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Should Doctors Consider a Concierge Medicine Practice?

Doctor moneyBy Alan S. Horowitz

Today’s doctor-patient relationships are under pressure. Providers face financial demands from the government and payors, and many feel forced to squeeze as many patients as possible into each day in order to maintain their practice.

It’s unsurprising that new models of care are emerging that address physicians’ desires to spend more time with each patient. One such trend is concierge medicine. According to the American Academy of Private Physicians (AAPP), there were 4,400 concierge physicians in the U.S. in 2012, which represented a 30 percent increase over 2011. Forbes reported in January 2013 on a study that found 9.6 percent of practice owners planned switch to the concierge model in the next three years.

A Fee-Based Model with Fewer Patients

The concierge practice model involves patients paying a monthly, quarterly, or annual fee to be a “member” of the concierge practice. This results in the number of patients in a practice dropping significantly, which in turn allows physicians to offer concierge services such as same-day appointments or 24/7 access. Other perks included in the concierge fee vary from practice to practice, but could include out-of-office calls and wellness programs.

Typical annual fees for concierge practices can range widely, from $600 per year on the lower end to $25,000 on the higher end. Tom Blue, executive director of AAPP, says the national average is around $135 to $150 per month. Blue estimates that some 75 percent of concierge practices accept insurance, while the remaining 25 percent operate cash-only practices. Says Blue, “You are directly contracting with patients, in addition to or in place of their insurance.”

Concierge medicine has already caught the attention of big business. Procter & Gamble-owned physician network MDVIP has over 600 affiliate physicians practicing concierge medicine. MDVIP provides support services, such as legal and marketing. Its physicians’ practices are limited to 600 patients and charge between $1,500 and $1,800 annually.

Similar Pay, But More Rewarding Practice

The primary benefits of concierge medicine have to do with patient and physician satisfaction. Although patients are paying to be a part of a concierge practice, physicians may not make significantly more money.

A Medscape survey in 2012 listed the average salary for a primary care physician in the U.S. as ranging from $156,000 to $315,000. Meanwhile, a Bloomberg Businessweek report showed the average salary for a concierge physician ranging from $150,000 to $300,000. MDVIP Executive Vice President Dan Behroozi says that in his experience, “in almost every case, [a concierge practice] is revenue neutral or the physician makes more money.”

Blue says he tells physicians that concierge medicine isn’t a secret recipe to work significantly less and make significantly more. “It is just a different, more satisfying, type of work,” he explains.

Dr. L. Scott Grant, a primary care physician in Birmingham, MI, began his transition to the concierge model in March of 2012. At the time, his practice had over 3,000 patients, but his aim is to lower that number to around 500.

Dr. Grant uses a three-tiered model where patients pay either $500, $1,000 or $2,500 annually based on their age and the services they elect. Dr. Grant says his income as been similar to or slightly higher than his pre-concierge income. “But I see fewer patients,” he explains. “I don’t have to work nearly as hard to make the same financial target.”

Although each physician practice will differ, here are some basic assumptions to help you gauge how a transition to concierge medicine might affect your income. Assume:

  • Your practice today has 2,500 patients.
  • You transition to concierge medicine, and 20 percent of your existing patients join the concierge practice.
  • No new patients join the concierge practice.
  • You charge an annual membership fee of $1,500.
  • Your concierge practice accepts insurance.

Under these assumptions, your concierge practice will have 500 patients paying $1,500 annually for a total of $750,000 per year in membership fees. Insurance payments add to this revenue. One physician reported in Medical Economics that membership fees comprise about two-thirds of his concierge practice’s revenue, with insurance making up the other third. Applying that to our assumptions above, your practice’s total revenue would be around $1.13 million.

Also consider that a concierge practice can reduce your costs. A smaller patient load can allow for decreased staff and maybe even a smaller office. However, if you join a concierge network like MDVIP, you’ll have to pay that organization’s fees.

The Concierge Model Fits Some Practice Better Than Others

In general, concierge medicine is best suited to general practice medicine. Behroozi says MDVIP looks for internal medicine and family practice physicians, as well as subspecialties such as endocrinology and cardiology treating chronic diseases. “The physician needs to function as a GP,” emphasizes Behroozi. “If they don’t have that primary care relationship, this is not the right model.”.

But if your practice fits that criteria, chances are good that not only will you and your patients be more satisfied with concierge medicine, but patient care will also improve. MDVIP conducted a study in 2012 which found a 72 percent reduction in hospital admissions for patients with commercial insurance in MDVIP-affiliated concierge practices.

And patients seem to be responding favorably. Even at a network as large as MDVIP, Behroozi reports a 92 percent patient renewal rate. So far, all of Dr. Grant’s concierge patients have chosen to renew their membership when the time came.

Jeff Schuster is a patient who pays an annual fee of $1,000 to be a member of Dr. Grant’s concierge practice. Schuster travels often for work and says being able to call his doctor and quickly get an appointment makes a big difference in his care. It also means he’s more willing to schedule appointments for preventive care that he might simply have blown off in the past. “Having access to the doctor so conveniently has prompted me to get things checked out a little more aggressively,” he explains.

Drawbacks of the Concierge Model

There are some potential downsides to the concierge model. One thing physicians often worry about is patients overusing premium services like 24/7 access to their doctors. But Behroozi and Blue say this concern doesn’t play out often. Since patients are able to get appointments more quickly, they are less likely to abuse their access to the doctor. “The anxiety level has gone away because they can see the doctor the next day,” says Behroozi.

Dr. Grant elaborates, explaining that difficult patients who would be more likely to abuse their access are typically not willing to pay to join a concierge practice in the first place. “They don’t see the value of what I’m doing and are not likely to sign up anyway.”

A bigger concern has to do with insurance regulations. Doctors have to be careful about double billing, or charging a patient directly (e.g., through a membership fee) for services also billed to an insurance provider. A careful eye on billing practices is needed to avoid such risks.

But the biggest challenge of all? According to Dr. Grant, that would be marketing. As with any small business, attracting “customers” (i.e., patients) is one of the biggest hurdles to overcome. In order to succeed in a concierge model, a physician has to sign up enough patients to be sustainable.

Enter marketing. Dr. Grant has gotten creative with his marketing strategies. He’s advertised in a country club newsletter, engaged financial advisors (who are always looking for services to provide their own clients), and even spoken in front of men’s groups since his practice is male-oriented. He’s also reached out to human resources departments at mid-sized companies to make himself available to their executives.

Most of Dr. Grant’s efforts are too new to gauge their success, but the takeaway is clear: doctors interested in the concierge model should be willing to commit to more marketing.

Key Takeaways

If you’re considering a concierge practice, here are the key issues to keep in mind.

  • If you don’t have a primary care relationship with your patients, concierge medicine is probably not for you.
  • Be careful to avoid double billing – don’t bill insurance providers for services your concierge fees cover.
  • You must be willing to take a risk. Bringing patients on board can be a challenge, and you’ll need to be willing to dedicate time and resources to marketing.
  • Concierge medicine isn’t a get-rich-quick scheme. Although it’s possible you’ll make more money, the primary benefits of the concierge model are improved patient relationships, improved care, and increased satisfaction with your own practice.


Alan S. Horowitz is a contributor for Software Advice.

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