Membership vs Fee for Service

Dr. T  0:00  
Owners of a direct care practice are more likely to experience higher job satisfaction than the insurance based practice. And it's no wonder why direct care is independent of insurance. Patients pay the doctor directly for their expertise, the doctor gets full autonomy in how they care for patients and how they get paid. They have chosen this path with a love of medicine. This is the direct care way. 

Dr. T  0:24  
By listening to this podcast, you may even start to believe that you too can have a successful direct care practice. Come listen with an open mind as I share my personal journey and how I pivoted from an insurance based practice to direct care right in the middle of the pandemic. And the valuable lessons along the way. This podcast may be the very thing you need to revitalize your medical practice. I'm your host, owner of a direct care podiatry practice, Dr. Tea Nguyen.

Dr. T  0:52  
What are we doing here on this episode? Today, I want to focus more on the practicality of whether or not you should have a membership type of payment model or do fee for service or have both and every specialty is very different. So I'll share with you what I've learned along the way. And the different specialties and what they're doing in different industries. So membership model, we like membership models, when there's something that requires a recurrence appointment. So something that has a longevity, if you're a specialty who does like Parkinson's, health, women's health, even

Dr. T  1:29  
I've known doctors who does rheumatology, something that requires them to see the doctor with their frequency would benefit from a membership. And we see memberships existing all over. Now, even in software industry, when I used to buy what is it Word document with Microsoft, you would just buy the disc and you would download the stuff into your computer and you would have access to that software indefinitely. And then you can choose to upgrade down the road. But what you purchase is what you have for your computer. Now they've moved into the membership model as well. So in order to get the benefits of the month, the membership, which may be regular updates that they often do, they have a monthly membership. So you can no longer purchase that product once and have it good on your computer. And now you have to purchase the membership because the benefit to that to the business is a recurring source of revenue. And that can work for medicine, too, we see that in also gym memberships, we know that we pay into the gym to have access to a variety of things. And if it's up to you, if you want to access that thing. And massages, I paid into a membership to get a massage at a discount. But unfortunately, you get what you pay for. And so those little monthly membership, you get access to the massages, but the quality was quite poor. So I stopped with that membership. Compared to the more high end spas. Now I used to work at Burke Williams spa here in Santana row in the Bay Area, I'm totally spoiled. So nothing has really compared to that level of a treatment. And that's where I want to spend my money. I want to splurge when I want to I don't want to be committed to a membership. So so the perks and the disadvantages of a membership is kind of like that maybe it's not something that people will value to get on a recurring basis. And maybe it's more of a as needed or once in a while type of thing. But we see memberships existing in that industry. Also, recreational parks, a variety of parks have a membership that you can buy into, in particular to medicine there is the DPC model, the direct primary care model, where their primary care doctors do offer a low monthly membership option. And that works for them because they're taking care of patients on a variety of issues. 

Dr. T  3:46  
They are the gatekeepers, they know a lot of different things that can serve the patients and the patient's needed, it's there for them. There's also the MD VIP model, which is more of a concierge where the doctors still are contracted with insurance. But they also have a retainer fee and annual fee that might be in the summer of 1000 up to $5,000. I've heard something as high as $15,000 for these types of doctors just simply to have access for the patients to have direct access with the doctor. And that allows the doctor to see fewer patients a smaller patient panel. So that's a type of model membership model that you can have. For specialists. It's a little bit different. The pool of people we serve is more niche, it's more specialized. And oftentimes we can take care of patients in just a couple of visits, and no membership is needed. So that's when a fee for service would make more sense. So what is a membership all have in common? They have a lot of options. So it might be if a physician has a membership, a specialist it might be the option of adding ancillary services. 

Dr. T  4:55  
Maybe you're adding acupuncture or a type of aesthetic service. See, this kind of serves as a buffet for the patient, maybe they don't need acupuncture now, but maybe they'll want it later. So by having access to that membership, patients can get more stuff than just the medical care that they kind of expect to have. Even with insurance, you can treat this as a buffet. Whatever services you have, patients can pick and choose. And it's just the one fee, it's easy to bill, it becomes a no brainer for the patient when it's this type of model. And it serves a lot of people memberships are intended to serve a lot of people who want what you have to offer. So how can a specialist offer a membership, I mentioned that you can still contract with insurance and then have the added retainer fee. Now this is not something that I do and I don't specialize in and every state will have their own unique health law. So it's worth getting a lawyer to talk over on whether or not this is viable for you as a private practice as a specialist. Because there are some issues behind kickbacks and restrictions or how a membership fee can be perceived as a type of insurance. It's, it's a little convoluted is beyond my expertise. But we know that it exists for primary care doctors, such as MD VIP, does it exist for a specialist, I have no idea. So that's just throwing that idea out there. And the world of direct care is rapidly evolving. 

