DPC and Medicaid expansion politics.

DPC docs uniformly recommend that their non-indigent patients have wrap-around insurance coverage. But for indigents, particularly for what are known as “Medicaid expansion adults” too many DPC docs are willing to push their state for an indigents’ program heavy on direct primary care coupled to, at best, skimpy coverage of downstream costs. They’re eager for their states to send a windfall their way, and apparently quite willing to provide ammunition for fiscal conservatives whose only real goal is spending as little as possible on indigent care.

Peer-reviewed research has confirmed that full Medicaid expansion has significant health benefits for its beneficiaries. For DPC providers to fuel the opposition to full Medicaid expansion by supporting “DPC+ (too little)” is not a good look.

DPC providers would do well to look at this through the eyes of an indigent beneficiary given a choice between full Medicaid expansion (even if, heaven forfend, it comes with FFS primary care) and whatever flavor of “DPC+chintz” they are asked to get behind.

At least DPC advocates should think their own interests through quite thoroughly. Those militant cost-cutters always find a way to cut indigent care; they are the folks who have always made sure that Medicaid reimbursement rates be meager. If DPC actually was so effective that a “DPC + chintz” plan resulted in the indigents getting anything resembling comparable care to the non-indigent, after a year or two fiscal conservatives will complain that “the poor don’t deserve care as good as everyone else’s”, and cut to a meager level the amount they pay DPC providers .

A moment of clarity about selection bias – at a DPC summit.

At 2019 Summit, Mike Tuggy, MD, FAAFP, presented this: What Have Primary Care Practices Provided to Employers Who Invested in Primary Care? The Results Speak for Themselves–Reports from Across the U.S.2019 DPCSummit62019 Direct Primary Care (DPC) Summit

His presentation began with high praise for Qliance and others. He suggested that these models might be used to entice employers into a DPC experiment. Strikingly, he did not mention selection bias or risk adjustment in connection with using these data sources to entice employers to sign up. Certainly, there was no acknowledgement that one of his poster-children, Nextera, had a very low-risk membership.

Even more strikingly, however, the talk ended up in a Q & A that focused heavily on (a) the problem of having too many high usage patients as members, and (b) being certain that potential employer contracts compensated the DPC better for riskier patients. It even reached the point of a benefits broker offering the equivalent of underwriting services for DPC clinicians.

It’s good to see some realism about selection issues deployed when it helps DPC providers . It would also be appropriate when realism might expose that selection bias might be lurking behind claims of DPC success.

Dr Rice’s “DPC saves money” fantasy.

When the third word of an article with a quantitative angle is hyperlinked to an article by the same author, an MD who also holds an MBA, and the linked article reveals that the author can not actually calculate “markup” correctly, look hard at both pieces. Behold Why direct primary care is the future by Todd Rice, MD, MBA.

That piece ends up with a spreadsheet purporting to compare the OOP costs Rice would incur before satisfying his $3000 deductible for his annual needs under an FFS practice in his insurer’s network versus the OOP cost (including the DPC fee) for the same goods and services at his chosen direct primary care clinic. The totals were FFS — $3095 and DPC — $2685, a savings of $410 on the year.

View Dr. Rice’s spreadsheet analysis here.

The savings amount to 13%, appreciable but hardly revolutionary. Yet, even that 13% savings seems questionable or, perhaps, complete and utter bullshit applicable only in the rather unique circumstances in which Dr. Rice finds himself. Here are some reasons why.

Most of the savings can be accounted for by the difference (about $310) between the retail price of two long-acting insulins Rice favors and wholesale prices researched by his DPC provider. Rice can only be satisfactorily treated with Lantus and/or Tresiba. Although both these basal insulins are in the formulary of insurers covering 80% to 90% of commerically insured patients, Rice’s insurer covers neither of them.

Despite Rice’s apparent inability to select a different insurer or a different basal insulin, the odds are excellent that another patient with Rice’s unique basal insulin requirements will be able to avoid Rice’s insurer; the odds are also quite good that patients stuck with Rice’s insurer can find a satisfactory basal insulin in that insurer’s formulary.

