Insights on Converting to a Direct Care Practice

Q: What has been your practice journey thus far?

A: Robert Kornfeld, DPM, went into private practice in 1982, which was completely traditional medicine and surgery until 1987. After an illness lasting 3 years that conventional medicine failed to help, he sought out a holistic internist, who he shared healed him in less than 3 months.

“It was then I knew I wanted to learn more about this and dove into an alternative medical education that eventually brought me to functional medicine and then regenerative medicine,” said Dr. Kornfeld. After leaving an insurance-dependent practice, Dr. Kornfeld established a direct-pay, fee-for-service practice in 2000.

Daniel Waldman, DPM, FACFAS, has owned his Asheville, NC practice since 1993. At that time, Dr. Waldman said there were no podiatrists allowed on staff at the local hospitals so he did his surgeries in the office operatory that the previous doctor had established. The next year he earned surgical privileges at 2 local hospitals with much more modern equipment than the nitrogen tanks and heavy sagittal saws and wire drivers he had been using. The practice became very busy and successful, and Dr. Waldman had to hire additional support staff. In 1999 he established a satellite office that also grew quickly and allowed him to hire an associate DPM who eventually bought that practice 5 years later. He opened another satellite office, but after a couple of years had to close it because the small city was not growing as quickly as anticipated.

During those years Dr. Waldman was also undergoing a Medicare audit, saying it was very stressful, but prevailed after 4 years of legal appeals to the administrative law judge level.

“Going through that was a real eye-opener, showing me how powerless physicians are when placing themselves in dependency on third-party payers,” said Dr. Waldman. “I knew there had to be a better way, but it took more years to transition to the direct care/direct pay model of practice. In retrospect I wish I would’ve done it much earlier.”

Michele Kurlanski, DPM, has been a direct care/direct pay practice for over 3 years. She started a private practice 20 years ago, a few months before giving birth to her third child. For the first 17 years, she took insurance. During that time, she dropped the lowest payors and added cash-based services such as laser, shockwave, and Keryflex. In the summer of 2021, Dr. Kurlanski decided to opt out of all insurances, including Medicare.

Tea Nguyen, DPM, started in 2018 in a traditional insurance-based practice and found overhead “far exceeded” revenue. “I didn’t want to keep sinking, so I sought solutions that would make practicing medicine more simple rather than more complicated.”

Dr. Nguyen started to opt out of the most stress-inducing insurances and eventually left her biggest payor, Medicare, in 2021. Although she contemplated staying in network with one PPO plan, she found it created too much confusion over the brand she was creating and decided to leave insurance entirely in 2022.

“This has been the most freeing experience I’ve ever experienced,” said Dr. Nguyen.

Q: What is the structure of your direct care practice, including any clinical areas of focus or unique features?

A: Dr. Waldman called his practice “probably most similar to the mid-20th century solo podiatry practice, but with modern 21st century treatment modalities.” Although he has been board-certified in foot surgery for decades, he decided to transition away from most foot surgery and focus on general podiatry care.

“It wasn’t an easy decision after having spent so much time devoted to my surgical training, but when I looked at the economies of scale and opportunity costs it was the right choice,” said Dr. Waldman.

Dr. Waldman considered how much time goes into even a basic foot surgery like a hammertoe correction or bunionectomy. This includes staff time scheduling, coordinating with the patient’s general physician, drive time to and from the surgery center/hospital, paperwork, 3-month global periods, and the surgery itself. With all those factors and then adding in low third-party reimbursement, it became apparent to Dr. Waldman that he could do much better practicing general podiatry and doing some surgical procedures in the office.

Dr. Kornfeld’s focus is chronic foot and ankle pain through a functional medicine paradigm that also incorporates regenerative medicine.

Dr. Nguyen’s practice focuses on preventive care, regenerative medicine, and minimally invasive surgery. “People come to me when their current options are insufficient and they want more,” she noted. “This often ranges from people who are uninsured to those with restrictive insurance of all economic backgrounds.”

