Why Membership Medicine Could Save Primary Care w/ Larry Kutscher, CEO, MDVIP

Welcome to Healthcare Rounds, the podcast where we talk with healthcare executives, operators, and investors about the business, policy, and technology forces shaping the industry. I'm John Marchica, CEO of Darwin Research Group. If you're working in healthcare and want unfiltered conversations like this, make sure to follow us on Apple Podcasts or Spotify so you don't miss upcoming episodes. Today we're diving into one of the most debated and frankly one of the most strained areas in healthcare, and that's primary care. My guest is Larry Kutcher, CEO of MDVIP, a company that's built a very different model around smaller patient panels, longer visits, and a membership-based approach to care. Now, you know, we talk a lot about healthcare and about burnout access and value-based care, and I'm sure we'll touch on those things today, but this conversation really gets into what's structurally broken, what's fixable, and what it would take to rethink primary care from the ground up. So with that introduction, Larry, it's great to have you on. Thanks, great to be here. So I'm going to give you a layup to start, which is, you know, when we say primary care is broken, and I have a quote that I'm going to pull out here in a few minutes, but we say it's broken, what does that mean? And really specifically, what does that mean from a physician's perspective day-to-day? Yeah, I think you said it's a layup. I think everybody knows it's broken and they all feel it and they know it every day. Um I I I think the the bottom line, what I hear from doctors over and over again, both doctors that are in our model and those that you know are not in our model, is that they're on a treadmill. That care, when you're a primary doctor, your job is every year to provide a little bit more of the same care and get paid a little less for it, to do it faster, to see uh visits, you know, 10, 15 minutes, sometimes five minutes, to not really provide solutions but solve specific tactical issues in any moment, and not do what doctors really went to med school to do. That's what they tell me all the time. I went to med school to make a difference and to help people live better. That's why they do it. And that's not what the medical system is set up to do. They've become, I often say all the time that most of our primary care doctors are basically all becoming urgent care doctors. That's what they are. They're being forced to. Not because they want to, but because the between the insurance companies and the government, uh, you know, the incentives that are in place are mandating volume-based medicine. And that treadmill gets faster and the care quality goes down, and nobody is happy. The doctor's not happy, and the patients for sure are not happy. Well, so when I think about um to bring in a little value-based care for a second, when I think about ACOs, something that we've talked about a lot on the show. The whole goal is number one, primary care, right? So you've got these two basic models that Medicare is is offering, Medicare Advantage and ACOs. That's where they pretty much don't want just about everybody, right? And I've had ACO people on, and we've talked about this issue. So why is that and and right? We want better quality, right? We want um keep costs down, preventive care. These are all things that are in that ACO model. So so why is that failing? Well, you know, the thing about value-based care, I'll pick on that specifically. I'm a real skeptic when it comes to value-based care. Um if you're gonna improve health, it doesn't usually happen in year. Like if I'm gonna do preventative health and help patients live a healthier lifestyle, do the right kind of testing, prevent them from going to the hospital. I'm not saying you can't make a difference in year, but the majority is you anticipate problems and you do it over a period of a long period of time and you and you bend the curve of the health care. You literally make it so people are healthier for a long period of time. And value-based care, by definition, is measured in year. And that is a real problem. So what we do, which is different than that, is we start with say, okay, we're not focused on the cost side. That's not where we start. We're not, you know, the the our model, for better or worse, a member pays a membership fee. That creates a whole new revenue stream to the doctor. They're no longer beholden to the insurance company or Medicare or anybody else to tell them they have to do so much volume to get so many uh reimbursements or so many codes have to be entered or any of that stuff. It doesn't happen. Instead, they say, okay, I my pact is I'm gonna take great care of you. I'm gonna help you understand where you are. Together, we're gonna develop a plan for your future, for your healthy life. And that can be a plan that goes over a year, five years, 10 years, 15 years, and truly changes how people are living and the health care that they're getting. It's very different. So you're you're saying it's really more a matter of the time frame. In other words, when you're looking at something in such a shortened time frame, you're going to be necessarily focused on I don't know, those immediately measurable things like the number of visits or your diabetes score, whatever that is, but that you need a a longer time horizon to be able to address it. Well, it's yes, absolutely, but it's also the incentives in the system, right? So it's the time frame. That's that's that's very important, but it's also how are you measuring what you're measuring? So right now, the metrics are not really very patient-centric. And they're not very doctor-centric. They're very much cost-centric. They're all about how do you drive more for less? And that's not really about