Josh Umbehr, MD is the founder of AtlasMD, Wichita-based direct primary care (DPC) clinics with over 3,000 patients, and a software business with over 500 clients and 10 years of operating history. DPC is an insurance-free monthly cash membership model for delivering unlimited primary care services.

I first met Josh in person in the fall of 2019 in Wichita and had a chance to tour an Atlas office, and get a peek at data and impact of DPC to patients. I also heard from employer groups, small businesses, and DPC doctors. He invited me to dinner where I had one of the best burgers I’ve ever eaten. He’s one of my favorite people in healthcare. 

Below is an interview we did via email.

What’s been the most surprising part of your DPC journey?

Maybe how quickly direct care has been adopted by patients and doctors. Some people look at the adoption curve and say it’s still relatively small at a thousand doctors out of 500,000 doctors doing primary care. But it took Starbucks 16 years to get 17 stores. And this is not a simple change for doctors – they have to be so frustrated with the current model that they are willing to put the brakes on that train “full stop.” This changes your entire business model for professionals who are not trained in business. That is scary and hard. Over a thousand brave physicians have done just that, which means hundreds of thousands of brave patients have followed them (patients that were frustrated and lost in a broken system that has overcharged and under-delivered). A system that has sometimes been worse than the disease.

Are there other Direct models that you think hold promise, e.g., direct care for dental care?

I’m very excited to see the variations of the “direct care” principles of innovating high-quality low-cost healthcare models. I think this will work for all kinds of outpatient medical care from dentistry, physical/speech/occupational therapy, mental health including psychiatry and counseling, cardiology, endocrinology, neurology, and much more. The system is broken in so many places and in so many ways that if we continue to apply sound business principles that allow us to eliminate co-pays, improve access, utilize technology, work with wholesale vendors to bring the cost of medications, labs, imaging, and supplies down to less than the tank of gas, that healthcare becomes affordable for nearly everyone. I’m really excited to see how this can be applied to international markets.

Tell us a little about Atlas software, and how it compares to other providers.

Atlas was built out of necessity, within the first 6 months we had 9 different software programs running parallel to each other for the business of running the business. That level of cost and inefficiency was going to hold the movement back and threaten viability. We started building the system in April 2011 and released it to physicians in December 2014 and now we have over 500 practices on our platform. I’d say we are the only major electronic medical record (EMR) system built exclusively for insurance-free practitioners, which means that we are not distracted by changes in government or insurance regulations and can focus directly on building software that helps doctors care for patients and run their practices efficiently.

What does the future of DPC look like? How do brokers and third-party-administrators and employers fit?

I think we are two-thirds up the long leg of the S-curve. I think within the next few years the direct care concept will be the predominant way of delivering outpatient medicine. Especially considering how quickly COVID is making everyone reevaluate their wants, needs, and business models. I think as the executive order from last year that establishes DPC as an IRS-eligible expense for health savings accounts, we will see widespread adoption from large corporations of the direct care model, again especially considering all of the financial considerations that will change post-COVID. Employers want to maximize salaries, minimize total employee cost, which will align with employees most likely desire to have maximum cash in their pocket to cover unpaid bills and they will have a unique decrease in their focus on the value of health insurance when they realized that the last 2 months they have decreased their outpatient needs by 90% for many clinics. They now realize telemedicine is a very viable option. And this will open up insurance companies to work with employers to develop wraparound plans to maximize the value of a direct care clinic. TPAs and brokers will be our force multiplier–they will be able to go to their book-of-business and say I have health insurance solutions for you that we have never offered but can save you 30 to 60% on your health insurance premiums – something that is likely an offer that they cannot refuse to consider when every business post-COVID will be focused on keeping their heads above water.

What type of employers are you getting the most interest from?

Typically smaller companies make decisions more quickly and are focused on managing their health insurance costs so that they can grow their business and support their employees.  However, increasingly we are seeing it from larger companies that realize that the executive order gives them a new opportunity to manage costs. They’re learning that not all care has to be delivered through insurance, and that memberships could mean unlimited care, zero costs at point-of-care, and wholesale pricing on medications and labs equals a very objective measurement of their costs.

How much of an accelerator do you think COVID will be for DPC?

Less specifically the infection of COVID, and more specifically the economic and behavioral changes resulting from the overall response to COVID I think will be a keystone catalyst. I’ve long said that we are predictably irrational when it comes to the purchasing of health insurance because of the momentum of the status quo. Even though we would never buy car insurance if it was structured like health insurance, we keep doing the same thing because that’s what we are familiar with. Everything is changing. Patients have realized that they didn’t have to go to the doctor nearly as often, resulting in a 50-90% reduction in outpatient visits for some clinics. Doctors realize that insurance contracts are not the financial security blanket that they thought they once were. Now they are viewing the predictable revenue of a membership model from a different light. They know that when their clinics open back up, they may be forced to evaluate a very different structure because they may not be able to afford their previously bloated overhead. But also the patients and physicians might’ve learned that they really like telemedicine and how little the standard paperwork/coding/bureaucracy really added in terms of value all parties, from patients to physicians to employers to insurance companies to governments, seem to be maximally receptive to change/value/innovation during this COVID response.