Dr. Nguyen has membership options for patients who need long-term care, saying patients can pay as they go for more acute symptoms.

Patients call Dr. Kurlanski’s office to schedule appointments and do not need a referral from the primary care doctor or their insurance to be seen. She often has same-day appointments available. “I don’t always know what a patient will need until I meet them so we don’t give them a quote, but rather a range of what it may cost,” she explained. “For those with commercial insurance, we can give them a superbill if they have out-of-network coverage.”

Dr. Kurlanski’s practice aims to be a “one-stop shop” for patients. She has ultrasound, X-ray, shockwave, laser, night splints, and a same-day orthotic system. Her practice also has a “doctor store” to eliminate an extra trip to the drug store.

“I can get more done in an hour than in most podiatrists’ offices,” Dr. Kurlanski said.

Q: What are the highs and lows of your experience in transitioning to this type of practice?

A: “Leaving insurance has been the best financial decision I’ve made, since it drastically cut my overhead expenses by at least 50% or more and my accounts receivable is always $0 every day,” noted Dr. Nguyen. “It forced me to focus on what really matters, which is the patient’s experience and connection to the person they are trusting to care for them, their doctor.”

Dr. Nguyen learned many business skills while moving to direct care and said it has been exciting to see the true potential of private practice today “where most people are fed up with paying an exorbitant amount into their insurance premiums and out of pocket expenses despite having insurance.” Patients are savvy and are always looking for something better, she noted, and doctors are burning out from having more paperwork and metrics to fulfill that have nothing to do with their medical training. “I didn’t go into medicine to be an insurance administrator,” she said.

For Dr. Waldman, the transition to a new type of practice took more than a year. He took a look at all of the network contracts he participated in, made a spreadsheet listing reimbursement for codes, and dropped poor-paying plans. Many of his patients still stayed with him and although they paid out-of-pocket, their out of network benefits helped them out.

Dr. Waldman also had a large Medicare population and instructed his staff that the practice was no longer accepting new Medicare patients. It convinced him to opt out of Medicare when many of his prospective new patients said they were willing to pay out-of-pocket.

When Dr. Kurlanski made the switch to direct care, she knew her patient load was going to drop. She lost 90% of her Medicare patients and the primary care physician referrals dried up, although she was counting on getting new patients from her website and online presence. She hired a bookkeeper and a fractional chief financial officer who used Profit First system to help her manage my cash flow. She was “brutal” in slashing expenses and her practice runs “pretty lean.” A virtual assistant schedules new patient appointments.

“I am not making the same (income) as I would if I were hospital-employed, but I have autonomy over my schedule,” noted Dr. Kurlanski. “I make a profit and take a lot of time off. I am not doing notes at home (on) nights and weekends.”

Dr. Kornfeld said he has been more successful treating 8–10 patients a day than when he was seeing 50–60 patients daily on insurance. Revenue management is simple in Dr. Kornfeld’s practice—patients pay when they come. He noted his accounts receivable has been $0 for almost 25 years.

Dr. Waldman officially opted out of Medicare about 5 years ago, saying although volume took a hit, because his fees were higher, he ended up bringing in more revenue. When he was on all the networks and Medicare, Dr. Kornfeld was seeing 25–40 patients a day, compared to 15–20 a day now, letting him spend more time with patients.

“Many of my patients have remarked that they feel listened to because we actually have a conversation instead of the provider clicking away on a screen for EMR,” said Dr. Waldman. “During the conversation I may take pen to paper and jot down notes that guide my dictation later. I’d rather look my patients in the eye to not only hear what they are saying but see how they are saying it. This is vital for the doctor-patient relationship.”

Finding the right patient is not as hard as it might seem, advised Dr. Nguyen. “People are craving connections with a doctor who will take the time to listen to their concerns and help them get better,” she said. “Too often patients feel rushed or feel like their doctor just doesn’t care. Or worse, the doctor they used to see quit medicine because he or she was burned out.”

