Matthew Holt & Claude
You may remember that a few weeks ago I provided Claude with a few messages about THCB and my entire work and asked him to write about it. My thoughts were about 70%, and my writing tone was about 50%. I’m trying it again. This time I spent about 20 minutes giving lots of hints and editing through some of my Linkedin posts and comments. Isn’t this about 85% my thoughts and 70% my tone? I rewrote something in every paragraph. But it’s much faster than writing it from scratch. So, I plan to continue this experiment for the time being.
It started with a LinkedIn post by Merril Goozner about his plan to cut healthcare costs. He points out that the Center for American Progress’s new 10-point health reform plan is closer to gradualism and, worse, too boring for anyone to pay attention to. Gouzner’s own proposal to cap out-of-pocket expenses isn’t very good. We’ve spent nearly a century proving that piecemeal reform of American health care doesn’t work. Tens of millions are still uninsured, patients are still bankrupt, and outcomes lag most developed countries. Of course, this allows profiteers to extract enormous wealth from the system. That is, from us.
My alternative is to go to the barricade and blow everything up. A revolution is necessary because moderate evolution is impossible.
My proposal, which you should read, is to give everyone a voucher for primary care, but switch to concierge care for all.
The post received some backlash, and some of the objections revealed important facts. My thoughts are not that complicated, but too many of us are too deeply entrenched in a broken system to see beyond it. And to be fair, it wasn’t until 35 years later that I developed a “burn it all” religion.
my basic idea
What I propose is concierge care for everyone. Every American receives a voucher worth between $2,000 and $3,000 per year, which he or she must use at a primary care physician (or attending physicians) of his or her choice. Each PCP or equivalent serves a panel of approximately 600 patients. This is about one-third to one-quarter of what a typical fee-for-service PCP clinic administers today, and is the same as most modern direct primary care clinics.
Annual revenue per physician ranges from $1.2 million to $1.8 million. That’s enough to pay doctors $500,000 to $600,000 a year, leaving $600,000 to $1.3 million for clinical staff, technology and overhead. This is basically the MDVIP model. It works. People who use it love it. And a recent study found a significant (31%) reduction in hospital emergency room use and inpatient costs. This alone can save you a significant portion of the cost of switching.
In this model, most of what PCPs do is manage chronic conditions such as diabetes, high blood pressure, heart disease, and COPD. This is a condition that drives most healthcare spending but is difficult for current systems to manage. Well-resourced primary care practices, freed from the shackles of volume-based billing, can do this proactively and deploy the technology to do it at scale. Remote patient monitoring, AI-assisted care management, and continuous data from wearables and home devices—tools that are working well for many digital health companies—all integrate directly into primary care. PCP organizations are purchasers of these technology services. This is essentially the logic behind CMS’s new ACCESS program, except that ACCESS attempts to add these features to the system from the outside. In this model, because PCPs want to manage patients and have the professional ethics and responsibility to do so, they are included in primary care practice.
I would like to include more mental health and dental care in the definition of primary care as well as light urgent care. Although it has historically been assumed that the head is not connected to the body and that the teeth are external to the body, many primary care groups in the United States and elsewhere now do so.
What you don’t have is equally important. There are no copays, coinsurance, deductibles, or charges. There is no staff to manage all that bureaucratic waste. Your PCP will manage your care, know you well, and refer you to specialists, scans or surgery when you need it.
What about specialty care?
Gary Levin asked the question: What do you do with specialty care? My answer is that specialists and hospitals operate on a fixed global budget allocated by governments, just like they operate in most other countries. Of course, we’re spending a lot more money than they are, so we’ll get higher paying specialists and better care. We will not pay hospital executives like we do Cy Young Award-winning pitchers.
We will maintain our existing organizations, including academic medical centers, community hospital systems, and specialty physician practices. We will stop paying per transaction and start funding ourselves as an institution. Everyone gets paid. No one has any incentive to overtreat.
Importantly, no one has an incentive to refuse treatment. Specialists compete for reputations and outcomes that are transparent to PCPs, who control referrals. That’s actually a healthy competitive dynamic, but that’s not the case right now.
but “Please guide me through the billing process.”
Lori Block refused funding and asked to explain what happens when someone needs heart surgery. What about the claims? conclusion. No claims
So if your PCP finds a problem with your heart and it’s outside the scope of practice, don’t forget what Bob Wachter says about AI making your PCP as smart as a professional. They will immediately refer you to a cardiologist via telemedicine or send you straight away for a scan. Specialists, imaging facilities, radiologists, etc. operate according to local budgets for specialized care. The cardiologist will order imaging, consult with your PCP, and decide with you whether surgery is needed. You will go to the hospital for treatment and then be recommended the level of nursing or home care you need.
By the way, most of this is happening today and is already being heavily funded by the government. The only difference is that hospitals have no incentive to find high-margin surgeries and encourage doctors to perform more surgeries.
We are also saving on administrative costs. At no point does anyone send a bill to the patient. Under no circumstances will the insurance company’s utilization management team determine whether a procedure meets the criteria for “medical necessity.” The patient has no idea that the anesthesiologist has gone out of network six weeks later. It’s not going to cost billions of dollars. There is no need to invest tens of billions of dollars in RCM.
In this scenario, there are no claims because there is no claims-based system. There are simply experts who make clinical decisions, supported by a global budget.
What about insurance companies and hospitals?
Lori also raised a bogeyman question. Isn’t this just government paid health care? Yes, that’s right. However, 70% of the sales and almost all of the profits of large insurance companies already come from the government. The same goes for large hospital systems with a byzantine system of federal subsidies: Medicare, Medicaid, and ACA subsidies. We are already paying for this.
Todd Guren directly raised the question of insurance risk. If you eliminate the insurers, who will absorb the $50 million claim? The answer is: In a system where hospitals and specialists operate on fixed budgets and cannot set prices, there is no $50 million bill. Those numbers are an artifact of the current system. The federal government is taking a disastrous risk, in fact already doing so.
Do you have enough primary care doctors?
Jeff Goldsmith, a health futurist and the man who convinced me that value-based care doesn’t work and that we can rely on doctors’ work ethics, raised the sharpest objection. Where do PCPs come from? Approximately 600,000 primary care physicians would be needed across the country to see 600 patients each. There are currently about 250,000. This is a real gap, and with 23% of current PCPs already over 65, the numbers are currently decreasing.
But the solution is hiding in plain sight. There are approximately 100,000 to 150,000 physicians practicing internal medicine and emergency medicine who could transition to primary care without much friction. And there are 400,000 nurse practitioners in the United States, many of whom already work as primary care providers.
Of course, there are many experts who major in specialized medicine because there is money in it. Many people will switch to a PCP when they realize that they can make $600,000 a year working as a PCP with a manageable panel and the ability to manage a patient’s entire health without the hassle of insurance issues. Financial incentives have created the workforce distortion we are experiencing today. Financial incentives can solve the problem. Needless to say, we can change some of the rules around interstate medical practice and give patients better tools to manage their health. Not all specialists will quit to become generalists, but many will.
We’ve spent 40 years proving that gradualism in American health care policy doesn’t work. Americans know the system sucks. All we have to do is explain how to solve the problem through excellent concierge management.
Matthew Holt is the publisher of THCB and Claude will soon either create a prosperous world or destroy humanity. (delete if applicable)