Alternatively, anyone with a critical need for specific out-of-formulary drug may often avail themselves of a formulary exception process, sometimes including an independent external review. Granted, an insurer is never required to grant an exception but, if a review process finds that a person is likely to have serious medical problems without the requested medication, an insurer’s self-interest lies in granting the exception to avoid potentially large claims for treatment needs arising from medical complications.

Rice goes on to state, however, that even if these insulins had been covered by his particular insurer, he would still have had to pay full retail prices for these drugs until he had met his $3000 deductible. Rice’s is a very strange insurer indeed, because that choice will accelerate the rate at which the insured meets the deductible, and that will cost the insurer money.

Example math: Patient needs a drug which costs $300 a month retail but only $249 at the insurer’s negotiated price from the pharmacy. If the insurer requires patient to pay $300 a month, patient satisfies the deductible in ten months and the insurer pays its (typically 80%) share of the cost for two months. But if the patient pays only the negotiated price, the patient would spend $2988 for a full year of the drug and not meet the deductible; the insurer would pay nothing. Sadly, because Rice’s insurer apparently has not figured this out, Rice’s insurance premium is probably more than it would be with a more typical company.

In any case, Rice’s case is at best a very odd outlier in terms of his having to pay full retail pricing for his two particular insulins and doing so without his payments being credited toward his deductible. A typical patient getting exactly the medications and services Rice has charted, even if incurring the full $3095 in charges Rice listed, will satisfy a $3000 deductible and begin receiving after-deductible benefits. On the other hand, had that same patient elected to “save” $410 by aping Rice’s choices, that patient would still be $3000 away from meeting that deductible.

View Dr. Rice’s spreadsheet analysis here.

Ross’s comparison includes laboratory fees for nine laboratory tests annually performed either by the DPC clinic versus or by a commercial laboratory at full retail prices. The result is astounding: DPC at $200 versus $807.

Apparently, Rice’s unusual insurer requires for labs, as it does for drugs, that patients in the deductible phase pay full retail price. Again, that policy will accelerate the patient’s advance toward meeting the deductible and, thereby, cost the insurer more money. But what would a patient like Rice pay if he had a less obtuse insurance company?

A major Rand study just found that ordinary private insurers pay hospitals about 240% of what Medicare pays for similar services. It seems likely that private insurer reimbursement of laboratory services would follow a somewhat similar pattern. So, it seems fair to assume that an ordinary insurer pays no more than 350% of Medicare rates.

Medicare pricing for the same testing regime as Rice received would be $105. At 350% of Medicare priving or less, an ordinary insurer would very likely have a negotiated price of less than $367 for those services; a patient who had not satisfied his deductible would pay $367 OOP rather than the $807 Rice included in his comparison. That $440 difference would transform the cost analysis developed in Rice’s computation from a $410 win for direct primary care into a $30 win for applying FFS insurance (even on the assumption that FFS patients pay full retail for prescriptions).

View Dr. Rice’s spreadsheet analysis here.

For the basic package of services in Rice’s chart, Rice is paying $2,685. A similar Lantus/Tresiba-dependent diabetic with a normal insurance company would likely be paying $30 less (even if they did have to pay full retail for prescription medications). Unlucky Rice is $3000 away from meeting his deductible; a Rice-like patient with a typical insurance plan is thousands of dollars closer.

For patients with normal insurance, Dr Rice has not demonstrated that direct primary care is the future. Dr. Rice has, however, discovered a growth market for direct primary care: patients whose unusual prescription drug needs run up against a mismatched formulary from an insurance company that also happens to harm its own profitability by allowing patients to accelerate meeting their deductibles by overpaying for labs and pharmaceuticals; it’s probably a niche market.

Making progress toward meeting a deductible matters. Interestingly, it is quite likely that a Lantus-Tresiba dependent diabetic requiring precisely Rice’s regime and insured by a typical company will meet a $3000 deductible each and every year.

