September 5, 2024

Comparing Revenue Management Models in Healthcare

by Matt Kolinski, DO, Associate Management Consultant

In the final installment of our series, we delve into a comparative analysis of three prominent revenue management models in healthcare: Fee for Service, Direct Pay, and Concierge Service. We’ll explore their adoption across various specialties, their impact on patient care, practice revenue, and overall healthcare costs, and factors to consider when choosing a model for a practice.

Recap and Current Adoption

Fee for Service (FFS): This traditional model, where services are unbundled and paid for separately, is still widely used. In 2024, about 46% of physicians participate in the FFS payment model [9]. Specialties using this model include Allergy and Immunology (62%), Anesthesiology (46%), Cardiology (51%), and many others [9].
Direct Pay: In this model, patients pay a physician or practice directly for services, often through a monthly or annual fee. It’s gaining traction, especially among non-profit organizations [1]. However, the exact number of practices using this model in 2024 is challenging to determine[20].
Concierge Service: This high-touch model, where patients pay an upfront fee for enhanced services and access, is also growing. Estimates suggest there are between 5,000 to 7,000 Concierge Medicine programs in the U.S. in 2024 [5].

Comparison of Models

Patient Care: Concierge Service often leads to better patient-doctor relationships and focuses more on preventive care [4]. Direct Pay can also enhance the doctor-patient relationship, with physicians spending more time with each patient[20]. In contrast, the FFS model can lead to fragmented care due to its focus on quantity over quality.
Practice Revenue: FFS can lead to high revenues if a large volume of services is provided. Direct Pay provides a steady income stream and can be profitable if enough patients enroll[20]. Concierge Service can also be lucrative, given the high fees charged [5].
Overall Healthcare Costs: FFS may lead to higher healthcare costs due to the incentive to provide more services [14]. Both Direct Pay and Concierge Service could potentially lower costs by emphasizing preventive care, but the impact on overall healthcare costs is still unclear [4][20].

Factors to Consider

Choosing a model depends on factors such as the patient population, practice size, and the physician’s goals. For instance, FFS might be suitable for large practices with a high patient volume. In contrast, Direct Pay or Concierge Service might be more appropriate for smaller practices aiming to provide personalized care.

Evolve Your Practice With DoctorsManagement

As we conclude our series, it’s clear that the landscape of healthcare revenue management is diverse and evolving. Each model has its strengths and challenges, and the choice depends on various factors. As healthcare continues to evolve, practices must stay informed and adaptable, ensuring they choose the model that best aligns with their goals and the needs of their patients.

Looking to learn more about healthcare revenue management? See our other blogs in this series below:

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