better outcomes over time and better healthcare. And again, I'm going to go back to what I said. What our doctors really want to do is not solve tactical problems or say, you know, uh, they don't want to solve the problem after it's happened. They want to prevent it from ever occurring in the first place. That's just a different approach. And most of medicine is not set up to do that. It's set up to be reactive and then maximize, quite frankly, uh uh minimize the cost of that reaction uh to the issue. So what are the forces? And again, I feel like this is a little bit of a layup to start before we get into your business. But but I just want to be clear about what we're talking about. What are the what are the forces that are that are driving this burnout, that are driving the the treadmill? Because you know, I've literally not half an hour ago, I was just talking to somebody here about what my doc actually in preparation for this conversation, what my doctor visit was like, say 10 years ago, 15 years ago. And by the way, I'm still with that doctor, but I generally see a PA now there. I don't see him like I used to 10 years ago. So setting that ACO and value-based care setting that aside, what are some of the forces that are that are driving the treadmill? Yeah, it well look, it's all about if you look at the cost, the reimbursement rates for doctors now versus 10 years, 15 years, 20 years, it's all down. They get paid less for the same amount of work. It's very simple. And so if you're a doctor, what does that mean? You have to have make it up in volume. So you have to do more in the same amount of time, or you have to spend more time, or both. That need to get, you know, to get a fair wage, to get a basic living existence, is driving the doctors to have to work harder and harder and harder, and it's harder to keep up. And on top of that, they have more paperwork, more liability, more cost over this is a very inflation-driven world. So you add all that in, and the doctors are in a bind. And so I'm not surprised they're burned out because they're having to work harder and harder and harder, and they're doing less. And they're doing exactly what you said. They're having to hire extenders, they're having to spend less time with their patients. They don't feel, you know, one of the things that's so important to all of us, right, is personal connection. Getting to know your getting to know your patient. Like when you go to a doctor, don't you want to know the doctor? Don't you want to have a dialogue? Don't you want him to, him or her to know you to ask the right questions? The doctors want to do that. The doctors want to know their patients. They want to understand it. But if you have 10 minutes in a room and you have a bunch of questions, you don't, that doesn't happen. It becomes transactional, purely transactional. And that's that that lack of satisfaction plus the volume leads to burnout. So what was it for you personally, Larry, as I as I look through your career, you've been CEO multiple times over, um uh been in some pretty notable organizations. What was it that compelled you to join MDVIP? Was there, you know, aside from the paycheck and everything else, what was it that intrigued you about the business? Well, yeah, look, I'm not a healthcare person. Like, you know, one of the things I think it's both, you know, it's an interesting perspective. I've I've really been outside of the core healthcare until this role. Um, but I've learned a lot. What I really love to do is build successful organizations. I love to make a difference. I love to get teams of really smart, motivated people together to tackle hard problems and change what otherwise would be outcomes. And I've done that throughout my career. And so when this company, when I looked at MDVIP, I saw a company that was doing really well, that was a leader in its space, that had a different approach, as you said at the intro, a very different approach to medicine, a very different approach in this market. And I said, wow, look at what they're doing, but there's so much more they can do. The impact this company can make is so much bigger if we really have a vision for it. And so that's what I was looking for. I was looking for something where I could really leave a mark by taking an organization and energizing it and continuing to help it innovate and drive forward. And so that's what I get excited by. I think you and I get excited about a lot of the same things, right? It's uh it's the building, right? It's the building and contributing. That I've I couldn't agree more. So getting in a room of people, getting in a room of people and and and thinking through what's possible and then actually working every day to make it possible, going through that, that's the fun part, the journey and the and seeing people get better. And in this case, what I particularly love in this case, working with doctors and seeing you making a difference in their lives and the patient's lives, when you add the mission orientation on top of just a business, you know, have a great business and a great mission that together is just unbelievable. Right. Very powerful. Well, so let's when you mention it a little bit at the onset, but talk to me a little bit about the business model itself. Um what is your value proposition? And why are you different from, let's say, I was gonna say other concierge practices, but I'll I'll just make it broader and say for other primary care aggregators or people that are in the space, what makes you different? Yeah, look, first of all, MDOAP invented what today is called concierge medicine, we call membership medicine 25 years ago. Uh and we've had over the last 25 years, we've built we we've built a clear way of doing this in a way that is truly uh legally compliant for the doctor. So we