I am Dr. Nicholas Beaulieu and I have been a practicing Family Physician for twenty-eight years. I believe I have unique insight into the financial models that fund the current American medical system. I propose an alternative funding model introducing a public and private partnership that does not require a major overhaul of the existing system. I hope you find this White Paper interesting and provocative. There is an opportunity for change, and the American public needs to understand we have viable options. A plan such as this creates a grassroots economic imperative so powerful that entrenched players and their lobbying efforts to maintain the status quo can be effectively challenged. Join me in propagating these ideas and creating better healthcare for all Americans.
In 2020, healthcare continues to be one of the most urgent — and most polarizing – topics of public and private debate.
It’s been 10 years since Congress has been able to pass any kind of legislation to make healthcare more accessible and affordable. While the Affordable Care Act dramatically reduced the number of uninsured, that improvement has plateaued, and affordable healthcare continues to be out of reach for far too many Americans. As of June 2019: 30 million remained uninsured, 40 million were underinsured and the cost of healthcare was rising faster than the median income in most states.(Commonwealth fund research – based on 2018 articles)
A year later, the need for healthcare solutions has become even more critical. Between February and May of 2020, 5.4 million Americans lost their health insurance due to job losses, according to a report published by consumer advocacy group, Families U.S.A. That represents the biggest loss of insurance ever recorded in a single year. And it comes at a time when analysts are predicting that 2021 insurance premiums could spike as much as 40% as employers and insurance companies face tens of billions of dollars in additional costs of treating coronavirus patients.
Expanding to a Medicare for All model is certain to be a major topic of the 2020 election dialogue. It’s a proposal that upends established private interests and will increase pressure on an already underfunded Medicare system. There currently isn’t enough understanding around how Medicare for all will work to gain the needed level of public support to make it happen. And it will likely take years for Congress to reach the consensus needed to implement significant changes.
In this paper, we propose an innovative alternative – one that doesn’t pit private and public sectors against each other, doesn’t require a total overhaul of the healthcare system, that would create partnerships between private practitioners and the Medicare system to:
- Improve access to primary care
- Keep Americans healthier
- Reduce the cost of healthcare
- Make healthcare more affordable
- Create a model to attract more physicians into primary care practices
- Fund Medicare
Primary Care as a practical and viable solution
Primary care physicians (PCPs) are what we used to think of as the family doctor. PCPs are generalists who see patients for annual wellness checkups, common issues, and chronic conditions. PCPs can manage multiple treatments and medications.
Primary Care Physicians typically expand their capacity to serve patients by assembling teams of medical support staff that could include physicians’ assistants, nurses and nurse practitioners, pharmacists, and social workers. Patients see the team member best qualified to handle their specific issue and help them navigate the health care system.
Shortage of PCPs
There are currently not enough PCPs to meet the need for primary care. There are a couple of reasons for this. Today’s physicians begin their careers carrying an average of $200,000 in student loan debt. Considering that the earning potential for PCPs can be $100,000 or more per year lower than specialists, it’s easy to see why fewer medical students are choosing to go into primary care. In addition, as fewer physicians are going into primary care, aging Baby Boomers are increasing the demand on existing PCPs.
In many areas of the nation, it has become difficult to find a PCP who is taking new patients. And if they do, patients often must wait long periods to get an appointment. As a result, more and more Americans are going without a primary doctor to help them monitor and manage their health. Instead, they’re turning to specialists, urgent care clinics, and emergency departments (EDs) for isolated care – but only after a medical condition has become more serious and more costly than it would have been if they’d been receiving consistent care from a PCP.
How PCP Impact Overall Healthcare Spending and Outcomes
An article published by the Commonwealth Fund analyzing cross-national health data found that despite spending nearly twice as much on healthcare as other countries, the U.S. trails far behind these nations in health outcomes.
The lack of access to primary care directly relates to outcomes that negatively impact the cost and quality of healthcare in this country, including:
- Americans visit their primary care providers less often than people in other countries, perhaps because of the shortage of PCPs in the U.S.
- The U.S. has among the highest rates of hospitalizations from preventable causes and the highest rate of avoidable deaths because people are not receiving timely, high-quality care.
