How Independent Practices Can Thrive
Exploring Fee-for-Service, Direct Primary Care, and Value-Based Care
The healthcare world is changing fast, and independent medical practices are feeling the pressure. With shrinking reimbursements (thanks, Medicare) and endless admin tasks, picking the right billing model has never been more important. Should you stick with fee-for-service (FFS), switch to direct primary care (DPC), or dive into value-based care (VBC)? Let’s explore what each model means for physicians, patients, and office managers—so you can choose the best fit for your practice.
Fee-for-Service (FFS): The Classic Approach
Fee-for-service has been the standard billing model for decades. For doctors, it offers a clear path to revenue: you get paid for every visit, test, and procedure. However, staying profitable in this model is becoming more challenging. Medicare reimbursement rates continue to drop, with the 2025 conversion factor falling to $32.35—a 2.83% decrease from the 2024 rate of $33.29, and other payers will likely follow suit. Practices that prioritize efficiency and automation can more easily navigate these challenges and thrive using a FFS model.
For patients, FFS provides freedom. They can choose their providers and access care without being tied to a specific plan. However, out-of-pocket costs can pile up, especially for those needing frequent visits. For office managers and billers, FFS means managing a high volume of claims, coding, and insurance reimbursements. The workload can feel overwhelming, but the right tools and workflows can make a huge difference in maintaining financial sustainability.
As Medicare reimbursements shrink and administrative demands grow, many practices are looking for alternatives to FFS. Transitioning to a new model requires upfront investment in technology, new workflows, and patient education. But if done right, the result can be a more sustainable and patient-focused practice.
Direct Primary Care (DPC): Simpler, Smarter, Freer
Direct primary care is a breath of fresh air for many physicians. Instead of dealing with insurance claims, doctors charge patients a flat monthly or annual membership fee. This model offers financial predictability and frees up time to focus on patient care. For physicians frustrated by shrinking reimbursements, DPC can be a game-changer. With private physician ownership dropping from 60.1% in 2012 to 46.7% in 2022, DPC gives smaller practices a way to remain independent and competitive.
Patients appreciate DPC’s simplicity and personalized care. The predictable costs make it easier to budget, and the closer relationship with their doctor is a huge bonus. However, patients may still need traditional insurance for specialists, hospital visits, or medications, which can add more complexity to the already complicated world of medicine.
For office managers and billers, DPC drastically simplifies billing. Instead of juggling insurance claims, the focus shifts to managing memberships and communicating the scope of services clearly to patients. Transitioning to DPC can be especially appealing for smaller practices, but success depends on strong patient communication and a focus on building and retaining memberships.
Value-Based Care (VBC): Focus on Outcomes
Value-based care flips the traditional model by prioritizing quality over quantity. Instead of being paid for every visit or procedure, physicians are rewarded for improving patient outcomes. This model encourages a focus on preventive care and long-term health management. For doctors, it can be rewarding, but also demanding, as meeting performance metrics becomes critical. On the bright side, the rewards include more consistent income and a collaborative approach to care. With multi-specialty practices growing from 22.7% of the market in 2012 to 26.7% in 2022, larger practices are well-positioned to succeed in this model.
Patients benefit from VBC’s emphasis on wellness and coordinated care. It’s a model designed to deliver better long-term health outcomes. However, patients may need to adjust to new approaches, such as population health management, which focuses on preventive care and managing chronic conditions.
For office managers and billers, VBC requires careful tracking of data and outcomes. Practices with fewer than 10 physicians—now 51.8% of the market, down from 61.4% in 2012—may find these requirements challenging. But with the right tools and analytics, billers can play a pivotal role in turning data into actionable insights that drive success. While transitioning to VBC takes time and effort, the result is often a more dynamic and sustainable care model.
Questions to Help Guide Your Practice
If you’re unsure which path to take, start by asking yourself these questions:
What are your financial goals? Do you want predictable income and better patient outcomes, or stick with the tried-and-true FFS model?
How will your patients respond? Are they more likely to embrace predictable fees, outcome-focused care, or pay-as-you-go services?
Are you ready to invest in the resources needed for success? Technology, training, and strategy are critical for making the transition.
The Bottom Line
No matter which model you choose, the goal is the same: delivering excellent care while staying ahead of industry trends. Fee-for-service, direct primary care, and value-based care each offer unique opportunities to build a thriving, patient-centered practice. By aligning your goals with the right model, you can navigate today’s challenges and set your practice up for success.
Regardless of which path you choose, OpenPM is here to help. With tools that simplify your revenue cycle and maximize collections, we’ll ensure your practice is ready to grow and thrive in the ever-changing healthcare landscape.
