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Launching a Functional Medicine Practice: Our Journey

Brett Sparks, July 18, 2016

Part 1: The History

My wife, Amy R. Sparks, MD, and I opened Sparks Family Medicine in 2002 with eight boxes of patient charts and a four-drawer file cabinet. We didn’t have much of a business plan or financial support. Amy had joined a practice in 2000 following our move to Las Vegas from Kansas City. After taking leave to have our second child, Amy decided she needed to open her own practice to deliver quality primary care in Las Vegas.

Over the next six years, we built Sparks Family Medicine into a robust primary care group with six providers. Amy had spent two years as the chief of staff and held a physician-position on the Board of Governors for the local hospital. After serving as the director of risk management for a medical malpractice management company, I was actively involved in medical management. We signed a non-binding letter of intent to open a second office in the medical office building adjacent to the hospital being built in northwest Las Vegas.

Despite these outward signs of success, the finances of practicing quality primary care had taken its toll. The practice incurred significant debt to grow the practice to six providers. While Sparks Family Medicine was viable at six providers, there was little margin for error. Any change to the building blocks supporting the practices—the providers, the insurance contracts, the patient referrals—held the possibility to bring the practice crashing down in financial ruin.

We had tried to avoid this point. Our involvement in the medical malpractice company—Amy sat on the board—didn’t result in the planned additional revenue for me or additional support for the office. We negotiated a merger with another primary care practice, but the owner demanded a greater share of revenue at the last minute. We looked to save money by acquiring a building, but several providers departed while we waited for the buildout to be completed.

The final straw came with the 2008 real estate collapse. The building was to provide more space for the same rent as the previous office, but as the financial markets unwound, the necessary rent almost doubled. We were excited to move into the new location when it was complete, but the financial picture looked bleak once the rent came due.

We were fortunate that Amy’s reputation made her a desirable physician addition to a medical group expanding to Las Vegas. Besides being chief of staff, Amy had graced the covers of two Las Vegas magazines featuring “Top Doctor” or “Best of” physician lists. In addition, the new office was a large, stand-alone building adjacent to an affluent master-planned community. Amy joined the corporate group in 2009 and focused on seeing Medicare Advantage patients while maintaining her patient population.

Part 2: Opportunities

In 2013, Amy left corporate medicine and had the unique opportunity to re-establish Sparks Family Medicine in the same location she had practiced at since 2008. We explored several options for Sparks Family Medicine, including meeting with a local hospital system that was interested in adding integrative medicine outpatient services and speaking to a national firm that was looking to open an integrative/functional practice in Las Vegas. Ultimately, Amy chose to become a client of the medical management company I was working for at the time. This offered greater autonomy than the other options as well as the ability to pursue integrative and functional medicine.

We considered converting Sparks Family Medicine to a cash-pay concierge practice, but we chose to reestablish Sparks Family Medicine as an insurance-participating practice for a couple of reasons. First, Amy wanted to restore her patient relationships, many of which had been disrupted by her four years with corporate medicine. Long-time patients complained of the changes wrought by corporate medicine, including being scheduled with different providers at different locations. It didn’t seem fair to have the opportunity to see these patients again only to require that they pay cash, especially considering that converting a traditional practice to a concierge practice typically eliminates 80-90% of patients.

There was also concern that changes to the health insurance market would be unfavorable to concierge practices. With one of the main objectives of the Accountable Care Act being to expand insurance coverage, it was possible that the government and insurance companies would punish providers who were not part of the system. While there was no way of knowing what the government might try to do—or how it would work out—we felt that if concierge practices were still viable in the future, Amy could always pursue a concierge practice at a later date. If she pursued a concierge practice in 2013, other alternatives would be eliminated, as part of what made Amy attractive to the hospital system and national network was her large patient base.

In the two-month transition required to reopen Sparks Family Medicine, we explored how to make practicing quality primary care viable. We focused on adding providers and complementary and alternative medicine (CAM) services. The CEO of the management company connected Amy with a national physician consultant for CAM services who offered the sage advice to pursue integrative holistic medicine and functional medicine. With the support of the management company, Amy pursued certification from the American Board of Integrative Holistic Medicine and the Institute for Functional Medicine.

Part 3: Relaunch

Sparks Family Medicine spent 2013 with Amy and two part-time nurse practitioners seeing traditional patients while the management company added cranial sacral massage and biofeedback services to the Sparks Family Medicine office. In early 2014, Sparks Family Medicine added a chiropractic sports physician and restructured part of Amy’s schedule to provide time to see functional medicine patients.

Once Sparks Family Medicine began offering functional medicine, it became clear that functional medicine was integral to the financial success of the practice, (as well as Amy’s happiness). While the CAM services provided a tremendous benefit to patient care, the price points necessary for quality CAM services didn’t impact Sparks Family Medicine’s bottom line. With functional medicine, however, Sparks Family Medicine could achieve viability, (short-term success), and sustainability, (long-term success).

In 2015, Sparks Family Medicine was able to duplicate the success of offering functional medicine in a hybrid practice after adding a second functional medicine physician who had been practicing in his own cash-pay clinic in Las Vegas. This provider brought a number of patients who wanted functional medicine, which allowed Sparks Family Medicine to add a third functional medicine physician in September 2015.