- As much as one-quarter of total healthcare spending in the U.S. – between $760 billion and $935 billion – is wasteful due to the lack of continuity and coordination of care, inefficiencies, duplication of services, and medical issues that are left untreated until they become quite serious and costly – all issues that could be remedied with better access to affordable primary care.
Americans don’t use more medical services than people of other countries. Our healthcare spending outpaces other nations because the cost of care in the U.S. is higher and because our healthcare is fragmented and inefficient.
Strengthening access to affordable primary care is the fastest and most effective way for the United States to begin reigning in out of control healthcare costs and improving health outcomes.
PCPs develop long-term relationships with patients which gives them access to a holistic view of the patients’ health. Because of this, they coordinate care between specialists, labs, and hospitals and provide the continuity essential for improving outcomes and controlling cost. In fact:
- Healthcare costs for adults with a primary care physician is 33% lower than for those without a PCP
- Medicare spending is lower in states with more PCPs – and these states also report more effective, higher quality care
Direct Primary Care
Direct Primary Care (DPC) is an emerging model that makes primary care more affordable for patients and more attractive to physicians. With DPC, patients pay a flat monthly membership fee directly to their Primary Care Physician, instead of billing insurance. With less administration and no deductibles, members typically pay less and receive more services through their memberships than they would with a traditional fee-for-service insurance plan.
In a study evaluating the viability of Direct Primary Care, the Society of Actuaries estimated significant savings over our current fee for services model.
|Source of Savings||Savings PMPM||% of savings|
|Carved out DPC Services||$22.54||37.8%|
|Lower Outpatient Facility claims||$19.03||31.9%|
|Lower Physician Claims||$13.02||21.9%|
|Lower Impatient Facility Claims||$4.98||8.4%|
|Total DPC Claim Savings||$5956||100%|
Other Direct Primary Care model benefits include:
- 20% reduction in overall healthcare costs
- 40% reduction in ER visits
- 25% reduction in hospitalization
- Expanding the number of patients a primary care physician can serve to 4,000, thereby reducing the shortage of primary care providers.
Providing greater access to affordable primary care is fundamental to reducing healthcare costs and improving outcomes. However, the DPC model is only one part of the overall solution. While it will greatly reduce the cost and need for additional services, we still need to cover the costs for specialist, hospitalization, and other “catastrophic” care.
This proposal creates a partnership between Primary Care Clinics and Medicare that is
- Economically viable
- Attractive to private practitioners
- Requires no government subsidies
- Provides much needed funding to Medicare.
How it works
This proposal creates a structure for the creation of privately-run Primary Care Clinics (PCC) with the capacity to serve 1,000 patients. Each PCC will be led by an Associate Provider – either a Physician’s Assistant or Nurse Practitioner — under the oversight of a Physician M.D/D.O. Each Physician will oversee four clinics, working one day per week in each clinic and seeing patients at the discretion of the Associate Provider.
Patients may self-pay or enroll as part of an employee group. The cost for primary care will be $60 per month per patient. That fee will go directly to the Primary Care Clinic and provide the patient with a maximum of five visits per year, including a full physical evaluation with labs and access to their provider, in person or via Teleheath, e-mail, text, or telephone.
Medicare will then become the provider of specialty services, catastrophic care, other non- primary care services – for which patients will pay a monthly premium based on factors that may include income level and risk.
There are no deductibles that individuals must meet before their benefits kick in. Premiums may be paid by individuals or by employers in the name of an individual and may be paid using HSA or HRA funds.
Running the numbers.
The financials for a single Primary Care Clinic will look something like this:
Revenue: 1000 patients paying $60/month = $60,000/month X 12 months
Total Annual Revenue $720,000
Rent $45,000/yr 1500 sq/ft at $30/sq ft
Med Supp $15,000/yr
Cash Res $10,000/yr
Total Annual Expenditures $422,000
Net profit $298,000
Now consider that a single PCP can oversee four of these clinics, giving access to primary care to 4,000 patients and creating greater efficiencies by pooling HR and IT resources.
How Medicare fits into this plan
Medicare is a federal insurance program designed to cover people ages 65 and over and younger people with long-term disabilities.
