Considering Going Direct Pay?

The traditional insurance-based health system had been approaching a tipping point even before the COVID-19 health crisis. Rising costs, declining reimbursement, expanded scope of practice, practice consolidation, and high-volume productivity requirements have all contributed to physician burnout. Distinct from this but critically important, moral injury has resulted from unaddressed systemic frustrations with the escalating expectation to do more with less. The commitment to excellence in patient care that physicians have both been trained and taken a pledge to give has been compromised.

Dermatologists have been particularly susceptible to the repercussions of these health care market forces. The coronavirus pandemic highlighted the precarious position of dermatologists within the traditional insurance-based health care system. Dermatology practices were deemed non-essential, like many other out-patient based medical practices. Operational challenges highlighted by the pandemic include: safety concerns with the density of high-volume practice settings; increased expense from supply chain issues; low-cost dermatology telemedicine platforms flooding the market; and explosion of non-physician social media skin health “experts.” From government-issued shutdowns and employer furloughs to prescriptive re-opening protocols, business practices under the new realities of an ongoing global pandemic have reinvigorated interest in physician driven, non-traditional practice models.

Cash-based practices, historically viewed as accessible only to the financially privileged by unconventional doctors, have re-emerged as an answer to the unwieldy traditional insurance-based health system. Direct care has gone from a simmering undercurrent in medical care culture to top of mind for entrepreneurial board-certified physicians committed to course-correcting their relationship to the practice of medicine and patient care.

What is direct care?

A direct care practice, as the name suggests, is a physician-to-patient relationship without any insurance intermediaries brokering the health care transaction. Putting it bluntly, direct care cuts out the middleman. Direct care dermatologists work completely outside of the traditional fee-for-service, insurance-based, third-party payer system, including Medicare/Medicaid. In other words: direct care dermatologists practice outside of all insurance networks and receive payment for services rendered directly from the patients they care for, typically at the time of service or as a monthly subscription fee.

It is important to name the huge elephant in the room upfront. As physicians, we struggle with the reality that health care is a business. The ethical standards of our profession have been wielded as a yolk to the third-party payer systems that have inequitably monetized health care delivery to the continued detriment of the doctor-patient relationship. Direct care is a free-market solution that empowers physicians to deliver a transparent, mutually beneficial patient care experience. While it is a cash-based practice model, direct care is not synonymous with concierge medicine. In traditional concierge medical practices, physicians are in-network with insurance carriers and charge patients a monthly subscription fee for services extended outside of their insurance contracts, such as 24-hour physician access, extended visits, or other perks. Traditional concierge medical practices still bill and receive payment from third party payers. Direct care dermatology practice is not a one-size-fits-all solution to the layered complexities of our current health care system, but for a growing number of physicians, a direct care model offers a viable business strategy to find equilibrium and escape the increasingly demoralizing in-network health care landscape.

Why have more physicians started considering direct care?

In his book, Drive, Daniel Pink examines the scientific research on what truly motivates people toward high performance and satisfaction in all areas of their lives, but particularly at work. He finds autonomy, mastery, and purpose to be the most critical elements. As humans we have a deep need to direct our own lives, engage in continual learning, and feel supported to create an improved status for ourselves and the collective world. This could not be truer for any physician, and yet the modern health care system has not evolved to support physicians to pursue and foster these elements. There is an ever-increasing disconnect between the business strategy in an insurance-based health care system and physician delivery of patient care. As costs of care increase through premiums, high-deductibles, coverage gaps, and prescription costs, physicians are increasingly opposite patients who question the value of their care experience with the doctor.

With dermatologists now widely accepted as “providers,” the homogenization of credentials for the delivery of care strikes many as the dilution of a hard-earned title of mastery. Lack of direct control, the high cost of compliance, and a global pandemic have left many dermatologists feeling a loss of purpose and fulfillment. The mismatch of incentives (i.e., money) to the burnout and moral injuries that have been slowly accumulating over the last decades have caused many dermatologists to wonder how to regain alignment of values and joy in the practice of medicine. I am one of those wondering dermatologists. As an early career dermatologist, I struggled to adapt to the realities of my first practice environment. The perfect storm of personal and professional discomfort led me to take the road less traveled and open my direct care dermatology practice, OneSkin Dermatology. Almost two years into my direct care private practice journey I know that this was the best decision for me and my patients.

There are no imminent signs of our insurance-based medical system evolving to meet the dire needs of physicians any time soon, and any changes would be slower than those that can be made on a personal practice level. I believe direct care dermatology is not only a financially viable but sustainable practice model for many more dermatologists than currently operate in this free-market space.

Whether you are a recent residency graduate like me or have been in practice several years, if you are considering operating or transitioning to a direct care practice the following are important considerations.

What is your why? Direct care can be an empowering choice, but it is not any easy path. Having clarity about what drives your motivation is critical. It will drive your mission, brand promise to your patients, and ultimately your success as you define it.

How does a direct care practice align with your values? Areas to prioritize include financial needs, time management, risk tolerance, etc.

Identify your resources including family and professional support, financial resources, unique skills/perspective, etc.

Perform a market needs assessment. Identify the white space. What problems can you best solve for your patients?

Assess your mindset. How would you rate it? Do you feel deserving of a healthy environment for professional development and a balanced fulfilling medical practice experience? Does your current practice environment support your personal and professional goals? Cultivating the mindset around creating the ideal practice environment for sustainable practice in medicine is central to the direct care practice model.

Radical Improvement

The success of any business relies on its ability to solve a problem in the market. Direct care practices give physicians the latitude to create a practice environment that is more aligned with personal value systems than traditional insurance-based models. Most importantly, direct care brings the therapeutic relationship back between patients and their physician as a starting point for addressing service gaps in patient care needs. I believe direct care dermatology will continue to be a growing area of interest that can radically improve the health care experience for both physicians and patients.