You can’t have Direct Primary Care

Just like nationalized health insurance, it all boils down to economics, and what to do instead.

Introduction

In this week’s article we are going to enumerate why Direct Primary care won’t work.  We will look at it from the practice, the doctor, the patient, insurance and systemic perspectives.

What is Direct Primary Care (DPC)?

Direct Primary Care (DPC) is a healthcare business model in which patients purchase a membership that allows them unlimited access to certain primary care services. The patient pays a monthly fee to the medical office, and can then access care as needed, without paying an additional fee at the time of service. In the United States, DPC is a type of primary care billing and payment arrangement made between patients and medical providers, without sending claims to insurance providers. Patients pay their physician or practice directly in the form of periodic payments for a defined set of primary care services.

The Problems

Let‘s take a look at several perspectives and list out the pros and cons according to each.  

The Practice

The practice is a business and as such, its primary purpose is to make money.  Making money requires seeing as many patients as practically possible.  We would never advocate herding them through like cattle, as the current business of medicine dictates, but that is what they dictate. Plum Health has this to say about productivity in the insurance model versus the DPC model:

 In a traditional family medicine practice, each doctor typically sees a panel of 2,500 patients. If each patient comes in twice each year, that means roughly 100 visits each week, assuming that the doctor works 50 weeks each year, or roughly 20 visits each day. In Direct Primary Care, doctors reduce their clinic panel to 500 patients. Now, if each patient visits twice each year, the doctor will see 20 patients each week, or 4 patients each day. If each patient visits three times each year, the doctor will see 30 patients each week, or 6 patients each day. This allows the doctor to spend up to an hour with each patient and use the remaining time in their schedule to answer phone calls, texts, and emails as well as handle the administrative duties that go along with running a Direct Primary Care practice.

Actually, that sounds pretty great, Let’s look at why it isn’t.

Money

First, if a doctor wants to cut his patient population by 80%, s/he is probably going to cut his/her paycheck by 80% as well.  The direct primary model is usually priced at around $100.  Some could be less, but let’s use nice round numbers.

The average insurance payment is about $500 per month and let’s say that you get half of your premiums returned as benefits.  That means the patient has twice and a half per month or $250 to spend on a doctor instead of the $100 with DPC.

Most practices are on the razor’s edge of profitability now and if their revenue gets cut by even 10%, they could go under.

Over Utilization

Some people, like my mother, are at the doctor’s office every other week.  This kind of use would completely bankrupt the DPC practice.

The Physician

All the same practice arguments apply to the physician.  However, the reduced workload and the altruistic tendency to make a difference in people’s lives could be absolutely worth it to some. I suspect that in the real world a doc will either take a 50% pay cut or end up seeing the same numbers of patients to maintain his or her lifestyle.  Notice that all the same expenses are associated with DPC except fighting with the insurance company, but that is offset by having to fight with deadbeat patients who won’t or can’t pay their bills.

The Patient

You would really think that the patient would be happy about the whole thing given their average payment goes from $500 on average to $100, but let’s look at what is really going on.  DPCs typically cover the following:

• Preventive care (such as routine screenings)
• Laboratory tests (such as blood tests or urinalysis)
• Management of chronic conditions (medication checkups)
• Acute-care visits (for strep throat or the flu, for example)
• Consultations

That means that nothing that requires a hospital is covered.  That includes labs that can’t be done on premises.  The upshot of that is that you still have to have insurance to cover major medical, or a catastrophic policy.

According to Forbes the average catastrophic plan is a little under $400 ($393 for each ten year tranche from 21 -60 weighted equally) per month on average.

So you are right back up to the average $500 per month, except that you have an almost $10,000 ($9450) average deductible. So if you do anything but go to your Primary Care Physician (PCP) you pay out of pocket at the rate of $9450 per year.  You might not have a physician or a practice to go to either given the economics.

Systemic Problems

The biggest systemic problem is that there is no way to manage risk.  The older you get, the more healthcare you consume.  This mismanagement of risk unfairly targets young people.  They might only use one visit per year, their annual check up, but they pay the same as everyone else.  This shifts the economic burden from the sicker to the healthier.  While that is kind of what insurance is about, it levels the playing field by cutting the population into tranches, generally ten years, so you are competing for care among your peers, not your grandparents.

Another problem for young people is being tied to your PCP.  You can’t move or you lose your coverage.  I don’t know about the average number of moves, but I have picked up and moved several times, and been a road warrior spending my weekdays travelling.  Most PCPs don’t have weekend appointments.

Finally, there are no protections for practices like there are for the big payers.  The savvy patient will sign up for a year of DPC when they are sick, spend the $100 for the first month, get their meds and then disappear, taking their monthly payments with them, and leaving the practice high and dry.  The practice then turns into the constant churn of finding new, or old, patients to pay the bills.  I’m pretty sure that doctors don't really want to be peddling medicine like a snake oil salesman out of the back of a wagon in 1835.

