Primary care is at a tipping point. We know it has been said before. However, in the past, primary care delivery has been dictated by changes in payor-led reimbursement models. Examples include healthcare maintenance organizations (HMOs) of the 90s and more recent risk-sharing, value-based care initiatives. This time other forces are also at play, including:
- Nontraditional market entrants
- Physician shortages exacerbated by industry-wide burnout
- Consumer expectations
Health systems will be forced to evolve their primary care strategies. Membership model medicine must be a key component of that evolution.
A changing primary care market
According to a recent report by Bain & Co, a consultancy, nontraditional players are expected to own a third of the primary care market by 2030. These nontraditional participants include retailers, payor-owned providers, advanced primary care disruptors, and concierge providers.
The market is well on its trajectory toward this new reality: UnitedHealth/Optum employs over 70,000 physicians, making it the largest employer of physicians in the U.S. Amazon is also making moves to dominate physician markets, buying out primary care practice One Medical. The acquisition aims to scale Amazon’s technology platform and consumer reach with One Medical’s 150+ primary care locations.
Other retail giants like CVS, Walgreens, and Walmart, are inching into comprehensive primary care, attracting customers to retail clinics through ease of connectivity and convenience. According to data from Atlas All-Payor Claims, 22% more procedures were performed at retail clinics in 2022 compared to 2021.
Physicians are also in short supply, with some contemplating leaving the profession entirely. According to an October 2022 research report from Definitive Healthcare, an estimated 333,942 healthcare providers dropped out of the workforce in 2021, with providers specializing in internal medicine, family medicine, and emergency medicine being hit particularly hard.
This will be exacerbated by burnout of the current provider base. Half of all doctors have considered changing their work situation, and 66% of primary care physicians report burnout, according to data from Grand View Research and Statista.
Patients, of course, have a hard time finding primary care physicians and making timely appointments. When they do see their doctor, their appointment doesn’t last long: The average primary care exam is just 18 minutes, according to a study published in Medical Care.
Patients increasingly expect a personalized, consumer-like experience in healthcare. They want to be able to ask all the questions on their list, to feel like they’re being heard, and to develop a relationship with their physician that ultimately leads to a happier, healthier life.
Without a robust and forward-thinking primary care strategy that addresses these market factors, health systems risk losing direct relationships with patients and their families. This will eventually lead to an erosion of a system’s strategic and financial position as new intermediaries potentially redirect inpatient stays, surgeries, imaging, and other hospital-based services.
Enter membership model medicine, a new approach to healthcare delivery. Also called concierge medicine, patients or members under this model pay a monthly or annual fee for enhanced services and better connectivity to their physician, who has a smaller patient panel. With fewer patients, physicians can spend more time with each one and provide more individualized care.
As shown in the following figure, the membership medicine model has multiple value drives that can positively impact a health system’s patients, providers, financials, and market.
Figure 1: Overview, Membership Medicine Model Value to Health Systems
PATIENTS: Convenience, experience, and differentiated enhanced services
With membership model medicine, the physician-patient relationship is different. It centers on preventive care, the optimization of the patient’s health and well-being, and the doctor as a trusted advisor. It’s a model that helps primary care deliver on its promises.
It’s also a model that meets patient expectations for a more convenient, personalized experience. While alternative sites of care like retail clinics can meet patient expectations for convenience, the membership medicine model can really deliver on the patient experience.
According to a 2020 Deloitte survey, patients’ top priority is the relationship they have with their physicians. When asked about their ideal healthcare experience, 42% said the most important factor was a provider who spends time with them and doesn’t rush through the exam. What patients really want is more time with their doctor.
Some health systems may answer the call to improve the patient experience by building a state-of-the-art facility or investing in an expensive digital health platform. But as long as doctors are overbooked, the connectivity issues remain.
Membership model medicine is a way to meet consumer expectations for convenience and experience. This is delivered through same-day or next-day appointments, extended patient visits, and 24/7 direct connectivity to doctors.
While patients pay an additional fee to be part of a membership model, programs can vary in cost depending on the type of experience and care patients are seeking. With different tiers of pricing based on the service offered, patients can customize the program to meet their needs and budgets. The convenience and personalized experience can be well worth an additional fee for many patients.
Additionally, other enhanced services potentially offered will create a differentiator to draw patients into the program. For example, membership medicine models can offer patients health coaching, exclusive health-related content, and discounts from partner businesses through wellness programs.
PROVIDERS: Retention and recruitment of high-valued physicians
Membership model medicine takes the administrative weight off doctors, giving them the chance to practice at the top of their license and more time to do what they do best – care for patients.
With a smaller patient panel, physicians have a more manageable workload — and that means increased career longevity. They also enjoy more professional fulfillment: 96% report career satisfaction, according to a study from Grand View Research.
