth looking at in more detail.  Even for individuals with several common chronic problems DPC might be preferable to traditional primary care models.

Though I have yet to do the math, A less expensive high-deductible health insurance plan, coupled with a well-funded HSA (preferably holding at least your maximum deductible amount) and a DPC subscription could be a great “diversified healthcare portfolio.”

Why have I not purchased a DPC subscription?  Through my wife’s job I currently have access to very good and very reasonably priced insurance.  However, if this were to change, I would very likely be looking for a DPC practice in my area.  Also, see #5 above.

If anyone has looked at this in more detail or has strong opinions on the matter, I would be very interested to hear from them.

Leave a Reply

Your email address will not be published. Required fields are marked *