Why dangerous math (not ideology) is killing DPC clinics [PODCAST]

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Well being care strategist Dana Y. Lujan discusses her article “Why direct major care (DPC) fashions fail.” Dana argues that the DPC neighborhood’s obsession with “purity” is lacking the purpose, stating that these fashions don’t fail over ideology, they fail due to dangerous math. She makes use of the College of Houston’s $1 million clinic failure as a major instance of a “elementary market mismatch,” the place a DPC mannequin was positioned in a low-income space that couldn’t maintain its membership charges (a ~70 % income deficit). Dana additionally debunks the parable that establishments can’t run profitable DPC applications, citing CHI Well being and Johns Hopkins as proof that monetary sustainability and market match are the true keys. This episode explores the essential distinction between what’s legally permissible and what’s operationally sustainable, and why the DPC dialog should shift from philosophy to execution. Be taught why you can’t “subscription-model your manner out of poverty.”

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Transcript

Kevin Pho: Hello, and welcome to the present. Subscribe at KevinMD.com/podcast. At the moment we welcome Dana Y. Lujan; she’s a well being care strategist. At the moment’s KevinMD article is “Why direct major care fashions fail.” Dana, welcome to the present.

Dana Y. Lujan: All proper, thanks for having me.

Kevin Pho: All proper, let’s begin by briefly sharing your story. Then we’ll soar proper into your KevinMD article.

Dana Y. Lujan: Certain. I’m Dana Lujan, and I’m a well being care strategist. I’ve been in well being take care of barely over 20 years throughout supplier teams, payer networks, well being techniques, and amputee consulting corporations main operations, income cycle administration, contracting, compliance, and technique.

My profession truly began within the army, the place I discovered the inspiration of management, self-discipline, accountability, and focus. These values nonetheless form how I work at the moment. Over time, I’ve discovered to attach the dots, take a step again, and see the larger image whereas nonetheless holding onto the small print that matter.

Kevin Pho: All proper, your KevinMD article is “Why direct major care fashions fail.” I’ve had lots of people on this podcast discuss direct major care, about how nice it’s, however I feel that we’d like a way of realism as properly. So this is the reason we’re going to speak about this. So for many who didn’t get an opportunity to learn your article, inform us what it’s about.

Dana Y. Lujan: Nice. So I’ve spent years transitioning suppliers from fee-for-service into numerous several types of cost fashions. The narrative that I proceed listening to within the DPC neighborhood is the truth that the DPC clinic failed as a result of it’s not on pure ideology. You recognize, it’s not a pure DPC, or there’s a technical mishap like of their planning financials and advertising.

I are likely to pause and type of take a step again. Whereas these are legitimate factors, I’m pondering that there needs to be a deeper strategic facet. Once I got here throughout the College of Houston Direct Main Clinic article, it actually me as a result of one, my house state is Texas, and I’ve labored within the Houston market, so I’m accustomed to the neighborhood on the market.

The creator wrote once more in regards to the ideology, and to me, I feel we do ourselves a disservice after we’re so targeted on ideology and never on what actually occurs and the place the breakdown is. So after I dug extra into the college and I discovered the peer evaluate, I used to be identical to, “Oh, it’s construction. It’s strategic planning.” You’re asking for one mannequin when there are literally three fashions attempting to be one mannequin. And I felt like this was an ideal time to jot down it.

Kevin Pho: While you say about DPC ideology and obsession with purity, simply inform us precisely what you imply by that.

Dana Y. Lujan: So, you understand, they push an all-or-nothing strategy. I’ve heard it throughout the board with physicians that I’ve come throughout, and even on feedback on among the articles that they write. As an illustration, suppliers say, “How about capitation? Whereas we’re transitioning, can we not less than maintain capitation?” They are going to be marked no. It’s pure all-or-nothing.

I really feel such as you’re setting physicians up who’ve been in enterprise for just a few years and have their very own follow. They’re attempting to get into DPC. Why not have a transition plan for them? Why not have a strategic transition plan? As a result of there’s a giant distinction between being strategic versus being technical and actually laying out a strong basis. So when they’re full true DPC, they’re not failing inside their first two years of opening up their doorways.

Kevin Pho: Do we have now any information or any sense about what share or proportion of direct major care DPC clinics fail?

