What is Direct Primary Care? – Podcast #165 – The White Coat Investor – Investing & Personal Finance for Doctors

Intro:
This is the White Coat Investor podcast where we help those who wear the white coat get a fair shake on Wall Street. We’ve been helping doctors and other high-income professionals stop doing dumb things with their money since 2011. Here’s your host, Dr. Jim Dahle.
Dr. Jim Dahle:

This is White Coat Investor podcast number 165 – Direct care medicine. Covid has sent your finances into a tailspin. However, there’s a silver lining to the pandemic. It’s an amazing opportunity to take advantage of the change in your income, or to start that new practice through proactive tax planning.
Dr. Jim Dahle:
As a spouse of physician, Alexis Gallati has over 18 years of experience using the tax code to her advantage to keep more of what you earn. She began cerebral to help docs have a clear path to success through tax efficiency while eliminating surprises. Her services are flat rate, and she will show you the return on investment before you invest in cerebral services. If you’d like to find out more visit www.cerebraltaxadvisers.com or check out Alexis’s new book, “Advanced Tax Planning for Medical Professionals” on Amazon.
Dr. Jim Dahle:
Welcome back to the White Coat Investor podcast. I missed you guys. I’m glad you’re here. I had an interesting shift last night in the ER. It’s kind of the classic experience in the ER. Patient who doesn’t happen to have any insurance, or is in the process of applying for Medicaid and not only needs a couple of hours of my time to suture up lacerations, but needs several specialists as well to take care of her as an outpatient. And it was such a pleasure to call up doctors and multiple different specialties and have them be willing to take care of this person who’s having one of the worst days of her life, despite knowing that they’re probably not going to get paid, and if they do get paid, certainly it’s not what their time is worth.

Dr. Jim Dahle:
And so, thanks for what you do. It’s not easy. It’s hard work sometimes. There’s a lot of risk. It took a lot of training and now you may be headed home from work or headed in, and you’re exhausted. And you haven’t slept well the last few nights, it’s not easy. So, thank you.

Dr. Jim Dahle:
Our quote of the day today, like last week is from Robert Doroghazi, cardiologist and author, who said “Physicians like artists and athletes make their living by having a skill or talent that results in a high level of remuneration. But that does not necessarily require a high degree of business skill.” And that’s the truth. If you want to be a good business person, you’re going to have to pick up those business skills at some point, whether it’s running your own business or whether it’s just running your own family, you’re going to need them.

Dr. Jim Dahle:
If you need some help, if you have a business and you’re trying to set up a practice retirement plan, you need some help with that, we have a new resource for you. We have Retirement Accounts recommended page, and there’s several things on there. First of all, advisors and people and companies that specialize in setting up practice retirement plans for your partnership or for your dental practice or whatever it might be. If you need some help setting those up, you want to get a good 401(k) plan or whatever is appropriate for you, or figure out if what you have is decent, if you just need a second opinion or you need some advice on how to get better investments in it, these are the folks you’re looking for. So, check out that page. It’s under the recommended tab at whitecoatinvestor.com.

Dr. Jim Dahle:
Also, be sure if you need two other things, we have them on there. If you need to self-directed IRA or 401(k), we have several companies we trust that put those together for reasonable price. If you’re looking to put alternative investments like real estate and retirement accounts, those may be good options for you. We also keep our recommended HSA providers there on that list and you can check those out. Again, that is the retirement accounts recommended page at whitecoatinvestor.com.
Dr. Jim Dahle:
So, speaking of practices, we have a really interesting podcast. I’ve been looking forward to recording today. We’re going to have a special guest on, who’s going to talk to us about direct patient care medicine. So, let’s get her on the line and we’ll introduce her and let’s have a great discussion.

Dr. Jim Dahle:
I have a special guest today on the White Coat Investor podcast. I have Dr. Aimee Ostick who is a primary care physician, but more importantly, a direct primary care physician. And we’re going to be talking about direct care medicine today on the White Coat Investor podcast, which I think is fantastic. She describes it as a revolution. I don’t know if it’s quite a revolution yet, but it certainly is the way I would be running my practice if I was a primary care doc. So, I think it’s great. And I kind of want to highlight it today and talk about what it is and talk about its advantages, both for the physician and the patients and those sorts of issues. But first, before we get into this, I want to let you introduce yourself a little bit, Dr. Ostick. Can you tell us a little bit about you and your upbringing?

Dr. Aimee Ostick:
Sure. Absolutely. So, I’m a family medicine physician. I grew up in Woodland Hills, California, which is a suburb out here in Los Angeles. I got into primary care from an early age. My grandfather was a primary care doc out here, and he was a big influence. He had five kids, none of which went into medicine. I was raised by two hippie musicians and got into it in a roundabout way, but very compassionate kind people. I went to Santa Monica community college for a couple of years and went up to Berkeley and then out to the East coast to Philly, Jefferson medical school, where I met my husband, who is also an ER doc. And we have three crazy, currently homeschooled children.
Dr. Jim Dahle:
So, was there any influence from your grandparents for you to go into medicine, or was it just totally lucky that two generations back you had a physician in the family?

