How to Be Happy and Appreciated: Switch to Direct Primary Care – Part 1

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Transcription PNC Podcast Episode 406

How to Be Happy and Appreciated: Switch to Direct Primary Care

Part 1 with Dr. Josh Umbehr

John: I recently interviewed a family physician who established her DPC about six years ago, and her practice was very lean with only a few employees. But this week, I'm interviewing what I call a DPC pioneer, because he's been doing this for a lot longer. It started about 15 years ago, and since then he's created an EMR and other useful resources for DPC physicians. So with that, Dr. Josh Umber, welcome to the podcast.

Dr. Josh Umbehr: Thank you for having me, looking forward to it.

John: This is good. Gosh, I wish I learned this stuff about 20 years ago, but I can just live vicariously through you. What we usually do is, have you give us a little bit about your background and education, and then when did you discover DPC and how did you get interested in it so early in your career?

Dr. Josh Umbehr: Yeah, the long version of a short story I like to tell is growing up, my dad was a trash man. He's a lawyer now, so we still tell people he's a trash man because it's less embarrassing. But he had a fantastic business model for 20 some years, which you pay once a month, you pick up once a week. What could be complicated about that?

And then in 2000, in undergrad, I started working for a plastic surgeon as a biller and coder and he hired me knowing full well, I was just a pre-med student and never done this before. And he had never done it before. And no one taught him in all those years of training or fellowship, how to bill insurance. And he struggled to make what a private practice or a resident would make in private practice because insurance doesn't want to pay. And he came from a medical family. So it was even more amazing that no one thought along the way. So you saw that sausage get made and said, look, this makes no sense. He's fighting every payment for everything and not getting reimbursed well. And he was a brilliant surgeon.

That started the path down this idea of surely there's businesses that run like my dad's business that run well and are simple. And that led to concierge physicians in some areas or fee for service, urgent care and others. But the trend being that insurance is enough of a problem even in 2000 that people were saying, I got to get out of this.

Then I became kind of the only med student really involved in the National Society of Concierge Physicians and watched that for 10 years. And the bitter truth there was that the failure rate was like 98%. It didn't work for most doctors. You had to have some sort of shtick of you were George Bush's doctor or Michael Jordan's doctor or something. But they were, some were making it work and doctors were still excited to leave a broken system and some things never change.

But the business side was very underdeveloped. We learned about it through undergrad and med school and residency. And I was kind of that token guy telling anybody who'd listen, this is what I would do. And attendings on rotations would say this is crazy or, but it was a blast. We graduated residency in July, 2010, launched our practice September 2nd, 2010 to pay homage to the book Atlas Shrugged because that's a key date in that book. And so a lot of our website and story has Ayn Rand-isms throughout it but it's been a wild journey since.

John: Funny you should bring that up because when I was listening to some of your videos online and then I heard you bring that up Atlas Shrugged in the book, which yeah, I definitely have read but you made me think I got to go read it again because apparently you've read it more than once.

Dr. Josh Umbehr: 19 times. Yeah, read or listened to it.

John: Yeah, oh man. Well, so you've done some planning beforehand, obviously. So what were the complicated parts of the beginning? It only took you a few months to get going. What were the little steps in there that needed major attention?

Dr. Josh Umbehr: I really like building the business model. There was everybody knew insurance. So 99% of doctors you talk to just knew that. Occasionally you talk to part of the movement at that time which I think has kind of faded away was the ideal micro practice movement and variations on these things that just really struggled to get any true formation or momentum.

We knew we wanted to be membership based because that was easy from a business model. We knew we wanted to be affordable. Ironically in some ways in those years the biggest complaint against concierge medicine came from doctors that it was expensive and elitist. Now we've come full circle and the biggest risk to direct care is doctors making it expensive and elitist.

We've become our own enemy here. And in a weird way, that's an outgrowth of the successful movement is that doctors before never, they saw more failures than successes. Now they see so many successes that they're getting soft at the edges of the business model. But I remember being in med school maybe as a first or second year, their AM radio show was talking about healthcare innovation. I called up and said, I want to do a cash practice. I remember vividly they laughed like, oh, does that mean you don't take checks for credit cards? Ha-ha, next caller.