Dana Y. Lujan: So what I’ve learn, and I’ve come throughout just a few articles, the baseline is there’s 100 DPC clinics that open. Throughout the first two years, 65 to 75 will maintain, after which the remainder will drop off. To me, I’m pondering to myself that what they quote is technical mishaps. They cite not planning sufficient financials and, once more, advertising. So once more, tactical mishaps. Technical is execution. Everybody can execute. However should you don’t have a deep data with regard to planning on the way you’re going to get from level A to level B, then what’s the purpose of executing?

Kevin Pho: So in line with the information that you just learn, roughly 30 to 35 % of direct major care clinics fail inside two years. Any commonalities when it comes to why they fail? You talked about issues like tactical mishaps, so what are some examples of such tactical mishaps that led to a few of their failures?

Dana Y. Lujan: Their financials. They battle from a monetary standpoint. So once more, that is the place I am going again to monetary planning from a strategic standpoint. A very fast tip is to know your numbers. Know your present panel measurement, what share of your income comes throughout from every payer, and know the true value to serve your sufferers.

Do a deep dive in your payer. I’ve seen a remark that was left by a doctor: “Oh, it’s simple. All you do is simply take a look at your contracts, take your smaller contract, time period it subsequent 45 to 60 days, take your subsequent one, and time period it.” Whereas that sounds nice on execution, while you’re trying and also you’re beginning to mannequin, typically it is perhaps an even bigger payer that’s extra possible to time period prior. Why? As a result of you’ve extra FTEs on that payer, after which the turnaround time on receiving your reimbursements is within the AR bucket of 90 days or extra. So why would I need to maintain a payer that doesn’t have a fast turnaround on income? I’d moderately maintain a payer that I do know even when it is perhaps a low density of 100 sufferers, if that affected person is available in, I do know I get my cash inside 30 days.

Kevin Pho: So on this story that you just wrote, you wrote in regards to the College of Houston, about how their failure was a major instance of elementary market mismatch. So for these, once more, who didn’t learn your article, inform us about that story and among the failure factors that this specific occasion made.

Dana Y. Lujan: Properly, I’m glad that they tried it out as a result of I at all times consider in attempting one thing out to see precisely what occurs. So I consider that they have been placing a DPC clinic right into a closely Medicaid, uninsured, and underinsured space. So there’s a whole lot of components that go into play with that.

So anybody who has labored Medicaid, even should you’re major and you’re heavy into Medicaid, you understand your retention charge is 30 to 40 % on a yearly foundation. Even should you work the networks, it’s onerous to get these Medicaid sufferers again within the door.

It by no means defined in the event that they have been going to accomplice with a payer to check out a extra value-based sort of incentive program. Then while you learn via the article, I indicated that they have been attempting to get employer contracts. So my query is, should you knew you have been going to go the employer route, how come you didn’t establish not less than 4 to 5? Then pivot. Attempt to safe not less than one or two contracts prior to truly beginning the pilot program to assist maintain the $1 million grant.

After which, you understand, it’s simple for us while you’re in that neighborhood for us to say $60 is an efficient mannequin and we will subsidize it. However while you’re talking with underinsured and uninsured, now you’ve behavioral economics at play. This can be a query of, “Am I going to get my automobile fastened or am I going to pay the $60 membership? Am I going to get my automobile fastened or nonetheless pay a $25 membership?” It’s behavioral economics.

Kevin Pho: And also you talked about a few examples the place establishments efficiently applied DPC fashions, proper?

Dana Y. Lujan: I’ve, sure. So, CHI, the Catholic Well being Initiative, truly launched their DPC mannequin, which is an impartial membership. I need to say that was again in 2017, although I don’t have my notes in entrance of me. After which it stretched from one pilot program to I feel seven or eight areas now. In order that’s pure DPC.

So to me, once more, it goes again to strategic planning and having your construction. Johns Hopkins has three several types of numerous cost fashions. They’ve the concierge, they’ve the employer direct DPC mannequin, after which in fact the value-based. So once more, it’s working as a result of there’s been planning together with the execution.

And I feel the rationale why I’m type of bringing this to the forefront extra is due to what you’re seeing after I hear impartial suppliers saying, “Hey, we’re impartial suppliers. We’re attempting to remain impartial.” What occurred again in 2007 and 2008 with the well being techniques shopping for the impartial suppliers out? They’ve personal fairness coming in they usually’re doing the shopping for out of the impartial suppliers. We’re seeing the identical wave. Whether or not you wish to consider it or not, you’re type of seeing that in concierge medication and direct major care as we communicate.