With some membership medicine platforms, doctors may have additional perks, such as health coaches who collaborate with their physician partners, acting as an extension of their team. These coaches can educate and guide patients on adopting healthy habits, help them set and achieve wellness goals, and handle other issues related to behavioral modification. This gives doctors more time to focus on building a relationship with their patients.
The financial benefits for physicians are also a draw. According to a survey conducted by OvationLab, 24% of membership-based doctors saw an increase in income in 2020, during the COVID-19 pandemic. Meanwhile, 72% of their peers in a traditional model reported a decrease in income in 2020 based on data from the 2020 Physician Foundation Survey.
Given the career satisfaction driven by a balanced workload, more time spent caring for patients, and greater financial rewards, membership model medicine is a vehicle to both retain high-value physicians, who may be burned out or retiring early, and recruit the next generation of providers for the system. As the demand for primary care continues to exceed the supply, recruitment and retention of primary care providers will continue to be a top-of-mind focus for health systems across the country.
FINANCIALS: Driving revenue and increasing network integrity
COVID-19 placed added financial strain on healthcare organizations as they confronted provider shortages, rising labor costs, a decrease in elective surgery, and care continuing to move outside the hospital. In fact, for hospitals that have reported fiscal year 2022 financial results, labor costs increased 111% since fiscal year 2021, according to data from Definitive Healthcare.
Membership medicine offers immense value to health systems committed to providing high-quality healthcare services to the community, while also bringing in new revenue streams. A high-margin service line — as a standalone service, practices often see profit margins of 60% to 70% — membership medicine enables health systems to boost revenue, which is especially important as healthcare organizations recover from the financial pressures of COVID-19. Profits can be used to invest in new technology, provide financial assistance, or fund special projects that support their mission.
Furthermore, membership-based programs promote what we call network integrity — or the ability to keep patients within a health system’s provider network for care.
In a traditional model, patients who need to see a specialist often get lost in the system, leading to patient leakage. In fact, 90% of health systems are not highly confident in their visibility into patient leakage. Patient leakage can also put more financial strain on health systems. According to Definitive Healthcare’s analysis of Medicare payments, health systems across the country are potentially losing out on $35 billion due to leakage.
With membership model medicine programs, the physician or member advisors and patient advocates can help coordinate appointments, make follow-up calls, and provide ongoing support throughout the referral process. This helps ensure patients get the care they need and, when appropriate, they stay within the system.
MARKET: High growth market with a target population base
With the growth of other on-demand subscription and membership services such as Hulu and Netflix, the concept of membership payments has become commonplace for the average consumer. According to a 2022 survey, consumers spend an average of $219 per month on subscription and membership services.
The same is true in healthcare. Many people are willing and interested in investing in their overall health, helping membership-based programs gain traction in the U.S. The market is expected to grow 9.4% per year through 2028, according to a study from Grand View Research. Traditional primary care, in contrast, is expected to grow 3% per year during the same period.
The explosive growth isn’t surprising. Many patients and physicians want to move away from the transactional relationship that dominates traditional healthcare — an impersonal “fee-for-service” model. Membership medicine offers a means to do so.
Value to a Health System’s Patients, Providers, Financials, and Market
Subscription medicine offers immense value to health systems and physicians as well as to the patients they serve and is another valuable offering health systems should add to their toolbox as they look to meet patients where they are and provide high-quality care.
“If the doctor is happy, engaged, and less stressed, patients will feel the same,” says Stephen Schneider, a membership-based doctor who partners with Castle Connolly Private Health
Partners. “It is a win-win model for the practice of medicine built upon mutual trust and respect.”
About Todd Bellemare, Sr. VP, Strategic Solutions at Definitive Healthcare
Todd Bellemare, Sr. Vice President of Strategic Solutions at Definitive Healthcare, has spent his executive leadership career building healthcare provider and patient analytics. He has grown powerful data and professional services teams at Definitive Healthcare and DRG and has helped thousands of leading life sciences and technology companies build their commercialization strategies through a deep understanding of the healthcare facilities, physicians, and patient landscape. With more than 20 years of experience in hospital equipment, medical devices, clinical trials, technology, and data and analytics fields, Todd brings a complete picture to his analysis and discussions.
About Alfredo Fernandez-Concha, EVP of Partnership Strategy Growth at Castle Connolly
Alfredo Fernandez-Concha is the EVP of Partnership Strategy and Growth at Castle Connolly Private Health Partners, LLC. He is a healthcare executive and advisor with extensive experience in enterprise-level corporate strategy, finance, partnership development, M&A, and growth strategies. He has advised on over $3 billion of board-approved investments working with leading health systems, medical groups, and private investors on a range of initiatives including joint venture planning, partnership & affiliation development, capital asset planning, and digital health development.