The pros and cons of operating a direct-pay practice

As the demands of practicing medicine have increased, many doctors are becoming increasingly discouraged and burned out. One solution? Eliminating the headaches of accepting insurance.

“Faced with declining reimbursements, administrative burdens, and legal concerns, some ophthalmologists have chosen to opt out of Medicare and private insurance and only accept private pay,” reported Ocular Surgery News.

Also called “direct primary care” or “concierge medicine,” the idea is that patients pay a monthly membership fee for increased access to their doctor and some basic services. Additional services are paid for out-of-pocket by the patients rather than insurers.

Does this business model make sense for your eye care practice?

How it works for one direct-pay doctor

When Ryan Neuhofel, M.D., started his direct primary care practice in Kansas in 2011, there were “maybe a couple dozen doctors” operating this way, he told Today he estimates there are 600-800 practices in the U.S. operating under the direct primary care model.

Benefits of direct-pay practices include lower overhead, better price transparency, and a closer doctor-patient relationship.

There are several benefits, say doctors who operate direct-pay practices. These include lower overhead, better price transparency, and a closer doctor-patient relationship because there is no interference with a third-party payer, said Dr. Neuhofel. He lists the costs of various procedures on his website, which are less than most traditional practices. (For example, X-rays are $25-$40.)

Direct primary care doctors are able to charge less because the lack of coding and billing requires less staff to maintain the practice, reported And while a fee-for-service model requires most doctors to average 20-40 patients per day to make a profit, “I don’t have to worry about that,” said Dr. Neuhofel.

Because his monthly revenues are based on membership fees and not volume of visits, he does not need to have patients come into the office for every minor ailment. “If it’s something I can manage that’s medically appropriate with a text message, email, or phone call, I do it,” said Dr. Neuhofel. He estimates that about half of the care he offers is remote.

But can it work for ophthalmology? Some are skeptical

But can the direct-pay model work for ophthalmology? Opinions are divided. Opting out of Medicare is not a viable option for most ophthalmologists, according to John B. Pinto, practice management section editor of Ocular Surgery News.

‘It’s really difficult to opt out of Medicare as an ophthalmologist. Financially, it just doesn’t work at all.’ – John B. Pinto, editor, Ocular Surgery News

“To the typical practice, it’s about 60% of cash flow, so unless you’re one of those few luminaries in ophthalmology who work in a market where you’ve developed over many years a reputation as the only go-to guy and you have kind of a concierge business that comes to you that way, or you’re a refractive surgeon purely, it’s really difficult to opt out of Medicare as an ophthalmologist,” Pinto said. “Financially, it just doesn’t work at all. There are so many providers willing to work with the system.”

It’s true that while concierge medicine has caught on with internists who care for a relatively affluent senior population, “there hasn’t been a very good model for ophthalmology,” said Richard L. Lindstrom, M.D., Founder of Minnesota Eye Centers, in MillennialEYE.

But in order to thrive in the future health care climate, eye doctors will have to get creative and consider other business models. Most experienced ophthalmologists have already implemented all of the ancillary care aspects possible, said Dr. Lindstrom, including having employee-doctors, integrating with optometry, and converting a higher percentage of patients to premium services. “We’re running out of tricks. The successful doctors of the future will need to think more about value-based medicine than about volume-based medicine.”

Why ophthalmologists are ideally suited to offer ‘lifestyle medicine’

Some ophthalmologists have already adopted the direct-pay model and are thriving. “The notion that physicians must contract with Medicare for practice success is a canard,” Jason P. Brinton, M.D, told Ocular Surgery News. “Those of us who work in private-pay ophthalmology have found that many patients prefer to receive care in an office that is independent from insurance companies.”

Ophthalmologists ‘are in a great position to lead the development of the non-reimbursed medical field.’ – Daniel Durrie, M.D.

According to Daniel Durrie, M.D., eye surgeons have an opportunity to help create and grow the field of “lifestyle medicine.” This includes procedures not typically reimbursed by insurance, such as laser vision correction or facial fillers. “Besides taking care of problems like cataracts, glaucoma, and macular degeneration, we can improve the way patients live with corneal and lens refractive surgery and oculoplastic surgery. We are in a great position to lead the development of the non-reimbursed medical field,” he told MillennialEYE.

For more on this topic, see The Benefits of Adding Cosmetic Services to Your Practice

Dr. Durrie points out that consumers already are willing to pay more to bypass lines at amusement parks and airports. He sees the “go-to-the-head-of-the-line” concept coming to health care next. “Seeing a smaller number of patients, giving them higher-quality service, and charging them a membership fee for those extra services” is a better practice model, he said.

And, he believes that ophthalmology “is probably in the best position of any of the medical specialties to be looking at lifestyle health care, because we have certain things that we’re very, very good at that are not reimbursed by insurance or Medicare.”