The COVID-19 pandemic and the consequent drop in patient visits have led some observers to conclude that primary care physicians would be better off financially if they were capitated than if they were paid fee for service. If they received a fixed amount of money per health plan member per month, they’d have a guaranteed income stream regardless of how many patients came to their offices.

However, a growing number of physicians have found a different way to garner predictable revenue: direct primary care (DPC). As Alec Wilhelm, MD, explains in a recent KevinMD post, DPC practices don’t accept insurance. Instead, they capitate themselves by charging patients between $50 and $200 a month for all primary care services. Primary care physicians in DPC practices provide longer visits and greater accessibility via phone and telehealth. They have fewer patients than those in conventional practices, but their overhead is also much lower.

Rob Lamberts, MD, a Georgia primary care doctor (and frequent KevinMD contributor) whom I interviewed for my new book on healthcare reform, launched his solo DPC practice in 2012 after leaving a group practice. He’s much happier now and feels that he delivers better care to his 800 patients than he did before to a much larger patient panel. The majority of his interactions with patients occurred via text messaging or email, even before the pandemic. At that time, he was averaging eight to 10 face-to-face encounters with patients each day.

Despite this, he is earning as much as he was in the group practice because he has such low administrative and billing-related overhead. He can also spend more time with patients because he doesn’t have to deal with insurance companies.

Lamberts charges only $50 a month, which he says most patients can afford. At that rate, 800 patients generate nearly $500,000 a year—a respectable gross for a primary care soloist.

To date, though, these compelling numbers haven’t led to a tsunami of physicians embracing direct primary care. According to the DPC Journal, which covers the field, there were only 1,200 locations of DPC practices across the U.S. in November 2019.

It’s a leap for physicians to give up all insurance payments, but there seems to be a market for DPC practices. There are also some reports of successful cash-only practices, which charge fee for service but eschew insurance.

The growing acceptance of telehealth among doctors and patients—mainly due to the pandemic–also bodes well for the DPC approach. Physicians now commonly use telehealth to diagnose and treat minor acute complaints, and some of them use it to check in with chronic disease patients for routine follow-up care. Because telehealth supports the economics of DPC, it can help more physicians switch to this relatively new mode of practice.

Nevertheless, DPC has a couple of serious downsides for patients. As Wilhelm notes, “it is recommended that patients utilizing DPC carry a high-deductible (HD) wraparound policy to cover catastrophic medical emergencies.” He argues that if health insurers incorporated DPC into bundled health coverage with an HD “wraparound,” many employers might offer this option to employees.

The problem is that high-deductible plans frequently limit access to care. More than one in four workers now have deductibles of over $2,000 a year, four times the number in 2009. In one survey, 40 percent of people with high deductibles said they hadn’t visited a doctor when sick or had skipped tests because of the deductible.

DPC payments cover only primary care. If a patient has an emergency room visit or a hospitalization, or has a high-cost medication, the person might have to cover the first $2,000 of the bill each year. So even if self-insured employers glommed onto this trend, it would not necessarily benefit their workers. Moreover, the uninsured, who are often unemployed, might not be able to afford high-deductible insurance.

A more frequently voiced criticism of direct primary care is that it inherently limits access to care, because DPC physicians have smaller patient panels than those who accept insurance. Wilhelm says we shouldn’t worry about that, however. The DPC model, he maintains, reduces burnout and improves work-life balance, so fewer doctors who subscribe to it will retire early. In addition, the model could help attract more young doctors to primary care. Thus, in his view, we’ll continue to have enough primary care physicians to serve the population.

This viewpoint omits the fact that the U.S. already has a serious primary care shortage. In addition, if DPC practices care for less than half the number of patients that traditional practices have, it’s hard to see how fewer doctors retiring early would make up for that shortfall. Also, the biggest reason why young physicians gravitate toward specialties is that they pay better than primary care does. There is no evidence that DPC practitioners earn more than other primary care doctors, on average.

On balance, direct primary care looks like an attractive proposition for physicians with a certain mindset, especially those who prefer to remain independent. But DPC will not solve any of the serious problems confronting our healthcare system. If it ever caught on widely, DPC would also make it more difficult for patients to access primary care when this is already a daunting proposition for many.

Ken Terry is a veteran health care journalist and author who has written extensively on health care reform, physician leadership, and the structural causes of America’s affordability crisis. He is the author of three books on health care reform, including Beyond Medicare For All: Cracking The Code of The Healthcare Affordability Crisis, published by the American Association for Physician Leadership with a foreword by health care consultant and thought leader David W. Johnson.

Terry’s work focuses on practical, physician-led approaches to improving the U.S. health care system, with particular attention to affordability, care delivery, and policy reform. His latest book is available through Amazon and the American Association for Physician Leadership.

More information about his work is available at Physician-Led Reform, and professional updates are available on LinkedIn.

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