Direct Care practices: choosing between a LLC vs. a PLLC

An independent physician operating a direct care practice is running a business, in addition to caring for patients. Operating a business requires that the provider maintain financial records, hire and manage staff, and conform to legal regulations for the business entity. Part of the consideration for a direct care practice is whether to operate as a limited liability company (LLC) or a professional limited liability company (PLLC).

An LLC protects the owner of a business from liability in regard to financial debts. When a business owner forms an LLC, the owner is not personally liable for the company’s debts and so the owner’s personal assets are protected. The LLC itself is, legally, the responsible party and the company’s assets are subject to any potential litigation. The business owner must keep up with any state filing requirements as well as annual reporting to ensure the LLC continues its legal protection.

A PLLC is designed for professionals, typically those that require licensing, such as lawyers, realtors, dentists, and physicians. In fact, many states require that healthcare providers form PLLCs rather than LLCs. The direct care physician should check with the state’s business licensing department to determine that particular state’s legal requirements.

While both the LLC and PLLC protect the direct care physician’s personal assets, neither will protect against a malpractice charge. That requires separate insurance protection. However, Attorney Lee R. Phillips, writing in MD Magazine, states that “the fact is that most of the lawsuits and liability issues will involve issues other than professional malpractice. An employee will sue over an HR problem. A patient will slip and fall in the parking lot. Your ‘partner’ or bookkeeper will embezzle money.” For these situations, the PLLC will offer protection for the direct care physician.

Like most medical businesses, direct care practices have legal needs outside of the scope of a physician’s training. Taking advantage of legal help and resources can play a large role in helping your practice comply with laws and employ legal protections.

Gabby Marquez
July 8, 2019

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What is the patient load sweet spot for direct primary care physicians?

When an independent physician converts the practice to the direct primary care (DPC) model, the provider knows that some patients will not follow. That is actually ideal for the DPC’s patient panel size. The DPC provider typically decides to pursue the model for the practice because the patient panel is smaller and the provider can give each patient more time and more attention. The patient load sweet spot for DPC physicians varies but is always much lower than that for the independent physician in a traditional practice.

Ideal patient panel sizes for traditional practices can fall in the 2000-2500 range. Though there is various research as to the validity of such a patient load and the benefits to the patient and the provider who is charged with caring for these patients, physicians in traditional practices do see more patients than DPC physicians.

According to a survey conducted by the AAFP in the spring of 2018, involving both DPC practices and non-DPC practices, “the average DPC panel size is 345 patients. The average target panel size is 596 patients.” Those providers who have started a DPC practice from scratch, 54 percent of those participating in the survey, are challenged with building up their patient panel, while those converting an existing practice, 34 percent of those responding to the survey, may be challenged with losing patients from their traditional practice.

Given the time it takes to build up a practice, particularly one as innovative and unique as a DPC practice, many of those responding to the survey have not yet reached their target panel size. In fact, the survey found that “Only 17 percent of DPC practices have achieved their ideal panel size. Of those that have achieved their ideal panel size, the average time to achieving a full panel was 20 months.”

The patient load sweet spot for any DPC physician is that which supports the practice financially and that still enables the provider to give each patient the personalized attention that characterizes the DPC practice model.

Krystle Thornton
June 21, 2019

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Direct care and in-office dispensing

Direct care physicians are often able to provide their patients with discount options for services that are not covered in their monthly membership fees, such as laboratory services and prescription drugs. A number of direct care physicians, however, have opted to provide in-house dispensing of medications as part of their services within the practice.

Ron Lamberts, MD, an Elation Health client, writes in Physicians Practice about his experiences, at first doubting the need for in-office dispensing and then deciding that it is a benefit for both his patients and his practice. Dr. Lamberts did not think that in-office dispensing was necessary initially, since his patients were happy with the existing services he provided them and his practice was growing. He changed his mind on the urging of colleagues and began dispensing medication in his office in late 2017.

As Dr. Lamberts describes it, “I underestimated the impact it has had on my practice. It has become one of the biggest areas of patient satisfaction, as well as a very powerful marketing tool to both draw in new patients and retain my current ones.” He cautions that there are some factors to consider for the direct care physician who is weighing the option of in-office dispensing.

First, regulations differ by state as to whether medications can be dispensed from within a direct care practice. In fact, in Texas, Minnesota, and Wyoming, in-office dispensing is not allowed at all. In other states, there are specific requirements that must be met before the direct care physician can dispense medications. Dr. Lamberts practices in Georgia, which has “some of the most lenient dispensing laws for physicians and does not require extra licensure within the practice to dispense.”

