Why DPCs should transform themselves into Provider-Sponsored Health Plans


Making the change can make it easier to provide care and keep your practice profitable.

Direct primary care (DPC) practices are becoming increasingly popular among providers, motivated by the desire to spend time with patients, focus on care, and eliminate the unpleasant “7 minutes of facetime” pushed by large system practices. DPC offerings, with their focus on personalized attention and doctor-led health navigation, are also attractive to employers. Many have added a DPC practice to their health care plan mix for employees.

The reasoning behind DPCs’ growing popularity seems to be that it allows providers to untether from the fee-for-service insurance model. There are now more than 1,000 DPCs nationwide, from venture-backed, technology-forward primary care providers like Firefly Health and Crossover Health, to more traditional neighborhood practices who want more control over how they provide care and run their business.

But DPC practices may find it hard to deliver on the promise of better patient care and better employer value, while also maintaining a sustainable practice. This is because they are often sold-into employers as an additional service on top of the existing health plan. This model leaves even the best DPCs between a rock and a hard place.

DPCs as a bolt-on service to another health plan can essentially erase the benefits the DPC model provides. This is largely because the existing health plan stands between the DPC and patients, thus limiting the opportunity to communicate with members and impeding the flow of member behavior data.

But there is another model available to DPCs today: develop their own provider-sponsored health plan, geared towards employers who are looking to self-fund instead of taking the usual insurance plan route. A well-conceived health plan, built by a DPC, could be competitive and attract employers who are looking to provide value-based health care to their employees.  By creating and running a health plan, as opposed to being an additional provider to an existing plan, DPCs can leverage their strengths in patient care.

Add-on provider versus health plan model

The two models for DPC engagement have very different implications for DPC practices and their ability to serve employers and members effectively. What follows are some of the key areas of impact.

Incentives and behavior change

As a bolt-on, DPCs have little ability to incentivize and steer patients, even though they know what actually works to change patient behavior. As a health plan, on the other hand, the summary plan document can be formulated to state that the DPC network is Tier 01, with the most competitive pricing, and can include creative rewards and incentives for members who consult the practice and follow the practice’s advice. For example, the plan might provide free downstream specialty visits, referrals, or even surgeries to patients based on how they start their care journey. 

Member behavior data

As a bolt-on provider, member behavior data, available in claims and other transactions, is not provided to the DPC, putting the practice a step behind. The DPC must rely on patients to disclose ailments, visits to other doctors and the prescriptions they’re taking. However, as a health plan, all member behavior data becomes the DPC’s automatically. They have access to information about the patient’s care journey because it’s all there in the claims and precerts. For example, a DPC might get an alert when Mrs. Smith visits an Urgent Care at 2 in the morning or could text a member who fills a prescription at the brick-and-mortar pharmacy when they could save money by using mail-order.

Scaling and financial considerations

As a bolt-on provider, the member economics are difficult to scale. DPCs giving better advice to their enrolled members than those who chose to navigate the PPO by themselves are still paid a flat fee regardless of the quality of advice and outcomes.  Additionally, there is limited financial upside for the good advice that DPCs are built to provide the employer, and little reward when they outperform the PPO plan. Fees are based on employees who enroll, and there may only be one chance per year to pitch to them (open enrollment). However, as a risk-taking health plan, the member economics become much more interesting. The DPC will receive premiums for every employee, plus plans can include scenarios providing an up-side reward for fulfilling the mission to improve health and lower patient exposure to unnecessary treatments and drugs. 

Creating a health plan – Getting started

Today we are seeing a radical mindset shift, from health plans as a means to accessing doctors, to health plans as a means to drive highly personalized patient experiences. DPCs are well-positioned to create great provider-sponsored health plan because they have a good understanding of how to help members manage their care since they already provide personalized service focused on the best health outcomes.

Additionally, great health plans take the needs of the patient population being served into account, something that most DPCs are already doing. Typical considerations providers weigh include certain physical or medical issues prevalent in the community; common socio-economic factors; specific industries the patient population works in, and any other social or life identities that may affect health and quality of life. Ability to understand their patient populations with this level of depth will increase the likelihood that the plans offered will prove optimal for patients.

DPC providers – keep an eye on this space for more virtual and DPC-sponsored health plans to emerge. The goal of converting to a health plan is to ensure long-term sustainability while offering employers a quality plan tailored for their business and employee population. Ultimately, this enables DPCs to focus on patient care, and the patient-physician relationship, which is why most of them got into medicine to begin with.

Cedric Kovacs-Johnson is the founder and CEO of Flume Health, a Health-Plan-as-a-Service platform that helps any health insurer or care provider to launch custom health plans for any population or risk pool in six months or less.



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