Kevin Pho: In these physician-only message boards, direct major care is usually seen as an answer to a whole lot of the company physicians who’re burning out and the treadmill of seeing sufferers each ten to fifteen minutes. However clearly, it’s not as simple as that. So speak to us about among the questions physicians must ask themselves and the kind of sources that they should seek the advice of in the event that they’re contemplating switching and opening up a direct major care follow.

Dana Y. Lujan: So once more, I at all times say know your numbers. That’s actually doing a monetary evaluation of your whole enterprise and your life since you’re upkeeping your life into one other sort of mannequin. So know your present panel measurement. Know the share of income for every payer. Know your true value to serve every affected person. Then mannequin out completely different eventualities, and while you mannequin out, see like, “OK, if I cut back my panel by 30 %, how would this look? Can I maintain it?”

Then do a timeline and accountability milestone. After which I might throw in a fast bonus tip. I wish to name it location recon. As a result of you understand, you’ve been in your impartial follow for therefore lengthy. I at all times ask the supplier, “How married are you to your location?” They are saying, “I really like this location. This can be a nice location.” Okay, properly let’s go take a stroll. Do a fast stroll, see what you see in concierge medication and direct major. Then drive one mile in every route and see what you see, as a result of once more, it goes again to market alignment. You don’t need to put your follow in the place it’s very closely saturated.

After which I get the pushback: “Properly, Google doesn’t seize everybody who’s DPC in concierge medication.” So you’ll be able to sit right here and depend on expertise all you need, however typically we have now to take it again to the way in which we used to do it.

Kevin Pho: So when it comes to physicians who must search for a guide like your self when it comes to doing such a analysis, what sort of questions do they should ask that guide, or what sort of questions do they should ask to search out that proper individual to information them in doing a few of this market analysis earlier than opening up a follow?

Dana Y. Lujan: I feel the kind of questions that you have to be asking a guide is relating to what number of practices have they been capable of transition or began. That you must know in the event that they perceive the market that they’re presently in. As a result of you understand, you would be an awesome guide out in Texas, however then you definately go into the South Carolina market. Two several types of markets, and even the states have their very own markets. So I is perhaps an awesome guide out in Dallas, however I simply don’t know the Houston neighborhood. That’s a differentiating issue.

In the event that they’re not asking about actually sitting down with you and going via the financials and the income cycle, then that ought to be a excessive alert as a result of that’s one thing {that a} guide ought to have the ability to do. They’re imagined to be your operator. The supplier is the visionary; the guide is the operator. So I are likely to hearken to the visionary and I say, “OK, that is the larger image, however these are the small print.” I ought to have the ability to sit down with that doctor and focus on and go totally on what they’re . So then they’ll perceive their very own operations and the way the transition is occurring.

Kevin Pho: So out of your expertise, assuming the doctor does all the pieces proper, does the suitable market analysis, is aware of their numbers, and hires the proper guide. Typically, how lengthy does it take for a profitable direct major care follow to develop into worthwhile?

Dana Y. Lujan: I might say inside a 12 months. Inside a 12 months. Generally I in all probability push out to 18 months simply relying on the place the situation is. I do know the place I’m presently situated, I’ve seen it inside a 12 months. In the event that they do have a problem, it will depend on who they’ve for advertising, as a result of typically they need somebody completely different for his or her advertising as a result of they know an individual that is aware of an individual, and that’s not on the guide. You possibly can solely give a lot info to them.

Kevin Pho: We’re speaking to Dana Luhan; she’s a well being care strategist, and at the moment’s KevinMD article is “Why direct major care fashions fail.” Dana, let’s finish with some take-home messages that you just need to depart with the KevinMD viewers.

Dana Y. Lujan: I feel what I want to depart with is assume like a CEO and never as a enterprise proprietor. Pondering techniques. And while you begin pondering extra like a CEO than a enterprise proprietor, you begin seeing the shift and learn how to shift it via.

Kevin Pho: Dana, thanks a lot for sharing your perspective and perception and thanks once more for approaching the present.

Dana Y. Lujan: Thanks a lot.