How many subscription memberships do you have? With very little thought, many come to mind—Netflix, HBO, Hello Fresh, Amazon Prime, Kindle Direct, and Consumer Reports to name a few. And the subscription market is expanding—bacon, clothing, shoes, beauty products, wine, and more. The subscription e-commerce market has grown by more than 100% a year over the past five years, with the largest players reaching $2.6 billion in sales (see The State Of The Subscription Economy, 2018).
Now, consider subscription health care, where consumers can pay a weekly, quarterly, or yearly fee to receive some type of health care services. These models give consumers a way to budget for specific health care costs and gives provider organizations a consistent, reoccurring stream of revue. Subscription health care can take on many different forms to cover a variety of different services, including software, medical devices, pharmaceuticals, concierge care, and direct primary care (see Subscription Medicine: On-Demand Healthcare For Everyone and Digital Healthcare In A Subscription-Based Economy).
Let’s think more about direct primary care (DPC) models. These models provide consumers with access to primary care services for a flat fee—or as the American Academy of Family Physicians defines it, “a meaningful alternative to fee-for-service insurance billing, typically by charging patients a monthly, quarterly, or annual fee … [that] covers all or most primary care services including clinical and laboratory services, consultative services, care coordination, and comprehensive care management” (see The Direct Primary Care Model: How It Works).
Examples of the market entrants operating with this model include Kansas City Direct Primary Care, which provides unlimited primary and urgent care visits with no copayments and unlimited access to primary care physicians via telephone and email. Memberships are available to people ages 24 to 64 years old for $65 per month, with family discounts available for children that also have a parent with a membership (see Kansas City Direct Primary Care). Gold Standard Pediatrics in South Carolina is another example of this model directed at serving children for monthly membership fees of $70 (birth to two years), $45 (2 to 12 years), and $35 (12 to 18 years) (see Gold Standard Pediatrics). And Strada Healthcare, operating in Iowa and Nebraska, offers unlimited primary care access, same-day appointments, after-hours access, and the ability to connect with physicians via telephone, email, and text message. Memberships are $99 per month for a single adult, with a discount of $79 per month for a spouse, and $299 per month for a family (see Strada Healthcare). Also, Seattle start-up 98point6 recently announced it wanted to be “the Amazon Prime of primary care” and seeks to do so by operating a telehealth subscription model designed to support consumer access with primary care practitioners (PCP) for the cost of $20 the first year, and $120 every year after (see Seattle startup 98point6 Wants To Be Amazon Prime Of Primary Care: 7 Notes).
The direct primary care model isn’t currently that widespread. In 2015, there were 141 of these practices with 273 locations across 39 states (see Direct Primary Care: Practice Distribution and Cost Across the Nation); and the average monthly fee for DPC was an estimated $77.38, covering services like “unrestricted next day or same day appointments, prolonged visits, direct communication via text, email, telephone, virtual visits, and access to greatly discounted ancillaries such as in-house generic medications, labs, and imaging” (see Direct Primary Care May Be The Link To The ‘Fourth Aim’ Of Healthcare). Like many newer models, there are several reported benefits and drawbacks. Some of the benefits include increased availability, access, and time for individual consumer encounters; improved quality; lower overhead costs; and the elimination of 40% of administrative staff resources associated with third-party billing (see Direct Primary Care: Practice Distribution and Cost Across the Nation). The drawbacks? Some reports include a lack of scalability, incentives to limit care, higher consumer subscription expense, and reliance on high levels of consumer engagement (see Direct Primary Care Has Limited Benefits For Doctors And Patients).
Another example of this approach are the direct-to-consumer services offered by virtual mental health delivery systems. TAO Connect, based in Florida, is a digital platform providing mental health therapy for $25 per month or $100 for six months of unlimited use of its services (see TAO Connect Launches Self-Help Subscription Service, Increasing Access to Digital Mental Health Tools and Counseling Services). TalkSpace provides different plans based on a weekly subscription that starts at $49 per week, and includes unlimited messaging therapy (see New Directions Partners With Talkspace, Adding Online Therapy To Its Offerings). And BetterHelp (see BetterHelp) has a similar program offering for $40 per week.
The rise of the subscription model has significant implications for service provider organizations. On the financial side, provider organizations become “mini-insurers” of sorts-offering unlimited services of a specific type for a fixed per member per month, or capitation, amount. On the administrative side, managing subscription services requires the same infrastructure as managing any other value-based reimbursement model (for more on the OPEN MINDS value-based reimbursement readiness assessment tool, see Value-Based Reimbursement Readiness Assessment). Most importantly, to be competitive with a health care subscription model, the key is use of technology—technology for consumer administrative interface (online portals, online scheduling), synchronous tech-enabled service delivery whether via telehealth or old school like telephones, and the use of AI-driven asynchronous consumer tools (such as product recommendations, or cost estimates, or real-time access to clinical records). And, even if provider organization executive teams aren’t interested in providing direct-to-consumer subscription services, this approach to health care financing will make its way to health plan contracting as well.
For more on the changing world of health care reimbursement models, check out these resources from the OPEN MINDS Circle Library:
- Digital Healthcare In A Subscription-Based Economy
- You Say Subscription-Based Health Care, I Hear Customer Service
- What Do The Disruptors Need To Be Disruptive?
- Primary Care Goes Virtual & On-Demand
- Moving To The Flip Side – Telehealth, Urgent Care & Medical Homes
- The On-Demand, Direct-To-Consumer Online Therapy Market – A Glimpse
- Planning For The Digital Reinvention Of Your Market
- Virtual Mental Health Delivery Systems Evolve
- Retail Clinics + Telehealth = Disruption
- Primary Care Isn’t What It Used To Be
And for more on the future of specialty primary care, join me on June 4 at The 2019 OPEN MINDS Strategy & Innovation Institute for the session, Building A Specialty Primary Care Program: New Models For Consumers With Complex Conditions, featuring Stephanie M. Murtaugh, Director of Clinical Services, Pittsburgh Mercy; and Tine Hansen-Turton, President & Chief Executive Officer, Woods Services.