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Feb 2004
01
February 01, 2004

Concierge Medical Practices Expanding Across the Nation

Quietly emerging across the country are a handful of unique medical practices. Some call them revolutionary and long overdue; others brand them as unethical or, at the least, not in the general public's best interest. But one fact remains:  Concierge medical practices are steadily growing in numbers and captivating the public's attention in the process.

The topic of so-called "boutique," "retainer" or "concierge" medical practices is being picked up by the national media, discussed by physicians in hospital corridors, and debated in the halls of Congress and the Harvard Medical School. Letters to the editor concerning concierge practices are cropping up across the country, from the New York Times to Delaware's modest Cape Gazette. Even the new law overhauling the Medicare system, the Medicare Prescription Drug Improvement and Modernization Act of 2003, addresses concierge medicine. The law requires the Government Accounting Office to study concierge medicine and then issue a report to Congress.

The History. Concierge medical practices were the brainchild of a former team doctor for the NBA's Seattle Supersonics. After seeing firsthand the remarkable level of service provided to professional athletes, the doctor founded MD2 (pronounced "MD Squared") in 1996 in Seattle, Washington, to provide the same kind of services to nonathletes. The idea underlying MD2 resonated with overworked, understaffed physicians who found themselves being stretched to the breaking point by the rigors, quotas and financial limitations of managed care.

What began as a solitary, platinum-plated, Ritz-Carlton-like medical practice in Seattle has now moved into the limelight—and, increasingly, more into the mainstream. Following on the heels of MD2, a small number of doctors began concierge practices. Today concierge practices are operating in nearly half of America's 50 states.*

How Do Concierge Practices Work? Physicians charge patients a fee in exchange for more personalized and convenient health services. Such services often include guaranteed same-day or next-day appointments, no waiting time at office visits, in-depth medical evaluations, customized health care and lifestyle plans, around-the-clock access to physicians via cell phones, pagers, and e-mail, coordination of care with specialists, and even house calls.

While all concierge practices share similarities, they vary widely in their structure, payment requirements, and form of operation. In particular, they differ in the level of service provided and the amount of the concierge fee charged. While some concierge physicians (including MD2) charge well over $10,000 per patient per year, others charge considerably less. Some practices provide service for both concierge and non-concierge patients, while others see only concierge patients. Some accept Medicare and traditional insurance coverage, while others do not. Several concierge practices have begun "franchising" their operations.

So What's All the Noise About? While at first blush they may seem to be little more than a medical novelty, concierge practices raise a host of ethical, legal, and medical issues that have stirred controversy.

Arguments in Favor. Among the most common reasons cited by physicians for making the switch to a concierge practice is their desire to spend more time educating and treating their patients. To them, concierge medicine represents a return to old-fashioned medicine. They cite as examples the opportunity a concierge doctor has to accompany a nervous patient to meet with a specialist, or to spend time with a terminally ill patient and her family in the waning hours of life. By reducing their patient load, concierge physicians are freed up to practice medicine in a more personal and caring fashion.

Some concierge doctors also argue that they are able to provide not only more personalized treatment to their patients, but also truly superior treatment. Concierge doctors indicate that they are able to spend more quality time listening to and treating patients, and less time worrying about paperwork, red tape, and coverage restrictions. Moreover, the physicians are able to focus on wellness and prevention instead of treating health problems after it is too late.

Another common thread that emerges from the collective experience of concierge doctors is that their new practice has enabled them to regain control of their health care practices—and their lives. More time at home with family. Increased salaries. More time for research and perhaps recertifying in specialty fields. Less harrowing and grinding daily routines. Fewer burned-out family practitioners.

On a more pragmatic note, physicians say that another reason they made the jump to concierge medicine is because of patient demand. Simply put, many patients are clamoring for a more personal, convenient, and effective form of health care. The numbers seem to bear this out. Physicians who make the switch seem to be filling up their patient rosters with patients who are happy to pay the concierge fee. Defenders of the idea argue that concierge medicine provides a desirable option for many who seek a different type of health care.

Arguments Against. Notwithstanding the benefits many attribute to them, concierge practices have vocal detractors. Charges of "country club" elitism and favoring the rich at the expense of the poor are routinely made. Some believe physicians should be obligated to provide the same health care services to every patient—regardless of one's ability to pay. Perhaps more stinging is the claim that with between 40 and 50 million uninsured Americans, a physician's decision to drop his or her patient load from 4,000 to 800 is almost unconscionable. Rather than helping the system, critics argue, concierge practices merely increase the burden shouldered by other physicians who remain behind in the trenches.

Some critics have denounced concierge medicine as injurious to America's system of health care. "Change is inevitable, but a change toward elitism in the delivery of health care is pernicious," Professor John Goodson of the Harvard Medical School observed in a letter to the Boston Globe. "It undermines the most fundamental commitments of our profession."

AMA Guidance. In June of 2003 the American Medical Association (AMA) issued ethical standards to guide physicians who operate or are contemplating concierge medical practices. The AMA largely endorsed these practices so long as physicians communicate clearly with patients and insurers about their fee arrangements and do not tout their practices as providing better diagnostic and therapeutic services.

Regulatory and Legislative Criticism. Criticism of concierge practices has not been limited to academic circles and media outlets. Insurance regulators in a handful of states have scrutinized concierge practices. Proposed legislation seeking to limit these practices has surfaced in a few states. A small cadre of Congressmen in Washington, D.C., has also cast a skeptical and wary eye on these types of arrangements.

Among other claims, the Congressmen have asserted that certain concierge arrangements may violate Medicare billing laws and the federal False Claims Act. To address these perceived abuses, they have introduced federal legislation aimed at preventing certain concierge doctors from receiving Medicare payments. Although all these bills have fizzled thus far, it remains to be seen whether a similar bill in the future will eventually become law.

In addition to proposing legislation, several Congressmen petitioned the Department of Health and Human Services ("HHS") to clarify the law regarding concierge practices. In May of 2002, HHS responded that concierge practices, if properly structured, do not conflict with Medicare's requirements. HHS further indicated that physicians may proceed with concierge arrangements, but "they are responsible for complying with Medicare requirements. [HHS] will advise physicians contemplating use of such agreements to seek legal counsel ensuring that the agreements comply with the law."

Concierge medicine implicates a number of complex state and federal issues. Before physicians throw their hats into the medicine concierge ring, they should carefully evaluate the legal and regulatory issues underlying the decision.

Conclusion. Notwithstanding the controversy that has encircled concierge medicine, an increasing number of physicians across the country are deciding that such practices make sense for them. Patients with their pocketbooks open appear to be following them. In the view of many, concierge medicine is no different than choosing to fly first class, buy a luxury vehicle, or order a satellite dish TV package with hundreds of channels. Certainly the debate will go on. In the meantime, watch for an increasing number of physicians to give concierge medicine a try. If you have questions about, or would like additional information concerning, concierge medical practices, contact the Concierge Medicine Team at Warner Norcross & Judd.

*States that have existing concierge practices include: Alabama, Alaska, Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New York, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Texas, Virginia and Washington.

John R. Marquis is a partner in the Holland office of Warner Norcross & Judd specializing in concierge medical practices, business and tax law, health care law and closely held businesses. He may be reached at 616.396.3054 or jmarquis@wnj.com. Because each situation is different, this information is intended for general information purposes only and is not intended to provide legal advice.

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For more information on concierge medicine, go to the Society for Innovative Medical Practice Design website at http://www.simpd.org.


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