Other considerations include choosing medication vendors, deciding on pricing, and integrating the prescription drug services with the practice’s existing technology. Dr. Lamberts uses Elation Health’s electronic health record (EHR) system, which assists his direct care practice with inventory and billing. “Our solution allows us to enter prescription in the EHR, go to the dispensing software and print the label, and send it to our billing system. If the prescription brings the inventory down to a set level, it notifies us that we need to order more. It’s quite simple to use and lets us manage an inventory of over 100 drugs.”

Gabby Marquez
May 30, 2019

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Applying the direct care membership model to specialty practices

The direct care model is based on patient memberships. Rather than pay the practice for each visit, the patient pays a monthly fee that covers the basics of primary care as well as some laboratory and diagnostic procedures, depending on the practice. The direct care physician’s financial stability depends on those monthly membership fees. In turn, the practice can be more efficient with less overhead and a reduced administrative burden, since there are no insurance reimbursements to file.

Other specialty practices are starting to follow this same model, recognizing its benefits for the members as well as the provider. Some are following a slightly different model, still based on membership fees but more directly related to the concierge model. A concierge provider offers patients more personalized services for a higher monthly membership fee than that found in direct care practices.

A recent article in Physicians Practice refers to the “membership model of the future” as hybrid concierge. In a hybrid model, patients within a traditional practice can opt to join the concierge plan and pay a monthly membership fee rather than per-visit fees. The hybrid concierge model “works very well for specialists like cardiologists, endocrinologists and gastroenterologists who see a healthy cross section of patients on an ongoing basis.”

Robbie Kellman Baxter, a subscription and membership business model consultant, writing in the Harvard Business Review, advises businesses that are investigating the potential of the membership model to consider what model leaders typically do:

  • Make sure they have a market/service fit before investing in on-boarding customers.
  • Identify the right metrics.
  • Invest in building a culture of membership.
  • Love their members more than their products.

Baxter further suggests that the membership model will not be successful if the goal is to simply produce a recurring revenue stream. Most primary care and specialty providers are focused on the benefits of such a model for their practice as well as for their patients, including more personalized healthcare, cost savings, and higher quality outcomes.

Gabby Marquez
May 22, 2019

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Considerations for Direct Care pricing and service offerings

When launching a direct care practice, there are a number of decisions that have to be made, including where to locate the practice and how many staff members will be required for the practice to run smoothly. Two very important decisions focus on price and services.

Direct care practices operate on membership fees. Those fees must be structured such that the practice will operate efficiently and successfully, retaining and growing the patient panel. The membership fees must also be viewed by patients as affordable and as offering appropriate value. Direct care practices do not accept insurance payments so the membership fees will fund the operations in total.

Elation Health’s Direct Care Playbook offers guidance on setting membership fees that make sense for the practice and the patient. Membership fees range widely and can vary on an individual and family basis. Accounting for age, geography, and local patient demographics are all key inputs to effective pricing strategy.

Direct care physicians also need to decide how much they need to make to keep their practice afloat, and how much they would like to make in an ideal situation. This calculation can be accomplished taking:

  • Sum all expenses (salaries, office space, and all other operating expenses)
  • Divide by anticipated size of the patient panel

Assume a baseline of 300-500 patients per physician as an average panel size. This calculation will give a practice a break-even price point, and the physician can then consider desired take home pay as a final input in setting pricing for their practice. When choosing a fee schedule, consider the overhead of managing more complex pricing or if staff will have technology to support your chosen pricing schedule.

As to which services to offer, most direct care practices offer basic primary care services as well as treatment for minor injury or illness. Some even include diagnostic and laboratory services in the basic membership fees. Most direct care physicians will also offer “enhanced services” such as “real time access via advanced communication technology to their personal physician, extended visits, in some cases home-based medical visits, and highly personalized, coordinated, and comprehensive care administration.”

The decisions as to which services to offer and the level of membership fees to charge are dependent on each other. The direct care physician must be able to support the practice with the membership fee revenue, providing services that patients need and want in a cost-efficient manner.

Gabby Marquez
May 22, 2019

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The benefits of DPC for local governments

Direct primary care (DPC) can be beneficial to individual patients who want to reduce their healthcare costs while receiving quality primary care services. DPCs operate on membership fees so there is no middleman in the form of an insurance company. The DPC physician has been compared to the “old-fashioned” family doctor who develops a relationship with patients, understanding their medical needs, and being available for questions and clarifications outside the office visit.

