Letters to the Editor  |   April 2006
Let the Beauty of the Marketplace Benefit Healthcare
Author Affiliations
  • GARRISON BLISS, MD President
    Society for Innovative Medical Practice Design Seattle, Wash
Article Information
Ophthalmology and Otolaryngology / Practice Management / Preventive Medicine / Professional Issues
Letters to the Editor   |   April 2006
Let the Beauty of the Marketplace Benefit Healthcare
The Journal of the American Osteopathic Association, April 2006, Vol. 106, 214-215. doi:10.7556/jaoa.2006.106.4.214
The Journal of the American Osteopathic Association, April 2006, Vol. 106, 214-215. doi:10.7556/jaoa.2006.106.4.214
To the Editor:  
I was interested to read the article on concierge care in the November 2005 issue of JAOA—The Journal of the American Osteopathic Association (Linz AJ, Haas PF, Fallon LF Jr, Metz RJ. “Impact of concierge care on healthcare and clinical practice.” 2005;105:515–520). The authors provided a balanced presentation of the usual points brought up about this subject in the press and in other published journal articles since the 1990s. However, there are important additional points that are rarely made and that I think warrant mention. 
First, monthly fee practices and similar financial arrangements between physicians and patients (which all may be considered types of “concierge care”) represent the first serious effort in the past 25 years to create a genuine marketplace for medicine (ie, a place where physicians and patients mutually control the price, availability, and quality of care). Control of pricing has been gradually eroded by increasingly restrictive health insurance contracting practices. The “hold harmless” clauses in health insurance contracts were originally designed to protect patients against the insolvency of insurance carriers.1 However, with the advent of preferred provider organizations (PPOs) in the 1980s, this contract language changed to give the insurer the additional right to determine the price of medical services and to constrain physicians from billing patients for the difference between the physician's charge and the insurer's maximal allowance (except for copays and deductibles, which are also determined by the insurer). 
It originally appeared as if the regulators and insurers agreed that PPOs would be a good way to reduce the ongoing inflation in healthcare costs. In reality, however, insurers can make more money if the price of healthcare is higher, because a substantial portion of their income derives from investing the temporarily pooled money they have collected for reimbursing healthcare costs. 
Despite the enhanced “hold harmless” clauses, which have become standard fare in health insurance contracts in the United States (certainly in all PPO and health maintenance organization contracts), the price of US healthcare has skyrocketed, particularly since the inception of the Medicare program in the 1960s.2 Inflation in healthcare services has outstripped the rate of growth of the consumer price index by a whopping 50% since 1965 and by 70% since 1980.2 When physicians cannot control their own prices, how can patients—who used to carefully monitor healthcare costs in the days prior to widespread health insurance—exert any influence on costs? Insured patients have had little incentive to demand lower prices, so they have rarely done so. However, if patients have little control over the cost of healthcare, they also have little control over the quality of care and services provided to them. 
Physicians have not actually worked for their patients for at least the past 30 years, since health insurance became common. Instead, physicians today work primarily for their employers, insurers, or the government—and the quality of care reflects this fact. 
Physicians spend inordinate amounts of time and money trying to satisfy the requirements of insurance companies. The cost of billing in many medical offices may exceed 25% of receipts, if one includes the costs of dedicated computer billing systems, excessive physician time spent on documentation, additional employees, delayed reimbursement, and complex electronic communications equipment to allow direct billing of insurers. Physicians are forced to study the fine points of billing codes in lieu of the fine points of medicine. Those physicians who spend extra time with patients and do the hard work of preventive medicine are paid the same as those who herd patients through the office like cattle. 
As Linz and his colleagues appropriately point out in their article, patient satisfaction rates of less than 50% are a verifiable feature of the current system. Thus, the advent of a marketplace in which patients can purchase healthcare directly from physicians should be greeted with celebration from the medical community, government officials, and the public. The beauty of the marketplace is well known and time tested. The predictable evolution in market systems is toward increased consumer and vendor satisfaction, lower prices, greater availability, higher efficiency, improved services, and constant innovation. The current, traditional system of healthcare, by contrast, provides all the wrong incentives, and its outcome is also predictable: ridiculously high inflation, physician and patient dissatisfaction, glacially slow rates of adopting new technology, and constant roadblocks to innovation and improvement. 
