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Clinical Transformation: New Business Models for a New Era in Healthcare

Accenture research reveals that independent physicians look to subscription-based models to sustain profits and improve care.

Overview


The number of independent physicians is declining, according to Accenture research. Physicians who wish to remain independent have to find ways to lower their cost structure or improve their revenue. Subscription-based practices have the potential to do both. Doctors who convert to subscription-based models that shift the focus away from service volume will not only access greater financial rewards, but will also gain the flexibility to get back to the basics of patient care. Patients could also reap the rewards by gaining enhanced access to care at a service level they can afford.

There is a wide range of subscription-based models. The associated costs range, too. According to Accenture’s research, the most common include high-end concierge medicine and direct pay models. Subscription-based models may expand and evolve over time as many physicians continue to look for ways to differentiate their practice in order to remain independent and self-employed.

In this point of view, Accenture examines these subscription-based models.

Background

Increasingly, private practice doctors have sacrificed their independence to seek employment, according to Accenture, as independent physicians have dropped from 57 percent in 2000 to 39 percent in 2012. By the end of 2013, Accenture estimates the market will comprise only 36 percent of independent doctors.

As the physician employment trend continues to accelerate, those who remain independent are beginning to test new business models. Of those who remain in independent practice, Accenture estimates one in three independent physicians will aim for higher yields by adopting subscription-based care models, and this trend will increase 100 percent annually for three years.1

Subscription-based models may expand and evolve over time as many physicians continue to look for ways to differentiate their practice in order to remain independent and self-employed. To the extent that they offer services that patients value, are not covered by traditional health insurance and are priced appropriately, patient demand for these service may grow as well.

1 American Academy of Private Physicians (AAPP)

Analysis

Accenture’s Physician Alignment Research reveals that business operations are the reason why 61 percent of physicians have decided to seek employment, with cost and expense of running a business indicated as the chief concern for 87 percent of those independent doctors surveyed.

According to Accenture Research, physician employment will accelerate over the next 18 months. As the physician employment trend continues to accelerate, those who remain independent are beginning to test new business models—including subscription-based models.

There is a wide range of subscription-based models. The associated costs range, too. According to Accenture’s research, the most common include high-end concierge medicine and direct pay models. Concierge services are often offered in a premium setting and have a large markup. In contrast, direct pay subscription models offer many of the same services as concierge practices, but at a lower price.

Subscription-based practices charge anywhere from $60 to $30,000 per year, with costs varying according to the population served.2

2 Wharton – Health Economics

Recommendations

Independent physicians are considering various subscription-based models.

Concierge practices
Concierge services are often offered in a premium setting and have a large markup. For patients, concierge medicine offers primary care—often with 24/7 access.

Concierge practices promote the fact that the physician personally attends to coordinating care needs and helping their patient navigate the healthcare system, thus improving the quality of care. For doctors, concierge care offers the potential to significantly boost revenue while decreasing patient panels by up to 90 percent.3 However, this model would require physicians to increase capital expenditures in acquiring sophisticated equipment. Furthermore, the market for serving high-net-worth individuals is narrow.

Direct pay subscription models
Such models offer many of the same services as concierge practices, but at a lower price. Patients at One Medical in San Francisco pay an annual membership fee to receive care. One Medical offers same-day appointments, online prescriptions and email access to doctors—all for approximately $150 to $200 a year. Medical cooperatives such as GroupHealth, are consumer-governed systems that coordinate care and coverage.

Such mixed models allow patients to keep their existing health insurance for acute conditions or emergencies, but supplement with direct pay care that allows patients to access services in ways that work for their lifestyle.

3 American Academy of Private Physicians (AAPP)