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Direct Primary Care: Employers lower healthcare costs

evolve medical clinics direct primary care annapolis maryland

Evolve Medical Clinics-OE Nov 1

Direct Primary Care

Employers Lower Healthcare Cost

Direct primary care is helping business leaders find solutions for their health benefits that address both clinical and financial aspects of benefit design which are inherently conjoined, rendering it impossible to make real progress in healthcare without keeping both in mind.

Some employers and brokers remain unaware of the recent advances in healthcare benefits design. From the wheel to the Internet, the businesses that recognize incremental advances earliest gain tremendous advantages. Without hyperbole, history will mark 2016 as the year that businesses discovered the lynchpin of the healthcare crisis solution: Direct Primary Care.

Direct Primary care (DPC) allows small to medium sized businesses to install an on-site or near-site clinic,

DPC health care expense evolve medical clinics
DPC reduces downstream healthcare expense

dramatically lowering insurance spend-through. DPC has shown “35% fewer hospitalizations, 65% fewer ER visits, 66% fewer specialist visits, and 82% fewer surgeries.” (British Medical Journal, 2013).

Leadership Evaluates Healthcare Expense Trajectory

For companies dealing with an endless sea of annual healthcare cost increases, aggressive solutions are critical to sustain business health and remain competitive. Leadership must evaluate the past, current, and future trajectory of their company’s healthcare costs and push understanding all the way to the source of these cost escalations. Many employers sense health benefit costs are out of their control–but employers should not underestimate their position in the healthcare cost containment arena. In fact, they are the most powerful drivers in this rapidly evolving industry.

Most well managed organizations have deployed traditional containment strategies over the last decade yet there has been a long and variable history of cost containment strategy success. Some have produced incrementally successful outcomes, while others were either unsuccessful or too nebulous to measure. Clearly, addressing the root cause drivers of escalating healthcare costs is the surest method to mitigate escalating costs.

For companies besieged with annual healthcare cost increases, who have exhausted traditional cost containment strategies, incorporating direct primary care as a benefit offering allows for increased control over the healthcare supply chain, without decreasing benefits for employees.

Direct Primary Care: Why does it work so well

The most revolutionary change that Direct Primary Care brings to the table is cost conscious providers who are motivated to lower employers expenses. Every Direct Primary Care will need to prove it’s worth, year after year. They recognize that each employer will be evaluating how much they saved using their DPC. If they want to attract and retain business, they must demonstrate a savings to the employer. At the same time, the employee is their “customer” as well. The DPC practice is motivated to minimize cost and maximize employee health.

Therefore, for the first time in many decades, employers, employees, insurance and provider’s interests are all aligned (David Chase’s Quadruple Aim). The point of intersection for this alignment is the provider who is incentivized to include financial concerns in their clinical decision making and time management. Note that all previous attempts at cost containment within corporate benefits have centered on an out-sourced third party to either incentivize or punish primary care physicians (see NCSL’s “Health Cost and Containment Efficiencies.“

From the employee standpoint, the key advantages are lowered out-of-pocket healthcare costs, improved access and higher quality, more comprehensive and better coordinated healthcare. Employees have a direct one-on-one advocate offering highly personalized care.

Better care = Better health

evolve medical clinics direct primary care annapolis maryland
Better health starts with better primary care

Better health starts with better primaryA healthy employee population is critical for an organization. Statistics clearly demonstrate that the best return on health spending comes from increased access to primary care. In an article published in Forbes, three self-insured employers who work with a Direct Primary Care provider have seen lower absenteeism and employee stress levels and improved employee morale. A 2014 Merritt Hawkins survey found that the average wait time to see a family physician is 19.5 days. After that wait, the average patient will actually be seen for only 7.7 minutes.