Big Insurance

Your health insurance company wastes about half your premium and only returns about half as benefits.  We aren’t going to go into the reasons for that here, we have dozens of previous articles for that, but we are going to wonder what the solution IS if it isn’t Direct Primary Care or Traditional Health insurance.  So what is the solution?  

The Solution

The solution, of course, is to automate what health insurance companies do and save about half.  We are going to show you how, right here and right now.  First, you don't want greedy, profit-above-everything, business people in charge of your healthcare.  The Commonwealth Fund identified several problems in their paper “U.S. Health Care from a Global Perspective, 2022: Accelerating Spending, Worsening Outcomes” That basically boiled down to two problems:

• Health insurance is too expensive
• Patient education is largely ignored

When we address these two problems, we fix the US healthcare system.

The Concept

Health insurance companies have three inputs: a practice, a patient and a procedure, and one output: a check to the practice for the procedure performed.  That is it.  If we automate the process between the input and the output, then we have eliminated everything the insurance company does.  The only other thing we will address is the way to educate and incentivize the patient on how to live a healthy lifestyle.  That would result in fewer claims, causing reduced rates for everyone.

The Execution

We at Sentia have designed and developed a solution that completely automates health insurance.  We provide the Electronic Medical Records (EMR) system to the practice, and when they document a patient encounter, we pull out the procedures performed and pay for them in real time.  There are no networks, no adjudication, no denials, no medical coding, no big buildings, no people, no float and most importantly, little to no cost once the system is built.  For this service we charge $10 per month plus the actual cost of the risk.  Remember that we proved with their own documentation that your health insurance company only returns 46% at most, if all their systems are automated, of your premiums as benefits.  We can return the 54% they waste to the patient, in lieu of the previously stated $10 per month, plus the actual cost of the risk. There are other efficiencies we will explain, and a way to manage chronic, behavior-based disease.

Patient Education

Also remember that treatment for chronic, behavior based disease consumes 84%, or $3.7 trillion of the $4.4 trillion spent on healthcare each year in the US.  The average of avoidable deaths per 100,000 in OECD countries is 225.  In the US it is 335, or about 1/3 higher.  If we could bring the US average down to the OECD average, we would save about $1.2 trillion.  That is a further reduction in costs of about a quarter.  

How do we do this?  We offer financial incentives for people who live a healthier lifestyle as measured by our built-in health and wellness system.  This system takes into account measurements taken at the primary care physician’s practice, like height, weight and  blood pressure, plus things screened for in blood work.  Additionally, there is a mental health screening right in the wellness package.  This system looks at all these factors and then prescribes patient education based on the results. At Sentia, this is part of the system. We can tell when the patient opened the patient education and how long they spent reading it, and offer a small discount for simply doing so.  A larger discount is offered for reading and following the education, as evidenced by better results in the patient’s health assessment.

The Finances

Let’s look at big round numbers.  Let’s say we can save the patient about 50% on their health insurance up front.  Let’s say that we save the people of the US another 25% by being educated about healthy living and getting to the average OECD deaths per 100,000.  We know that eliminating medical coding, providing a free EMR to the practice and putting compliance and efficacy reporting into that system will save each and every practitioner an additional $77,000 or about 2% of the total.  If we total all that up, we see more than 75% savings.  That means that we would have not only the best healthcare on the planet but also the cheapest.

Conclusion

We have shown a way to save more than 75% from the cost of health insurance and have addressed both of The Commonwealth Fund’s two conclusions about health insurance in the US: cost and education.  We have all of this written and deployed in a prototype application.  The only thing we really need to get this all started is to clean up that application and turn it into an enterprise system with logging, administration and redundancies in hardware.  We will need funding, probably about $10 million over the first year.  For comparison, United Healthcare had revenue of $371.6 billion and net earnings of $22.3 billion in 2024.  With about 50% upfront savings we should service and retain 90% or more of the 330 million insured people in the US.  That gives us a revenue of $36 billion.

This figure shows that this is a viable business proposition.

We have shown a way to make patients healthier by educating them on the consequences of their behavior, and a way to capitalize on that to the sum of $1.2 trillion or about 25%. If we add that to the process automation savings of our solution, we are in the ballpark of more than 75% savings in total. We already have the best doctors and the best equipment; we just need to implement the above detailed framework to give them all the tools necessary for success.

We have this system in prototype now, fully functioning.

Contact us here or on our site and we will be happy to provide a demonstration of the fully functional prototype.

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We have built a comprehensive health information system to keep the patient healthy and on the right track with the ability to incentivize healthy living. Implementing this system should be fairly simple and will completely revolutionize the way healthcare is paid for, saving countless lives. We have shown a way to use this system to make the best healthcare system in the world also the most efficacious and the most affordable.