In addition to labs and drugs, Rice’s analysis had a third cost category, physician office visit fees. For PPS, he indicates $433 for an initial visit and three followups; Rice based that pricing on insurer-negotiated fees. Assume that a normal insurer’s drug pricing reflects the same modest discount (17%) on Lantus and Tresiba as the DPC clinic obtains; that’s an $1855 drug cost. Then, add in $367 for labs at 350% of Medicare prices. Combine visits, labs, and drugs and the patient pay amount is $2655.

But some things are still missing. Most people on a basal insulin also take a rapid acting insulin during the day on an as needed basis. In fact, according to his earlier article, Dr. Rice’s regime includes one or two doses of Novolog each day. Because Novolog, like other rapid acting insulins, has a short half-life, a user is instructed to discard his pen (or vial) every 28 days. This means any regular Novolog user, even one using a small amount, will require at least 13 Novolog pens per year. The most heavily discounted price of Novolog works out to more than $26 per pen, $345 per year.

Bingo! $345 + $2655 = $3000. Someone just like Rice, but sadly not Rice himself, will meet his deductible every year.

And that will be helpful, because there still more items that need paying for.

Insulin pens require pen needles. For one daily dose of Tresiba and one or two daily doses of Novolog that’s about 900 needles a year. They come 90 or 100 to a box. That’s a hundred dollars a year, rock-bottom. Patients who have met their deductible, are probably getting at least $75 dollars worth of help. Then, there’s the cost of testing supplies. Even at rock-bottom Medicare prices, that’s $200 a year. Patients who have met their deductible are probably getting help of at least $150 year.

For patients lucky enough to have normal insurers, their annual diabetes costs alone are likely to come to at least $3250 with $3075 OOP and an insurer contribution of $175.

And, of course, they will have only co-pays and/or co-insurance should any other expenses arise. They might cough up $600 when a $3000 bill arrives, while Dr. Rice eats the whole meal after having already paid $3250 through the DPC.

Don’t you hate it when anesthesiologists are bad at math?

An HSA break for DPC monthly fees?

Update: See additional considerations here.

HSA owners have the privilege of using before tax dollars for medical expenses but they are generally barred from using HSA dollars to pay supplemental health insurance premiums. The HSA privilege itself is usually justified by the argument that more “skin in the game” or “financial stewardship” for patient/consumers breeds cost-consciousness, reducing overutilization when compared to patient/consumer choice buffered by insurance. Giving the same break to supplemental health insurance premiums is rejected, therefore, because it takes skin out of the game.

So, why extend favored HSA tax benefits to a patient/consumer’s choice of unlimited access/subscription direct primary care plans, that carry an obvious risk of overutilization and, indeed, whose virtue is said to lie in letting patients consume heavily without incurring additional office visit fees?

The fairest answer to that question is that financial stewardship by financially sovereign patient/consumers includes their own choice of any combination of services and payment arrangements that seems best.

But that rationale proves too much, for it applies equally well to sovereign patient/consumers who choose supplemental health insurance.

DPC advocates meet this argument with semantics about whether DPC is “insurance” or “transfer risk”. But from the particular policy perspective that favors sovereign patient/consumer financial stewardship there is no significant difference between a patient who decides that the best way to navigate a high deductible insurance plan and still get needed care is to commit to a fixed subscription payment to a direct primary care clinic and a similarly insured patient who chooses instead to make a fixed payment to a supplementary insurer.

Rather than seeking better HSA treatment for direct primary care subscriptions than than is afforded supplemental insurance, direct primary care practitioners could simply provide their services entirely on a direct pay fee for service basis. So why would sound policy grant privileged HSA treatment for subscription plans justified by low barriers to utilization?

Some DPC advocates emphasize that a subscription model stabilizes practitioner income. But ultimately this stabilization relies on the statistical pooling of collected fees so that net gains on patients needing fewer services are available to offset net losses on patients needing more services. From a consumer perspective, it matters not whether payments are pooled by a provider or an insurance company.

