Why Direct Patient Care (DPC) Makes Sense
By Dr. Ashley Kittridge
To discuss how the direct care medical model helps provide solutions in our current healthcare environment, we should first understand the problems in the industry. Please note the list of problems is exhaustive and I have selected only two of the major players to discuss here.
As a consumer and a provider of healthcare, I am uniquely placed on both sides of the healthcare industry. It is obvious that our system is broken, but what is even more obvious is that an engaged patient and a caring physician share the exact same goals; better access to quality care at an affordable and transparent price. So then how is it that we are so removed from the coveted doctor-patient relationship? What has prevented a patient from receiving quality care? What obstacles have made it difficult for physicians to provide better quality care? Why is pricing opaque and not transparent? Why is it that healthcare spending has increased in our country, yet the amount of covered health care provided has declined?
The cost of healthcare coverage consumes approximately 1/5th of the average family’s household income and is increasing annually as a product of increasing premiums, deductibles, copays and other out-of-pocket expenses. On the average healthcare premiums alone increased approximately 20-30% this past year. This cost increase is accompanied with a decrease in covered services. We’ve all been in that situation where we have received a surprise bill in the mail months after an office visit for an exorbitant amount of money. There was no way of knowing that your insurance would decline to pay and no way of preparing for these bills. Lack of transparency in healthcare exponentially increases the stress of healthcare expenses and deters many from reaching out for care.
A few major players are responsible for some of the largest problems in the healthcare industry, which include the insurers, lack of transparency, increased regulatory burden, hospital systems and consolidation of health systems.
The Insurers aka Third-Party Payers (as you know, anytime there is a third party with too much control, costs invariably increase)
I would like to preface this discussion with a reminder of the concept of insurance. Insurance is meant to transfer financial risk from an individual to a pooled group by way of a contract. First, let us think of other forms of insurance outside of the healthcare industry. Our car insurance is used to protect us financially in case of an accident. It is not meant to pay for new windshield wipers, tires or oil changes. Similarly, life and disability insurance are there in case of a life threatening or debilitating incident and not for the payment of claims on non-life threatening, non-debilitating events. Slowly health insurance has morphed from the original catastrophic coverage model towards a model that alleges to provide coverage for all claims. As a result, healthcare insurers have come to control the majority of healthcare payments which have given them more control and power over pricing. Since its initiation in the 1940’s healthcare insurance has been used as an incentive to attract people into the workforce, using health insurance as a benefit provided by most employers. Over the years insurers have convinced consumers that we need health insurance to pay for our day-to-day healthcare expenses but also that health insurance is equivalent to healthcare. Let me be very clear… healthcare is provided by doctors not insurers.
Because insurers’ contracts are confidential, they do not provide accurate price transparency. If healthcare coverage was viewed more like auto, life or disability insurance, where consumers only used insurance for catastrophic coverage, insurers would lose their pricing power, healthcare pricing would become transparent and cost would decline. Physicians would then be better positioned to make medical decisions and patients would become better managers of their healthcare spending. By eliminating the third-party payer middle man, physicians would be able to provide transparent and affordable pricing directly to their patients.
Unfortunately, in the U.S., health insurance is assumed to be equivalent to health care. Which couldn’t be farther from the truth. By focusing on coverage for all, we have shifted even more control into the hands of insurers, who drive up healthcare spending. Mandated insurance has exemplified this via increased deductibles, premiums and copays which are NOT affordable for the average American. The current Affordable Care Act (ironically named) does not effectively control or cap the rise in these insurance costs.
Insurers are also responsible for the great deal of regulatory burden that has not been shown to increase the quality of care. The demand for prior authorizations by insurers for medical care further contribute to healthcare expenses. As a physician, I can attest to numerous scenarios where I have spent hours on the phone per prior authorization that was later denied by non-qualified persons despite meeting all requirements set forth by the insurer. Aetna and other large insurers have infamously appeared in the media of late for similar allegations; erroneously denying care to patients in need despite meeting the appropriate criteria for coverage and without appropriate review of medical cases. Prior authorization and other insurance company administrative burdens consume more than 50% of a physician’s work week, distracting physicians from providing more patient care hours, adding to physician burnout and disrupting the doctor-patient relationship.
The Hospital Systems
Hospital systems are a large part of the spending problem as well. Hospitals have no incentive to decrease healthcare spending and, quite frankly, they are incentivized to do the opposite. They are a proponent of over treatment as they often charge unnecessary facility fees and receive higher payments from insurers than independent physicians or practices. Acquisition of small, independent hospitals and medical practices by large hospital systems has led to monopolies, decreasing competition and increasing the costs of services.
Unique to Pittsburgh, Pennsylvania is the concern of two dominant healthcare systems who also happen to own two of the largest third party payers/insurance companies in the city. The consent decree between these two big players will end come June 2019, and many patients will be left without the doctors that they have come to know and trust over the years. It seems to me that the only ones benefiting from this setup are the hospital systems and the insurers. What makes this worse is that it is at the cost of the patient and their care. Isn’t it ironic how the traditional healthcare model in this city has simply done away with the patient care part of healthcare?
How can we correct these problems?
- Require that providers post cash prices
- Remove the insurance company from the day-to-day healthcare services and utilize health insurance as it was intended, for catastrophic coverage
- Create laws that support and encourage independent physicians to offer services for cash at transparent and significantly reduced pricing (obtainable when the middle man has been eliminated)
- Eliminate biased payments towards hospital systems and the ability to charge additional fees (i.e. hospital/facility fees)
- Prevent monopolies in healthcare
- Work with employers to help them provide catastrophic plans coupled with direct care practices, thereby saving employers and patients money while increasing the quality of healthcare
- Educate consumers (including employers and patients) on the difference between health insurance coverage and healthcare
- Incentivize consumers/patients to utilize health savings accounts (pre-taxed dollars that can be used for any healthcare expense)
Where can you find a model of medical care that redirects control of healthcare back to the patient and meets many of these criteria? Look for a direct patient care model. Direct care medical practices cut out the middle man and the accompanying bureaucracy. In this practice model the doctor-patient relationship is sheltered from any burden by the third parties and regulations that plague the traditional healthcare model. The restoration of affordable, transparent, quality care is at the center of this practice model.