Author: Matthew Holt
A few weeks ago I wrote an article about the problem with primary care and how we should fix it. The tl:dr version is to provide every American with a government-paid concierge primary care physician. We give each person a $2000 voucher (on average, depending on age, medical condition, location, etc.) and the average group size per PCP is 600 people.
My point is that a) it would be cheaper than current health care – because of the reduction in emergency department visits and hospitalizations, and b) it would allow us to pay PCPs the same as specialists (roughly $500,000 per year). This means that many existing emergency physicians, internists, hospitalists, etc. will be converted to PCPs. I also think we can and will make better use of the 400,000 nurse practitioners in the United States. We only need about 600,000 PCPs to do this. Although this would double primary care spending, it would reduce health care costs overall. (Okay, there's some controversy about this, but the Milliman study linked to above and common sense say it saves money).
There are obviously two big problems with my proposal. First, we have to go through the conversion process. Second, we have to do something big with the three major players that are currently sucking up health care dollars—the large hospital systems and their associated specialists, health insurance companies, and pharmaceutical and device companies.
I don't think there would be any problem selling this to most doctors or the American people.
Doctors know they are trapped in the current system. This will give them the freedom to practice the way they want and remember why they entered the medical field in the first place – to care for patients holistically.
People are very aware that access to primary care is both beneficial and difficult for them. The waiting list is too long. In this system, primary care will be abundant. I and many others know only horror stories of how poorly they are treated by large hospital systems, insurance companies, and Big Pharma. They would rather have an authorized PCP on their side.
The only concern with patients' primary care is whether PCPs have an incentive not to refer them to the specialty care they need. In my system, there is no global capitation or risk for PCP, so there is no incentive not to refer. But there is no reason to mention it unnecessarily. They will do the right thing because it is the right thing to do. (It took Jeff Goldsmith 30 years to convince me of this). So insurance companies don't need to manage primary care at all. No claims, no bills, no usage management. Instead, we should have our 600,000 primary care physicians well compensated and able to manage their practices to do the right thing.
This can involve a lot of changes. PCPs will work in small groups. There will be solos. There will be people who specialize in certain types of patients (thin kids or people with serious illnesses or geriatricians). They would all be paid the same salary, but their clinic revenue and patient volume would be adjusted for risk in a manner similar to how we now risk adjust for Medicare Advantage, but there would be no competition and no profit motive.
This system will create a lot of innovation. The PCP will be responsible for treating patients with chronic conditions. They will use a budget of $2,000 per person (about $800 of which is revenue) to build a remote monitoring program, use artificial intelligence, and build a team of assistants and nurses.
So can it be done in the United States? Yes, it already has. I highly recommend you take the time to read this neat ChatGPT summary of the Nuka system in Alaska. (I believe created by Steve Schutzer MD). Nuka went from a legalistic, bureaucratic, expensive system that patients hated, to a system with culturally appropriate care that “consumer owners” loved. And it costs less and the results are better. There are many other examples of similar approaches across the United States. Just ask Dave Chase. They just haven't scaled up because the incumbents have killed them. (A good example from Texas is where a hospital chain bought and killed a large primary care group led by Scott Conard because it cost them $100 a year in reduced hospital FFS admissions).
What we need is to create incentives that make it difficult for doctors and patients to participate in these arrangements and allow American ingenuity and medical professionalism to work.
The other side of the equation is the need to control the cost of specialist and hospital care. How this will happen is yet to be discussed.
I personally would phase this plan in over 2-3 years and identify which hospitals will be the “losers” – those that currently utilize their primary care networks as loss leaders for their expensive specialty care. I would have them form a national group and gently persuade them to chart a course for their own transition to a global budget. After all, they don't have to provide primary care in emergency rooms, and their admission rates for uncontrolled chronic care would decline. Oh, and they don't need those huge hedge funds so they can reallocate to pay for primary care! In this worldview, there is no need to pay top executives like baseball players—as UPMC (for example) does for its 117 top executives!
America's leading hospitals and experts will continue to provide the most scientifically advanced, world-leading care. They just don't offer as much product at such a high price. And of course, they develop very strong relationships with those primary care physicians who are innovative. In fact, I highly doubt there will be direct integration, but under the terms of the PCP. Look what happens with Alaska and Caesar.
You may have noticed that in a world where it's basically the PCP's global budget and the hospital's global budget, my system doesn't seem to have room for health insurance companies. you are right. Look, I just saved 15%! Well, not really. Some administrative costs and some actuarial analysis have to be done somewhere. But in this system, there are no claims, no UM, and no UnitedHealth Group corporate jets. Technology and service companies sell services to PCPs. In fact, Elevance et al are now part of Manchester United and will continue to operate as a medical group and technology company. But the core insurance functionality will no longer exist.
This leaves the last big players in the healthcare ecosystem. Drug and device companies are creating (generally) wonderful products right now. They are simply used incorrectly and cost too much. I would add a feature to the FDA that would focus both on cost effectiveness and on management of drugs, post-Phase III drug use, and I would have a universal transparent pricing system. Goodbye PBM. Hello, Mark Cuban.
And how to pay the fee? For now, that won't change much. Currently, the government pays 60% of health care costs, with employers and consumers paying the other 40%. I just take and redistribute the money. (Well, I'd run it through a sensible tax system, taking reserves from insurance companies and hospitals they no longer need, and imposing a wealth tax on billionaires for good measure. But those details can come later).
Look, I know this is a huge change to the system. We may need a king/dictator to get it done. But given the current mood in the country, we seem to like the idea. This is an area where radical change can bring many benefits.
Give me a small policy marketing budget and I could easily cast insurance companies, hospital systems, pharmaceutical companies, etc. as the bad guys and make low-wage PCPs the heroes.
Who doesn’t want free concierge service?
Matthew Holt is founder/publisher of THCB
