Subscription Medicine: On-Demand Healthcare for Everyone

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Recurring revenue models, already firmly established in the healthcare industry, are taking hold in a new medical arena: the doctor’s office. Known by names such as membership medicine, concierge medicine, and direct primary care, these models are paid through subscriptions. Though retainer-based medicine represents only a tiny fraction of primary care practices today, it’s quickly catching on. Along the way, it’s making healthcare more affordable and accessible for patients and more satisfying for doctors. As with any effective recurring revenue arrangement, its success stems from fostering long-term, mutually rewarding relationships.

Subscription medicine gives consumers a way to pay for better care incrementally. Patients aren’t charged for each service a doctor performs, as they are in traditional practices. Instead, they pay a monthly, quarterly or annual fee in exchange for a wide assortment of enhanced services, including: unlimited office visits; same-day or next day appointments; personalized service; and, greater access to their doctor—in person or by phone, email, text and web video.

Concierge medicine vs direct primary care

The umbrella term for retainer-based healthcare is concierge medicine. MDVIP is the largest network of concierge physicians in the U.S. Its average annual fee of $1800 per individual is a bit above the industry average of $1200. Alternatively, red carpet “boutique” plans can cost more than $20,000 a year.

In typical concierge practices, subscription fees cover the bulk of in-office services, regardless of the number of visits. Those visits also last longer, because concierge doctors handle far fewer patients than traditional doctors do.

Most retainer-based practices accept insurance for additional services patients may need, such as lab tests, X-rays, and prescription drugs. The one exception is direct primary care (DPC). Doctors in a DPC practice don’t take insurance. Instead, patients have a direct financial arrangement with their doctor. There are no third-party insurers in the middle dictating treatment decisions. Most DPC patients do carry insurance, however, to cover circumstances such as hospitalizations and surgery.

One of the chief benefits of DPC is that it costs less than other concierge services, because DPC doctors don’t have the overhead of dealing with insurance companies. As a result, DPC rates average just $35 to $85 a month.

Why it works

Like all successful recurring revenue models, membership medicine works because it delivers tangible benefits to both parties that build over time.

Benefits for patients. In this era of sky-high deductibles, many people avoid doctor visits because they can’t afford to pay out of pocket. They may put off going until they absolutely have to, and end up getting sicker as a result.

But for just $35 to $100 a month, patients in a subscription-based practice can see their doctor as often as they wish. And not just when they’re sick. They can go regularly and prevent getting sick in the first place.

In fact, preventive care is a main attraction of retainer-based practices. When compared to traditional healthcare, membership medicine actually reduces costs as much as 20%. It does so by keeping patients healthier and out of hospitals, according to a 2015 study by Qliance, a Seattle-based DPC provider.

Benefits for doctors. Traditional primary care is a volume business. Doctors are compensated for services. As a result, many doctors must handle 2500 to 4000 patients a year, spending an average of only 15 minutes with each one. In contrast, physicians with MDVIP see no more than 600. The industry average is 500.

Concierge doctors have more time. And, because their income comes from subscriptions instead of services, they can spend that time providing quality care, not volume services. They can give patients the full attention they need. They even have time to work with patients between visits to help them reach their goals. The end result is more satisfying outcomes for both patients and their doctors.

Looking ahead

Currently there are only about 6500 concierge practitioners in the U.S. But that’s a gain of nearly 50% since 2012, according to the American Academy of Private Physicians. That growth will likely accelerate because today’s patients, younger ones especially, are more motivated to stay healthy at a price they can afford. For their part, many doctors are eager to find ways to serve patients better at a pace they can manage. As with so many recurring revenue models that have come before, subscription medicine may prove to be the right prescription at the right time.

About the Author

Sean Kirk
Sean Kirk has been writing about evolving business and technology trends for more than 25 years. His areas of specialty encompass big data, as-a-service offerings, cloud technology, networking, recurring revenue, data security and IP communications, among many others.

The Forrester Wave: Subscription Billing Platforms, Q4 2015

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