DPC has also been shown to be effective as an employer sponsored health plan. Employers who are searching for ways to reduce their costs have found the DPC model to offer cost savings as well as a number of heath benefits for their employees.

Likewise, local government can see the same benefits of a DPC arrangement for employees. One of the best examples of county employees being offered a DPC as a health benefit option is in Union County, North Carolina. The county began offering a DPC option to their employees in 2015. The employees’ other option is a traditional health insurance plan with a reimbursement account.

Statistics from 2018 demonstrate that the DPC option has been a success for employees as well as the county government. Jordan Roberts, a Health Care Policy Analyst, found that those Union County employees who opted for the DPC healthcare have cost the county 26 percent less per member per month than those covered by traditional health insurance.

Of those county employees participating in the DPC option, “99 percent of participants reported a positive overall experience, 99 percent of participants reported high satisfaction with provider access, and 97 percent of participants reported a high level of trust in the care they received.”

Additional measures of DPC benefits for local governments include the employees’ opinion of their employer. Roberts notes that “77 percent of employees said that their opinion of their employer had improved since Union County offered a DPC option.”

The county employees who opted for DPC coverage felt that they spent more time, almost double in fact, with their DPC physician than they had with their traditional primary care physician. One of the advantages of the DPC model is the fact that the DPC physician typically has a smaller patient panel and is more focused on developing a relationship with each patient. The majority of the Union County employees also reported that they felt their health had improved since taking advantage of the DPC option offered to them by their local government employer.

Gabby Marquez
May 22, 2019

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Direct primary care and patient engagement

Independent physicians tend to launch direct care practices out of a desire to spend more time with their patients. They might convert an existing practice, leave a bigger practice, or start a new practice based on the direct care model which typically ensures they see fewer patients during the day.

Part of the challenge of the current physician burnout issue is the sheer numbers facing the provider. In a traditional practice model, the independent physician may feel pressure to see more patients during the day, to meet insurance reimbursement requirements and to cover the practice’s overhead. As described in a recent Forbes article, “A major cause of burnout is ‘bureaucratic drag’ – a toxic amalgamation of administrative demands that erodes the physician-patient relationship. It’s time spent on getting approval from insurance companies to prescribe medications or request an MRI.”

In the direct care model, as the name suggests, the independent physicians works directly for the patient. There is no middleman, specifically insurance companies, to determine how much time the physician can spend with each patient or how many patients the practice needs to see during the course of the day.

Based on patient membership fees, the direct care practice has less overhead than a traditional practice. The physician has more control over time spent engaging with each patient, including time outside the office visit. Patients may communicate with the physician before or after the appointment, to clarify instructions or to ask questions about their plan of care.

As described by the AAFP, “The opportunity to spend more time interacting with patients and providing ongoing follow-up services is at the heart of the patient-centered care provided in DPC practice settings.” The organization continues to emphasize that “because DPC physicians are no longer generating revenue solely on the basis of how many patients they see per day, many report that they have significantly more time to spend with patients in face-to-face visits.”

Patient engagement can play a key role in that patient’s healthcare outcomes. The direct care model enables the physician to actively engage with each patient, spending as much time as needed to ensure the patient is receiving proper care and following those care instructions.

Krystle Thornton
March 5, 2019

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The cost-savings for direct primary care patients

Healthcare costs, including insurance premiums and out-of-pocket costs, are of concern to most patients in the US. The Centers for Medicare & Medicaid Services (CMS) reports that US healthcare spending grew 3.9 percent in 2017, reaching $3.5 trillion or $10,739 per person. Healthcare spending accounted for 17.9 percent of the country’s Gross Domestic Product in 2017. One option for the cost-conscious patient is the direct primary care (DPC) model, which will save the patient money while providing high quality primary care services.

Direct primary care practices operate on membership fees. Patients pay a monthly fee, typically in the $50-$100 range, that covers all of their basic primary care services. Many DPCs also include laboratory and x-ray services in the basic monthly fee and offer reduced prices on prescription drugs and other healthcare services. DPCs do not accept insurance but generally encourage patients to maintain high deductible, catastrophic insurance.

The cost savings for patients in DPCs have been detailed by Consumer Reports in a recent article discussing smart money strategies for 2019. The article states that DPCs “can be cost-effective and convenient for people with chronic health problems that need close monitoring, such as diabetes, high cholesterol, and hypertension.”