Like this idea of even what is a cash practice and insurance free, third-party free, concierge, administrative, had all these sort of rough, ugly names except for concierge, which was at least a nice sounding name, but still didn't quite, people didn't connect that to what it did. So it was a fresh slate in a lot of ways of explaining to patients, this is just a new model. Netflix was 13 years old at the time launched in.

People were at least, you could say something like we're the Netflix of medicine or a gym membership, but it really was getting the idea out that you could do healthcare differently. We would have doctors or nurses come to us and say, it's actually illegal to take cash. No, it's against your insurance contract to take cash if you're contracted with insurance. But I remember in residency as well, they bring the Medicare rep or whatever to help everybody enroll. It's like, well, what if you don't want to enroll? And they couldn't fathom that, everybody enrolls.

And so then piecing that out because in a large way that hadn't been done, concierge movement was so expensive and underdeveloped, they didn't see meds or labs or procedures or imaging or DME as a problem to solve. And again, one time a doctor kind of like, very sort of flippantly said, it's not my problem. It is, and that's the strength of family medicine is that we touch everything. And it's still the underappreciated aspect of this.

Amy Finkelstein's got an amazing set of books, Risky Business, Why Insurance Companies Fail, We've Got You Covered, and kind of her economic research of healthcare models. And she's an MIT economist, and she misses the point. She says two kind of funny things. At one point in the book, she references Helen Hunt, who I've always had a crush on. So I think my wife looks like Helen Hunt.

In some movie where a doctor sends, Jack Nicholson sends a doctor to look, do a home visit and look at her kid. And the kid says, mom, did you know doctors do home visits? And in at least the audible book, Amy Finkelstein, the author says, not in the 21st century, this economist screams at the TV. And I'm like, I did a home visit today. She goes so far as to say, primary care is only five to 8% of the national spend. It doesn't matter how we administer it. Let's move on. Everybody forgets what family medicine or intramedicine primary care peds can do because we touch meds, labs, procedures, urgent care, ER, referrals, imaging, patho. It starts from here.

And so to find a cash pathologist, to find where you dispense meds, again, we had pharmacists tell us it's illegal. And if you read the Kansas law, the board of pharmacy manages pharmacists and the board of medicine manages physicians. And they read their law and it does sort of sound like we can't, but that's not my law.

Because most of them were still part of a corporate pharmacy, didn't really quite appreciate there was a wholesale world out there. That you can get a thousand Lucinapril for $20. A thousand amlodipine, five milligrams is $8. It's less than a penny a pill, even after our 10% markup or getting somebody to give us cash labs and like just figuring out each of these things along the way.

And that's one reason we do all the consulting for free is because none of that's really proprietary. If we all practice best practices, then the whole movement grows faster. If you want to go fast, go alone. You want to go far, go together. And we need a thousand doctors converting to direct care a month for the next hundred months to make a real impact.

John: All right, I got a comment on a couple of things here. I did at one point, I was part of a three person group, traditional many years ago. And for whatever reason, the group kind of fell apart. I had to start my own practice. And literally half of the work of doing that and all of the delays was insurance billing. Finding staff that knew what they did, systems, whatever. So you take that out. It's just half of the problem just disappears.

Dr. Josh Umbehr: It's amazing. It really is designed by subtraction. If you're familiar with the Emperor's New Clothes, we were the wise fool at the end of the story because we had never seen how it was supposed to be done. We kind of just did what made the most sense to us at the time. And does it make sense to jump through all these hoops? No. And the key question was, what is the best, most affordable thing for the patient? Well, if you put that out front, then everything kind of just mapped itself to that. Well, client bill prices. When we started 15 years ago, a CBC was a buck 50. Now it's $225, damn inflation.

But it's like, well, I hate doing all of this stuff. I am a workhorse for stuff that matters, but I don't probably tolerate busy work very well. If we can offer unlimited visits and we knew practices were struggling with marketing and value and explaining to people, it's almost starving artist style. You threw as much value at the wall as you could. And then if you did that, the rest just kind of fell in place because you don't need all these extra systems.