The real reason DPC providers favor both a subscription model and favorable HSA treatment for subscription fees is the more ordinary one: both are likely to improve the bottom line of DPC providers. Fair enough.

But let’s be clear, giving HSA owners who choose DPC subscriptions a tax break specifically withheld from HSA owners who choose supplemental insurance amounts to a governmental thumb on the consumer choice scale, not some form of “health care freedom”.

That said, a tax break for DPC subscription fees might be warranted, if direct primary care subscriptions could be demonstrated to be sufficiently superior to alternatives — including direct primary care on a fee-for-service basis. Show me.

DPC + Cat is not a good substitute for full ACA Medicaid expansion

Adapted from B. Matthews, C. Crafford, and C. Queen, Direct Pay Medical Model at Access Healthcare. Presentations of a course project at Poole College of Management, North Carolina State University, Chapel Hill, NC, August 23 & September 13, 2013.

When Brain Forrest MD, the founder of the Access Healthcare direct primary care clinic, does legislative advocacy at, for example, the United States Senate, he shows the data of the foregoing chart. It’s from a 2013 course project by three NC State post-baccalaureate management students. He advocates pro-DPC legislation, apparently telling policy makers that the NCSU students found that, over a ten year period, Forrest’s patients’ total costs of care were lower than even than the lowest of the selected industrialized countries, and had remained flat at $2200 a year through Forrest’s ten years in direct pay practice.

That $2200 figure is composed from an estimate of the annual fees for subscription members of Forrest’s DPC clinic coupled with a catastrophic coverage insurance policy priced at $1750. After passing through the hands of Forrest’s allies in the public policy arena, this soon became a proposal by the Georgia Public Policy Foundation for an alternative to Medicaid expansion, for about 400,000 low-income Georgia adults, that would provide each of them with a catastrophic coverage insurance policy and a direct primary care subscription. The Foundation prices this “patient-centered” option at between $2000 and $3000 per year, a fiscal conservative’s dream when compared to the $5370 per so-called “expansion adult” projected for 2018 by CMS’s chief actuary.

But even $3000 does not come close to providing adequate funding for the health care needs of the Medicaid expansion population. The Foundation’s model, like Forrest’s claim that his DPC patients pay the lowest amounts in the industrialized world, seemingly rests on a massive error. The calculations Forrest presented reflect a patient population that carried high-deductible catastrophic policies but paid not a penny of cost-sharing for any downstream care. It is absurd to suggest that any typical patient panel will have a similar result.

Some DPC advocates seem to believe that there is some sort of “true catastrophic coverage”, under which anything beyond primary care is a “true catastrophe” for which an insurer will pay all or nearly of the total cost. Such policies do not seem to actually exist. If they did exist, the premiums would likely be quite high, comparable to those of platinum policies on ACA exchanges. In any event, a fantasy of this sort provides a foundation for the delusion that “DPC + a cat” can meet the health care needs of indigents.

To get some idea what health care for indigents might actually cost, we can start with looking at catastrophic policies as they exist, today, in Georgia. A 42 year old (average age for expansion adults) Atlanta resident can have catastrophic coverage for $3200 per year; it comes with a deductible of $8150.

It has an actuarial value of less than 60%; so, annual cost-sharing would average at least $2133 for each covered person. Adding the cost-sharing and the premium, annual expenses for a covered person of average age and with average experience would come to $5333.

Even a $3000 version of the Foundation’s program would be insufficient to pay the premium of a catastrophic coverage policy for an indigent adult of average age. And even with a “cat” policy in hand, and primary care prepaid, an average indigent patient would still need massive financial assistance to meet an average patient share of downstream care costs.

If there were sound evidence that direct primary care can actually produce net cost savings, the care of that average expansion adult might be brought below $5333. Since there is no sound evidence that direct primary care can do that, however, Medicaid expansion at $5370 completely reasonable.