What do you do to help with steerage toward specialists or hospitals?

As a general part of being their family physician, we try to evaluate their medical needs and direct them to the most cost-effective resources. Often we have discounts or are able to do things in the office that would typically be a referral and insurance-based system. We also can use resources like RubiconMD.com for online specialist consults (doctor-to-doctor) to decrease costs and increase access.

What advice do you have for an employer that wants to do a rollout of DPC across various states?

Keep. It. Simple. They’re so used to working in an insurance mindset that they think they need a TPA or middleman type administrator to manage a distributed workforce. In reality, they don’t need this kind of help for other commodities like groceries or gasoline. One of the values of the model is its simplicity and transparency, so now the employer can set the price that they’re willing to pay, educate employees and direct them towards full scope/value direct care clinics. Don’t complicate things with data because we don’t know what data is worth tracking and doctors are hesitant to be “graded” on patients’ health when ultimately it’s the patients’ decision to be healthy or not.  But when it’s only $2 to check your blood sugar and $11 for a thousand diabetic pills (Metformin) and they have unlimited access to texts, email or office visits then we have laid a solid foundation for them to choose health. 

What’s your opinion of DPC-leaning models, that may work with insurance but charge partial memberships and work with insurance for claims (e.g., OneMedical)?

I think the beauty of the free market is that there are always lots of experiments going on to see what blend of services and payment models will work best but I think there’s a reason that Netflix doesn’t allow one-time visits for purchases. The overall concept is that insurance is the wrong tool for the job of paying for primary care if we can make primary care so much more affordable and I think the direct care model demonstrates that so now trying to combine it into a hybrid seems like a dilution of the value rather than a concentration of value. In my opinion, it’s like having a vegan steakhouse, possible in theory but difficult in practice because they are opposing models. I think an investor-backed clinic like this sees an opportunity in billing insurance to maximize revenue which is a different goal than most direct care practices which are trying to be consumer-obsessed and see how affordable we can make healthcare.

What’s your opinion of near-site/onsite models?

I think near- or on-site clinics were reasonable experiments for employers but more of a twist on the status quo compared to true innovation. Many such clinics bill insurance, so the employer has gained some level of additional control and some financial benefits. That said, they often lack unlimited visits, zero co-pays, free procedures, and wholesale pricing on both generic medications and labs. We want to take their goal of managing their healthcare costs and apply the 10x principles of Silicon Valley to it for enormous changes. The Wall Street Journal reported last year that the average employer cost of health insurance for family coverage was $20,500. There is a lot of stress now, including big layoffs in Tech. For example, there’s a tracker for post-COVID startup layoffs. I am confident that when these companies recover, they’re going to be very hungry for innovative solutions that lower costs, and as you have so elegantly pointed out in the past, health insurance premiums are a top expense for companies. 

What are the likely legislative changes you see around DPC payments and tax-deductibility? Are we closer to having DPC fees run through an HSA?

I think the executive order was the game-winning shot. My basketball analogy is that the ball has been shot, it’s in the air, the buzzer has gone off, but the ball has yet to go through the hoop. That’s how close we are to overall winning the HSA, IRS, DPC issue the IRS/treasurer was supposed to announce their final rolling after hundred and 80 days which would’ve been December 22 but that timeline I think got altered unfortunately by current affairs including the Iran scuffle, Christmas, New Year’s, impeachment, COVID. We expect it to come up soon and be finalized but no clear ETA of course but again relative to the fact that we already process nearly a hundred thousand credit card charges a month and a good chunk of those are HSA accounts, functionally it is been alive and well for 10 years but putting that issue behind us will definitely help pave the way for large corporations to jump on board for their employees.

What do you think DPC looks like in a healthcare reform world, call it ACA 2.0 or some version of universal coverage?

I think this COVID related financial crisis will drive the discussion towards either a universal healthcare system or a free market-based approach…Medicare for all versus direct care for all. I think the argument for universal healthcare will be a stalemate because if you want universal healthcare you can use COVID as part of your argument that everyone should have access and if you do not want universal healthcare then you can use the government’s cumbersome response to COVID as proof that they cannot handle such a large task. But just like DPC can help employers, DPC can help state and federal systems such as Medicaid and Medicare through the same cost-saving mechanisms, the right care, at the right time for less money means a lot of pressure off of state budgets, unfunded pension plans, etc. 

What are the biggest DPC head- and tailwinds? 

Maybe not the biggest, but the last headwind for DPC is finalizing the IRS/HSA/DPC issue. I think there is nothing but tailwinds after that: positive effects of COVID on encouraging innovation and cost-effectiveness,  post-COVID adoption of telemedicine, and a realization from physicians that insurance may not be their best model going forward.

Photo by Siddhant Kumar on Unsplash