Most PCPs are overpaid: A value mismatch in primary care

No other function in healthcare has as much market diversity as primary care. The continuum currently runs from mid level virtual only care all the way to “high-end” concierge care. While certain specialties have up markets and down markets, like plastic surgeons for the stars compared to their hospital based counterparts, nothing varies in scope, care, and level of service quite like primary care does. Part of the variety arises from the fact that “primary care” is more of a concept like “nation” or “corporation” with vaguely defined characteristics rather than a more concrete set of services. Various specialties perform primary care in various settings with various payment models. Looking at the diverse market from a 10,000 foot view, there are two groups worth highlighting, primary care providers who are overpaid and those who are underpaid. Both are rapidly evolving due to natural forces and both will be disrupted by the coming changes. 

Family medicine, pediatrics, and others who deliver primary care in the insurance-based system have long lamented the underpayment of their services. Efforts to convince payers to increase pay, like AAFPs successful efforts to get G2211 implemented, have been marginally successful at best. The general sense in academic centers and at the insurance companies is that primary care is easy and gets paid what it deserves. Many PCPs bristle at this notion, especially rural and older docs who have huge scopes of practice and are the main pillar for their communities. However, the way insurance-based primary care has become, PCPs in the system are overpaid. Consider the average day for a fee-for-service (FFS) PCP. 25-35 patients scheduled with upwards of 6-8 new patients a day. That’s about 15 minutes per patient with at most 7 dedicated to actual medicine. In that time, a PCP can’t reasonably do much besides for quick ordering of labs and meds, a brief admonishment to exercise more and eat better, and/or a referral to someone else who has more time to actually handle a specific problem. Hospitals have a well known financial incentive to increase referrals, so they supercharge this already ineffective system and what’s left is a primary care system that has no availability for acute issues and can only handle the most basic chronic conditions. PCPs who practice in this manner are overpaid and the market knows it. There is no signal that this trend will cease, and as the value of this type of care drops, the replacement of physicians with nurse practitioners and physician assistants makes sense because their pay and level of training match the value and complexity of the services. No increase in reimbursement or Value Based Con will fix this fundamentally flawed version of primary care.

Direct primary care has arisen naturally as a reaction against the insurance based primary care system. Doctors who wanted to add more value by taking better care of patients in the insurance system found they couldn’t and so carved out a new space where they could. Every direct primary care practice looks different given its grassroots nature, driven primarily by mom and pop shops, but almost all are identifiable as much by their offerings and culture as their payment model. DPC practices offer longer appointment times (usually 30-60 minutes of direct, medical care), generous use of texting and calling, and some degree of care navigation involving finding the best prices for labs, imaging, specialists, etc. Longer visits and more availability along with use of tech like e-consults allows DPC docs to increase their scope of care and reduce referrals. Based on the metrics of the insurance system, DPCs are doing the work of primary care, at least 2-3 specialists (via reduced referrals), and social work. Not to mention, inherent in the culture of the model is a focus on cost savings for the patient, for which various insurance companies in full risk contracts are paying providers $1-10k per member per month (PMPM). Needless to say, the average $80-90 PMPM DPC practices are charging seems on the low end. 

Looking at non-insurance medical care gives a better sense of what people value because insurance and government payers dictate payments through committee; and like any central planning body, prices reflect opinion and horse trading more than true value. One may think straight medical care would be the highest value, but in fact this is where the race to the bottom has occurred the fastest. Virtual only care (VOC) fueled by COVID-19 can offer single issue visits for as low as $15-20 a visit or even “free” as part of some insurance plans. But even at these low price points, VOC as an industry hasn’t really done well in the post pandemic era (see: Teladoc stock). To be fair, most of the cratering VOC services are generally virtual urgent care for basic, acute issues like colds and rashes. Certain VOC services for personal vanity like those for hair regrowth and erectile dysfunction are still doing well. The main service grossly underrepresented in the general VOC market is chronic care. 

Chronic care still lives mostly in full-service, in-person primary care settings. Skipping over insurance-based primary care, concierge medicine and DPC are where people can find chronic care management, which is also bundled with basic urgent care and varying degrees of care coordination. While there is some race to the bottom in the DPC space with employer sponsored, virtual, mid level-only offerings, most DPC and concierge pricing stay fairly stable. This demonstrates that a good number of people would rather pay a recurring subscription to have a personal doctor for acute and chronic issues rather than pay $15-20 for as needed VOC. Some urgent cares offer “primary care” in varying degrees and the relatively small number of people who go to urgent care for their primary care further exemplifies the value of continuity. At the extreme ends of the concierge market, where people pay 5 to 6 figures a year for their membership (of course excluding those who pay for concierge as a status symbol), the high end offerings are usually “advanced” testing (full body MRI, genetic testing, Galleri cancer screening, etc) and “treatment” (rapamycin, peptides, supplements, etc), 24/7 rapid response to any issue, and the ability to get special access to specialists and hospitals. Two of the three of those high end offerings involve what should be good primary care- access and care coordination. Clearly, in the non-insurance market, people value access to continuity and care coordination.

Natural market forces are widening the rift between low-value, insurance-based primary care and high-value direct primary care. On the insurance side, the historically low reimbursement and the replacement of physicians with lesser-trained professionals will continue despite the opposition of physicians and professional organizations. On the other side, more people will realize the value of a primary care system not underwritten by insurance. DPC practices have already grown tremendously nationwide with support from individuals. Employers have entered the fray and will further supercharge this movement. The final payer, the government, will join the movement in one of two scenarios. Cynically, when the DPC movement has enough capital and connections to lobby effectively. Hopefully, this will happen when government officials understand the fundamental misalignment of primary care with insurance. Valuing primary care appropriately will solve many healthcare issues. The question now is when not how. Key decision-makers must support this shift or prolong a failing, overvalued system.