Bonus Segment 1. The cost of DPC+Cat were not flat for ten years.

It is quite unlikely that the costs for Forrest’s patients at Access Healthcare, even just those for DPC fees and catastrophic premiums, stayed constant from 2002 through 2013. Medical cost inflation, per the Bureau of Labor Statistics rose about 50% over that period. An insurance policy comparable to one that cost $1750 in 2013 should have cost only $1167 in 2002.

As to the direct primary care fees at Access Healthcare, the students found that the average member in 2013 had 3.7 clinic visits, for which he would have paid $473. Dr. Forrest himself has published rates for his own practice in 2002 that would have priced 3.7 visits at $285. Forrest’s 2013 fees were actually 65% greater than his 2002 fees; he was raising fees even faster than the general rate of medical cost inflation.

Forrest’s patients’ cost curve flexes upward, like those for every country shown.

Bonus Segment 2. The $1750 premiums in the Forrest calculation reflect the exclusion of those with pre-existing conditions.

The relationship between 2013 catastrophic policies to those in 2020 is less straightforward. Above I used a $3200 policy from 2020; had it existed, the same policy if deflated to a 2013 value (using BLS information as in the previous segment) would have cost about $2600, $900 more than the $1750 in Access Healthcare Calculation.

The difference between the policy pricing is that the 2013 figure of $1750 is pre-ACA and would have been underwritten; risky customers were broadly excluded or, if allowed, were subject to exclusions and waiting periods.

Presumably, a program of healthcare for indigents requires significant parity of access for the individuals at all risk levels. One way or another, the costs of risky indigents has to figure in. Realistic “cat” pricing in 2013 would have been $2600 for a community rated policy, or would have averaged $2600 for a series of underwritten policies covering all ages/risks level in separate pools.

Bonus Segment 3. The United States’ series line in the chart above is not representative of either Forrest’s patients or the Medicaid population.

The charted figures for total healthcare cost of various nations shown above include basic medical care for the particularly expensive aged population, as well as the cost of custodial long term care for those, old or young, who receive it. In the US, these items are paid for in systems that are essentially separate from either the target Medicaid expansion population or Forrest’s patient panel.

Bonus Upshot of Bonuses.

  1. Adjust Forrest’s patients’ cost curve upward so it no longer excludes downstream care costs born by real patients;
  2. Further adjust Forrest’s patients’ cost curve upward so that it includes the cost of catastrophic insurance for the full range of real, non-aged patients, including the risky;
  3. Adjust the curve of the United Sates downward so it reflects the non-Medicare population and excludes long-term care expenses;
  4. Give the correct upward curving form to Forrest’s patients’ cost curve; and
  5. Viola — Forrest’s patients’ cost curve will look a hell of a lot like everyone else’s.

A calculus of mOOP

DPC practitioners seeking to recruit insured patients often tout that the cash costs for primary care services and/or for downstream services procured through the DPC entity (e.g., advanced radiology) might be lower than even the patient cost-share for the same services procured under the insurance policy, especially high deductible policies. Patients should, however, carefully consider that paying for service “out-of-pocket-and-out-of-plan” may entail costs that result from not having those payments count toward satisfying deductible or mOOP amounts.

Here’s an example of an extraordinary calculation involving an MD with an MBA, one largely turning on the surprising claim that, for his insurer, an insured in the deductible phase must pay full retail pricing for labs and prescription medications.

The only bona fide university study of DPC has a message: “There’s no data.”

Health Programs Group, University of Wisconsin School of Medicine and Public Health, Population Health Institute. Direct Primary Care (DPC): Potential Impact on Cost, Quality, Health Outcomes, and Provider Workforce Capacity, A Review of Existing Experience & Questions for Evaluation, October 8, 2019. On-line publication.

The thing speaks for itself, acknowledging potential and noting absence of proof.

Also makes clear that how much my own analyses misses a hell of a lot.