Dr. Aimee Ostick:
Yeah. He was definitely a pinnacle in our family and was a very well trusted figure. And I remember just that kind of influence in anyone he really met and had a relationship with. So, for sure from that level of esteem and looking up to him and wanting to have that type of influence on people and be that trusted figure in people’s lives. For sure he was an influence and then just being a science nerd and liking science, and then being encouraged. So, my parents were very encouraging from that standpoint too. My dad had a very amiable relationship with medicine. I mean, his dad was in it. He never wanted to do it himself, but he thought it was a very noble profession. So, they were very encouraging.
Dr. Jim Dahle:
You mentioned your education and training, particularly out on the East coast. Did you have any exposure to direct patient care, direct primary care during your training? Or did you even hear about it or this is all totally post-training that you really got into this?

Dr. Aimee Ostick:
Totally post-training. I graduated medical school in 2008 and there is very much the narrative when we were a medical school that the private practice model is dead. Everybody’s getting bought up by corporate medicine. And so, there really wasn’t even any efforts to educate us on how to run a business or what a private practice model would look like. So, really very naive to not only just direct primary care, but being a business owner and everything else. So, I got into it just in the last couple of years. I was with a big HMO group Kaiser out here for several years, and then with UCLA for a couple years. So, I got really good exposure to different types of payment models. And then my former resident,-co-resident got into on the East coast and was just turned around in terms of his falling in love with medicine again. So, that was really the exposure that I got.

Dr. Jim Dahle:
Cool. Well, let’s start with the very basics. Can you give us a quick definition of what direct primary care means?

Dr. Aimee Ostick:
DPC really aims to put the patient doctor relationship back at the forefront. So, back in the center. And the contract is between the physician and the patient. There’s no third-party payer that’s involved. The patient pays a monthly membership fee, kind of like a Netflix, which gives them access to the physician, to the practice, to a variety of quality and financial advantages to the practice like in house dispensing, etc. which is kind of like a Costco. So, it’s really been likened to those types of memberships or it’s sort of a wraparound fee, but a very low cost.

Dr. Jim Dahle:
So, a lot of people talk about concierge care. How is DPC different from concierge?

Dr. Aimee Ostick:
Yeah. I’m very familiar with that being out here in LA. And always trying to make that distinction between concierge and DPC doesn’t build any third parties. So, where a lot of concierge practices will still probably charge an access or maybe an administration fee, a monthly annual fee. Then they’ll also bill insurance for each visit. The DPC monthly fee is really all you ever pay the practice or for that physician.
Dr. Aimee Ostick:
The other distinction really is the cost. The DPC fee is usually between $50 and $150 a month. Where concierge fees can be much, much higher, probably more than thousands. DPC also really tries hard to provide price transparency to the patient. So that’s the real, I think more advocacy part of this is that we try to find great cash prices for labs, for radiology procedures, even some outpatient surgical procedures. And that’s really where a lot of my education and my time goes is to help to advocate for my patients financially, how to access medical care. So that is a big distinction too, if I’m concierge.

Dr. Jim Dahle:
Now, a lot of those concierge providers talk about, “Here’s my cell phone number, call me anytime. I’ll come over to your house.” Whatever, this super close access to a doctor. Are most DPC practices like that, or most of them don’t offer that sort of level of service that you can email and call the doctor at any time?

Dr. Aimee Ostick:
Yeah. I think the phrase that I’ve heard a lot is if you’ve seen one DPC practice, you’ve seen one DPC practice. So, some have a small panel. Maybe they have 50 to 100 patients and they’re very handholding, more maybe like a concierge model. Some probably maybe are a little bit bigger and they have a bit more boundary setting and “Okay, I’m after hours” or they have a patient agreement that might look a little bit different.
Dr. Aimee Ostick:
So that is what’s great about it is you can model it based on how you like to interact with patients. What type of patient would fit best for your practice? So, my particular patient practice is more accessible. People can call and text me. And I just like that. I think that’s efficient. Especially in this pandemic world that we’re running practices in. And so, people love texting me rashes, parents’ text me all the time when they’re worried about something and it’s just easier efficient, it’s safer. So, I like that personally. So, I think it just depends on the practice.

Dr. Jim Dahle:
That’s awesome because you don’t have to worry about how to bill for a text conversation or a phone call or any of that. I mean, it’s super nice that way to be able to avoid that. The other thing that would be great is not only not having to wait months to get paid by the third-party payer, but not having to have the staff required to fight with the third-party payer. How many fewer people do you think you have in your practice as a result of that? Do you think you have fewer staff members because you don’t have to do all that crappy coding and billing crap?

Dr. Aimee Ostick:
For sure. Yes. The estimate is around 60% to 75% of a typical primary care insurance-based practice goes toward billing. Like having a billing person or billing department, going backtracking, recoding, telling the doctor to recode the visit and then submitting again to the clearing house and to the insurance company. So, that’s a lot of legwork. It’s a lot of time. So, I have one nurse and myself and that’s it.

Dr. Jim Dahle:
What about pre-authorizations? Have you done any pre-authorizations for anything?

Dr. Aimee Ostick:
I haven’t had to do it pre auth in nine months. And that’s if we are really fighting for a medication that we cannot get, because again, I buy all of them wholesale through a wholesaler. If we can’t get through a generic wholesale company, and we have to go through insurance, but I haven’t had to do one yet. I have 250 patients now in my practice. You just remove so many of those headaches because the patient needs this retinae cream and that’s what they need. And you order it and its $6 and they show up the next day and they buy it from you. And there’s none of this, “It’s not on our formulary that we can only use the ointment, not the cream.” I mean, all of that is removed.

