Direct Primary Care:

Better Healthcare, Happier Physicians

Last week, Florida joined a growing list of states passing legislation that recognizes a novel approach to healthcare: direct primary care (DPC). What is DPC? In short, it is primary care where patients pay a monthly fee to their doctor. In exchange, patients typically receive unlimited clinic visits and basic laboratory services. This model completely removes health insurance: the doctor never bills the patient’s insurer, nor does the patient pay a co-pay—all of the costs are included in the monthly fee. Similar models also exist where patients have no monthly retainer fee but instead pay a small fee per clinic visit (~ $40) or lab test (~ $20 – $60). This method of providing primary care is growing rapidly across the United States. But why exactly would patients and doctors prefer such a model where patients are required to pay their doctor out of pocket? The benefits, it turns out, are quite substantial.

From a physician’s perspective, it significantly reduces the overhead costs associated with private practice. For example, not having to bill insurance allows the practice to trim labor costs associated with medical billing. It also allows the doctor to see fewer patients in a given day. While the typical primary care doctor may take on 2000 to 3000 patients, a DPC physician may only take on 500—and make a comparable income. The DPC physician who takes on 500 patients and charges a $50 monthly retainer brings in a revenue of $300,000; after subtracting overhead costs of 30% (which is the amount some DPC physicians have noted in their practices, a figure well below the 60% overhead cost in the typical primary care practice), nets the DPC physician $210,000. This compares closely with the average salary $200,000 of the typical PCP. Some DPC physicians have been noted to make upwards of $400,000 with this model. The lower patient count is another factor that allows the DPC physician to reduce overhead costs, as fewer patients means fewer nurses, medical assistants, and receptionists needed. Having fewer patients also allows the DPC physician to lease a smaller building and maintain a more limited quantity of medical supplies, again reducing costs. The limited patient base also reduces the workload of the physician, thus making burnout less likely while improving work satisfaction.

From a patient’s perspective, DPC provides better healthcare that often comes at a lower cost, despite paying out of pocket. Since their doctor sees fewer patients per day, they are able to have much longer appointments with their doctor (e.g., 30 minutes vs. 15 minutes). It also makes it significantly easier for patients to get same-day appointments for acute situations. In the case of uninsured patients, it is often much cheaper to pay $50 for a single DPC visit compared with a $200 urgent care visit, let alone an even more expensive trip to the emergency room. One physician noted that the majority of his patients actually do have medical insurance, yet they continue to pay an out-of-pocket retainer fee simply because they value the longer appointments. Some DPC clinics are able to drastically reduce the cost of lab work and imaging for their patients by forgoing insurance altogether. Instead, they pay the laboratory or imaging center directly. Because the lab or imaging center does not have to be concerned about rejected insurance claims (because they are paid up-front in cash by the DPC clinic), they are often willing to provide DPC clinic impressive discounts. For example, patients may pay $25 for a lab test that would have cost $100 if the lab company had billed the patient or insurer directly. In a different situation (at a completely different clinic), another patient was able to reduce the price of an MRI from $2000 to $368.

In summary, direct primary care could very well be the future of American healthcare because it aligns the values and needs of both physicians and patients. Doctors can forgo the hassle of insurance and make a higher income while seeing fewer patients and providing better quality healthcare. Patients in this model gain access to longer appointments and more convenient same-day visits while frequently paying less than they would otherwise pay. This model of healthcare does not eliminate the need for insurance—insurance is still essential for covering the cost of non-primary care services that a patient would need, such as specialty consults, surgeries, and hospitalizations. In the future, we are more likely to see insurance companies create plans which integrate with the DPC model, possibly by covering the cost of their primary care, knowing that it can improve patient outcomes and save them money down the line. DPC has even been supported by the American Academy of Family Physicians for the benefits it provides over the standard primary care clinic: better quality healthcare, lower costs, and happier physicians. This could be the future of primary care.

Jason Singh

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Jason Paul Singh is a student at The University of Arizona College of Medicine – Phoenix, class of 2020. He graduated summa cum laude from the University of Michigan – Ann Arbor with a BS in economics. His academic interests include alternative healthcare models and methods to improve efficiency in medicine. In his spare time, Jason enjoys traveling, reading and running. Please feel free to contact him at jpsingh[at]email.arizona.edu with any questions or comments.

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