make sure we're protecting the doctor. It has a clear economic model, uh, and it also is great for our patients and members. So, you know, we've built something that really we've now done thousands of times. We have over 1,400 doctors, and over the years we have a number of retirements. So we've done this thousands of times. So we really have we know it works. And the model is really simple. It's what I said up front. We are we charge a membership fee that is really comprised of services that are not included in Medicare or reimbursable for most insurance plans. And it's all about preventative medicine. So it's all stuff that most plans say that's discretionary, not needed. We look at it and say it is needed. It's all the stuff that you were talking about earlier that somebody wants to have to say, how do I plan and how do I prevent illness, not just deal with illness. So we charge that membership fee. It covers all those that advanced testing and very sophisticated uh examination and all the stuff we do, and we do that once a year. Often that exam could be up to two hours for each member, each patient. Beyond that, that allows our doctors to really know their patient. They know them inside out. And so what we can then do is say to that patient, you know what, you know your doctor. Your doctor is now available. And by the way, I should have said this up front. Because the doctor has that membership fee, they reduce their panel size. So their panel size goes down from, you give me the number, 1500, 2,000, 3,000, 5,000 these days. You whatever it is, it goes down from there to 300, 400, 500, 600. And so now our doctor has the time to one, do all those exams and two, make themselves available to the patients when they need it. They can text, they can guarantee an appointment within 24 hours, they can respond to emails real time. Uh and so the patient and the member, the patient and the doctor are having our dialogue. It's like you're starting up a conversation that you're in the middle of. You never are having to reintroduce what might you know explain where you're coming from because the doctor knows you. So that is the model. And the doctors, now there's lots of other concierge type things that are out there. We're not, you know, what always, I have to be honest, what always annoys me like crazy is TV loves to show the doctor and the Hamptons charging $50,000 a year to go do house calls. Um, and that's not what we do. You know, we have 440,000 members in 47 states. Our average price is between, you know, our prices range between two and five thousand dollars a year per member. It's ex it's not, I'm not gonna call it uh it's not that it's it's it's accessible for many people, right, when you think about it. And that's our our point. We're not trying to charge something that is, you know, um this exclusive only, you know, to the very small number of people. We think it's a better way to provide primary care. It it changes the game so that doctors can spend more time with their patients, can do better diagnosis, can do preventative medicine, and the members can feel like they get heard and known. And what's really powerful is they get to develop a relationship. In the end of the day, when people say to me, when I'm a I I as you said, I grew up as a marketer way back when I started my career at American Express. I learned about marketing and value. And in the end of the day, what's most important what we do is we create a value, but uh we create a relationship between a doctor and their patients. And it's a deep, trusting relationship. Like it used to be 10, 15, 20 years ago, 30 years ago. And that's what we do. That's what the difference. And our doctors will tell you often what they'll say is the only thing I wish I'd done is I'd done this sooner. It it it it brought joy back into life. They feel like they went what they did, why they went to medical school, they can now actually practice. And um, I can't tell you how many doctors can say I would have retired long ago if it wasn't for it wasn't too. I just couldn't keep going in the old model. So that's what makes us different. So I want you to address the $50,000, whatever, the the doc in the Hamptons, because I want to read you a quote um from Drew Altman. I think this is last week. Uh somebody asked, he's he's with KFF, asked to write a one-pager on what's wrong with health care. So that that was probably a fun exercise. But here's what he says if I were to nominate one more item for the list, it would be the crisis in primary care with crisis in quotes. In many parts of the country, it's just not easily available. And in some, like Silicon Valley where I live, much of it has been skimmed off to expensive concierge practices with long waiting lists. So then now I stick a microphone in your face and I say, go. Respond. What do what do you say to to uh Drew Altman? I would say primary care is broken. And if you didn't have membership medicine, that wouldn't fix it. What membership medicine actually has a chance to help fix it because the core reason it's one of the reasons go broken is we talked about at the beginning, they're burned out. It's it's not fulfilling, it's not a good job. You wouldn't tell your kid to go into it right now. But if you live the kind of life that you live within an MD VIP as a doctor, if you actually feel fulfilled, you feel like every day you make a difference, and you can recommend it to your friends and family, over time, you're gonna have more primary care doctors, which is what we need. It actually makes it an attractive industry, an attractive job, an attractive career. It reaffirms the calling that they all went into. And that's what we need to do. We need to make something. And by the way, people won't flee it, they won't leave it. More doctors will be in it. So I think