Dr. T  6:29  
Lots of stakeholders are trying to make something out of it. So just kind of penciled in back of your mind as possibly. But more often than not a specialist can serve people through the membership if there is a life long need for access. So if you specialize in let's say neurology, you want to help people who have migraines, that's a lifelong condition that needs maintenance and care. Or if you're a podiatrist like me, I was doing foot care for people who needed their nails and calluses trimmed. And that's a lifelong thing, right? Those things grow forever. And I see them at least once a month, or if you're a rheumatologist, and you're you're wanting to specifically treat those who have rheumatoid arthritis. Or if you have a menopause type of practice where you're serving women, those types of situations where it is a specialty, but also has a lifelong problem to maintain our solve. 

Dr. T  7:26  
Membership makes a lot of sense. You can have what I have, which is a dual option, where I have some things for membership, but everything else is fee for service. And I really love the idea of a membership because that gives you recurring revenue, predictable, recurring revenue. Now for me, the membership option is really a small percentage of my revenue, it just gives me a little bit of peace of mind, and predictability as far as scheduling patients once a month, so that they're on track to maintenance so that we're not having to put out fires when things are too late. You know, we're taking care of things before problems arise. And I really liked that personally, but the majority of my revenue is surgical, and it's fee for service. So now let's move into what fee for service is fee for service has a bad connotation because the term originated from insurances where the insurance would reimburse the physician for that service, there was no membership involved. And it down the line people had made fee for service on really negative when in fact, it just means getting paid for your service. 

Dr. T  8:35  
So what I'm meaning by fee for service is exactly that you want a service and you just pay them for that it's a direct exchange of money for the service. And you're not dealing with insurance at all, how this works is you can if you're a specialist, you want to help patients, you want to get paid what you're charging, rather than a discount. You know, with insurance, you can offer patients a super bill, which is a bill that just gives the patient it's like an invoice or a receipt that includes your fees. And then with the super bill, you might add a code, maybe it's the office visit code and a diagnosis, those are usually the things that patients need to Bill their insurance themselves. You can you can provide that super bill for them. Some will choose to do this as an added value. I choose to not really promote it because I don't want to be tethered into that relationship between the patient and the insurance. I can see the benefit of having that in house. If you have a biller who can provide that stuff for them. For me, I have a software that's really easy to produce. But I don't mark it as a way to bring more patients who want to use their insurance because then what happens when insurance don't pay for it. Then the patient comes back and says You didn't give me the right code. So I never got paid right and you get pulled into the situation that it's just it's just very awkward and I hate it and I hate having to

Dr. T  10:00  
The answer to insurance, you know, they're gonna want your chart notes, they're gonna want certain words in your documents, I want to be hands off, if patients really want my service, that's what I'm here for. If they really want to use their insurance, they should find a physician that offers that for them. So you can offer that super bill. And what you need to be clear about is that there's just because you provide the superville, it doesn't mean that it's a guarantee for payment, the patient will assume the risk and be done with it have I had patients who did not understand or want to understand a word I said, about these super bills. Yeah, they come on occasion. And sometimes I write a really negative review about it. And that's okay, because they just kind of self selected themselves out of my practice, I can't help people who don't want to be helped or can't understand what I have to say, I did also have a patient this week, who has Medicare and Medicare, it's a different situation, if you're serving a patient who has Medicare, you need to be clear with the patient that Medicare will not reimburse for this service. And you can give them the freedom to move on to another practice, or proceed with the care if they're willing to pay out of pocket. So the patient I had just this week, said, Well, I don't really know what that means. But I'll try to build the insurance myself, then I just needed to be taken care of today. And I said, the private contract you have here says that neither of us agree to proceed with this relationship, but will not seek reimbursement to CMS Medicare. 