Dr. Jim Dahle:
So, most of your patients, as far as their medications go, are they still using insurance to pay for that? Are they buying them through you somehow? How are they getting their medications?

Dr. Aimee Ostick:
Typically, it’s almost always cheaper to buy them through me. I don’t order any schedule two medications or a schedule for benzodiazepines or anything like that. So, it’s mostly your run of the mill antibiotics, hypertension medications, cholesterol medications. But also, just Parkinson’s medications that are really expensive for them to get through their insurance so I can get them a lot more affordably. And yeah, almost always it’s cheaper to get them from me than from a big pharmacy.

Dr. Jim Dahle:
So, is there no legal barrier there to doing that as a physician? I feel like I’ve always been told we can’t dispense medications because we’re not pharmacists. And maybe that’s because of the payers, maybe that’s because of the hospital, maybe that’s because of the state. Can you talk a little bit about how you got into dispensing medications?

Dr. Aimee Ostick:
It really is part of almost every DPC practice that I’m aware of. It’s part of the benefit as being a member of the GPC. It’s that part of my time and effort goes into having a good inventory of wholesale medications and keeping stock and being judicious with that. So certain states like two, I know Texas for sure where for physicians it is illegal for them to dispense medications. They can write the prescription and how they want it to be dispensed. But then for them to actually put that pill in a bottle, it’s illegal. In California there is not a legal issue there. So, it’s really nice. It’s a great benefit and it’s cleaner and easier for me. And again, as a physician, I know exactly what I’m giving my patients and how much, and there’s much more communication there. Imagine me telling them exactly how I want them to use it or how it should be applied.

Dr. Jim Dahle:
So, what is a day look like? How many patients do you see in a day? How many phone calls do you take during the day? How many emails are you doing during the day? How many people call you after hours? What’s a typical day in the life of a DPC doc?

Dr. Aimee Ostick:
A typical day is they say about a typical primary care physician will see about 1% of their panel in a day. So, for a typical insurance-based practice, that’s 2,000 to 3,000 patients in one person’s panel. So that’s 20 to 30 patients a day. I have about 250. So that’s probably 2 to 5 patient interactions in a day. Some of them in person, a lot more of those are virtual texting, emailing, calling. So that’s the typical patient load.
Dr. Aimee Ostick:
But then a lot of my time, again, like I mentioned, is advocating for patients coordinating care. If we have the patient getting a liver biopsy on Monday, so we’re calling the radiology center to make sure that he knows exactly what the orders are. When does he need his Covid test? What is that going to look like for him? He needs the coordination with the rheumatologist and the dermatologist’s follow up.
Dr. Aimee Ostick:
So, I do a lot of coordination of care, which is really important. And patients, we just write something on a piece of paper or write an electronic order and we thrust them out there in the healthcare world. And a lot of things get confused and mixed and not done or not done properly because we don’t have the time to coordinate that care for them. So that’s a lot of what I do as well.

Dr. Jim Dahle:
So, at some point, you made a decision to leave traditional primary care for lack of a better term, third party primary care and go DPC. Tell me about that decision, the decision and what your fears were, how many of them were realized, what pushed you over the edge, why you chose a DPC practice. Take me back to that time, if you can remember.

Dr. Aimee Ostick:
Yeah. I think again, having never any intention of going into private practice at all, being a little bit afraid of being a business owner and just thinking it’s too complicated, it’s too hard for me to understand us doctors, that’s for the administrators to deal with. But then being in that world long enough and seeing just how silly the decisions that the administrators are making on our behalf clinically, double booking patient appointments. I felt like in losing that autonomy and when and how I wanted to see my patients, what I thought was important to discuss in that visit, coding and all of that just taking more and more and more and more of my time. I knew there had to be a way out and for most people, for most good clinicians’ docs that just get burnt out that way, it ends up either leaving and going into an administrative role, which I knew I didn’t want to do. Going way down, going part time, which we couldn’t really afford.

Dr. Aimee Ostick:
Once I really learned about this model and realize it’s not concierge, so I’m not really abandoning a whole host of patients that I would feel guilty about and providing kind of “have and have not” world when it comes to medical care, it’s not that, it’s really something accessible. And also, there’s a movement to change primary care. And I’m part of this cool movement. It was an easy switch for me. Once we went to a conference, my husband and I in Orlando in 2018, we were drinking the Kool-Aid at the end of the conference. We made a business model and marched out our business model and there was no looking back after that.

Dr. Jim Dahle:
I had a great time researching for this interview. I spent some time on your website. If listeners are interested in that, it’s healthandhealingdpc.com. You have some testimonials on there. There are clearly a few people that love you.
Dr. Jim Dahle:
One among them there says, “I can’t say enough about our visit this morning with Dr. Ostick and her nurse. They are both so personable, kind, extremely thorough, and just amazing in a million other ways! It was so nice to not just be a number in a huge waiting room and then getting a quick 15-minute rushed exam, especially when it comes to my kiddos. My sweet boy was so sick and so sad. We were treated so kindly, tests were run, results were given, medicine was provided there at time of the visit! My little one is already feeling better! Another best part, it was so less stressful for me! You guys are the best! So glad we switched from the crowded, crazy, just a number Dr. office that we’ve become used to, while dreading it!”
Dr. Jim Dahle:
So, what do the patients think?