Part 4: The Model

The functional physicians at Sparks Family Medicine practice both traditional care with an integrative emphasis and functional medicine. The practice writes far fewer prescriptions now than it did in 2013. There are few samples or drug reps. All patients are offered lifestyle advice to address their health objectives, with many patients leaving their visits with diet plans to implement. Patients who choose to pursue functional medicine commit to a quarterly payment to receive access to functional medicine services.

It has been relatively easy to manage each physician’s capacity. When a functional physician starts, only a couple of hours a week are reserved for functional medicine patients. During the other hours, they deliver integrative traditional care to patients. If the functional slots go unfilled, they become acute care slots for same or next day appointments. As more patients schedule for functional medicine services and the initial time slots for functional medicine are filled, more time is allotted on the physician’s future schedule for functional medicine. There is a maximum time that can be devoted to functional medicine services, which means that physicians always maintain part of their schedule to see traditional patients.

Las Vegas is an underserved primary care market, so the traditional time slots fill up as the physician is credentialed with insurance companies. In March 2016, Sparks Family Medicine stopped accepting new traditional patients because the wait for a new patient appointment was several months. Sparks Family Medicine maintains a waiting list for new functional medicine patients. If Sparks Family Medicine adds another physician, their schedule would be open to new traditional patients and functional medicine patients from the waiting list.

Sparks Family Medicine has made adjustments to its model over time. In January 2016, the quarterly payment was increased and a registration fee was added for new functional medicine patients. A new website platform was implemented to help manage patient payments and to move away from prorating the payments each quarter. With the new platform, the practice can track payments from the date of enrollment, send patient payment reminders and provide reporting features that the previous system lacked.

Part 5: Challenges

There have been challenges with our hybrid model. First, the distinction between “traditional” and “functional” medicine is really created by the insurance companies. Sparks Family Medicine physicians would prefer just to practice medicine and get paid for what they do, but participating with insurance requires a working knowledge of plan design and benefits. Functional medicine is no exception. Some insurances cover specialty lab tests; other insurances do not. Physicians have to explain to patients the limitations of their insurance coverage and help patients understand functional medicine so that they can make an informed choice about the services they want to receive.

Sparks Family Medicine was dropped by one insurance company after they requested that physicians use only the contracted lab for their members, even though proprietary specialty labs were not available from the contracted lab. Sparks Family Medicine replied to the insurance company that patients were being made aware of their plan benefits, (which did not include the specialty labs), that patients were not paying more than they agreed to at the time of service and that Sparks Family Medicine was receiving no financial benefit for using the specialty lab. The next communication from the insurance company terminated Sparks Family Medicine’s provider agreement. Even though no reason for termination was given, I suspect that my correspondence regarding the specialty labs was the reason Sparks Family Medicine’s contract was terminated.

It is challenging for the physicians to “shift gears” between traditional medicine and functional medicine at times. I know other practices don’t split days between traditional medicine and functional medicine because physicians find it easier to just “wear one hat” each day. Sparks Family Medicine physicians have accepted the minimum essential time for functional medicine even if it splits a day, however, because they understand the importance of seeing the traditional patients. Physicians average fifteen patients a day, with patients scheduled in 15, 30 and 60 minute appointment slots.

Part 6: The Future

The hybrid model has made Sparks Family Medicine a going concern, but we constantly look for ways to improve the practice. Most weekends start with early morning coffee and a discussion of what is going well and not-so-well for the practice. Amy is now an Institute for Functional Medicine Certified Practitioner and certified by the American Board of Integrative Holistic Medicine. Amy wants to add CAM services to help with detox and stress reduction, but we are looking at structuring these services differently than in 2013.

We anticipate that Sparks Family Medicine will be omitted from more insurance plans as “narrow networks” are emphasized in 2017. This happened in 2016 with one of our largest insurance companies. Sparks Family Medicine had accepted all PPO plans from the company, but the company created a narrow network plan for 2016 that excluded the practice. About a third of our insurance company’s members enrolled in the narrow network PPO without realizing that Sparks Family Medicine wasn’t included. We didn’t realize that Sparks Family Medicine was not a participating provider on this plan until claims started being denied.

Sparks Family Medicine is looking to remain flexible as insurance companies push narrow networks and pass more copay, coinsurance and deductible costs to members. We offer patient agreements for different situations, including cash pay patients and health care sharing ministry members. We are preparing for a reduction in the number of insurances that participate with the practice. It is entirely possible that Sparks Family Medicine may become a cash-pay practice not by choice, but by the reality that insurance companies are increasingly contracting with large corporate practices for “population management.”

Regardless of what the future brings, the training and experience of implementing the hybrid model are invaluable. Sparks Family Medicine is the only practice in Las Vegas with an IFMCP medical physician practicing functional medicine on a regular basis. Amy enjoys practicing medicine, isn’t burned out and has helped our family with functional medicine. Patients are appreciative and Amy is helping many patients who have been told by multiple other doctors that they wouldn’t get better. I don’t think there is any one model for all doctors, but our model has been successful for the providers at Sparks Family Medicine.

©2016, Brett Sparks, e3Business.