I'm reading a fantastic book from 1975. The old phrase, if you want a new idea, read an old book. Systemantics: How Systems Work and When They Fail. And most things are a system, a great line in there. Systems fight themselves, resist themselves. Most systems don't do what they're supposed to do. He had a quote from a Russian czar that said, I never led the country, 10,000 clerks did. And we're not practicing medicine in this system. We're collecting data to send to an insurance company. Those are two very different systems.

And so when you remove all that and like, well, why are we insuring strep throat? It's not even, because I think we're perpetual students and that feels like a multiple choice test. And we did the paperwork, so we should get the dopamine. But we've extrapolated all of these extra steps to get paid when it still doesn't do what the system was supposed to do, which was just deliver a diagnosis and a treatment to a patient.

John: Yeah, you know what? The other thing that occurred to me recently as I'm learning more about this is that my wife and I are not a DPC in the practice, but we opt out or we sometimes we'll just go get imaging at the MRI center and pay out of pocket because it's deductible so high anyway and then hassle factor so high, it doesn't make any sense. So it's like, I don't know, systems and everything is getting in place to really just make this like the logical solution.

Dr. Josh Umbehr: It'll come full circle. There's a brilliant author, Christine Ford Chaplin. She is a medical economic historian. And I think social transformation of medicine, I think is the book. But anyway, she says 1920s, this is the model they did. They called it prepaid medical, but there was no insurance.

And so you had these groups combined. And so she would say a beautifully self-balancing system, because if you, in a prepaid model, if you don't do enough for the patient, they leave. If you do too much and your overhead is too high, you're less profitable.

So you oscillate somewhere in this Goldilocks zone. But then in terms of branding, you'd think you wouldn't want sick people, but everybody could be sick. So you want everybody to think that you could handle them if they were to get sick.

The brand really developed from bringing in specialists and giving out free care and taking on complicated patients, just so you could show all the other patients that don't worry. If you get sicker, we have the resources to help. And in this same book, it talks about how systems oscillate from academia, from letter grade to pass fail to letter grade.

And in true economic fashion, we're coming full circle that the emperor's new clothes analogy again is that the lie we were told is that insurance made care affordable. And I don't even blame insurance companies. I blame doctors.

Because doctors are the ones delivering the care. The doctors are the ones who don't know the prices, who keep trying to prescribe name brand or get paid by insurance. And so that had nowhere to go but up.

We're using a hammer as a wrench. So we're always going to get a bad result. First and foremost, if we're talking business startups in the world of clean energy or clean water, the term is too cheap to meter.

And doctors should be taking business classes to understand what they're doing. So the goal to making healthcare affordable isn't by making everyone have even more insurance, it's by making so much healthcare so affordable, it's too cheap to insure. At 0.8 cents a pill, it costs more to mail you the meds than it does to give you the meds.

There's no reason to insure that. That's great because those chunks of meds make up about 30% of everything insurance pays for. So we could bring it back to 2000s prices if every doctor dispensed wholesale meds, which is well within their license in 45 states. And again, answers the question of what's best for the patient.

John: All right, another basic question is we're going to get too far down here and I'm going to drift off in a different area and focus. But I've got to think of my listeners. So besides the membership model as opposed to using some weird thing called insurance, are there any other major characteristics of this model that make it stand out?

Dr. Josh Umbehr: I think it's that one, there's a lot of flexibility for the doctors. There's a recipe that works best, but like bumper lanes on a bowling alley, there's a variety of stuff. I used to make the joke that you can put almost anything on a pizza, but if you put sushi on a pizza, it's not going to work.

But I would eat the hell out of a sushi pizza. So I'm always in look for a better analogy. So the doctors have that to say, okay, do I want more patients or less patients? And is it hard to recreate this model? No, because it's easy to get wholesale labs, wholesale meds. A lot of the free consulting work we do is just getting that information out to them and letting them know we have a free lawyer, free cardiologist, free radiologist, free pathopharmacist, free national quest account, all these sort of things so that they know, all right, just now come out and practice medicine.

Designed by subtraction, we've removed 90% of the headache. Now you, which I will often say, if you really understand the model, you should wave the BS flag. When done well, this should sound too good to be true.

