Over the last few decades, the US healthcare industry has seen an increasing number of providers leaving their independent practices for opportunities with hospital- or health system–employed medical groups. Providers are enticed by guaranteed salaries and reduced practice management responsibilities, especially considering the growing challenges of operating a successful private practice.
Providers who choose to remain independent frequently tout the benefits of controlling their work schedule, generating income based on their desired work effort, and ultimately owning their business. Unfortunately, many independent providers feel the patient volume levels needed to operate a profitable practice come with negative consequences, such as physician burnout, limited time afforded to each patient, and a practice approach that focuses on symptoms, rather than preventive and wellness care.
In response to these challenges, concierge medicine is becoming a more attractive option for providers who wish to remain independent, devote more time to patient care, and maintain a profitable practice. Under a concierge business model, providers significantly reduce their panel size and increase the level of preventive and wellness health services offered to patients. In exchange for an enhanced relationship and additional health services, providers collect a regular membership fee from patients, separate from the patients’ personal health insurance coverage.
For many providers interested in converting their practices to a concierge business model, the time, effort, and change management required are daunting. Apprehension to deviate from the status quo to adapt a new practice style can stem from the following:
- Departure from Current Medical Practice: Compared to a traditional practice model, concierge medicine requires an approach rooted in proactive, preventive wellness care.
- Changes to Support Staff Structure: Depending on the services offered in a concierge medicine program, providers may need to alter the mix of support staff or reduce staff count.
- Worries about Patient Attrition: Legacy patients who are financially unable to join a concierge practice may feel excluded and voice their opposition to a new practice approach.
- Concerns about Meeting Higher Patient Communication Expectations: Providers may be worried about whether expanded communication availability will be manageable from a work-life balance perspective.
- Potential to Work More Hours: Depending on the provider services offered in a concierge model, providers may need to be available for patient care more often than in their current practice.
- Adapting to a Changing Revenue Structure: The largest revenue source in a traditional practice is third-party payers, but in a concierge practice, patients are the largest revenue source.
- Regulatory and Compliance Challenges: The application of out-of-pocket membership fees exposes the practice to legal and regulatory compliance risk.
- Time and Effort Needed to Manage the Conversion: Providers may struggle to find the time needed to properly plan and execute a concierge practice transition while continuing to operate their current practice.
Five Steps for Transformation
The practice conversion deterrents listed above can be overcome through good planning and change management. Below are five steps physicians should take to increase the likelihood of a successful transition to a concierge medicine practice.
Conduct a Market Assessment
Before converting from a traditional practice, providers should conduct a market assessment to determine if their geographic and demographic markets have the potential to sustain a concierge medicine practice. Income, age, sex, and other socioeconomic factors of the population in the provider’s service area should be evaluated to understand the market. These activities will help determine the demand for concierge services in the provider’s target service area.
Providers should also identify the competitive landscape in the provider’s desired geographic service area. Addressing the following questions will help providers understand their competition:
- Are there any existing concierge medicine practices operating in the area?
- What customer segments do they target?
- What services and products do they offer?
- How many patients do they serve?
- How satisfied are their patients?
A well-researched appreciation for the current competitive landscape, combined with market demand, will help interested providers determine if a new concierge practice is feasible in their service area.
Develop a Comprehensive Business Plan with Financial Projections
At the onset of a concierge practice transition, providers need to formulate a clear business strategy that will inform and guide all subsequent operational planning and practice conversion activities. A comprehensive business plan is essential to identify the mission, vision, guiding principles, and competitive strategy of the concierge practice as well as the pricing strategy for the targeted patient volume. These foundational elements inform key future-state practice characteristics and activities that are clearly defined in the business plan, including, but not limited to the following:
- Targeted customer base
- Target number of paneled patients
- Membership services
- Membership fees
- New member marketing strategy
- Acceptance of third-party payer reimbursement
- Operational policies and procedures
- Cash flow and income statement projections
Manage All Legal and Regulatory Risks
Concierge medicine practice models expose providers to different legal and regulatory risks than a traditional practice model. Most notably, providers must ensure regulatory compliance with regard to the membership services that are included in the program fee charged to patients. If providers continue to accept government and private insurance plans, they must continue to bill for all payer-covered services incurred by patients and can’t include those covered services in the concierge membership services scope (i.e., double dipping).
