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  • Prepaid Medical Service: An Interesting Business Model

    Posted by Jonathan on October 22nd, 2007 (All posts by )

    Via Rachel comes a WSJ column about a physician who charges his patients flat, monthly rates rather than billing by appointment or procedure. This seems like it might be a good system. It resembles monthly plans for cellphone service, where service providers makes money in part because many subscribers use fewer than their allotted minutes, and subscribers who go over the limit pay a higher rate for the marginal minutes. (The fact that the prepaid medical plan doesn’t cover everything is its way of dealing with high-demand, high-cost customers who are analogous to cellphone users who exceed their allotted minutes.)

    Naturally, the innovative physician’s business is under attack from regulators and insurance companies, but it appears that he is more than holding his own (one insurer is considering offering a plan to complement the prepaid service). It will be interesting to see if his business model is viable in the long term and in markets other than the one that he serves.


    4 Responses to “Prepaid Medical Service: An Interesting Business Model”

    1. Mrs. Davis Says:

      For a monthly fee of $83 per individual or $125 for a family, the clinic provides unlimited primary and urgent care. Those who enroll in the prepaid plan get office visits, lab work, X-rays and as many generic drugs as the clinic can provide.

      This is just backward integration into the insurance business by the primary care provider. What’s interesting is that the $83 per individual seems a bit low but not extraordinarily so. But the $125 per family is a real bargain.

      It would be interesting to read the fine print about when the physician can dump a patient.

      This would be a great way to go for people who have an HSA and it would be an interesting way for HSA providers to integrate forward into providing care.

    2. david still Says:

      For my cell phone plan, there is a monthly fee but there are charges on top of my allotted fees for time beyond what I have signed up for–it is not,then, a real flat fee entirely.

      As for the medical plan, I assume the doctor is a general doctor, an internist. Wha he does then for complicated (iel expensive) cases is to send you on to a specialist, and then does the patient pay addtionaly?

    3. MD Says:

      But isn’t this just managed care writ small? Perhaps it’s the ‘writ small’ that’s the important part of it.

    4. Jonathan Says:

      That’s the way it seems to me (both points), and it seems to be an innovation. Have individual physicians or small practices used similar business models in the past? If they have, I would be interested to know the circumstances and how well it worked.

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