Not more than a quick look at this, for example, made me realize that old comparisons of OOP for DPC primary vs FFS primary – such as the one mentioned in this previous post – were likely to be shifted significantly in more recent years even further in favor of FFS because of the ACA rule barring application of cost-sharing for a list of designated preventative services. Note, too, that the bar applies to high-deductible plans.

Spin doctor says DPC saves 85%. Don’t bet on it.

In a May 2018 “Policy Position” for the John Locke Foundation, Kathleen Restrepo wrote the following:

A study conducted by University of North Carolina and North Carolina State University researchers found that patients seeking treatment from Access Healthcare, a direct-care practice located in Apex, North Carolina, spent 85 percent less on total health care spending and enjoyed an average of 35 minutes per visit compared to eight minutes in a nondirect-care practice setting.


Can you imagine that?

Did Restrepo imagine it?

Let’s carefully address her sourcing and find out.

Restrepo misrepresented the provenance of the 85% claim.

If you thought that Restrepo’s hyperlink from the word “study” to an article in a peer-reviewed academic journal would take you to an academic report of the study by a team of academic research professionals, you were wrong. Restrepo’s statement is not your ordinary reference to a piece of peer-reviewed academic research.

Restrepo gives a fourth-hand account of unpublished material by medical students and business school students engaged in course work projects. The published article by Eskew and Klink, to which Restropo provided a rather misleading link, gives a third-hand account of the research Restrepo describes; the second-hand account of that particular research comprised less than three minutes and three powerpoint slides in a meeting presentation by Dr. Brian Forrest.

The business school students’ part of the work was never compiled into a manuscript, although the students made slides and presented them in several closed-to-the public venues (personal communication with Charles Queen, one of three business student authors named by Forrest ). Forrest’s talk also included a thirty second summary of separate work by an unstated number of unidentified medical students.

Along with the identity of the originators of any work referred to, the very fact of publication and the details of publication are, of course, important initial indicators of the credibility of cited research. Even high-school students are taught to fully and accurately represent the provenance of the material they reference. Restrepo knew that the relevant work was enitirely by students (see her earlier policy piece), but eschewed revealing that telling detail to those she sought to influence. More importantly, even though the Restrepo-cited Eskew and Klink article plainly stated that the actual research was unpublished, Restrepo disguised that unpublished research by dressing it in the garb of a peer-reviewed published article.

Restrepo did not accurately convey the content of the article she cited; and that article had not accurately conveyed the content of the source it cited.

High-school students are also taught that they must accurately represent, not just the provenance of claims on which they rely, but also the substance of the material to which they refer. Yet it seems that Restrepo’s fourth-hand account may have failed even to accurately convey what was said in Eskew and Klink’s third-hand account. Eskew and Klink (“EK”) say the study showed that DPC patients “spend 85% less out of pocket for their total cost of care compared with the same level and amount of care in a traditional setting.” Restrepo offers instead that DPC patients “spend 85% less on total health care spending”. These seem to mean quite very different things. Dr. Eskew has confirmed to me that he was referring to primary care cost sharing for insured FFS patients. But primary care costs are only a part of “total health care spending”, referred to by Restrepo.

Perhaps Procrustes could fit Eskew, Klink, and Restrepo on the same page. If so, that page should be the Forrest presentation that Eskew and Klink identified as their source. But neither Restrepo’s fourth-hand account nor Eskew and Klink’s third-hand account accurately reflects Forrest’s representation of what the research team itself had to say about comparative savings cost savings for DPC versus traditional patients.

The 33rd minute of his talk was the only point at which Dr. Forrest referred to comparative cost savings of DPC versus traditional patients as determined by NCSU business students. For this, he showed a slide by those students which made exactly one cost comparsion: that of the employee share of premium for various employer sponsored insurance policies versus the full premium of a catastrophic policy ; the students computed a differential of 33%.

