“Concierge Medicine”: A Growth Industry?

In this age of managed care, and as discussions of healthcare reform heat up, one form of healthcare delivery is continuing to receive attention from investors and doctors: “concierge medicine,” which offers amenities in health delivery for high-paying elite customers. (Newsweek covered the phenomenon here.)

Doctors like the idea because they can avoid the frustrations and loss of income that come from dealing with insurance programs (private or public). The more popular a physician’s practice, the more attractive they will find “concierge medicine.” (There are descriptions of the concept from a doctor’s perspective here and here.)

From an investment point of view, the idea’s almost irresistible. Even if nothing changes politically, many of the well-to-do will pay to escape the grind of medical management – and to receive amenities like prompt appointments, less wait time in the office, and even house calls.

If reform does kick in, doctors who accept insurance will be even more burdened than before. That means longer wait times, less face time with the doctor, and other issues. And if single-payer care ever becomes reality, concierge medicine will explode.

Some policy advocates may have a problem with concierge medicine, since it exacerbates the two-tiered system. Still, many socialized medicine systems (like the U.K’s) allow private health plans. And for those doctors who have the clout, it’s a very attractive alternative to the paperwork, frustrations, and income reduction that comes with insurance.

It’s also one of the few reform-proof investment opportunities in healthcare delivery, which should attract venture capital.  This means that, like it or not, there is likely to be a future for concierge medicine.

Pay-For-Performance: Does It Work?

A study in this month’s New England Journal of Medicine will not end debate on the topic of performance incentives for healthcare. The Centers for Medicare and Medicaid Services conducted a pilot program (administered by nonprofit hospital consortium Premier, Inc.), and will shortly issue $8.7 million in incentive payments.

When correcting for all the relevant variables, hospitals enrolled in the incentive program only performed 2.6% to 4.1% better than nonparticipants, depending on the condition being evaluated.

(“Better” is defined, in this case, as closer adherence to a predefined set of treatment guidelines. This study did not address medical outcomes. In the old medical data analysis lingo, it addressed “process” rather than “structure” or “outcome.”)

The Wall Street Journal quotes one professor of medicine as saying the impact of the program was “very modest.” That may be generous. The New England Journal’s editor, Arnold Epstein M.D., suggests that the difference may be entirely attributable to the “selection effect” – that is, that the hospitals that enrolled did so because they believed they were already achieving the program’s goals. That’s a plausible explanation, and the topic deserves further study.