By Jay D. Reyero, JD

In the evolving landscape of health care, innovative models such as concierge medicine have been gaining traction among both health care providers and patients. In today’s case study, we will take a closer look into one physician’s departure from the traditional model of medical practice and venture into a subscription-based health care model, now commonly known as concierge medicine. This innovative physician, to whom we will refer as Dr. Creative, envisioned a different model of care for her patients, free from the constraints of traditional health care. We will discuss Dr. Creative’s journey, the challenges she faced, and the legal, business and health care considerations associated with subscription models such as concierge medicine.

_{Disclaimer: As with many client case studies, the names of the people have been changed to protect the attorney-client information. However, the facts and law are real and should be accordingly considered.}

The Case of Dr. Creative

Dr. Creative, a board-certified internal medicine doctor, began her career at a large private practice—a common route for many medical professionals. However, she soon became disheartened by the impersonal nature of mainstream health care, the time-consuming administrative tasks, and the constant pressure to maintain a high volume of patients, all while grappling with the limitations of primary care reimbursements.

Feeling these constraints and challenges, Dr. Creative made the decision to depart from the standard health care model, opting to build a unique practice that emphasized direct and personalized patient access to health care. Dr. Creative would be successful in her journey by taking into consideration not only her health care expertise, but also by being mindful of the legal and business elements associated with such a shift.

The shift to subscription-based health care

Following Dr. Creative’s departure from the large private practice, she began work on implementing an alternative model of patient care. She wanted to ensure that her new health care approach would provide personalized care to patients, clarity in what patients could expect in their care, comprehensible fee structures and practical membership agreements, all while ensuring she remained compliant with health care regulations. Consequently, Dr. Creative’s primary obstacles during the establishment of this new model were centered on:

1. Patient care and expectations;
2. Medical board regulations;
3. Business considerations; and
4. Financial considerations.

The concierge medicine model

Dr. Creative’s new health care approach ultimately became what is now commonly known as “concierge medicine.” Also known as “retainer medicine,” concierge medicine redefines the relationship between the patient and primary care physician. This membership-based health care model provides an alternative to traditional primary care. Its primary objective is to foster stronger patient-physician relationships by enabling physicians to practice without the complications brought by insurance-related issues and bureaucratic constraints. Concierge medicine also enables physicians to maintain more control over their practice and manage their patient load more effectively by reducing patient volume without sacrificing revenues. Physicians find concierge medicine particularly appealing as it addresses the challenges of heavy patient loads and insufficient time to see those patients. According to the American Journal of Medicine, a concierge physician sees “six to eight patients per day, compared with 20 to 24 patients for the typical primary care physician.”

Under the concierge medicine model, patients pay a periodic subscription fee, typically monthly or annually, in exchange for more personalized and direct access to medical services. This fee typically covers a defined set of health care services directly from the physician. The services included in this fee can vary widely depending on the practice and the needs of the patient. However, additional services—such as specialist referrals, certain tests or procedures, and specialized therapies or treatments—may not be included and could incur additional costs in the concierge medicine model. Although concierge practices may still accept insurance and its reimbursements in addition to membership fees, it is the membership fees that help physicians alleviate the burden associated with complex insurance billing and collection procedures.

For patients, the chief incentive for transitioning to concierge medicine is that it provides them with more personalized and timely care due to a smaller patient panel, often including longer, more in-depth appointments with minimal wait times, remote and immediate physician access that often includes 24/7 access via phone or email, same-day or next-day scheduling, wellness and nutrition planning, and more comprehensive care. In certain cases, physicians may even accompany patients on out-of-office visits to specialists or accept house calls. Premium concierge services may go a step further by offering luxurious amenities, such as bathrobes and slippers, during appointments. Altogether, patients in search of a more personalized and accessible model of health care may see concierge medicine as a more appealing alternative.

For physicians, there are a variety of incentives, such as improved work-life balance and enhanced patient relationships due to a smaller patient panel, increased income resulting from direct payments and additional services that can generate additional revenue, and reduced administrative tasks related to insurance billing and pre-authorizations. These benefits may all result in more focus on patient care—the main emphasis of the concierge medicine model.

Patient care and expectations

The core of concierge medicine is a patient-centric approach that prioritizes increased physician access and enhanced communication, tailored patient care, and a genuine commitment to patient welfare. These considerations were among Dr. Creative’s chief focuses and laid the foundation for her success.

However, physicians should also be mindful of the importance of ethical and professional conduct during this transition to maintain patient care and compliance with medical board regulations. Patient abandonment was one of Dr. Creative’s critical concerns when switching to concierge medicine. This occurs when the physician terminates the doctor-patient relationship and fails to give the patient reasonable notice, as defined by the physician’s medical board, and to give the patient the opportunity to find alternative care. Giving reasonable notice is especially important when dealing with critical care patients—the physician should ensure that these patients have been stabilized or that another provider has taken over care before terminating the doctor-patient relationship.

Dr. Creative addressed this issue by providing patients with ample notice. By law, physicians must ensure that they provide patients with reasonable notice and adequate time to find alternative care if they choose not to participate in the new model. For example, Texas’s Medical Board and the Medical Practice Act mandate that physicians must give patients reasonable notice before making significant changes in their practice. The exact duration of “reasonable notice” may not be explicitly defined but may be interpreted within the context of the specific circumstances. When terminating the patient-doctor relationship, for example, the Texas Medical Board has stated that notice should generally be given to patients in writing and provide them with anywhere from two weeks to 30 days to seek alternative care though the board’s rules do not explicitly define “reasonable notice.” Other states, such as Illinois, do not provide a specific timeframe for “reasonable notice” in the context of patient notice requirements during transitions in medical practice, but generally emphasize the importance of avoiding patient abandonment and ensuring a professional and ethical transition. “Reasonable notice” may, therefore, depend on individual circumstances, but should typically allow patients a minimum of 30 days to find alternative care.