A second important point that should be made about concierge care is that monthly fee practices need not be available only for the rich. I have seen subscription rates for such practices in Seattle as low as $35 per month, for plans that provide patients with extra access to services and greater availability of physicians. When Mitchell Karton, MD, and I opened our retainer practice in 1997, we charged $65 per month for inclusive internal medical services, with no additional charges to patient or insurer for other in-house medical care or laboratory services. 
Many critics and pundits have chosen to ignore such lower-priced models of concierge care, most likely because these models do not fit well with their arguments that monthly fee practices foster inequality in the provision of healthcare.3 However, what sane American would object to physicians providing same-day care, longer visits, understandable fee structures, and greater attention to preventive care? 
Some critics object that the services provided in monthly fee practices are not universally available for free. Unfortunately, nothing worthwhile is free. If these services are not provided within a market-based environment, they will become increasingly expensive, awkwardly administered, rarely updated, and ultimately rationed as the cost of the system spirals out of control. 
A third major point regarding concierge care is that people in the United States have labored for 50 years under the delusion that health insurance is healthcare. But it is not. Health insurance is simply a promise to pay for some portion of the cost of care. Insurance as a management vehicle for care is severely flawed. Insurers have not—and cannot—measure the quality of the services they are buying with any accuracy. As a result, there is little incentive to improve the quality of those services. 
For better or for worse, the only people who have an informed opinion about the quality of healthcare are the doctor and the patient. Neither is consulted by the health insurance industry in any meaningful way. This is not to say that insurance doesn't have a place in healthcare. Obviously, health insurance is an invaluable aid in preventing financial devastation for the seriously ill. It is time, however, to acknowledge that insurers cannot reproduce the laudable aspects of a well-tuned marketplace. 
Concierge care (or whatever name one chooses to call it) represents the first step in enrolling physicians and patients in a marketplace that will benefit them both. This movement has overcome significant resistance from insurers, the press, and the government, both at the state and federal levels.47 The success to date of more than 250 physicians in monthly fee services (a conservative estimate based on membership in the Society for Innovative Medical Practice Design and MDVIP Inc, the leading franchiser of concierge care) has proved that patients are attracted to this type of healthcare model. In November 2005, MDVIP, of Boca Raton, Fla, was recognized as one of the fastest growing companies in the United States, with a sales growth rate over the previous 3 years of 1814%.8 
In light of such successes, even the detractors of monthly fee practices should be compelled to admit that something that satisfies the needs of both patients and physicians may not be all bad. 
Akula JL. Insolvency risk in health carriers: innovation, competition, and public protection [review]. Health Aff. 1997;16:9–33. Available at: Accessed March 23, 2006.
US Dept of Labor Bureau of Labor Statistics. Costs of medical care services, 1965–2006. Available at: Accessed March 23, 2006.
Hoffman W. Fed up, some doctors turn to `boutique medicine. `ACP-ASIM Observer. October 2001. American College of Physicians-American Society of Internal Medicine Web site. Available at: Accessed March 6, 2006.
Sharpe A. Boutique medicine: for the right price, these doctors treat patients as precious. Wall Street Journal. August 12, 1998: A1.
Warner Norcross & Judd. Letter from Waxman et al to Thompson and Rehnquist. March 4, 2002. Available at: Accessed March 23, 2006.
Warner Norcross & Judd. Letter from Thompson to Waxman. May 1, 2002. Available at: Accessed March 23, 2006.
Wash HB 2404: An act relating to retainer health care practices; amending RCW 48.44.010; and adding a new chapter to Title 48 RCW (January 3, 2006).
MDVIP's scorching growth rate lands company in Inc. list; November 2, 2005. Birmingham Business Journal Web site. Available at: Accessed March 6, 2006.