Direct Primary Care Funding Trends Upward
Private-sector funding for primary care clinics is increasing, as companies seek new opportunities for investment in the $3.5 trillion U.S. health care market.
One Medical, a primary care provider that offers concierge-style health care services giving patients off-insurance treatment for a flat membership fee, announced a $350 million investment from private equity firm the Carlyle Group in August. Having previously garnered funding from firms such as Benchmark Capital, Google Ventures, Maverick, and JP Morgan, One Medical says it plans to double the numbers of clinics and members under its umbrella.
Concierge medicine offers health care to insured individuals who wish to have a better relationship with their primary care provider and are willing to pay a monthly fee. The monthly cost of concierge medicine is usually around $200 per month, on top of insurance payments, but some doctors charge tens of thousands of dollars per year. Concierge services provide medical care to patients 24 hours per day, seven days a week; provide contact information for easier access; make same-day appointments; and stay with a patient as long as it takes to meet his or her medical needs.
Concierge services, which began to grow in popularity in the 1990s, are a kind of direct personal care agreement, but their reliance on health insurance in addition to monthly service fees makes them more expensive than other forms of direct personal care, such as direct primary care (DPC) agreements, which usually cut out health insurance companies from primary care practices, reducing costs and allowing doctors to treat a greater number of patients.
Carlyle Group Managing Director Ram Jagannath says the company’s investment in One Medical is part of an attempt to repair a broken system.
“The primary care system in the United States is broken, and One Medi- cal is the brand poised to help fix it,” Jagannath said. “We have partnered with One Medical because of their prov- en innovative model and track record, outstanding providers and leadership team, and significant business momentum. One Medical pioneered the concept of a more modern primary care experience, and it has an incredibly exciting roadmap over the next several years.”
One Medical will ultimately serve nine U.S. markets and has relation- ships with more than 1,000 mid- to large-sized employers. It focuses on primary care and digital health care. Of the $350 million expected to be invest- ed by the Carlyle Group, $220 million will be a direct investment and another $130 million will go toward buying shares from existing investors.
In June 2018, investors secured $165 million to expand Paladina Health, which operates 53 primary care clinics across 10 states.
One Medical CEO Amir Dan Rubin says the company’s goal is to simplify the primary care doctor-patient relationship, to make it more efficient and rewarding for both parties.
“From the time of our founding, ... we have been on a mission to create an entirely new kind of primary care experience, one that starts with people,” Rubin said. “We call this ‘real-life care.’ Through our incredible clinical team, technology platform, and inviting and accessible medical offices, we simplify the complex world of care for members every day. We believe that no detail is too small to make health care more effective, efficient, and dare we say, enjoyable.
“Our latest plans are to bring this unique One Medical experience to more consumers and companies across the country and add fuel to our aggressive growth plans,” Rubin said.
Improving Doctor-Patient Relationships
Another primary care option experiencing rapid growth is the direct primary care model. DPC, like the concierge- style health care offered by One Medical, seeks to build a better relationship between patients and providers, offering longer office visits and basic primary care services.
Under a DPC model, patients are charged a low monthly fee, often just $50 per month. In return, patients receive a predetermined number of services, including office visits, various tests, and vaccinations. Because DPC agreements only cover primary care services, DPC providers encourage their patients to also enroll in a catastrophic health insurance plan.
A primary reason DPC models are so affordable is because they remove health insurance companies, a costly third-party insurance middleman, from their agreements by contracting directly with patients. This allows practices to eliminate the insurance requirements related to claims, coding, claim refiling, write-offs, billing staff, and claims-centric electronic medical records systems.
Dr. Joel Bessmer, founder of Strada Healthcare, a direct primary care clinic in Nebraska, says direct primary care is based on the belief patients can pay for doctor visits themselves. Bessmer says the modern health care delivery system undermines the critical relationship between doctor and patient. “The concept of primary care is that patients shouldn’t have to pull out their insurance card for non-life-threatening doctor visits,” Bessmer said. “Under our model, patients pay a flat monthly fee and they’re covered for most primary care needs."
"Our theory is that everyone needs primary care at some point, and the best way to provide it is to make it as inexpensive as possible and allow unlimited access to a familiar provider,” Bessmer said. “We have established cash prices for imaging, X-rays, and MRIs, and we are beginning to discuss how to work with the state [government] on a solution for Medicaid patients.”
‘We Have the Data’
Bessmer says Strada recently published a white paper on an employer that gave its workers the option of enrolling in the Strada DPC program. The employees who chose to participate in the DPC program had better health outcomes than those who did not, Strada found.
“If a patient has better access to primary care, they are going to be healthier,” Bessmer said. “And we have the data to prove it.”