Introduction by Tannus Quatre PT, MBA

It pleases me to welcome Dr. Steven Knope to The Healthcare Entrepreneur.  Hailing from Tucson, AZ, Dr. Knope is board certified in internal medicine and has owned his own practice in the Tucson area for several years.  Dr. Knope is considered by many as one of the pioneers in the area of concierge medicine, and has been referenced and featured by a number of news organizations for his efforts and accomplishments in this area. 

Dr. Knope recently authored the book, “Concierge Medicine: A New System to Get the Best Healthcare,” a publication dedicated to sharing with both physicians and patients a history of the concierge medical model as well as the practical aspects of the model that can be used as an alternative to the traditional 3rd party payment system (learn more about Dr. Knope here).

Dr. Knope is a true healthcare entrepreneur, and will author a series of posts on The Healthcare Entrepreneur about the benefits of entrepreneurial business models within the healthcare arena, and specifically the viability of concierge medicine.  Please enjoy reading the first post in his series below.
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The Hostile Takeover of Medicine: An Entrepreneurial Response - by Dr. Steven Knope

Fifteen years ago, after graduating from Cornell Medical College and completing my residency at UCLA, I settled into private practice with five other internists in Tucson, AZ. After only a year, I knew I could not continue.

I was too independent. I quickly learned that I was not employable. As I talked with my colleagues about opening my own practice, I received many warnings. They said I was “too idealistic.” They said that by striking out on my own, I would be losing the protection of the pack. They projected that I would soon be eaten by the corporate predators - the third-party payers who controlled their lives.

All around me, doctors were forming larger groups and capturing a greater percentage of the “market share of patients,” all in an attempt to maintain some level of control at the bargaining table. Instead of defending their profession on their own terms and focusing on their mission of patient care, they tried to hire their own corporate foot soldiers to do battle in the business arena.

Stating the obvious, this strategy was doomed to failure from the beginning. Over time, it has not been successful in putting doctors back in control of their professional lives. It has been disastrous for patients. Doctors were outflanked by their opponents. Their office managers squabbled pitifully over minimal increases in reimbursement rates from insurance giants and Medicare.

They got bogged down in small, meaningless battles as they slowly lost the war. Meanwhile, physicians in these large groups seemed willing to accept the fact that their patients were getting precious little of their time and less than optimal care. The quality of their “product” in this business model (patient care) was deteriorating.

Most new problems, like our current healthcare crisis, are at their core, old problems with a new face. Here is the age-old problem that doctors faced: One of the basic rules of nature is that as soon as you have something worth taking, someone is going to try to take it from you. It’s just that simple. This rule applies to hyenas prowling the Serengeti, and it is true for predators in the medical marketplace. Business predators realized that there was a lot of potential cash to be made if they could morph the old Marcus Welby-style of medicine into a Wal-Mart model. The brand without the goods.

They first made a deal with the employers, who paid for much of nation’s expensive healthcare. They sold the idea that they could limit rising healthcare costs and manage “greedy doctors.” Having made the sale, they soon controlled large panels of patients. They then moved on the Medicare arena and offered to take some of the administrative load off of Uncle Sam. Controlling the healthcare dollar, they could now manipulate doctors at every level, essentially stealing doctors’ medical practices and forcing them into employment relationships. Physicians were no longer doctors; they were “providers.” Is this evil? Maybe, but it’s just what predators do: the frog must recognize a scorpion for what he is.

As a practicing martial artist, I seek to recognize the world’s ethical people. However, I also fully accept the fact that there are predators and scorpions on the planet; people who would just as quickly cancel the insurance policy of a sick child as they would throw a half-eaten sandwich into the dumpster. Years of fight training have taught me how to survive a battle brought by a predator: I had better fight smart.

So I urge private practice physicians - Play to your strengths. Make your opponent do battle on your terms.

If you want to lose a fight, battle on your opponent’s turf. Follow his rules. This is the mistake that doctors made. They tried to play the game of big business against a giant that they didn’t understand, using his rules.

The way to beat the third-party payers is fundamentally easy: opt out of his system. Walk off of his battlefield. Stop.

