Direct Primary Care

Epistemic Status: PSA and raising questions

Medical care in the US is expensive. There aren’t that many demonstrated ways to make it drastically cheaper.

Direct primary care seems to be an exception.  It makes routine medical expenses 95% cheaper.

Yes, really.

If you have a cash-only, or “direct”, primary care practice — i.e. you don’t accept insurance — you can negotiate much lower wholesale rates from providers of tests (like EKGs, MRIs, blood tests) or prescription drugs. Why? Because you can guarantee the providers immediate payment, rather than the uncertainty and inconvenience of insurance reimbursement.  They’re willing to give you a discount for that.

Direct primary care also cuts down on paperwork for doctors, because they don’t have to document everything with the ICD codes that insurance companies require.

Atlas MD is an EMR designed for direct primary care practices that use a subscription model, founded by Dr. Josh Umbehr, who also uses it in his own direct primary care practice in Wichita.  I’ve spoken to him via phone and tried to poke holes in his model, and came away even more impressed.

My question is, could this model scale up nationwide — and would it still be as effective at cutting costs if it did?

Right now, as I understand, direct primary care practices negotiate individually with suppliers to get discounts. I imagine that it would be much more efficient if done by a nationwide chain of direct primary care practices.  Bulk wholesale purchases, after all, could be even cheaper than what a single practice might hope to get.

With Amazon moving into healthcare, direct primary care might get a chance to shine. Amazon has a lot of experience cutting prices through economies of scale & supply chain optimization. Jeff Bezos even funded direct primary care startup Qliance, which went bankrupt last year.

Direct primary care only works as a complement to insurance that pays for more catastrophic care like emergency room visits and specialists.  And if you can get a “minimalist” insurance plan that’s not redundant with the direct primary care membership, your total healthcare costs (membership + premiums) can be much lower.  The potential problem arises if it’s difficult (or illegal) to sell sufficiently “bare-bones” insurance plans — in that case patients wouldn’t be willing to pay out of pocket for a direct-care membership in addition to their already pricey insurance.

Umbehr has managed to negotiate deals with insurers to offer lower premiums when patients bought insurance along with direct care subscriptions, but maybe Qliance, which apparently struggled to keep customers, didn’t successfully pull it off.

At any rate, if I’m not missing something, this seems like an ideal opportunity for Amazon to make healthcare a lot more affordable. Are there barriers I haven’t thought of?

Advertisements