Giant direct primary care pioneer Qliance has turned to online begging.

“No deductibles or copayments, but we have a coin box at the reception desk for your donations.”

Qliance, the first corporate provider of insurance-free direct primary care and one of the three largest, seems to be headed down the drain. It has taken to online begging at gofundme.com.

Not even ten days before the donation drive began, Qliance was the leading poster child for direct primary care. A Forbes article by Daniel McCorry and Katherine Restrepo said this:

Washington State is deservedly recognized as the birthplace and one of the most prominent frontiers for DPC, in large part because of Qliance. The Seattle-based DPC conglomerate is recognized as an exemplary market force in the private sector of health care.

They went on to praise the State of Washington for its exemplary DPC-friendly legal and regulatory environment.

Qliance was the first, and only, direct primary care provider to have Medicaid patients. It was the first to be part of a plan on an ACA Exchange. It operates in the best state for direct primary care. It has over 35K patients; and it has over $20,000,000 in annual revenues.

Despite these revenues, lenders have not been impressed with Qliance’s business model.  So, now that it needs to raise $1,000,000 in about ten weeks, Qliance has decided to beg. Today, gofundme; tomorrow, coin boxes at the reception desk.

If the crash of Qliance surprises anyone, it will be those with unrealistic expectations of what direct primary care can accomplish. The above-quoted article by McCorry and Restrepo, for example. promises such an intensive level of primary care that expensive “downstream” care, like specialist consults and ER visits, can be cut by 66% and 65% respectively. Eliminating all overhead expenses associated with billing and insurance is said to make all this possible, because doing so is presumed to enable physicians to reduce their patient patient panel size by fifty percent (50%) or more.

Actually, that’s inconceivable.

A 2014 quantitatively detailed, peer reviewed academic study of billing and insurance-related administrative costs for physician practices found that these came to thirteen percent (13%) of gross revenues. So physicians could drop their panel size by thirteen percent (13%) and increase their face time with patients by fifteen (15%).  [Hint: divide average length of patient visit by 0.87.] 15% more face time does not produce miracles.

But surely 15% more face time will help reduce “downstream” care a bit? Sure. In 2015, Qliance’s most recent report claimed to have reduced specialist consults and ER visits, but only by fourteen percent (14%). Seems reasonable, a lot more reasonable than 66%. And specialist and ERs are expensive, so maybe there’s some net savings here, even at 14%, right?

Maybe. But Qliance is obviously having trouble persuading lenders, investors, or partners that it can perform that well.

Where did those inflated expectations for direct primary care, like a 65% reduction in specialist visits, come from.  They came from a table by Qliance summarizing unpublished internal data from a 2010 investor pitch by Qliance. They were mentioned in a feature article written for the British Medical Journal in 2013. Though this was not a research article, the gaudily-high figures were passed off in a Heritage Foundation report written by McCorry, as “a British Medical Journal study of Qliance.”

Qliance knew better than to try to pass these wildly high numbers off as “a British Medical Journal study”. On February 6, 2017, McCorry, writing in Forbes, again published the numbers from 2010, but this time without any link or citation.  Now that Qliance is in dire straits, however, those exaggerated 2010 results  – now attributed to Forbes – have made their way into Qliance’s gofundme pitch; their more recent and more relevant but far less compelling results have not.  That is precisely why you, in your exercise of due diligence, should not donate to Qliance.

A final note. Reducing billing and insurance overhead can be accomplished by a single-payer system perhaps even more easily than by direct primary care. But whether the system is fee for service, single payer, or direct primary care, the physician’s conjoined choices as to the size of her patient panel and the size of her income are the dominant drivers of the amount of personalized care each of her patients receives, far more so than the mechanism by which she is compensated. More intense primary care may have some net positive benefit, at least up to a point, but there is no clear evidence that that benefit is unique to the direct primary care model.