I understand it, but uh I understand what he is saying, but I I just disagree. Well, it makes I mean you uh in in 20 minutes, you're making a convert out of me. So I like I get it. You know, the the the fees themselves can cover fixed costs, they can cover uh you know uh a new person to hire, whatever the case is, but ultimately what that allows is to get off the treadmill, right? And so you can reduce the panel, increase the time, increase satisfaction on the part of not just the patient, but also the provider and everybody there. So I I get all of that. I guess I I'm gonna ask you to put your marketing hat back on. And what I'm curious about is are you at with with MDVIP, are you in a role of marketing to patients? In other words, helping these doctors add the right kind of patients to their panel? Because I would imagine one of the things if you're conver and I maybe there's two questions in here, Larry. When you're trying to when a physician is converting to this model or moving over to this model, there's probably some intrepidation. You know, where what if everybody leaves? And then for somebody like me, what is it that you're saying to me, or maybe you're not, maybe it's just through word of mouth, I'm not sure how you market this, but that's gonna, when I know that there's a fair chunk of my salary that comes out and goes to healthcare, then I'm gonna outlay you know another two to five grand, as you say, um for this kind of care. Um how how do you acquire the patients and then how do you convert what's the process like for converting doctors? It's a really long way of asking two basic questions. I think you asked me more than two questions, but I'll try to I'll try to I'll try to get to them. Fair enough. I don't know which one to let me answer the second one first because I think it goes to the question you actually just asked me, and then I'll come back to what the doctor said how do we acquire them. You know, I don't know whoever said in this country that all healthcare has to be free. Like, in other words, if you assume like that's I think consumers, individuals have gone to the point to believe that, you know, healthcare is something I should get great care all the time, the way I want it, and not pay anything extra. I mean, I pay my insurance bills and that's it. And as we just said, the insurance companies are all about making money. They're not paying that money that a consumer pays to the doctor. They're slamming the primary care because they don't think it's valuable. They don't value it. So if the insurance companies and the hospitals don't value primary care the way they should, if the consumer doesn't pay for it, they're not gonna get what they want. They're not gonna get a healthier outcome. So I think it's actually what's so powerful about our model is it puts a little bit of the free market back into healthcare. You know, if you want something, yes, you have to write a you have to write, you have to pay something for it. But it gives you more control over your destiny and it gives you the outcomes you want. And if you just want to stay in the volume medicine, not pay for anything, that's fine. But you might be in the hospital 10 years earlier than you otherwise would, or you might, you know, not live be living the life you want to live, or you might not have the convenience you want to have, all those things. So I think the by putting money into it, I think the consumer should feel good. They're now back in control of their healthcare life, and that's a very different place. This country is training people to not think like that, which I think is different. So anyway, that's maybe a little bit I'll get off my soapbox. The on the other side is when you think about how we acquire members, uh the company historically has always been really good, and I said we've done this thousands of times, of finding doctors who had existing primary care practices and helping them convert to membership medicine. And so the way we do that is we survey the member, their their patient panel. Before we even start with them, we've got 25 years of data. We can pretty accurately predict what we think the outcome of that conversion will be. We know their demographics and their, excuse me, their market research. And so we really are pretty good at figuring out who's the right doc and helping them understand what their financials will look like. Like so we actually help them prepare a PL statement. Like, how much money will you make? How much, what will this look like? What will your overhead be like, you know, in this new world? And we help them do that. And then we actually run that conversion process. So we have a team, a dedicated team of people, they've done it over and over again. And we run all the sales and marketing of helping talk to their patients. The doctor's still very involved, don't get me wrong, because the patients want to know the doctor believes and is all in and that's who they're doing it for. But we're we're the arms and legs of the doctors to help them do it. And so we've done that over and over again. And and the and the reason that really is important is because that conversion allows us to open the doctor practice open with enough members to be financially viable for that doctor. In other words, we start off by mining their patients. Now they may start with 2,500 patients and open up with 500. Okay, that's fine. But that's that 500 creates the economic underpinning. And then from there, we will do marketing and we'll help them acquire new members as needed or as they want to and continue to grow if that's what they want to do. And that's how that's how we work it. Now, there is a twist, you know, which you know is important to understand, which is 25 years ago when MDVIP was founded, 80% of primary care physicians were independent. They worked for themselves, they ran their private practices. That was one of my follow-up questions. So go ahead, go on, please. Today it's the opposite. 