It’s called “capitation” – and it’s nothing new
I get a real kick out of the headlines proclaiming that some primary care practice was “fed up with insurance” and was going to only charge patients directly, and spend all the time “needed” in an office visit. These practices claim that they are great for people who can’t afford health insurance or to see a doctor.
Excuse me? In these practices, often dubbed “concierge” or “cash only” practices, the patient pays some sort of flat monthly or yearly fee, often a per visit fee. The practice does not bill insurance. The fee also does not cover the expensive stuff – hospital care and specialty care.
The argument is that since insurance companies aren’t involved, the physicians won’t rush patients through.
Now a new twist: In Seattle, something called Qliance. According to the Reuters report, the company just raised $7.5 million in venture capital. “Co-founder Norm Wu said per-patient revenue is triple that of insurance-based clinics. He said many costs are fixed so the firm, now losing money, will turn to profit as business grows.”
Qliance uses a separate medical management company – remember those? – as the vehicle to raise capital and expand.
From their website:
Qliance charges a monthly fee ($49 to $79) for unrestricted, 7 day a week access to a Qliance provider. Qliance features same or next-day appointments for urgent care, unhurried 30 to 60 minute office visits, 24 hour phone and email access to a physician and the convenience and cost savings of an on-site x-ray, laboratory and “first-fill” prescription drug dispensary.
Ah – the convenience of on-site x-ray, lab and basic pharmacy. Imaging and labs can readily add several dollars of pure profit to the practice’s revenue.
This is capitation, pure and simple. Rather than buying a pure insurance product, the patient is paying for limited services only available from Qliance, and hospital services (such as they are) are only at one Seattle hospital.
Qliance claims that 40 percent of revenue is consumed by insurance billing and collection. If that’s the case, no wonder they weren’t making any money. Nationally, overhead for a primary care practice runs about 40 percent on average. That’s all overhead, not just billing and collection.
Let’s do the math for a family of four: four times $50 a month (59 for parents, 39 for kids) is $200, or $2,400 per year. Catastrophic insurance? $400 a month for an individual – assuming they meet underwriting criteria. Let’s say $ 800 a month for the family of 4. Plus out of pocket. And the savings are…..where?
Want to go insurance free? Fine. But don’t feed this nonsense to patients and the press that this is a good thing for patients. It’s financially great for the practice (and here, the investors), but of questionable benefit to the patient. And if your overhead is out of control – get it in control.