The 18th minute of his talk was the only point at which Forrest referred to any specific work by UNC medical students. There was no slide, but he said this, and this alone: “In fact, some work by some UNC medical students showed that people who were commercially insured actually came out of pocket 7% cheaper for the year when they came to our practice versus ten other local practices that were in the traditional model that were in network.” I have repeatedly asked Dr. Forrest for copies of any reports made these students or that he identify them; he has not answered.

Neither a 7% difference in OOP nor a 33% difference in insurance premiums bears much resemblance to the 85% reductions in whatever it was Eskew, Klink, and/or Restrepo (EKR) had written about. No 85% figure was tied to any student research finding anywhere in Forrest’s presentation. Somehow, the entire EKR trio found themselves in contradiction to the very report that announced the existence of the studies to which they referred!

Nothing could better demonstrate why it is broadly agreed that referrers should carefully examine the material to which they refer. This is precisely why the rules of citation prioritize primary reports of research results. Indeed, even when citation of secondary reports is allowed because, for example, the original source reference was physically unavailable for inspection, these rules nonetheless require full details of the original source.

The value of sharing research by citation turns on accuracy in describing both the provenance and the content of the material cited.

The 85% claim badly needed to be masqueraded as high quality research – because it is literally incredible.

Eskew and Klink’s 2015 article in the Journal of the American Board of Family Medicine declared that unpublished work by post-baccalaureate students who studied a certain direct primary care clinic in 2013 “demonstrated” that the average fee for clinic members was 85% less than the cost-sharing paid by traditionally insured patients for the equivalent care.  The 85% claim is preposterous.

The American Academy of Family Practice and affiliated groups regularly lament that 8% or less of health care costs are spent on primary care, and hold up 12 or 13% as an aspirational model. In 2013, the overwhelming majority of traditionally insured patients were covered by employer sponsored plans. These plans had an average premium of $5884 for a single adult and an actuarial value of about 87.5%, indicating average total health care costs of about $6725. Even if we apply AAFP’s aspirational 13%, the amount spent for primary care by insurers and insureds combined would be less $875. Reducing that by 85%, would mean that the direct primary care practice in question was receiving fees of less than $132 per person per year. That’s not credible.

As the NCSU students showed, however, the average member of the subject DPC practice paid fees of $473 per year.  But, in that case, 85% savings would imply that primary care spending in traditional FFS practices was $3,153, about 47% of total health care costs. That’s AAFP’s aspiration more than tripled. That’s not credible either.

And then there is Katherine Restrepo, who gilded the 85% lily by assigning that huge reduction to total health care costs, not merely primary care costs. That would mean that the DPC patients had total health care costs of $1009 dollars.  Subtracting the $473 they pay for primary care, that leaves $536 dollars for all downstream care.  But for average FFS insured, even the aspirational 13% allocation for primary care leaves 87% for downstream care – $5851. Dividing $536 for downstream care of those DPC patients by $5851 for downstream care for FFS patients suggests that the Apex DPC’s patients saw a truly miraculous 91% reduction in downstream care costs. Nowhere near credible.

In a separate post, I explain that Restrepo’s suggestion that DPC office visits can be over four times as long as traditional office visits, is equally incredible. For now, keep in mind that Restrepo apparently expects the public to believe that DPC both has vastly lower costs and delivers hugely longer visits.

If you are a doctor choosing a pharmaceutical for your sister, feel free to rely on third-hand and fourth-hand reports of literally incredible results of unpublished pharmaceutical research by Master’s level students, some unnamed. If, instead, you are treating my sister, make sure you’ve paid your malpractice premium.

Please approach the design of healthcare systems that serve our brothers and sisters across the country with some concern for credible evidence.

Spin Doctor: DPC office visits are four times as long as PPS office visits. Don’t believe it.

“A university study found that patients treated in one Apex practice enjoyed average 35-minute office visits, more than four times longer than the average visit in a more typical practice. They also spent 85 percent less money.” 