DPC physicians also make themselves available outside the office visit, responding to communication or even making house calls when necessary. These extra services contribute to the added value of a DPC practice. In particular, “for people who make frequent appointments with their primary care doctor, joining a DPC could cost less than using the coverage provided by a traditional insurance plan.”

DPCs are growing in popularity with cost-conscious and health-conscious patients. Consumer Reports cites industry estimates that indicate there are “more than 900 DPC practices across 48 states and Washington, D.C. … up from 273 locations in 39 states in 2015.” Approximately 500,000 patients are currently enjoying cost savings and receiving quality care as part of DPC practices.

Krystle Thornton
February 19, 2019

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How to address DPC objections

The direct care model of medical practice is often misunderstood, to the point where those who are not clear on its structure or purpose may pose a series of objections to the independent physician in a direct care practice. Providers who choose to transition their practice from a traditional model to a direct care practice, in particular, may face questions about why those chose to do so.

Rob Lamberts, MD, a board-certified internist and pediatrician who runs Dr. Rob Lamberts, LLC, a direct primary care practice in Augusta, Georgia, and who is an Elation Health Clinical EHR user, offered his own experience with objections as well as ways in which to address them, in a recent article in Medical Economics.

Common objections to the direct care model include:

DPC is elitist. The direct care model of medical care is often associated with concierge medicine. Those who are unclear as to the concept may confuse the idea of a concierge physician, who charges somewhat higher monthly fees, with the idea of a direct care provider, who typically charges between $35 and $75 per month. In fact, direct care practices usually discount their monthly patient membership fees depending on age and, in Dr. Lamberts’ case, the patient’s ability to pay.

DPC is not scalable. The direct care physician tends to have a smaller patient panel. Dr. Lamberts went from approximately 3,000 patients to 750 in his practice when he transitioned to direct care. The quality of care that a direct care physician can provide patients is significantly higher, however, as the provider has the opportunity to spend more time with each patient. As Dr. Lamberts states, “what is more valuable to society: giving poor care to 3,000 people or excellent care to 750?” in addition, Dr. Lamberts points out, “DPC is far better for the doctors, and will likely slow the burnout rates afflicting primary care at this time.”

What happens when patients need specialty or hospital care? Direct care patient membership fees cover basic primary care services. Labs and discounted prescriptions may also be included, depending on the practice. Patients are encouraged to carry high deductible insurance for catastrophic events such as hospitalizations because the direct care physician offers patients high quality and affordable healthcare, which “can (and does) reduce the need for specialty care, ER visits, and hospitalizations, but it doesn’t eliminate it.”

Dr. Lamberts concludes that direct care “takes a number of steps towards some desperately needed changes (in the healthcare system): lower cost, less over-utilization, happier doctors and healthier patients.”

Krystle Thornton
February 6, 2019

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The power of the Elation DPC network & DPC partners

Direct primary care (DPC) physicians need an electronic health record (EHR) system that enables them to manage their practices, maintain accurate and easily accessible patient records, and spend more time with their patients. Online billing, payment, and appointment capabilities are also critical to a successful DPC practice. Integrating partners to provide these features in one EHR solution is the key to Elation’s ability to give DPC practices what they need.

At Elation Health, we work with industry partners to offer DPC physicians a complete solution for their practice management:

Hint – offering advanced enrollment, billing and growth analytics services. Integrating with Hint enables Elation to provide DPCs with a “highly customizable enrollment, billing and eligibility management engines (that will) let you design and automate complex consumer and employer plans in minutes.”

Spruce – boasting “Modern care that providers, patients, and employers love,” Spruce’s features enables Elation to integrate “communication and care for the 21st century” into our EHR solution.

Hale – a remote care platform that lets clinical teams streamline triage, automate follow-up, and increase practice capacity – all while delivering an incredible patient experience.

KPI Ninja – offering a “portfolio of cutting-edge analytics solutions” and focusing on issues of particular concern to DPC physicians, such as population health, Elation integrates with KPI Ninja on capabilities from “identifying social determinants of health to measuring health outcomes.”

Health Biller – integrating direct care practice management as well as patient data enables Elation to provider DPC physicians with a practical and comprehensive EHR solution.

Elation is about building a technology platform that doctors and patients use because they want to use it. Because they trust it. Because it improves the quality of care. Because it makes them more productive and more effective. And most of all, because it deeply respects that the heart of healthcare is the doctor-patient relationship. Integrating with industry partners enables us to provide the highest quality EHR solution for our DPC clients.

Krystle Thornton
January 28, 2019

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