We have this sort of love hate Stockholm syndrome thing with American healthcare. Canadians love to say that they love their system, even though it's broken. Americans love to hate our system and refuse any possible solution.

But it should sound farcical that we can get meds 95% less than Walgreens. In general, I would say we're 80% less than Amazon, 70% less than GoodRx and 40% less than Mark Cuban. Jokingly, there's not a billionaire on the planet that can get meds for less money to our pay.

So the family physician has all of these tools and you'd think that would be expensive and hard. And the reality is it's very easy. That means doctors can have some staff, no staff, more patients, less patients, chart how they want, do the procedures they want, but it's all in the service of the patient. It's amazing how little burnout there is when 95% of the work is what you would have wanted to do when you were trying to get into med school. Just sit in front of a patient and figure out what's going on. Remove the noise and the job's actually pretty good.

John: Well, one of the things that occurred to me also was when I was in practice, we wouldn't really like to take phone calls and we basically had to drag our patients in, otherwise we couldn't charge them and we couldn't get paid. So it was a weird dynamic where today you could do a one minute phone call, text, whatever. I'm assuming you use whatever methods are convenient to you and the patient.

Dr. Josh Umbehr: It is kind of, I like to think teasingly, respectfully. I think doctors are some of the smartest dumb people that I know because we're so good at being cogs in a wheel, professional academics, et cetera, multiple choice test takers, that it blows my mind that it took COVID for us to finally embrace telemedicine. We knew for, I'll say 40 years, not to bring influenza patients to the office.

Like what a horrible system, but that's the only way we got paid so that we full stop, we won't do it, even though it's horrible infectious disease protocol to bring and then have them sit in an office and for a long period of time and no, no, no, no, no, no. Right, like if nothing else, just bring the sickest patients in or schedule them apart from the other patients or call, text, email them or do anything other than just decide the type of medicine I practice is based solely on what insurance will pay for. Whenever we made that switch, that was the beginning of the end.

John: Let me ask another leading question. This sounds like something, like hang up your shingle, be a solo and ride into the sunset, but I'm assuming, I think you have partners or people that work with you. So what, tell me how that evolved for you.

Dr. Josh Umbehr: I'm very lucky to have fantastic people around from my partner, Dr. Doug and co-founder to my wife, my family works for me or with me, dad, a couple of brothers, a couple of nephews. I joke on the software side, I used to think half of my ideas were good and then I got married and started working with the project manager. Now I think it's closer to 10%, but I just try to make it up on volume.

So much of this has been accidentally successful in a weird way, which is a longer story. But I think because we kept asking the right question, we just naturally led to the right answer. What is best for patient care?

And that helped us to avoid all kinds of pitfalls. But I hired all my friends from residency and then realized I didn't have a whole lot of friends. So we've got two locations and five docs, but they're all just, they're great people.

They want to commit to this model. It's an amazing group of doctors that will say at the direct care conferences, it's the happiest group of doctors you'll ever meet because they're not messing with all the other stuff, they're focused on patients. And it's amazing how much other support you get when you tell people the main goal is to make healthcare too cheap to insure.

Everybody kind of rallies around that idea. I think the luckiest thing we did is had clarity of purpose. And then everything came around that is we just, and again, longer story, but who I wrote my med school and residency personal statements on was my neighbor, Toronto, probably an illegal immigrant from Germany, but just an eccentric lady in all these kinds of ways and was sick and I had to take her to the hospital and follow up and physical therapy.

And you saw how the system made an amazing person as my neighbor, a horrible patient in the system. But art of war, if the soldier makes a mistake, blame the general, the system made her a bad patient. She was a wonderful person until healthcare got involved. Oh, they're upset that they had to wait an hour? Who isn't? Doctors don't wait an hour for anything. Oh, they wanted a clear bill? Oh, who wouldn't want that. They're distrusting, so they show up late, but then they have more questions and so they stay long. Like, yeah, so it's the system's problem. And if good people can't become good patients naturally, then we should be fixing that.

And so that was kind of the ethos that led that. I think in large part, yeah, we're successful because of all the wonderful people in and around the movement who share that same desire to put patients first and fix healthcare.

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