Dr. T  11:31  
Now do people hear me when I say that, not always, people are still going to try to submit they say what's the worst that can happen? The worst that can happen is you know, they're gonna call you in bother you about an agreement that they read and sign, and they're not going to want to hear any of it. They're gonna say, why don't you want to bill my insurance, and it has nothing to do with you wanting, it's the fact that you have no contract relationship with Medicare, and Medicare does provide a private contract that you can just copy and paste into your own practice where they need to sign that. And then you can proceed with that patient physician relationship. So in order to make direct care really desirable enough for people to pay out of pocket for decide on that niche that you want to serve, maybe it's something that doesn't get covered by insurance anyway. 

Unknown Speaker  12:16  
And so transitioning out is easier for you, or you are truly the expert in your community that nobody else does this thing that you do. And so you become really sought out after, that's where direct care can really work for you. You can also offer conventional care, but you'll want to be very clear on what that value you offer to patient is why they need to choose you versus an in network option. And I know that might sound really vague, like what is the value proposition that is something that you do have to work with maybe with your coach, or read a couple books on value proposition and how to stand out in a crowd. There's a book by Alex Hermoza, which I'll put in the show notes that talks about this in detail. And he also has a podcast, called the game, check that stuff out. But you do need to learn the language of marketing where you are portraying or articulating what your value is, in a really strong way that makes patients want to gravitate towards you and pay you so understanding what your value is, living in that value and believing people will pay you at your price point is going to be the majority of the work you have to do to have a direct care practice. 

Dr. T  13:29  
So that is something for you to work on, if you don't already have a value proposition on why patients need to choose you over the network insurance option. So in order to have a really great thriving fee for service practice, or direct care practice, I speak to those who are uninsured who hates insurance, or those who are insured, but they are effectively insured. Meaning they're still paying out of pocket because they have a high deductible. Or they're paying out of pocket because it's the beginning of the year and their deductible has reset. These are people who still need access to medical care. They need it fast. They don't want to wait three to six months to see somebody. And those are people you can also serve. So you can lead with when you offer your value proposition you can lead with being an affordable option. But I kind of tread this carefully. You want to yes be affordable so that it makes sense for people to see you but you also don't want to be cheap or the cheapest. And I talk about this all the time. Like do you really want to position yourself attract those people who are looking for cheap or are you wanting to attract people who value what you have to give at any price point. So you don't have to be the lowest cost in order to be valuable. You want to be the specialist who has this advanced training and be the expert in order to be the expert.

Dr. T  14:51  
 You also want to have a price point that demonstrates you are the expert there is a psychology with how you price and people do see that a high your price point equates to a higher level of care, or an expert level or even a level of luxury. So how do you lead yourself as somebody who is top tier who can command a higher price point? Well, you'll need to demonstrate social proof as you being the expert. If you're doing your marketing in social media, then it's you talking about the same thing over and over again, in a variety of different ways. You're just kind of repackaging what you're delivering. And you can certainly talk about your training, but not a lot of people care about your training, as much as how you can connect with people, as the expert on the thing that you want to draw in as you want to attract. So it's really important that, yes, you have the credentials, but also, how are you conveying your knowledge to the public in a way that will attract them to come to you. 

Dr. T  15:51  
So if you're constantly leading your marketing message, as I am three years surgically trained, so and so that doesn't mean a whole lot to the public, compared to somebody who says, Here are the quick ways to solve your foot pain 123. And if that doesn't work, then you can come see me, those two messages are very different physician to physician, we understand more education is more powerful, but physician to consumer consumers understand that what you're saying with confidence and authority, and with more frequency positions you as somebody with authority and an expert in the field. So it's kind of a funny thing, it's it really ends up being the matter of frequency that you show up in your marketing message. Other ways that you can position yourself as top tier in your industry is talking a lot about what you want to talk about what conditions you want to solve for people. So any opportunities where you can speak, whether it be on a podcast, somebody's YouTube channel, on the radio, professional conferences, anywhere that you can speak to an audience will position you as an expert, even writing an article for general publications or even your own industry, you can use that resource to share it with your patients in to share it with your audience. If you find that you're struggling with confidence, then this is a place that you know you need to practice. It's kind of like saying, you can't lift a 20 pound dumbbell with one hand. 

Dr. T  17:21  
So what do you need to do? You need to do the reps in order to get to that point, you just have to keep practicing and the thing that you're weak at a lot of us don't love public speaking. So how do you get better at it, you keep doing it. Another way to show yourself as a top tier specialist, getting testimonials from patients you already helped is very helpful. Google is a reliable way to show your social proof get those testimonials, you may even want to get video testimonials with your phone, your iPhone, or with your smartphone. And just ask the patient to provide with you provide you a couple of sentences of a testimonial of how great you are and how you solve their problem. This helps build your social proof of expertise. If you've given free treatments to friends and family, then guess what they owe you a nice testimonial, they need to do something in exchange for what you've given them. Even if it's not painted, maybe it's a nice review, or referral. That's just part of the unwritten contract of when you do things for free, it's actually not free, and who use something. So from here, you can choose what you want to do with your practice membership fee for service a little bit of both. 