20%, less than 20% are independent. And quite frankly, if you look at it by age cohort, less and less of the younger doctors are independent. In fact, you know, in in med school and everywhere else, nobody tells them that it's even possible that you could be an independent doctor anymore. Everybody thinks, you know, you go into the machine and that's how you have to run. Um and so we still do, you know, the majority of our doctors last year still came from converting existing independent doctors to uh membership. But we started a new product a couple years ago, and that's going after doctors coming out of hospitals or groups and who again still hopefully have a good panel but and a good reputation and a good relationship, but we helped them set up their own independent practice. And so we're doing that now over and over again. And we did that last year. I don't know, I you know I'm gonna misquote a number. We did that over 50 times last year alone, and and it's the fastest growing product we have, and we're investing very heavily in that. We believe that's the future, and and uh and and we've seen what's interesting about it is it takes longer for those practices to grow to the same size, but eventually they get to be the same size or bigger than the traditional doctors were. I was gonna ask with the you know, given the trend, and that's that makes sense what you said. Given the trend, 80% of physicians are either employed by an IDN or a private equity group, right? And so being able to peel them off, because I would imagine at some point someone in those practices made the decision to say, I can't do this anymore, and I can hand this off to Optim or whoever, and I can get a nice salary and I can go to sleep at night and have normal, reasonable hours and everything else, and that they they made that trade-off because they just said, I can't survive. And so basically what you're doing is you're providing that that uh uh that vehicle for them to be able to survive in a new way. So can you think of an a time? Everything is all rosy here, Larry, that we're talking about. But can you think of a time or a place where this model just doesn't work? Or where you've struggled. Well, I've only been with a company for two years, so I can't tell you I have all 25 years, but I will tell you that we have grown as a company every quarter for 25 straight years. Often double digits plus every quarter. So we've grown through every economic crisis, through COVID, you know, through the recovery of COVID, through acquisition. We've nothing has prevented it. You know, what I often say to friends and family is look, when you have something that works better than the alternative, people find it. Doctors find it, members find it, and that growth results. So I I I don't, you know, the only thing, the only way I think we are stopped is if somebody decided to legislate us out of existence, which I don't think is gonna happen. Right, right. Um last question is is we're given your background, given the fact that you've, as you said, started uh is it American Express? And you've you've been CEO multiple times over, are there lessons that being a non-healthcare guy that when you came into this space that you just said, wow? You know, like healthcare doesn't get it. It was there were there any you know, light bulb moments or things that that at that time that you saw from all of your other experiences that you could bring to the table at MDVIP? Yeah, I've probably had I've had that many times. Uh you know, and don't don't ask me to remember all of them. Uh but you know when you Yeah, you know, I I think it's I I would start almost I'm trying to pick one. I I you know for me the biggest change, I as you said I grew up in America's press. I spent a dozen years there, very start of my career. And what I learned there is about branding and about customer relationships and and how you and how you treat people. And healthcare doesn't think of itself as having customers. Like it it it it it you know, by calling it patients and other things, it's almost like everybody's a widget. And the doctor becomes a widget, and the patient becomes a widget, and everybody hates that. And I don't think of it that way. No, we don't call them customers per se, but I look at my doctors as my customer. My job is to provide them a different experience and a happy experience. Who else is out there looking for doctors to provide them that? Like I really, and I'm, you know, we just we do a satisfaction survey every year. We ask our doctors what they think, we ask our members every year what they think. And we listen to them because we do make mistakes. There's no question. We're not like any organization, we can do things better. And so we want to get better. We want to learn. Um, and I think that's what we're bringing. I think that hunger to focus on the end outcome for the doctor and for the member, uh, you know, I didn't see it necessarily in healthcare. I don't see it in healthcare. And I think that's what I think I bring that can ultimately help us really make a difference. That's a great place to wrap it, Larry. And and listen, thanks so much for joining today. Really appreciate your taking the time. If you're in healthcare and found this conversation valuable, please follow healthcare around on Spotify or Apple Podcasts or wherever you get your podcast so you don't miss future episodes. And if you have a minute, leaving a quick review helps us bring on more leaders and continue these conversations at a high level. You can find all of our episodes on DarwinResearch.com or your favorite podcast platform. I'm John Marchica, and we'll see you next round.