Dr. Aimee Ostick:
Many of my patients like my colleagues and think this is just too good to be true. And they have a hard time understanding and switching paradigms when it’s like, “Well, I don’t understand you don’t take insurance. What does that mean?” That’s the real hard barrier for them to initially get over and that they feel like they’re paying extra for something. And a lot of people’s experience is if they switch some of their things with their benefits package, they can end up saving money for sure.
Dr. Aimee Ostick:
But once they’re in it, and once they have a visit with our office, realize how easy it is to access their primary doctor and there’s no call center they have to go through and the barriers that are put forth in front of them, they’re bought in. Many of my patients are like, “Are you sure that’s all you’re charging? How are you doing financially?” They’re worried about it, but no. But they love it. And they’re really bought in for the long-term. I want this. I went into medicine to do it for 30-40 years. I didn’t go into medicine to do it for 10 years and burn out.

Dr. Jim Dahle:
So, the other thing I found fascinating about your website it’s its menu. You have the prices on your website, which is like my dream to run an ER where people actually know what we’re charging them. But this is really fun. You go on there and you see that an adult pays $89 a month. A senior pay $99, a family pays $199, a kid’s $39 a month. In addition to an adult. It’s $20 for an additional child after two. And then there’s a nonrefundable $99 registration fee per household.
Dr. Jim Dahle:
I mean, it’s awesome. You actually know what the price is when you walk in the door. So that’s fun. You also do after hours visits available within 10 miles for $99 per visit fee, which I think is pretty exciting as well. How many patients do you think a family doc needs under this model for it to actually work? For them not to take a pay cut from their old job, but to actually make this work, how many patients do they need?

Dr. Aimee Ostick:
We broke even frankly speaking, my husband and I are very again, because we’re so into price transparency, we’ve been very transparent with our colleagues about what it takes, our P&L statements and everything else. But we broke even around 200 patients when it came to our overhead. And like I said, I have one full time staff. So, one full time nurse. So, I have med malpractice that I pay for an HR that I pay for. And I’ll be making what I was making at my previous employer at around 400 patients.

Dr. Jim Dahle:
Which is one fifth to one seventh to what you’d be seeing in a typical practice. So obviously dramatically fewer. Now you talked a little bit about how to start a practice like this from scratch. From our own experience, where you drew up a business plan and started recruiting. What if you’re already in a typical practice? You’ve got an insurance-based practice and you want to go to a DPC practice. How do you make that change?

Dr. Aimee Ostick:
There are actually several of my colleagues in a DPC world have done it that way. Again, kind of just being fed up with the system and they have 2,000 patients and they want to convert. So, basically, what you have to do is obviously educate your patients about the new model and what it’s going to look like.
Dr. Aimee Ostick:
The legal part of it is really opting out of Medicare. You have to opt out of Medicare in order to keep your Medicare patients in state clean, kind of legally to, in order to charge them that monthly fee. You have to break kind of your insurance contract and say, “No, thank you. I’m done.” And now your contract is really with your patients. And then you probably have to really downsize in terms of your operations and what that looks like and whether you’re going to have one MA or a nurse, or what that looks like.
Dr. Aimee Ostick:
And then educate your patients and see who’s really up for that type of model. I mean, you probably have of your 2,000. That would be great. Because there’s definitely 10% of those patients who are looking for this type of care who either want it for access purposes, but also like you, or maybe even financially, this might be a better option for them. So that’s kind of how you would convert it from a typical practice.

Dr. Jim Dahle:
Do you have any idea what the conversion rates are? If someone is going to convert their practice, they send out letters to their patients and say, “We’re going DPC.” What percentage of the patients stay and start ponying up the $89 a month or whatever it is.

Dr. Aimee Ostick:
I mean, I don’t know. I think I can tell you. I had a panel of about the last practice I was in, I had 600 patients because I was fairly new to the practice only in there two years. And about 50 of them followed me. I don’t know if that gives you some idea, so maybe 10%, I think. But it just depends how long you’ve been in the practice and how long you’ve had these patients. I mean, a lot of primary care docs, once they have their own practice for a long time, their patients are pretty devoted and maybe want to follow them no matter what it looks like.

Dr. Jim Dahle:
I thought it was pretty interesting that you do both after hour visits and home visits. At least you offer that service. How many do you actually do?

Dr. Aimee Ostick:
I do them a lot now. After hours, it’s interesting. That’s the biggest concern that I gave a talk to some residents earlier in the year. And they all looked at me like, “Oh, my gosh, the patients had their cell phone number?” They couldn’t fathom that extra layer of access that patients could have. But when you put it into all of it, the direct primary care model where you’re seeing again, two to five patients a day and you are free to make the decisions that you need to make, you can block off the hour to go to your kid’s volleyball game. You have that schedule flexibility. You find yourself saying “yes” more than you did ever before. And so, the after-hours become like, “Yes, please, don’t go to the ER. Please come to my house. I have a cat extractor, and I’ll pull that piece of apple out of your two-year old’s nose. Please don’t go to the ER for that.”

Dr. Aimee Ostick:
I love those. And that’s why I got into medicine. I could not have imagined doing that in my former practice with 3,000 patients, because you’re already up to your eyeballs in patient interactions and people pulling at you. So, I think I’d probably do maybe two to three after our visits a month. And the home visits, I offer more as a service right now to my elderly patients because of sort of the stay at home orders here in Los Angeles. So again, it doesn’t seem as intrusive as it did before, because I’m committed to these patients and I’m wanting to be there for them.

