Direct Care (cash-based)/Concierge Models

In Direct Care practices, patients pay at the time of service and there are no third-party payers involved to complicate the transaction or the relationship. Although contracting with health plans can produce a wealth of patients for a medical practice, it can also increase practice costs substantially and result in deeply discounted payments. As a result, many physicians must work extended hours and rush through appointments to maintain practice viability and income.

However, some physicians have begun rejecting insurance contracts opting instead for a simpler practice model Direct Care resulting in decreased costs of care and significant savings. Direct Care physicians receive a monthly, quarterly, or annual fee rather than payment through an insurance provider. The fee may cover services such as clinical and laboratory services, consultative services, care coordination, and comprehensive care management. It does not cover all services, such as those needed in an emergency. Physicians practicing under a direct care model should suggest their patients use an insurance plan for catastrophic/emergency-related services. Since patients are not paying for services through an insurance provider, Direct Care physicians often benefit younger, middle-income patients. There are variations on Direct Care practices such as Concierge Medicine and Hybrids, a mixture of cash-based patients and insurance patients.


Avoid complex and costly reimbursement processes
Ability to spend more time with patients, and clinical autonomy
Enhancement of financial viability by reducing cost and collecting payment upfront
Increased satisfaction with the care delivered
Reduction in hours worked.


Reduced patient volumes least initially • Increased marketing expenses as the practice will not be listed in any payer directories • Increased healthcare cost for patients.

Considerations for Implementing Direct Care:

The local market should support this type of practice, for instance, a community with large numbers of uninsured patients and affluent patients with or without insurance. 
Are there other Direct Care practices in the area?
Conduct a survey to determine if existing patients would be willing to transition to this type of structure. If too few would be willing to make the transition, consider keeping contracts with better paying health plans, at least temporarily.
Physicians should determine what services they would offer:
        -Would lab tests be a part of the practice?
        -Would you see patients in the hospital?
        -Would you order medication via the insurance's specialty pharmacy and administer it in the office?
        -Would you order DME through the patient’s payer and have the DME shipped to the patient?

Fee Schedule Development

Direct Care physicians offer services in exchange for a monthly membership fee. Since Direct Care emerged, it has been advertised as cost-efficient and transparent in pricing. Physicians should be prepared to publish their fee schedule when starting this form of practice. According to the Journal of American Board of Family Medicine, in 2015, the average monthly fee was $93.26.

When developing a fee schedule, there are several factors that are important to consider. The current local healthcare market may provide beneficial evidence while developing a fee schedule. If many patients in the area have insurance, they are less likely to opt-in to a direct care model. The important factor here is the number of available patients. The number of patients willing to commit to a direct care model in the area as well as how many patients a physician wishes to retain will affect a fee schedule. Additionally, a physician may wish to consider the age of their patient demographic when developing a fee schedule. Patients may require different levels of care during different periods of life. As such, monthly fees may change based on age. If a physician finds that older patients are not their primary patient demographic, or do not require a heightened level of care, a flat monthly fee for all patients may be reasonable.

Several approaches are available to determine your fees. One approach is to identify your cost, determine your break-even point, and apply a profit margin using our Charge Master Calculator. Another is to charge a percentage of the current Medicare fee schedule for your locality. Still another is to purchase data on fees for your market from Fair Health, the MGMA, or other sources. A physician may find that the area caters to lower-income patients and the fee schedule will need to be adjusted accordingly. Consider hiring a practice consultant, available at the TMA, to help develop an appropriate fee schedule.

Concierge Model

Concierge Medicine also may be described as “Retainer”, “Boutique” or “Membership” Medicine. This model is based on the financial relationship the doctor has established the patient to provide exceptional personalized care. Patients pay a membership fee (monthly, annual, or pay-as-you-go) in exchange for enhanced services. Such services may include 24/7 access to physicians, same day appointments, extended visits, house calls, nutrition and fitness coaching. The amount of the membership fee must be sufficient to compensate for seeing fewer patients resulting from the enhanced services offered.

If a physician is considering a concierge practice and already participates in traditional health care services, they may consider a hybrid model. A physician currently practicing traditional health care services may opt to offer additional concierge services for a monthly fee to some patients. Participation is solely up to the individual patients, and only a small percentage is needed to make the practice worthwhile for physicians. When considering the switch to a hybrid model, the patient demographic in the area will be important. For example, if the area has a high patient turnover rate, a hybrid model may not be the best option.
Consider these advantages and disadvantages for both patients and physicians that may influence the decision to transfer to concierge practice. 

Advantages for patients:

More time with a physician
Increased access to a physician by phone or email
Assistance with coordinating care with specialists

Disadvantages for patients:

Pay higher out-of-pocket costs
A concierge practice taking new patients may be hard to find
Health insurance is still needed for other health expenses

Advantages for physicians:

Physicians can spend more time with patients
The practice has less paperwork
Physicians experience lower stress

Disadvantages for physicians:

Difficulty in recruiting and building a patient base
More concierge practices may leave traditional doctors with higher patient loads
Possible lower income at the start
Demanding patients with unreasonable expectations

While concierge practices may be similar to Direct Care, there are some important differences. Concierge practices accept patient fees that cover in-depth physical exams and screenings. However, unlike direct care services, they may continue to accept insurance plans or government programs and will bill the insurance company for some services in addition to the patient fees. Concierge practices often cater to higher income populations due to the membership fees required. When considering starting a concierge or Direct Care practice, consider the surrounding population to determine what variation would fit best. 


The U.S. Small Business Administration has a web page and step by step tool to assist in developing a business plan.

The American Academy of Family Physicians has a guide to assist in determining actual costs of services rendered. After determining actual costs, you would then be capable of determining fees to break even and maintain a profit.

City Data is a useful resource for determining socioeconomic information of the intended area of practice. Information may be segregated by zip code.

The Texas Medical Association has a free CME on the subject of alternative practice models.

Physicians interested in Direct Primary Care can find information at the Direct Primary Care Coalition website.