Although health insurance generates billions in profits, Dr. Nguyen said the industry does not focus on either the patient’s outcomes or the physician’s well-being. She called that “a bigger problem than costly overhead and diminishing reimbursements. People are simply not getting better, and fewer doctors want to stay in clinical practice.”

As Dr. Kornfeld said, one challenge with this type of practice is it requires a keen focus on branding and marketing. After establishing connections with functional medicine MDs and DOs, he began getting plenty of referrals from them. He also did public speaking and had his own radio show for 4 years.

Patient reviews have been crucial to building the practice, noted Dr. Kurlanski, saying a great patient review “is empowering and keeps us going.” Google has been her biggest referral source.

Q: Do you do any inpatient or facility work? If so, how does this work in relationship to insurance?

A: “I think we all follow ‘First do no harm’ as a tenet and that we understand that clinically; however, direct care allows us to financially protect our patient with price transparency,” said Grace Torres-Hodges, DPM, MBA, FACPM, FASPS.

Dr. Torres-Hodges maintains her hospital privileges, so if she receives a consult or if her patient is hospitalized, she can still follow them. She gives patients a choice, telling them before initiating contact that her visit charge is not covered by insurance. Those who want to use insurance are able to see someone else who is in their insurance network. For patients having procedures at ambulatory surgical centers, Dr. Torres-Hodges noted they have the option to use their insurance. She will offer those patients the surgeon’s fee; however, for many with high deductible plans or who just don’t have any insurance, she said they can opt for a bundled price she negotiates with the facility.  

“Patients, whether they have insurance or not, are often surprised that they have options, but then they are really surprised when they see how straightforward it is,” said Dr. Torres-Hodges.

Between 2000 and 2011, when he stopped doing surgery, Dr. Kornfeld had an OR in his office where he did most of his surgery. He also used an ambulatory surgery center for more involved cases but stopped using hospitals. In those years, he noted all his patients either paid direct or paid the difference between out of network benefits and his fee.

Dr. Waldman recently sold his share in a successful outpatient surgery center as he transitioned away from surgery. He noted this was a difficult decision since he had been a shareholder for close to 25 years with a group of orthopedic surgeons and podiatrists. He didn’t completely leave surgical practice all at once and when he did have private pay patients needing outpatient surgery the surgery center and anesthesiology provided in-network billing.

Dr. Nguyen used to do inpatient or facility work but recently decided to stop to simplify her practice. If patients have an opening insurance plan, the facility that is in contract with the plan can bill their facility and anesthesia fees to the insurance company while services provided by the surgeon is self-pay.

Dr. Nguyen performs minimally invasive surgery (MIS) in the office under local anesthesia. She has not experienced issues like postop infections in the last 3 years, so she will continue to offer MIS, calling it “so much more convenient for the patient and for my practice this way.”

For major surgeries Dr. Nguyen refers patients to trusted local colleagues who have an abundance of resources. She noted direct care is a complement to the system filling in the gaps that insurance is missing out on.

Q: What are the major misconceptions to direct care that you encountered when talking to patients or colleagues?

A: Dr. Nguyen noted that many people think not using insurance is more expensive. However, she asserted that a breakdown of usage, premiums, and the actual time patients spend with doctors would show patients they are getting concierge-level care, which she said patients appreciate.

Among colleagues, Dr. Nguyen said, all kinds of emotions arise, such as concerns that people would never pay for medical services, yet $30 billion dollars are being spent annually on health care that is not covered by insurance.

“Unfortunately, many doctors were taught to devalue their own worth because the system is so abusive and doctors were taught insurance is the only way,” said Dr. Nguyen. “But fortunately, many of us are physician advocates and we’re here to show others there is another viable way you can practice medicine and make a great living without the stress of insurance.”

Dr. Kurlanski agreed, citing a misconception that direct care is expensive. “We try to provide value by spending more time with patients and addressing their issues in as few visits as possible,” noted Dr. Kurlanski.

Dr. Kurlanski acknowledged that her practice model is not for every patient, saying older people in Maine want to use their Medicare benefit. Her practice is for people who can’t get an appointment for 2 or 3 months with their “good insurance.”