What most physicians fail to realize is that healthcare predators have no weapons other than intimidation. They are not licensed to practice medicine. They cannot operate without doctors. By contrast, doctors don’t need third party payers. As primary care physicians, we do NOT need the third party payer to treat the sick or to make a living. The patient/consumer does need one valuable service offered by insurance companies - namely catastrophic healthcare coverage - but there is no reason why every dollar in the healthcare system must flow through their hands. There is no reason why the patient cannot, or should not, pay the doctor directly for his services. This is what is being done in the concierge medicine movement across this country. It is not a pipe dream. It is not complex. It is both an effective and simple way to deal with the predators.

It is now quite clear that patients who are dissatisfied with the present system are willing to pay their doctor directly for more time and access.  Concierge medicine is very much a consumer-driven phenomenon. Doctors who are willing to respond to this market can change the rules of the game, without any change in the law or the need for any governmental intervention. Primary care physicians can return to focusing on patient care. They can increase their income to a level commensurate with the demands and responsibilities of their calling, and regain control over their professional destiny.

How do I know this is possible? In the year 2000, after dropping all of my HMO contracts, I opened one of the first concierge practices in the country in Tucson, Arizona, which was ground zero of the for-profit HMO movement. At the time, I was one of a few doctors in the country experimenting with this model. Today, there are approximately 1,000 doctors engaged in direct financial relationships with their patients. The genie is out of the bottle and he is not going back in.

Many believe that a “nationalized healthcare” system is the only way to solve our current healthcare woes. However, make no mistake about it: We Americans are not socialistic at heart. Nothing else we do involves socialism. We are uniquely free-market driven and an independent breed. Our people will not tolerate a mediocre, socialized medical system, regardless of political stripe.

Like all freedoms, the freedom to practice medicine the way that doctors want to practice medicine comes at a price. If physicians are currently experiencing taxation without representation, it is time to dump the tea into the harbor. There are times when fighting is appropriate and necessary, to defend what is dear to us.

If doctors want medicine to be reformed, they must take back their own profession, one practice at a time. Unless we are willing to pay the price for professional freedom, we will be at the mercy of those who wish to subjugate us and subjugate our patients for their own profit.

Last month, Vantage was featured on the cover of PT Magazine in an article that focused on the topic of “healthcare consumerism.”  Healthcare consumerism is the shift toward the treatment of patients as “consumers” of their healthcare services, rather than simply passive recipients in their care.  As a result, the focus of many [smart] private practice owners is on the development of services and environments of care that will create loyalty and satisfaction among their patients.

Here is a link to the article - Thank you to PT Magazine for their coverage of such a relevant topic to today’s healthcare environment.

In traditional industry, says Quatre, businesses compete for customers by either lowering prices or improving product quality-say, by building a better widget. “In health care it’s much different because you can have a different service based on your training, your staff, your expertise, and so forth, but can you charge more for that because the quality’s a lot better? Your hands are tied to some extent, unless you’re on a strictly cash-based model. To compete for the customer, what you really need to do is make it an experience with which they would prefer to be involved.”

If the “it” is e-medicine, and the “they” refers to patients, the “build it and they will come” strategy doesn’t necessarily apply - not without a bit of work, that is.

Readers of this blog will know that we support efforts to challenge normative business models in the practice of healthcare, including those that incorporate the use of the Internet to communicate and interact with patients (here are some posts about Jay Parkinson and the use of e-communication in medicine).  We don’t know exactly what the practice of healthcare is going to look like in 20 years, but the Internet will definitely play an increasingly important role in the future - and we will be there to greet it.

Many of the healthcare providers that are using the Internet to provide care to patients today will someday be acknowledged as pioneers that helped to shape the evolution of the industry, regardless of whether or not their efforts were immediately successful in today’s healthcare economy.  One of these pioneers, Dr. Ben Brewer, has developed a savvy and secure electronic interface for patients of his Illinois medical practice - one that helps define “cutting edge” e-medicine in today’s largely status quo healthcare economy. 

The problem is - patients aren’t interested.  It’s a common problem in business, where great products in the absence of interested markets do vastly worse than decent products in ripe markets.  Dr. Brewer likely has a great service, but if patients aren’t interested in (more likely, not ready for) it, it’s not going to sell, and the doors will have to close if changes aren’t made.

The key to selling “cutting edge” services, especially in healthcare, is to make sure a market exists that will demand the service, and if no market exists, create the market yourself through a combination of customer education and market hype.  This takes a lot of work to do, and though it may be too late to pay off for Dr. Brewer, there will likely be no shortage of opportunity to introduce cutting edge services into the healthcare market in the coming years.