Dr. T  18:33  
This is the buffet, you choose what you want to do, and then you test it. And you see what works for you. I do suggest that if you have issues around pricing, like you don't believe that people will pay whatever your price is that you're starting with. Just call it the introductory rate, give it a timeframe. So let's say you're really uncomfortable with pricing, this one service at $1,000. But you feel very uncomfortable with that number. That's a good sign. That means let's start there. So charge at $1,000. And call that the introductory rate. The mine is kind of a crazy place to be you can play tricks on it. You can call it the introductory rate, which means it's going to go up and it has to go up with time. Your price points needs to follow inflation. That's just what business is we need to remain profitable. So maybe $1,000 freaks you out. Let's just go to what I charge for my hourly rate right now is 450 $450. For an hour, it's pretty average. It's actually a little bit below average. I live in California and things are expensive. So habit, but you start with this introductory rate and you tell people I'm a new practice, and I want to offer this great, affordable introductory rate at whatever and then you leave it at that and when you start to build the confidence to understand your value and see that people are actually paying for that then down the road you can increase your prices and it's little resistance to do so. And plus people love the impression of a deal because everybody wants a deal. No matter what your pocketbook is, you will enjoy a great deal. So make it sound like a deal by giving a lot calling it an introductory rate giving patients that experience that they would never expect from a doctor, especially in the world where every doctor in the insurance model is running through patients minutes, you know, at a time, direct care gives a totally different experience. 

Dr. T  20:27  
We're here to listen to patients, we spend a lot of time we give them a lot of information that they're asking for. Therefore, you're high value already, and you can charge whatever price point you want to charge. What I find really funny myself included back in the day is that we tend to lead with our intellect, we tend to lead with our accomplishments. Like I'm the Doctor Who i did i fellowship training, it took me one year to do this. I've done 500 cases, which is more than a doctor might experience in 10 years of practice, right like that doesn't resonate with people's pain point to resonate with people's pain points. You can say I can help with your foot pain with this technique? Or would you like to live a life without foot pain? Would you like to live a life without body pain if you're not a podiatrist, so I've given you a lot of information in regards to how to decide on a membership or fee for service model, you can really listen to this episode, and you may not have it all right. In the first round, I had thought I wanted a membership model because I was serving people who had chronic problems, people with diabetes, wound care, needing maintenance care, wanted Amputation Prevention care, you know, like all of the things, but I found that it just wasn't really viable at this point in my practice. 

Dr. T  21:44  
So I switched over to fee for service because lots of people just needed me for a few visits, and I solved their problem and they were happy and they moved on. So I liked the hybrid that I have, you can decide to be exclusively fee for service, which makes a lot of sense because you get patients used to paying you every time they see you. And that's actually really nice, they're always going to expect to pay you. So when they show up, you can expect that they will pay. And that's a really good feeling. Whereas in the membership model, you might be treading an area of unclarity, if you don't have a clear agreement that says what that membership includes. And if you have cooler things that are going to cost more, you have to decide are you going to include that in the membership? Is this going to be an add on? How are people going to feel if they're having to pay more than what they're paying into your membership, there's a little bit of a psychology behind membership stuff. So you know, just kind of keep that in mind. And again, I just want to reassure you that you may not get it right the first time on deciding a membership option or a fee for service option. And that's okay, that's totally okay. That's why you have a library of free content here to kind of work with and you may not truly know what you want to do until you start putting it into practice and seeing how it ends up working for you. So I'm curious to know what you end up deciding if you ever had to pivot between one model or the other or if you also have both? Let me know shoot me an email, we'll stay in touch. And that's all I've got for this week. I'll catch you next time. Take care.

Dr. T  23:08  
Thank you so much for being here with me. If you enjoyed this episode and want to hear more, please like, share and subscribe so more people like you can have access to another way of practicing medicine, that direct care way. Let's connect find my info in the show notes and send me your questions. That might be the topic for future episodes. 

Dr. T  23:27  
And lastly, if you remember nothing else, remember this be the energy you want to attract. See you next time