Landing DPC Employer Contracts, Part 2: Getting Employers to See the Value of DPC

There’s nothing that can take your direct primary care (DPC) practice to the next level like landing an employer contract, but they can seem overwhelming to negotiate. In this five-part blog series, join me as we cover the most fundamental aspects of finding, engaging, and closing deals with businesses of all sizes to get them promoting your DPC clinic as part of their employees’ healthcare.

In this second part, we’ll cover what it means to provide value to employers and how you can best convince them that the DPC model will improve their employees’ health while saving money for everybody involved. The final three parts of the series will follow soon, but if you don’t want to wait, you can download our full ebook on DPC employer contracts right now: “Secrets of Direct Primary Care: 5 Keys to Landing Employer Contracts.”

Key #2: Be Able to Show How You Provide Value

You know the DPC model and why it’s attractive, but many businesses will not. Because of this, you should make it a top priority to be able to articulate lucidly the ways in which your practice can provide value to a patient population, and you should also know how that value varies with the payment system in which those patients exist.

Primarily, you can show value to a potential employer partner by being either cheaper or better (preferably both, of course). You can control the “better” aspect of your services fairly easily, but it’s important to remember that you may not be able to make care cheaper for every business. Whether an employer is “self-funded” or “fully insured” will have an especially large impact on this latter point, and you can check out our first article in this DPC employer contract series to learn more about the crucial difference between the two.

According to Dr. John Birky of Wellspring Family Healthcare, a DPC practice in Kansas, “self-funded employers really get the DPC model. I’ve talked with smaller, fully insured employers, too, and there’s growing interest, but they just don’t have the same financial incentive to do it yet. Interest is growing, though.” Megan Freedman of the Free Market Medical Association agrees: “It’s hard to get a good return on investment for a place that’s fully insured. DPC doctors really need to go after self-funded groups, mostly.”

With this in mind, make sure that your go-to talking points for your practice include compelling items to show that you’re both better and cheaper in a variety of ways. Examples to get you thinking:

Better Care with DPC

  • Same-day appointments
  • Longer appointments (e.g., 30 minutes instead of 10)
  • Greater doctor and clinic accessibility (e.g., direct numbers, after-hours or weekend availability)
  • Better technology (e.g., patient smartphone apps for convenient, secure texting and telemedicine)
  • Other possible benefits, depending on your practice:
    • In-office pharmacy
    • Low-priced connections for lab testing and imaging
  • Incentive structure is aligned to keep focus on preventive medicine and maintaining health
  • Reductions in unnecessary lab testing, imaging, and procedures
  • Improved health outcomes (and therefore a healthier, more productive workforce)
  • ~50% lower hospital admission rate and ~90% reduction in hospital bouncebacks
    (2012 AJMC study of MDVIP)1
  • Ability to refer to other like-minded upstream providers instead of big hospital systems (can save significant money on imaging, outpatient surgeries, and other non-emergency treatment)

Cheaper Care with DPC

  • Mostly relevant to self-funded employers:
    • Reductions in lab testing, imaging, specialist visits, and procedures equate directly to cost savings
    • Internal Qliance data show imaging reductions of ~30–60%, specialist visit reductions of ~14–66%, and surgery reductions of ~70–80%, culminating in $679 saved per patient per year (20% total cost reduction)2,3
    • Healthier population is less costly
    • 2012 AJMC study of MDVIP found $2,551 savings per patient per year from reduced hospitalization1
    • Can use the new partnership between New Jersey and R-Health to offer DPC options to state employees as “social proofing” evidence that DPC is respected and on the upswing as a high-quality, cost-effective solution for self-funded organizations
  • Relevant to any type of employer:
    • Healthy employees miss less work
    • When a DPC patient does have a minor illness or other medical issue, their doctor can often handle it via phone or telemedicine without the need for an in-person visit. Contrast this against the incentive structure in a typical fee- for-service practice, in which an in-person visit is almost always required for billing. Travel time alone for a typical outpatient visit is 37 minutes.4
    • Many employees with high-deductible health plans still avoid care or are subject to large bills until their deductible is met. A DPC membership can be very cost-effective for these patients, given that most care needs are primary care needs.

Know Your Value and Spread the Word

Every DPC physician I’ve spoken with has told me that they picked the DPC model because they truly believe that it can be better for doctors, patients, and the healthcare system in general. In medicine, we don’t typically love change, so the emergence of such a strong new sentiment is a compelling indicator that a true source of value has been found.

When the incentives align correctly, it can be straightforward to convince employers of this value, too, even if it may never be simple. The key is to spend time really understanding your own clinic and business. Identify which of your value points will be attractive to different types of patients (or employers), and then be ready to share those benefits with decision-makers when the opportunity arises.

Feel free to use the lists here to get started with your planning, and if you have identified other DPC advantages, please share them with us in the comments below! We’re always looking for more. DPC can be potentially advantageous for nearly any type of employer, but it’s not a one-size-fits-all formula; don’t get caught flat-footed when its time to communicate how great you and your clinic are.


Once you understand the different types of employers and have formulated your value pitch for each of them, you’ll be ready to start interacting with actual companies. Join us next time, in part three of this series, as we tackle how to find and engage some of your best potential partners: self-funded employers!

Or, if you don’t wait to wait, get our full ebook on DPC employer contracts right now: “Secrets of Direct Primary Care: 5 Keys to Landing Employer Contracts.”


References:

  1. Klemes, A. et al. Personalized preventive care leads to significant reductions in hospital utilization. Am. J. Manag. Care 18, e453–60 (2012).
  2. Wood, S. M. The medical home bends cost curve. Benefits Q. 28, 20–24 (2012).
  3. Qliance. New Primary Care Model Delivers 20 Percent Lower Overall Healthcare Costs, Increases Patient Satisfaction and Delivers Better Care. PR Newswire (2015). (Accessed: 7th March 2017)
  4. Ray, K. N., Chari, A. V., Engberg, J., Bertolet, M. & Mehrotra, A. Opportunity costs of ambulatory medical care in the United States. Am. J. Manag. Care 21, 567–574 (2015).

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