The Wall Street Jounal’s Health Blog recently commented on the fate of Dr. Brewer’s practice:

Brewer counts himself among the minority of doctors willing to take the online plunge. “Most doctors I know seem unwilling or unable to make even email part of the way they practice medicine,” he writes. Legal worries and data overload are the deterrents.

At Brewer’s office the technical end works as promised, but patients don’t really seem interested. They don’t want to pay the (usually unreimbursed) $30 for the online visit with Brewer, and they’d rather just send a regular email, even though it’s vulnerable to snooping.

Everyone loves a holiday.  Thanksgiving, Memorial Day, the Fourth of July…most of us get a day off and enjoy spending time with family and friends.  I know I do (except, of course when the family is out of town and I choose to spend the day blogging instead of watching the Fourth of July pet parade).

As cool as they are though, holidays are like just about everything else that’s good in life - they soon become taken for granted and the true meaning they were originally intended to bring soon play second-fiddle to what we’ve made of them.  The Fourth of July is no different, but today I did want to take a step back from the fireworks, put the watermelon down, and comment on the concept of freedom in America, and how, if at all, this impacts the healthcare industry (believe me, I’ll get to the fireworks and watermelon a bit later).

We often hear about “freedom” and “independence” in America, and how the “land of the free” is one of the most sacred constructs of our way of life in this country.  I agree that it is.  We are free to choose how we live, free to go where we want to go, and free to do what we want to do.  Freedom really is a pretty cool thing, and even though many of us prefer a cold beer and a hamburger on Independence Day rather than a deep discussion about our founding fathers and the Declaration of Independence, I think it’s OK as long as we’re living “freedom” and “independence” in our everyday lives, providing living testimony to the significance of our freedom.

Living “free” has many benefits, and has allowed our country to evolve into the technologically advanced and economically powerful force that we are today (Did I just say that?  Give it a couple of years, we’ll swing back around).  Living free allows us to express ourselves creatively and try new things, hoping to improve ourselves and others through an endless pursuit of the biggest, the brightest, and the best.  And while many fall down in their pursuits (I know I have), we as Americans are free to stand back up, try again, and get it right the next go around.

Now, freedom, as great as it is, is an interesting concept as related to healthcare.  In my opinion, there’s no other industry in which freedom should play more of a role - innovation, creativity, compassion, progress, and many other by-products of freedom form the cornerstone of the healthcare industry, allowing us to care for each other, improve the quality of our lives, and form the foundation for future generations of healthy individuals.  The problem is, this isn’t the way it works.

Unfortunately, the healthcare industry is far from “free.”  On the provider side we don’t have the freedom to choose the treatments that we know will help our patients because they aren’t reimbursed, we don’t have the freedom to spend the time we need with our patients because we need to see large volumes in order to keep our doors open, and we don’t challenge the system with new business models and delivery methods because of fear of professional fallout and failure.  On the patient side we don’t have the freedom to choose our providers because they aren’t part of our insurance plan, we don’t have the freedom to leave our employers because they insure our health, and we don’t have the freedom to work as a team with our providers because they don’t have the time to spend with us.  Doesn’t sound too “free” to me.

So, what’s the answer to this apparent lack of freedom in healthcare?  Well, I think it’s entrepreneurship.  I think we need to spend more time evaluating the drivers of good healthcare, and how to align the incentives of our healthcare business models with those of our patients (our “customers”).  I completely understand the argument that there are many who will fall through the cracks in a system that doesn’t provide a safety net - I get it, and I agree.  I don’t agree however that the safety net should effectively reduce the “freedom” of our best and brightest to find new, more efficient, and more profitable ways to deliver healthcare to our country - entrepreneurship as I would call it.

There’s not a simple fix to the healthcare problem in America, but I firmly believe that innovation and creativity is the foundation from which the tides will begin to turn.  Much of our freedom has been lost in the healthcare industry, but the good news is that getting it back is not as far off as one might think.  Making the decision to say “no” to insurance companies that won’t allow you to provide good care and deciding that you will find a way to be profitable using new, perhaps even untested business models in your area is a profound, but good first step.  There are many great new models of care out there that may or may not work change healthcare as we know it.  But my hat is tipped to all that are trying something new in an effort to be “free” and to improve our system through innovation, creativity, and entrepreneurship.
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Tannus Quatre is a passionate blogger and writer, as well as a principal/consultant with Vantage Clinical Solutions.