Since 1970, Medicare enrollment has tripled due to increased longevity, an aging population, and Baby Boomers turning 65. By 2018, enrollment reached 60 million and is projected to hit 90 million by 2048. Even so, little is happening to reduce healthcare spending or raise taxes to meet the growing need.
Unlike privately run insurance plans that mitigate risk by serving populations with varying degrees of need, Medicare has always suffered from adverse risk by focusing solely on those requiring the greatest amount of care.
This proposal eliminates the adverse risk inherent in Medicare by opening enrollment to every member of American society who agrees to participate in this Primary Care Clinic/Medicare partnership.
This new partnership between private Primary Care Clinics and Medicare will save money and save lives.
This private Primary Care Clinic/Medicare partnership is an extremely practical solution that can dramatically and immediately improve health and healthcare in the US and provide much needed funding for Medicare.
- By creating a financially viable model for primary care, more medical students will become family doctors, making primary care more accessible and more affordable.
- More accessible primary care lowers healthcare costs across the board and is especially effective in diagnosing, monitoring, treating, and reducing preventable catastrophic illnesses.
- More individuals will be able to afford to pay into the system. And because this model is based on a known system with a known cost structure – not subject to yearly double-digit premium increases – it will be more attractive to employers wanting to offer healthcare benefits to their employees.
- Increasing and broadening Medicare’s patient base will provide the program with additional funding to cover non-primary healthcare services and mitigate the adverse risk associated with its current patient group.
Benefits to the Medicare System
In 2018 Medicare cost the nation $582 billion which came from these sources:
- 15% beneficiary premiums
- 36% payroll taxes
- 43% general revenues
Medicare premiums for the new Primary Care Clinic/Medicare Partnership may vary based on risk factors. However, using an estimated $240/month premium for an adult in average health, a pilot program enrolling 10 million people will generate an additional $28 billion for Medicare.
Medicare for all – the current reality
While we don’t officially have Medicare for all in this country, under the current system, Medicare still ends up paying enormous sums to cover the care of people who have no insurance or who are underinsured.
- When people go to an ED, they have to be treated whether they have insurance or the ability to pay or not. The government ends up paying out billions of dollars to hospitals for indigent care.
- With greater access to affordable primary care, this proposal will greatly reduce the number of people who seek healthcare through EDs.
- When an uninsured or underinsured American faces a catastrophic medical situation they can’t pay for, Medicare steps in, creating delays and interruption of needed treatment, to pay for care at a point where it has become the most expensive and least successful option possible.
- Greater access to affordable primary care provided for in this proposal will significantly reduce the number of patients who develop catastrophic illnesses.
This proposal will reduce the burden on EDs to care for patients with illnesses that either aren’t emergencies or that could have been prevented from becoming emergencies with proper primary care. It will also prevent manageable conditions from becoming catastrophic – but in cases where catastrophic care is unavoidable, having a PCP providing continuity and coordination will eliminate gaps in care, resulting in greater efficiencies, lower costs, and better outcomes.
A Note About Medicaid
Providing greater access to affordable Primary Care also offers a significant benefit to Medicaid as well as Medicare. The reduction in healthcare costs generated by enrolling Medicaid patients into this Primary Care Clinic partnership model represents a substantial opportunity for savings – especially for states bearing the bulk of the burden of Medicaid funding.
The United States spends more on healthcare than any other country in the world, yet we trail behind all comparable peers when it comes to health outcomes.
Healthcare reform has been stuck in the debate phase long enough.
As we enter the 2020 election cycle, millions of Americans are either uninsured or underinsured, our growing aging population is further straining Medicare, and millions of recently unemployed have also lost their employer-sponsored insurance.
This is a healthcare solution that can move beyond discussion and into action.
As a plan that builds a partnership between the private medical industry and Medicare, this proposal is uniquely positioned to gain support and momentum across traditional divides.
- It’s financially viable for private practitioners, requiring no government funding.
- It will compete on the fair market with private insurance programs.
- It will provide Americans with greater access to affordable primary care.
- It will improve health and curtail the need for more expensive health services.
- It will ease the burden on Medicare and create a source for Medicare funding.