Concierge medical practices

The Major Business Challenges of Concierge Medical Practices

It’s a fact in the last decade that we have a shortage of doctors in the US and many physicians are now dealing with many more patients than they were and having to work longer (in the day and the week) to see them all. In fact, it is now not uncommon to see a doctor with 2,000 to 3,000 patients, which makes it harder to maintain quality and, just as difficult, to establish close personal relationships with all of them.

As a result of these pressures (and with the added impetus of falling average physician wages as reimbursement income has fallen) there has been a strong trend, in the last 5 years in particular,to cut down on the number of patients seen and to provide a more personal service, not to mention better quality care –this has become known as providing a “concierge medicine” service.

Although it’s not an exact number, partly because some practices start a concierge practice as an ancillary service, it is estimated that there are already around 6,000 concierge doctors in the U.S, with many more doctors looking to head in this direction on the near future. Although the business model varies a little, in broad terms, concierge practices generally require each patient to pay an annual fee, with the fee payable monthly, quarterly or annually. The number of patients in the doctor’s practicerostertypically drops dramatically, often to 1,000, 500, 250 or in a few cases to as low as 100 patients. This allows concierge doctors to offer patients same-day or next-day appointments and even access 24/7.Annual fees run anywhere from $50 to $2,000 a month (and even higher in some very rich suburbs) with $150 to $295 per month being the average range for most doctors.

Of course, transitioning to a concierge medicine model does have its challenges, such as the following.

Getting the right number and quality of patients
In order to maintain current revenue, and perhaps to slightly increase it, doctors need to think carefully about the number of patients they need to have and then make sure that they are the “right” ones. For example, some patients may abuse their newly provided “ready access” to the physician. In addition, some patients may sign up with more many ailments and the need to come into a clinic or practice much more frequently than average. This means getting the right patients numbers and quality of clientele is critical to try to control and get right.

Getting the Price Right
As we have already said, monthly or quarterly fees for concierge medicine vary greatly and will depend upon enough people in a doctor’s catchment area having the ability to pay the fee that is charged. This needs careful research and to be then set to ensure the target numbers of reasonably healthy patients (or at least in average health) can be signed up and kept renewing every year. 250 patients paying $195 a month, for example, grosses $585,000 a year for a doctor but these patients are likely to want better service for this fixed price, whether they use the services or not, which will mean added costs to be taken into consideration.

Setting an appropriate level of service and cost structure
The concierge model promises patients not only better and faster access to their chosen physician but a superior level of service altogether. This might include unlimited email access, telemedicine options, better technology in the practice, faster turnaround of tests and better nursing care, just to name a few. All of these added services have an incremental cost implication and these need to be carefully calculated to ensure that the switch is a profitable one for the physician.

Dealing with Insurance regulations
Although most concierge medical practices are cash-based and do not have insurance as a major concern, insurance should not be ignored, as it is an additional income stream. However, this introduces a challenge, as there is the potential for double billing or charging for care submitted to the insurance company or Medicare in addition to charging the concierge fee. Concierge doctors should therefore make sure their monthly fees do not overlap with specific procedures that are charged to insurance.

An Increased Need for Marketing
Perhaps one of the most challenging aspects of moving towards a concierge model is marketing. The first challenge is to use effective marketing methods to educate those existing customers you want to be included within the concierge patient numbers that this is a better option for them. However, it may well be that a practice will want to reach out to new patients, which fit the profile, and to do this a doctor may need referral partners (to get to higher net worth individuals) or new relationships with local companies (to reach out to their senior executives and managers, for example). But whatever marketing strategy is adopted physicians clearly should be planning carefully.

On the surface, a concierge model of medicine offers the promise of a better quality life, better relationships with patients and the same or better annual income earned in less time for the physician. And even for the patient, access and service may be much better than they had before. However, despite these advantages, there are many challenges to think about before the transition is made. RX4 has experienced all of these concierge medicine transition challenges in many different healthcare environments and can provide considerable insight and options where the knowledge is limited or does not exist internally.

Dr Jon Warner

Dr. Jon Warner
CEO-RX4 Group-Taking Care of the Business of Healthcare

Jon is the CEO of RX4 Group based in Los Angeles, California. He can be reached at

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