direct primary care

How Direct Primary Care Can Save Money and Boost Employees’ Health

Health insurance and healthcare costs overall have risen over the course of the past 50 years with a steady consistency. Neither the Affordable Care Act nor regulations from the Trump administration have been able to make a dent in the growth of these costs.

In 1960, national health spending equaled five percent of the country’s gross domestic product (GDP). This figure ballooned to 17.9 percent of the United State’s GDP in 2016. Private-sector employers, alone, paid $665 billion in 2016 in health-related costs.

Of this total, $504 billion went to subsidize employees’ health insurance premiums. Employers typically pay about three-quarters of these premiums, according to the Society of Human Resource Management. And, the rise in the cost of health coverage is set to reach an all-time high next year.

According to BenefitsPro, the cost of employee health insurance will increase to $14,800 per worker next year. This exorbitant price has pushed spending on benefits to absorb compensation that could otherwise go to higher wages.

Fortunately, there’s a relatively new way for employers to keep from overpaying for employee health benefits. This new method of cost-containment is called direct primary care (DPC). Below, we’ll detail what direct primary care is, its advantages and disadvantage, and how it can help your employees and business overall.

 

Direct Primary Care Definition

Direct primary care is a form of health coverage but isn’t health insurance. Under DPC, plan participants pay a flat membership fee, which typically ranges from $25 – $85 a month. DPC differs from standard health insurance through its alternative payment model.

Because it technically isn’t health insurance, claims under direct primary care aren’t sent to insurance companies. By avoiding insurance contracts and third-party billing, DPC providers can give patients more time with a doctor, as well as a more customized and personalized service.

 

Advantages of Direct Primary Care

1. More Time with a Physician

The first advantage of direct primary care is it gives patients more face-to-face time with a physician. Studies have shown, in the traditional system of care, 43 percent of physicians spend more than one-third of their day on data entry and other administrative tasks.

doctor with stethoscope

Similarly, other studies have found primary care physicians spend upwards of 50 percent of a patient’s office visit on the computer. And, a whopping 87 percent of surveyed physicians feel professional burnout due to these administrative demands.

Today, doctors must see more and more patients, to generate a healthy revenue. The more patients a doctor must see, the less time they spend with each one. Now, family doctors must see 25 to 30 patients a day. And, the average physician has 3,000 total patients.

This number of patients increases the amount of administrative work they must do and decreases the time they get to actually spend with their patients. In 2017, the average length of an appointment with a primary care physician was only 15.7 minutes.

 

2. No More Insurance Hassle

Again, direct primary care isn’t insurance. While this feature may seem like a negative, it helps DPC providers stay more profitable and effective. Healthcare’s conventional system of insurance demands and limited patient interaction make it difficult for physicians to practice to their full capabilities.

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Because direct primary care isn’t insurance, care providers can opt out of traditional insurance contracts. Instead, direct primary care providers receive a retainer fee. DPC practices, through their compensation structure, can pay physicians to provide comprehensive care rather than only care during a visit.

Under direct primary care, claims aren’t sent to an insurance provider. This lack of insurance allows providers to not only eliminate insurance contracts, which eliminates third-party billing, fee-for-service payments, and insurer relationships.

Without the costs associated with the traditional insurance system, DPC providers can cut their spending on administrative overhead by 30 to 40 percent. Consequently, direct primary care physicians can see four to six times fewer patients and remain profitable. Having less patients allows DPC physicians to spend more time with each patient, as detailed above.

 

3. Better Quality of Care

Another advantage of direct primary care is an increase in the quality of care for patients. For a broad swath of the country, visiting a primary care physician is difficult. Thirteen percent of Americans, or 44 million people, live in a county with a shortage of primary care physicians, according to a 2018 UnitedHealthcare study.

Without a nearby or available primary care physician, many people struggle to receive thorough and timely care. Luckily, direct primary care can help. For a monthly DPC membership fee, employees get a direct relationship with a primary care physician.

doctor with patient

And, as previously mentioned, DPC physicians can spend more time with their patients which improves quality of care. Similarly, patient panel sizes for direct primary care doctors are 70 to 80 percent smaller than those for traditional primary care physicians. DPC doctors can spend more time with their patients, and have more availability, overall.

Those who suffer the most due to a lack of a primary care physician, are patients with a chronic disease. A 2017 RAND study found 60 percent of Americans live with at least one chronic condition. And, these people account for hundreds of billions of dollars in healthcare spending, every year.

These patients with chronic conditions would benefit the most from access to direct primary care. Because DPC physicians have more time, and fewer patients, they can better coach and monitor patients with chronic conditions.

According to Qliance Medical Management, Inc., the use of services rendered outside of a primary care facility, drop precipitously once direct primary care is introduced. Patients enrolled in a DPC program have 59 percent fewer ER visits, spend 30 percent fewer days admitted to a hospital, are referred to specialists 62 percent less, and have 80 percent fewer surgeries.

 

4. Reduces Cost of Care

One of DPC’s most significant advantages for employers is that it can help reduce the cost of care for your employees, and consequently, your business itself. Healthcare in the U.S., according to BenefitsPro, is expensive because third-party insurance carriers obscure the actual cost of healthcare.

This price obfuscation prevents consumers from comparison shopping. Overutilization is another driver of the price of healthcare. In 2010, for example, $29.7 billion was spent on hospitalizing patients for potentially preventable complications. As previously stated, DPC can help patients avoid unnecessary treatments and procedures.

When combined with a transparent Rx program, direct primary care can reduce your firm’s healthcare spend by 15 to 20 percent in one year. Similarly, some self-insured employers who implement a DPC program, have saved as much as $260 per member per month.

 

Not Actual Insurance

It’s important to note one of the advantages of direct primary care can also be a disadvantage. We’ve already covered the fact that DPC isn’t insurance. This status allows DPC providers to avoid all the expenses associated with insurance.

But, it also means an employee with DPC only would be on the hook for all the expenses due to seeing a specialist or being hospitalized. It’s essential for any employer implementing a DPC program, to educate your employees about the differences between DPC and traditional health insurance.

 

The Wrap

Direct primary care isn’t a cure-all for the rising cost of health insurance premiums and healthcare overall. But, DPC does offer your business the opportunity to cut down on healthcare overutilization, save money, and improve your employees’ health.