Physicians contemplating a shift to concierge medicine should take Dr. Creative’s approach into consideration to help minimize the risk of patient abandonment claims and ensure a seamless transition to concierge medicine that is also in line with the physician’s medical board regulations.

Health care considerations: medical board regulations

Because the financial arrangement is different in the concierge medicine model, Dr. Creative had to be aware that medical boards regulate fee disclosures and unearned fees. Consequently, Dr. Creative knew she had to be transparent about her new fee structure and ensure compliance with all medical board guidelines and state laws.

Medical boards often require physicians to provide clear information to patients about the retainer fee and the services covered, any additional fees for services not covered and how the arrangement differs from traditional health care models. Informed consent is crucial to ensure that patients understand the nature of the concierge medicine model and its implications. Additionally, medical boards may stipulate that physicians have a clear policy for refunding unearned fees if a patient chooses to terminate the concierge medicine agreement early, or if the physician fails to provide the agreed-upon services.

These stipulations on unearned fees also tie into possible medical board regulations regarding patient cancellation policies. Physicians may be required to specify in their agreements the notice period patients must give if they wish to cancel the concierge medicine arrangement early. In particular, medical boards may require that cancellation policies include provisions for refunding any unearned fees if a patient cancels before the end of the contract period. Physicians should be careful with cancellation policies that prohibit patients from receiving refunds on unearned fees. This may lead disgruntled patients to seek help from the medical board, claiming they paid for medical care that they did not receive. Though these actions by physicians may not be a direct violation of medical board regulations, they may nevertheless be considered unethical and unprofessional.

Business considerations

As with any business model, concierge medicine comes with its own unique set of business considerations and challenges. Dr. Creative was able to lay the foundation for a legally sound business model by merging these business considerations with her health care knowledge.

From a business perspective, providers must ensure clarity and comprehensiveness when documenting the doctor-patient relationship under the concierge medicine model, typically through a membership agreement. This agreement should outline the fee structure to which the patient is expected to adhere, define proper boundaries between the physician and the patient, and clarify the services that the physician’s retainer fee includes. Crafting this agreement can pose a challenge, as it must be detailed enough to outline the terms and conditions of the relationship but not so complex as to deter potential patients. Some providers may, therefore, choose to make these agreements accessible on their websites, promoting transparency and ensuring easy updates.

Staffing may also pose a unique business challenge for physicians offering concierge health care services. Given the personalized and often 24/7 nature of concierge medicine services, there is a constant demand for health care professionals to be available and responsive to patient needs. In a traditional health care setting, the absence of a physician due to travel or other reasons might not significantly disrupt operations. However, in a concierge practice where patients have higher expectations for accessibility and personalized care, the absence of the primary physician can pose challenges and impose additional hiring costs.

Financial considerations

Unlike traditional health care practices that rely heavily on insurance reimbursements, Dr. Creative sought to build a model that instead focused on direct payments from patients, thereby eliminating the complexities associated with insurance billing. She ultimately implemented a retainer fee at the center of this fee structure.

From a financial perspective, the fundamental aspect of concierge medicine is the fee structure. The primary revenue stream for concierge medicine providers is the annual or monthly retainer fee paid by patients. This model can offer more predictable revenue compared to traditional fee-for-service arrangements. Providers must first decide whether to charge an annual or monthly fee, each with its own implications for cash flow management. An annual fee, while ensuring upfront revenue, presents challenges in synchronizing billing cycles with service delivery. The anniversary dates of numerous patients can introduce irregularities in cash flow, complicating financial planning.

Furthermore, the subscription model’s success hinges on effective renewal strategies. Auto-renewal emerges as a practical solution, streamlining the administrative process and ensuring continuity of care. Relying on manual renewals may burden the system, potentially leading to lapses in patient coverage and revenue disruptions.

The issue of insurance reimbursements adds another layer of complexity to the concierge medicine model. Under the traditional health care model, providers must grapple with varying payment timelines and amounts dictated by insurance contracts—a $200 service charge might only yield $75 in reimbursement, and the delay in payments can strain the practice’s cash flow. The subscription model offers a more predictable revenue stream, as fees are collected upfront, mitigating the uncertainties associated with insurance billing. However, because patients are essentially pre-paying for services, it is key for providers to offer an exceptional patient experience. Providers must offer distinct benefits to justify the out-of-pocket expenses.

Lastly, providers with existing contracts with third-party insurance companies also must be prepared to navigate the insurance aspects of concierge medicine.

Conclusion: Dr. Creative’s journey as a blueprint for medical practitioners

Despite the challenges, Dr. Creative’s transition was successful. Her revenues quadrupled, and her patients appreciated the personalized care the concierge medicine model provided. Dr. Creative’s journey into concierge medicine serves as an insightful case study for medical professionals contemplating a similar shift. Her journey underscores the potential benefits of the concierge medicine model. However, while the benefits are evident, the legal considerations are paramount. Dr. Creative’s transition was not without its complexities, emphasizing the need for medical professionals to seek legal counsel and understand the intricacies of similar shifts to maintain compliance with regulatory requirements.

Jay D. Reyero, JD, is a partner at the ByrdAdatto law firm. His practice focuses on the representation of business clients, with health care being the core of his practice. His health care and regulatory expertise involves the counseling and advising of physicians, physician groups, other medical service providers and non-professionals. Specific areas of expertise include federal and state health care regulations and how they impact investments, transactions and various contractual arrangements, particularly in the areas of federal and state anti-referral, anti-kickback and HIPAA compliance.