Kathlerine Restrepo, John Locke Foundation press release of March 22, 2017

As discussed in a prior post, Ms. Restrepo is spinning more than a little bit in sourcing this information to a “university study”. In this post, however, we primarily address the substance rather than the provenance of her claim of four fold increases in patient visit times.

The work to which she refers on visit length is part of an unpublished course project by three post-baccalaureate management students from NC State: Ben Matthews, Chad Crafford, and Charles Queen. Mr. Queen has told me that only the 35-minute figure came from actual field research; the eight minute figure used for comparison came from one or more publications.

It is easy to find printed anecdotes about eight minute primary care appointments, frequently in the form of recollections from a physician explaining his migration to direct primary care. There are also diatribes about how all the time of a visit does not count when the doctor looks at a computer during some of the time during that visit. But there appears to be no published research that demonstrates that eight minutes, or anything approaching it, is the average time spent by the patient with the physician during an appointment at typical primary care practices.

Instead, there is fully documented and broadly accepted survey work from the professionals engaged by the respected Centers for Disease Control that shows that the average primary care visit around the period covered in NCSU work was 23.5 minutes. This measurement is essentially identical to that attributed in the AAFP’s Family Practice Management issue reporting on AAFP’s Family Practice Profile for 2015. That measurement would suggest that appointments at the Apex clinic are a bit under 50% longer than typical primary care visits. That’s still a feather in the Apex practice’s cap; it is also, as we will see, a fairly plausible outcome for an insurance-free practice.

What is not plausible is that any direct primary care clinic, even the one in Apex, actually delivers a four-fold increase in patient visit duration over traditional practices.

DPC advocates place their ability to deliver longer patient visits on their ability to reduce overhead. But how much overhead is there, and how much can it be reduced?

A 2014 quantitatively detailed, peer-reviewed academic study of “Billing and insurance-related administrative costs in United States health care” concluded that billing and insurance-related costs in physician practices amounted to thirteen percent (13%) of gross revenues. This works out to be about 22% of the estimated 60% overhead expenses (see here and here) for family practice physicians. 

So, while a traditional practice would divide $100 of revenue into $60 of overhead and $40 for the practitioner, eliminating all billing and insurance would increase the funds retained by the practitioner from $40 to $53. That would allow an average physician to boost appointment duration by about one-third (1/3).

That boost would bring average patient visit duration above 31 minutes, a number that might reasonably taken as confirming the 35 minute visit duration determined by the NCSU students for the no-insurance clinic in Apex.

Still, pro-DPC activists regularly assign a much higher percentage of overhead to billing and insurance costs; at least one advocate suggests that as much as two-thirds (2/3) of overhead goes to billing and insurance. Let’s look at some possibilities that I’ve developed with the aid of a spreadsheet.

Assuming that half the overhead of a practice can be eliminated, then the amount of funds left for the practitioner would increase from 40 cents to 70 cents on the dollar. Doing so would let the practitioner spend 75% more time with her patients without a loss in revenue. And, while that might be a considerable achievement, it comes nowhere close to quadrupling visit lengths.

Even were it possible to eliminate all overhead, the effort would not generate visits that were four-fold longer.  A practitioner who gets to keep 100 cents on the dollar instead of 40 cents can still only spend two and one-half times as long with her patients.

To spend four times as long with his patients, an average practitioner would have to reduce overhead by 200%. A physician would have to “keep” 160 cents on the dollar to get that result. Instead of the physician paying $32,000 per year for an assistant, the assistant pays $32,000 per year to the physician!

A physician could, one supposes, reach 160 cents on the dollar by increasing patient charges. So keep in mind that Ms. Restrepo asserts that the Apex practice manages, not only to quadruple normal visit times but, to lower patient prices by 85%.

Marshall on Dershowitz; or is he talking about me on DPC?

To put it baldly, if it’s a topic and area of study you know nothing about and after a few weeks of cramming you decide that basically everyone who’s studied the question is wrong, there’s a very small chance you’ve rapidly come upon a great insight and a very great likelihood you’re an ignorant and self-regarding asshole.