Dr. Jim Dahle:
So, you mentioned two or three of the after hours, how many home visits do you think you actually do in a month? I mean, it’s a little odd time right now, obviously, but I guess pre and post pandemic?

Dr. Aimee Ostick:
I think I probably do four or five home visits. And again, a lot of them I initiate because I’ll get some seniors that come on to my practice and I don’t know them very well. And there’s just a story there about falls and I’ll say, “I really need to do. I want to do a home visit. I want to take a look at your house. I want to do a safety eval.” So, I just want it to be more comprehensive. So probably four to five in a month.

Dr. Jim Dahle:
And you charge $99 for those. The question I say is $99 for a physician to go out to your house. I mean, how is that a good use of your time, especially given the commuting time and overhead and all that?

Dr. Aimee Ostick:
I think it’s very useful in the sense that in the context of my day. So, my day is not jam packed with 30 patient encounters. So, I have the time to do it. I’d also, again for a subset of patients, it really gives me a lot of context. I walked into their bathroom and there’s pill bottles all over and they don’t know what they’re taking and how.
Dr. Aimee Ostick:
For me, it fills in a lot of gaps in history. So, I love doing home visits. It’s a very rich experience and a rich visit for me. I don’t offer them. I’m offering them more out of convenience right now and safety for the pandemic. For pre pandemic, if it’s a low risk patient and a kid or whatever, then I’ll have them come into the office because it is a little bit easier.

Dr. Jim Dahle:
So, speaking of your fees, how do you set those? For instance, why not charge more? How’d you decide on $89 a month for an adult and $39 for a kid?

Dr. Aimee Ostick:
I knew it was going to be between $15 and $150. That’s kind of how most DPC practices work. And we went to this conference and the beautiful thing about DPC is there’s a community of docs all over the country that are ready and willing to share their information, share their stories, share their documents, share their fee schedule, all their forms that they have patients fill out. All those things so you can get a good sense of what you need and what you need to develop. I set my fees based on a couple of DPC practices that are around me here in Orange County, just for cost comparison. And we sort of basically backed our way out. So, if I wanted to make what I was making at my prior practice at a full panel of patients of 400 to 500, we sort of backed our way out into what that would look like after overhead monthly cost per patient. So that’s kind of how we worked it out.

Dr. Jim Dahle:
Some of the other interesting things on your website, you have a list of radiology procedures with prices, including a no contrast MRI of $325. It doesn’t even list body parts and it’s $325. Ultrasounds are $150. A non con CT is $275. X-rays are $40 to $75. Did you negotiate these and do they include the radiologist fee?

Dr. Aimee Ostick:
No, I don’t negotiate them. Basically, this was the biggest barrier for me and the hardest sort of effort and energy expenditure before I set this up was getting lab and radiology prices. And it’s because in this world where we’re used to basically radiology centers or labs, charging insurance, these fake inflated amounts, based on the insurance contract, the insurance says we’ll pay 20% of that amount and they’d collect whatever it is. So, the higher you charge, the more you’re going to collect. So, it’s hard to get these prices, but a lot of radiology centers don’t want to jeopardize their contracts with insurers. So, they’ll say, they don’t want to put anything in paper or in writing. If you, as a cash patient, ask them verbally places will have these numbers, but they don’t want to put anything in writing.

Dr. Aimee Ostick:
I just found a really nice local, smaller radiology group out here that was willing to do that for me. They just said, “Yeah, this is what we charge.” And they were just willing to work with me. And then similarly with the labs, that was another big barrier, but I basically joined a group purchasing organization. So not only do they provide you discounts for like sprints and things like that, but they provide you discounts for Quest diagnostics. So, I had to jump through a lot of hoops. You get that relationship. And our rep then had to give me a cashless price for all of our labs.

Dr. Jim Dahle:
Does this $325 for the MRI, does that include the radiologist reading it?
Dr. Aimee Ostick:
Yeah, it includes all of it.
Dr. Jim Dahle:
Then I assume the patients have to show up with cash on the barrel head to get these prices.

Dr. Aimee Ostick:
Actually, no. Not all of them. A lot of them will just bill you, but some will ask for the payment upfront. It depends. There are two different centers that I work with. It depends on what their protocol is.

Dr. Jim Dahle:
Do any of your patients try to pay for this sort of stuff using their insurance, or they all basically go to this radiology center and try to pay cash?

Dr. Aimee Ostick:
What we’ll do is they’ll pay for my fee, obviously cash, and then we can use their insurance to bill there. The lab and the radiology center can bill it through their insurance. If they don’t have a high deductible fee or they’ve met their deductible for the year, then the inquest is whoever can just bill insurance for it.

Dr. Jim Dahle:
Now, speaking of which, what do they typically carry? Obviously, this fee they are paying to you is not going to cover them if they’re in a terrible traffic accident, end up in the ICU or get cancer, that sort of thing. What else are they buying?

