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White Paper on Direct Primary Care: Healthcare Service Trade-Offs

Meridian Springs Primary Care, founded by Dr. Bhavana Rao, is a pioneer direct primary care clinic serving patients in The Woodlands, Tomball, Springs, North Houston and Conroe area. We are a membership based family medicine clinic that provides unlimited access to the doctor 24/7/365. Think Netflix but for HealthcareLearn more at SpringsMD.com/LearnMore

Healthcare in America is on a negative spiral of increasing cost and decreasing quality of care. The main cause is definitely a lack of consumer exposure in healthcare that has prevented efficiencies of free market in this industry, efficiencies that have been possible in industries like Technology, Airline or Restaurants [1].

Within the third party payment healthcare system, the negative spiral in care can be analyzed under three parameters –

Ease of Access – With about 64% of the revenue being currently spent on overheads, physicians are forced to move to a volume business to breakeven quicker and maintain a good standard of living. The result is difficulties for the patient to get access to the physician who now has to deal with 3000-4000 patient panel. Currently, the average cumulative wait time for a PCP across the nation is 19.5 days [2]. It is much worse for specialists. With more than 3 weeks of wait time for appointments, especially in the case of new patients, access is one of the biggest difficulties for patients today.

Cost of care – Third party payment system is by its very mechanism price inflationary. Patients no longer drive the system but it is the insurance companies and the government, the payers, who the physicians are answerable to. Without price transparency, the cost of care has spun out of control. Over a 10 year period from 2005 to 2015, there has been a 83% increase in employee contribution towards healthcare and a 61% increase in healthcare premiums (Figure 1: Average annual health insurance premiums and worker contributions for family coverage). Even though the rate of premium increase have slowed down over the last 10 years (mainly due to HDHP insurance plans), they have consistently been about 2x to 3x compared to the inflation rate and rate of employee wage increase during that period (Figure 2: Average premium increases for covered worker with family coverage). Nerdwallet [3], in its 2013 study of bankruptcies, found almost 57.1% of all the bankruptcies in America were medical bankruptcies.

Figure 1: Average annual health insurance premiums and worker contributions for family coverage [4]

Figure 2: Average premium increases for covered worker with family coverage [5]

Quality of care – As the physician is forced to move to a high volume business to make up for low margins per patient, the amount of time spent per patient has reduced to only about 8 – 12 minutes on an average. As discussed earlier, this short time is not enough to develop trust between physician-patient and do true healing. Physician is forced to decide on care within 8 minutes irrespective of the complexity of the problem. Not only does it lead to unneeded referrals to specialists and labs, it may delay diagnosis resulting in prolonging of the illness.

Tradeoffs

Within the current limitations of third party payment system, healthcare industry has come up with certain tradeoffs to solve issues of access, cost and quality. Quality can be measured in terms of complexity of care i.e., subject matter expertise and skills, personalization of care i.e., duration of visitation and continuity of care with the same physician, and Range of care i.e., breadth of services available. Services tending to ease access offer limited range and complexity of care and those providing complexity and range tend to cost more and less easy to access.

Table 1: Range of Healthcare services as a trade-off among access, cost and quality of Care

Table 1 is the response of Healthcare industry to the crisis. The effort has focused on providing a range of services to ease access and cost issues plaguing the system. This has been achieved as a trade-off with complexity, range and personalization of care. At the lower end, telemedicine companies like Teladoc employ physicians to diagnose over the phone for minor issues. A level up is walk-in clinics that populate grocery chains like HEB, Walmart, Kroger, pharmacies like Walgreens and CVS. Here nurse practitioners provide basic care to patients. As we move higher, complexity increases in Urgent care and ERs but with much higher cost of service. All the current approaches try to ease the healthcare situation by treating the symptom and not the root cause of the issue. Cost inflations in third party payment system through lack of consumer price transparency are not quite addressed. The service approaches only play within the existing system limitations [6].


[1] Catastrophic Care: Why Everything We Think We Know About Health Care Is Wrong – David Goldhill

[2] Primary care access, 2013 data as surveyed by Merritt Hawkins – //www.merritthawkins.com/uploadedfiles/merritthawkings/surveys/mha2014waitsurvpdf.pdf

[3] //www.nerdwallet.com/blog/health/managing-medical-bills/nerdwallet-health-study-estimates-56-million-americans-65-struggle-medical-bills-2013-2/

[4] Kaiser / HRET survey of employer sponsored health benefits, 2005-2015

[5] Kaiser / HRET survey of employer sponsored health benefits, 2005-2015, Bureau of Labor statistics, consumer price index, U.S city average of annual inflation (April to April), 2000-2015.

[6] //hbr.org/2015/03/red-ocean-traps

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