In the DPC model, employees have the access, affordability and convenience to be able to address health problems early. Health costs are expected to continue dropping in for employers using DPC for years to come. IBM’s study of their $2 billion annual healthcare expenditures concluded, “More primary care access led to a healthier population which, in turn, led to less money spent.“

New self-funding models

As direct primary care becomes more widespread, options for self-funded health plans are increasing. In fact, direct primary care lowers the entry-level threshold for self-funding. Self-funded companies dramatically lower healthcare cost by minimizing downstream costs:

  • Reducing unnecessary utilization of hospitals, ERs and specialists
  • Objective referrals to specialists and hospitals that deliver the improved value
  • Decreasing excessive lab, radiology and ancillary testing through active care coordination
  • Improving chronic care treatment adherence
  • Expanding the savings of primary care

Since direct primary care eliminates the perverse financial incentive to refer patients out to specialists, clinics that are part of direct primary care networks often contain more in-house testing options. In other instances, DPC networks may seek out specialists who will steeply discount their charges in exchange for immediate payment. An example of this is Evolve Medical Clinics in Annapolis, Maryland. Evolve has a negotiated substantially reduced prices for everything from an MRI ($400 instead of $1,000) to a cardiac echo ($250 instead of $750).

When there are extra charges for tests such as X-rays and EKGs, those fees are far lower than they would be under the traditional health insurance system. When patients do need to be hospitalized, their direct primary care physician serves as a guide and advocate, helping them navigate their medical choices. And when they come out of the hospital, DPC providers are prepared and available for post-inpatient care, thereby avoiding expensive bounce-backs.

Prescriptions are all vetted for lesser expensive alternatives as well as lesser expensive pharmacies and even available coupons. Evolve Medical has an App that connects providers and patients to GoodRx.com. Unlike traditional pharmacy benefit managers, patients and providers work together instead of having a 3rd party oppressively push them in an unwanted direction.

DPC minimizes unnecessary procedures and referrals

One third of healthcare dollars are spent on unnecessary care–or upwards of $690 billion per year, according to the

direct primary care annapolis maryland evolve medical clinics
Estimates of Waste

Institute of Medicine (IOM).

The founder of Evolve Medical Clinics, a direct primary care in Annapolis, Maryland, Dr. Michael Freedman, put it this way, “When you are forced to see patients in 10-15 minute blocks–and half that time is charting and billing–then something has to give.” The “dirty secret” many physicians admit to is referring patients to Specialists at the mention of another problem. “Patients often bring lists of complaints, and that is in addition to the ‘checklist’ of insurer-related PCMH requirements,” adds Freedman. “So the ‘quick’ answer is the financial incentivized answer: ‘Have a headache, see a Neurologist,get an MRI. Have allergies, get allergy testing and see an Allergist.’”

In direct primary care, smaller patient panels and longer appointments means doctors can provide higher quality healthcare and even work on lifestyle issues. Patients and doctors develop better communication because the doctors are accessible between visits by phone, email, text or via telehealth.

Furthermore, all testing costs are entirely transparent. Patients are empowered to make decisions about their own healthcare. This payment model no longer incentivizes excessive testing.

Paired with high-deductible insurance

The Affordable Care Act contains a clause that allows direct primary care to be offered if it is paired with a high-deductible wrap-around policy that covers emergencies and hospitalization. Cigna is one of the first health insurance carriers to offer such a paired package, currently available to self-insuring businesses with 50 to 250 employees who contract with Qliance. Associated Mutual has followed suit, and more insurers will certainly line up, as the savings become more widely known. In the meantime, most organizations are vertically integrating DPC into their existing health benefits which, according to CNBC, lowers costs immediately by 12-15%.


Senators Bill Cassidy, MD (R-LA) and Maria Cantwell (D-WA) have introduced bipartisan legislation (S.1989) which clarifies that direct primary care is a medical service for the purposes of the tax code regarding Health Savings Accounts. The bill also creates a new payment pathway for direct primary care as an alternative payment model (APM) in Medicare. For more information, visit DPCare.org.


Employers and employees are equally dissatisfied with the current system. According to a often quoted 2014 Heritage Foundation article, “While insurance premiums could guarantee catastrophic protection, which is what insurance is meant to do, patients could receive a majority of their care as part of a monthly fee.”

At the same time, employers have an opportunity to finally lower their healthcare costs without cutting benefits and instead providing a form of concierge-level care. Improved morale, health, lowered absenteeism, better retention and recruitment–and reduced spending on healthcare. It is clear why, in January 2013, Forbes called direct primary care the “Trillion Dollar Disruption“.

Evolve Medical Clinics is a direct primary care located in Annapolis, Maryland.
Evolve Medical Clinics is a direct primary care located in Annapolis, Maryland.
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