Dr. Aimee Ostick:
Right. So typically, what this really works with well with, there are high deductible plans. So DPC works well with high deductible plans because it’s similar like in the world of insurance. We don’t use our car insurance to replace a windshield wiper, right? We really shouldn’t be using our insurance to access low cost primary care. And when we do, the more we do, the next year the more that drives up premiums.
Dr. Aimee Ostick:
So, what we advocate, what I tell patients is get that high deductible HSA plan. Incur some of that, take on some of that lower amount for risk, as far as primary care. Get it with a DPC practice, pay cash. And then when that high deductible plan is there for all of the big stuff. All of the surgeries, the cancer, God forbid, cancer diagnosis, heart attack, etc. the ICU stay, the NICU stay, all those big financial catastrophes. But we don’t need to use your insurance for your $20 flu shot or your $6 wart removal that’s going to cost $800 after you run it through insurance and code and everything else.

Dr. Jim Dahle:
So, what about health sharing ministries? Are any of your patients in a health sharing ministry? And can you talk about the differences they’re running into using DPC with that versus a high deductible health plan?

Dr. Aimee Ostick:
Right. And it’s similar. So basically, some of my patients also have a cost sharing plan. Those are much more affordable, kind of co-ops where you pay a monthly membership fee. And basically, there are lists of things that are shareable and un-shareable. And the most of the things that are shareable are maybe elective surgeries or an ER visit for a ruptured appy.

Dr. Aimee Ostick:
So, if you run into those, that’s basically when the cost sharing plan will kick in and pay for that after your initial and shareable amount and IUA, which is similar to kind of a deductible, but you pay out of pocket X amount. And then after that amount, the share ministry will pay for that. And DPC is great for that because we are making primary care very affordable. So, patients will pay cash labs, x-rays medications for primary care. And as soon as they need to go get a colonoscopy or do something more expensive, they can access their health sharing ministry to help them with that.

Dr. Jim Dahle:
So, the other fascinating part of your website is where the lab price is. So, you charge $5 for a lab draw and then these labs, I mean it’s $4.03 for a BMP. It’s $5.04 for a CMP. A CBC is $3.05. The most expensive thing on here is a serum iodine at $73. I mean, how’s anybody making any money charging $3 for a CBC and $5 to draw it?

Dr. Aimee Ostick:
I don’t make money off the labs. I charged $5 for my phlebotomy charge. My nurse draws all the labs. I act as basically a pass through. So, I charge those prices and then Quest charges me the same exact price that I haven’t basically contracted or negotiated them with through my GPO. And then I charge the patients. So, the patient pays a typical panel for their physical $30 to $35. And then they pay me and then I pay Quest. I’m kind of a pass through. But that’s how much it costs. It’s not expensive to run these labs. We just have these fake inflated prices. When you get an ER bill that it’s $800 for your CBC, $150 for your Tylenol. So, we’re just used to seeing either no price and nobody will tell you how much it is or very inflated price for these things.

Dr. Jim Dahle:
Yeah. It’s fascinating to see what the actual prices are. Quest wouldn’t offer you this price if they weren’t making money at $3 for a CBC.
Dr. Aimee Ostick:
Exactly. Right.
Dr. Jim Dahle:
But the bill that goes out in my name for a CBC has got to be $100 or more for it. I mean, it’s just crazy to actually look at the prices here that a lab is actually willing to work for. So, all right. So, here’s the big question a lot of people have. Do you think a DPC doc on average makes more than a regular primary care doc? And if so, how much more?

Dr. Aimee Ostick:
I actually don’t think so. And I don’t know this for sure. I think a lot of the DPC docs that I know that went into this take probably a small minor pay cut at the end when they’re all full at capacity. And definitely that first year of building their practice, probably they take a pay cut. And it just depends on the practice style. Once you add a second doctor, that is probably where you can start making some more money as a business model.
Dr. Aimee Ostick:
But a lot of practices, DPC practices are a one woman show. They just find it easier to maintain, the quality of life is better. It’s really kind of what people are after and physicians want to do this for the long-term. And then you find yourself, like I mentioned earlier saying “yes” a lot more to patients and in your life in general. You have more time for your family, more time for your patients. And that’s kind of the invaluable piece to this.
Dr. Aimee Ostick:
And I remember leaving my former practice and my medical director was like, “Oh, that’s just concierge. You’re just doing it for the money.” And I get that. I understand that that’s a sort of an offhanded way of thinking about it, but it’s not really a cash grab. At the end of the day, it’s really a mission-oriented model that aims to try to restore the doctor-patient relationship back at the center. And DPC docs are just happier and they just love clinical care again. And I think that’s kind of what they’re all after.

Dr. Jim Dahle:
So, a critic of this model might say, there’s an ethical problem here. You’re filling your practice with people who can afford you and dumping Medicaid and Medicare and low-income patients and other clinics or emergency departments in order to make your life easier and more profitable rather than really serving those who need it most. What’s your response to that criticism?

Dr. Aimee Ostick:
Yeah. I think in fact, many of my patients, and this is true for a lot of DPC practices, especially even in urban areas, many of my patients are just above the safety net. So, they make you a thousand dollars too much to qualify for Medicaid or whatnot. Or they have a few part-time jobs so they don’t qualify for an employer-based insurance plan. Or they have very high deductible plans so they just can’t access primary care. It’s very expensive in a typical insurance-based practice.
Dr. Aimee Ostick:
I still see a lot of Medicare patients and I mentioned before I opted out of Medicare to make that legal and clean. I also have several Medicaid patients that can never get into their assigned FQHC or assigned Medicaid doc. And they pay me a fee to have better access. They call me, text me anytime, they pay cash for low cost labs, radiology exams. And in fact, I’ve become their medical home in that way. And their ER has stopped becoming their medical home.
Dr. Aimee Ostick:
So, in fact, my former practice at a very well-known academic center nearby, I didn’t see any Medicaid patients at all. That’s because of the reimbursement rates. And we’ve all run into those situations, trying to refer patients to a specialist and they just don’t take Medicaid. So, in fact, my panel, I think, is now more diverse than ever. I have some refugee patients. I even have undocumented patients. I don’t care. I want all comers. I want to be accessible. And that’s why the price point is where it is. Patients that are kind of low resource patients actually can afford me. And in some ways, we can offload the EDS from becoming kind of their primary care and keeping them out of the ER.