Dr. Kornfeld noted his patients understood what was happening as far as payment prior to their first visit. Those willing to pay came to their appointments and those who were not willing to pay did not come.

“As far as other colleagues, they did not get it at all and I was the recipient of lots of criticism, and to be honest, slanderous remarks from other podiatrists who knew nothing about the way I practice,” asserted Dr. Kornfeld.

Dr. Waldman noted that opting out of Medicare requires a contract between the physician and patient notifying them that Medicare will not be billed and will not be responsible for payment to the patient. He has had a few Medicare patients mistakenly submit a claim but to cover himself, he does provide Medicare the signed contract.

“What surprised me the most is hearing from other podiatrists that they didn’t even know they were allowed to drop out of insurance networks or Medicare,” said Dr. Waldman.

Q: What was your biggest fear factor in changing your business model, and how did you overcome it?

A: Dr. Kurlanski cited setting up pricing as an obstacle, saying she had to think about her worth as a physician apart from the value assigned to it by insurance companies.

“Am I charging too much or too little? Where is the sweet spot?” she asked herself. “It is liberating yet terrifying to set your prices when you first start. You are afraid no one is going to want to see you because you are ‘too expensive’.”

Physicians can always change their pricing, noted Dr. Kurlanski. She and her staff talk about pricing regularly, noting the practice must be able to tell patients their prices with confidence.

As Dr. Waldman noted, although practices may initially lose patient volume, physicians also have time to spend with patients and the economies of scale are in their favor. He no longer needs support staff to do billing to get reimbursed.

Dr. Nguyen had feared not knowing what she was doing or knowing when money was going to come in consistently. She combated this by learning the business side of practice, calling it “an absolutely essential skill to build a thriving practice that doesn’t burn you out.”

In the beginning of his practice transition Dr. Kornfeld used the fear of failure as motivation instead of letting it stop him. He did everything he could consistently to create the practice he wanted. At about the 2-year mark, he noted his net income had nearly doubled from before the transition.

Q: Would you still be practicing if you didn’t switch to direct care?

A: Dr. Kurlanski said she would not still be in practice, as she was close to burnout when she switched. Dr. Kornfeld would “absolutely not!” still be in practice.

Dr. Nguyen would probably not still be practicing, saying her last-ditch effort to stay in medicine was to leave insurance just to see what would happen. After 3 years she is “pleasantly surprised that I am still here, and I know direct care is absolutely the solution for doctors struggling with insurance in private practice.”

Dr. Waldman would probably would still be practicing but thinks he would be “more stressed and suppressed by the system.”  

“Working with third-party payers really is a game but it is a game that is rigged against physicians,” said Dr. Waldman. “But here’s the kicker: nobody says you have to play the game.”

Grace Torres-Hodges, DPM, MBA, FACPM, FASPS, is the owner and founder of Torres Hodges Podiatry. She is the author of Private Practice Solution and Purposeful Private Practice. She is the owner and co-founder of D2PMedicus Consulting and the Co-Leader of the Florida Chapter of the Free Market Medical Association.

Tea Nguyen, DPM, is board certified by the American Board of Podiatric Medicine and the American Board of Multiple Specialties in Podiatry. She practices in Santa Cruz, CA.  

Michele Kurlanski, DPM, is board certified by the American Board of Podiatric Medicine. She practices at Lighthouse Foot and Ankle Center in Scarborough, ME.

Robert Kornfeld, DPM, practices in New York City and Port Washington, Long Island. Dr. Kornfeld is the Founder of the Institute for Functional Podiatric Medicine.

Daniel Waldman DPM, FACFAS, practices in Asheville, NC. He is on the Board of Advisors of SOLEutions.

For further reading, see “Current Perspectives on Podiatric Practice Settings” at https://shorturl.at/ij7MX, “Medical Professionals as Social Media Influencers: What is the Impact on Practice?” at https://shorturl.at/yOzMy or “Considerations When Buying a Practice” at https://shorturl.at/I2KKF.