HIPAA compliance documents, provider medical malpractice policies, commercial liability policies, and other legal and regulatory risk mitigation products, policies, and procedures need to be reviewed and adapted for a concierge medicine operating environment. To accomplish this, providers should identify which documents need to be amended and track the status of these documents until they are all compliant within the new set of concierge medicine regulations.
Align Practice Operations and the Business Strategy
Achieving higher levels of patient service as is essential in a concierge practice model requires certain operational changes that may not be obvious. A concierge provider may need to change how practice schedules are templated, how patient communications are handled, what staff are employed by the practice, what in-office amenities are provided, and what vendors are used to support membership services (e.g., pharmacogenomic testing). Providers should perform a gap analysis between their current practice and the service requirements needed to successfully operate a future-state concierge practice to identify any required operational changes.
Market to New Patients Strategically, Effectively, and Efficiently
Achieving and maintaining target patient panel volumes is critical to the financial success of a concierge medicine practice, but attracting new patients requires vastly different marketing strategies than a traditional practice employs. While legacy patient transitions and word-of-mouth referrals are common membership sources for new concierge practices, providers need to develop a thoughtful marketing strategy that takes into consideration digital forays (e.g., website, search engine optimization, search engine marketing, social media), traditional avenues (e.g., direct mail, radio spots, print advertisements), and other promotion activities (e.g., in-person health education events).
Practice Transition Support
Due to the extensive business planning, project management, and transition support activities required for a successful concierge practice transition, providers frequently seek external professional services for their practice conversion. Currently, the professional services industry for concierge practice transitions is generally divided between two approaches: concierge medicine management companies (CMMCs) and project-based consultants.
CMMCs specialize in converting traditional provider practices to concierge medicine business models. These companies partner with provider practices to conduct the concierge business planning process and supporting the chance management process. Post–practice transition, CMMCs continue to provide support to converted concierge practices typically for a period of 5 years, depending on the CMMC. In some cases, support contracts can go for as long as 10 years.
Long-term CMMC support services typically include patient retainer fee collections, access to a patient wellness program, regulatory and legal assistance, and new patient marketing. In exchange, an agreed-upon percentage of gross concierge patient retainer fees is paid to the CMMC, typically ranging from 20% to 40%. For a practice with a panel of 250 concierge patients, the annual CMMC fee can easily exceed $100,000.
Project-Based Concierge Medicine Transition Consultants
Project-based consultants specialize in providing independent advisory and project management support to providers either looking to launch a concierge medicine practice from scratch or transition a traditional practice to a concierge business model.
Project-based consultants, like ECG, provide the same general scope of business planning and practice conversion implementation services as CMMCs; however, the typical engagement for a project-based concierge practice transition ends after the new concierge practice is successfully converted and operational.
In exchange for their pre-implementation business planning support and implementation assistance, project-based transition consultants are typically reimbursed for their services on a time-and-expense or fixed-fee basis. In contrast to the CMMC approach, there is no obligatory long-term operating cost based on patient-fee collections associated with project-based engagements.
ECG’s Concierge Medicine Approach
Independent providers not only are highly trained healthcare professionals but also are established business entrepreneurs with proven experience managing profitable practices. The best value that ECG, or any other transition support vendor, can offer during a provider’s journey from a traditional practice to a concierge business model is during the initial business planning, transition support, and go-live phases.
A good concierge medicine practice transition approach is built on a project-based support model focused on developing highly customized concierge medicine practice solutions for both small independent practices and large health systems.