Dr. Jim Dahle:
So, my parents are in Alaska in some sort of a weird plan. I don’t know if it’s a hybrid. I don’t know if it’s DPC. I don’t know if it’s concierge. But they pay an annual fee and the practice also builds their Medicare. Can you speak for a few minutes about that sort of a and how successful you think it might be and whether some people who aren’t really ready to take a full step to DPC might consider something like that?

Dr. Aimee Ostick:
Yeah. I think that there are people who do hybrid as a way exactly like what you kind of mentioned. It’s like they are in a typical insurance-based practice and they’re not quite ready. Maybe they have a lot of Medicaid or Medicare patients and they’re not ready to opt out of Medicare yet. So, they will do some patients that are DPC that they are part of their DPC, and they’ll pay an access fee and they’ll still bill insurance.
Dr. Aimee Ostick:
And it just gets a little messy. A lot of docs that I know that started out that way ended up going full on over to pure DPC because it’s just cleaner. You’re still dealing with a lot of regulatory factors. And what happens at the end of the day is that you’re still having to bill and code each visit, which can take up to 60% of the time of your visit. Your notes become these big billing machines. And then you’re still doing prior auths and you’re still doing all of that. So, I don’t think it gets rid of what we’re trying to kind of reform here, which is primary care in its purest form, which is the patient doctor relationship.

Dr. Jim Dahle:
Do you think it’d work for other specialties? And if so, which ones?

Dr. Aimee Ostick:
I think the best ones that would work for, for specialty wise would be rheum, endo ID, renal maybe even like non procedural based specialties. I think procedures that are costly can get difficult to pay cash for probably and certainly you want to do the specialties that have a long-term relationship with their patients. But there are places in the country that are really pushing for price transparency even with elective procedures.
Dr. Aimee Ostick:
There’s a place called the Surgery Center of Oklahoma. That’s a great model. And so, there are places in the country that are really pushing for that. So, there are specialists, anesthesiologists, ophthalmologists that they don’t have a DPC pure model, but they do have a fixed price for procedures in elective surgeries.

Dr. Jim Dahle:
I guess the other thing that I might worry about is that people respond to incentives. It’s the first law of economics. So, you’re now offering somebody care. However, that might be defined for $89 a month. What’s to keep your practice from filling up with somebody that comes in and sees you twice a week to get the maximum amount of money out of their $89 a month payment?

Dr. Aimee Ostick:
Yeah. I do make them sign a patient agreement that basically does have some safeguards in there that say that I’m accessible 24/7 but that I’m not an ER. And if you don’t hear from me within 30 minutes, that you need to go to the ER. Basically, I have a family life and there are some boundaries. I can sniff those out. I’ve been in practice for a long time.
Dr. Aimee Ostick:
What’s really interesting is it’s more the anxious patient that I can see people getting worried about. Like you’re saying the heavy users, people call all the time. And I have several of those that followed me from my old practice and they have said to me out loud, like I’m just so used to having to call all the time because I never get an answer and nobody ever calls me back. And I’m worried and having to advocate for myself all the time that they’re not used to, when I call their doctor that she answers the phone.
Dr. Aimee Ostick:
So, I think there’s a little bit of anxiety there. The first few weeks of a typical heavy user. And then they call out and then once they realize that, “Oh, she texts back. Oh, she actually calls me. Oh, well, I did get an appointment tomorrow” they kind of chill out and they realize, “Oh, that anxiety kind of subsides” and they become usual users.

Dr. Jim Dahle:
Have you had to fire anybody for that sort of a problem?

Dr. Aimee Ostick:
I haven’t had to fire anybody. Again, in my patient agreement, I don’t do any chronic pain and that is just becoming a little bit easier to enforce now. I haven’t had any of those types of patients where I’ve had to fire.

Dr. Jim Dahle:
Now you occasionally obviously have to refer people out to specialists. And they go to specialists and find out what specialists are charging for their visits. Often, I suspect dramatically more than it might cost even for you to come to their house. Are they surprised when they find out what the rest of medicine is charging or they just roll with the punches there? What’s your experience been referring people out? Do they not want to go see the specialist? Or what’s the experience?

Dr. Aimee Ostick:
We take a very individualized approach. We know what insurance my patients have. So, we will do the legwork for them and say and make sure that their specialist is in their network, if they have a network so they know what to expect. But then a lot of times my patients will come to me that draw the labs that the specialists ordered. Because they know if they get it done there, that they’re going to get a bill for $1,200. So, they’ll text me and go, “Do you have these labs?” And then it’ll rattle it off. I go, “Yeah, I have most of those. If I don’t, I can get a cash price for one.” And we draw them here. And they’ve learned that if you don’t ask and if they don’t tell you, you’re probably going to get a surprise bill.

Dr. Jim Dahle:
Awesome. Well, we’re starting to get short on time, but this is probably going to be downloaded and listened to by about 30,000 people, mostly docs. What have we not talked about that they should know about DPC or anything else? You’ve got a platform here to actually talk to people about whatever bees in your bonnet lately. What would you say to these listeners?

Dr. Aimee Ostick:
I really believe this is the future of primary care and I’ve never felt so passionate about clinical care and fall on kind of in love with medicine again than I have in the last nine months since I started this practice. We’ve absolutely destroyed the integrity and utility of primary care in our country.
Dr. Aimee Ostick:
And even though every little piece of literature that you’ll pick up about primary care says that people with good access to primary care live longer with healthier lives. And the conglomeration of corporatization of primary care has destroyed that. It destroyed the relationship between the doc and the patient. And it really just falls all downhill from there, increases referrals, increases the acuity care that access to care.
Dr. Aimee Ostick:
So, I believe, I really truly believe while I know there’s a scaling issue. And I understand that for sure. I think this is a great conversation to start about how to at least reform primary care, how to put docs back in charge with deciding what the best decision for the patient is.

Dr. Aimee Ostick:
The other thing I’ll just say is I had talked to a lot of docs come out of residency and they’re worried about taking on more debt. Starting a business. What does that look like? That’s probably one of the number one questions they’ll talk to people about. They’re worried about that because they come out of medical school with a half million dollars of debt.
Dr. Aimee Ostick:
My husband and I paid off $550,000 of medical school debt after six years. We just got busy and we lived like a resident and we lived on a budget. And I think if you do those practices, this is why I think it works so well. You learn how to live simply. It can give you this freedom and this choice. And at once we paid off that debt, we were able to say, “Oh, we know how to do this. We can save.” And we saved towards starting a practice.
Dr. Aimee Ostick:
And then once you have that setup and that saved starting fund then kind of the world is your oyster and you can build what you want to build. So, that’s the only other thing I’ll say is be careful about out leveraging yourself if you want to start a DPC practice and borrowing an extra $50,000 from somebody to do this because it takes time. But if you’re diligent, you can definitely do this.

Dr. Jim Dahle:
Awesome. Dr. Aimee Ostick thank you so much for coming on the White Coat Investor podcast today. It’s been wonderful having you and talking about DPC.

Dr. Aimee Ostick:
Thank you so much. I really appreciate it. Thank you.

Dr. Jim Dahle:
You’re welcome. And if the listeners would like to learn more about you, you can go to healthandhealingdpc.com. And like I said, your prices and everything is right there on the website. So, you can really almost have a model of how you can start a practice like this yourself just by perusing your website. So, thank you so much.

Dr. Aimee Ostick:
Thank you.

Dr. Jim Dahle:
That was a great episode, huh? It makes me excited to go be a primary doc. Just not dealing with the rigmarole of non-transparent pricing, overinflated pricing in the ER can be especially bad. You feel terrible ordering tests. I try to talk people out of MRIs all the time. I tell them the hospital would love for me to order this test. But if you go home and you’ll order it, at an outpatient radiology center, it will be one quarter of the price.
Dr. Jim Dahle:
And it just feels icky sometimes dealing with the system. It would feel so good to be in a pure system where you say, “Here’s the menu, here’s the prices. This is what it costs. Take it or leave it” and move forward. So, I don’t know. I find it pretty refreshing. I’m excited to see a lot of primary care practices going that direction. And I think it is part of the solution to our significant healthcare crises.
Dr. Jim Dahle:
Our sponsor today is Cerebral Tax Advisors. This is Alexis Gallati’s firm. You might have met her at the WCIcon in Las Vegas. She says, “Covid is sending your finances into a tailspin. However, there’s a silver lining to the pandemic. It’s an amazing opportunity to take advantage of the change in your income, or to start that new practice through proactive tax planning.”
Dr. Jim Dahle:
As a spouse of a physician, Alexis Gallati has over 18 years of experience using the tax code to her advantage to keep more of what you earn. She began cerebral to help docs have a clear path to success through tax efficiency while eliminating surprises. Their services are flat rate and she will show you the return on investment before you invest in cerebral services. If you’d like to find out more visit www.cerebraltaxadvisers.com or check out Alexis’s new book, “Advanced Tax Planning for Medical Professionals” available on Amazon.

Dr. Jim Dahle:
Be sure to check out our retirement account recommended page if you need some help in that department. Setting up your retirement accounts, getting an HSA. If you’re looking for a self-directed 401(k) or IRA, check out that page for some great recommendations.
Dr. Jim Dahle:
Thanks to those of you who have left us a five-star review. I appreciate all of your feedback that comes in by email and on the Speak Pipe and on other social media outlets that we have. You guys can stop sending songs in foreign languages. I got about four or five more of those this month. I’m not going to put them all on the podcast just because you record a song on the Speak Pipe. But some are pretty interesting, even if I have no idea what they’re saying.
Dr. Jim Dahle:
Thanks for telling your friends about the podcast. Keep your head up and your shoulders back. You’ve got this and we can help. We’ll see you next time on the White Coat Investor podcast.

Disclaimer:
My dad, your host, Dr. Dahle, is a practicing emergency physician, blogger, author, and podcaster. He’s not a licensed accountant, attorney or financial advisor. So, this podcast is for your entertainment and information only and should not be considered official personalized financial advice.