Deluxe Doctors
By Patricia B. Gray

(FORTUNE Small Business) – At first glance, Dr. Bernard Kaminetsky seemed to be living his dream. Since childhood he'd wanted to be a family doctor, and he'd pursued his ambition diligently. Nearly 20 years of hard work had earned the internist a thriving practice in Boca Raton. His 2,600 patients were devoted to him. Mornings were a whirlwind of hospital visits. Afternoons were crammed with appointments. Evenings he tackled a mountain of paperwork. At 47, Dr. Kaminetsky was busy, beloved--and miserable. He worried about tests that might have gone astray in the rush or patient concerns that went unsaid as he dashed from one exam room to the next. "I have always loved medicine," he says, "but practicing it became a nightmare." Two years ago the internist made a radical move: He left his practice.

A week later he opened a boutique practice for the well-to-do as part of a fast-growing national network called MDVIP, based in Boca Raton. Now Dr. Kaminetsky has a roster of 600 patients, each of whom pays an annual fee of $1,500 on top of any insurance reimbursements. That buys white-glove medical care: same-day appointments, friendly nurses who know patients' names and the names of their grandchildren, and even home delivery of prescriptions when needed. The doctor is always in, and he has plenty of time to listen. Stuffy nose keeping you awake? Call the doc at home. He'll make a house call. "This is the way medicine should be practiced," says Dr. Kaminetsky. "My patients are very willing to pay the price."

MDVIP is shaking up the beleaguered medical profession with a controversial new kind of medical practice: luxury primary care. The company isn't the first to offer such a service, but it is the first to do so on a national scale. Four years after MDVIP's founding, its gurney is starting to gain some traction. The company has 55 physicians in nine states, including California, Florida, Massachusetts, New York, and Virginia, and it is adding more at a rate of two or three per month.

Patients in the network number 13,500, and the company says they are renewing at an annual rate of 95%. MDVIP expects to post revenues of $29 million for 2004, mostly from patient fees. The privately held company says it will earn profits for the first time this summer. Earlier this year MDVIP scored a major coup, opening a clinic at Tufts-New England Medical Center in Boston, the first major academic medical center to embrace the concept.

Not long ago the notion of the well-to-do paying out of pocket for luxury medical care was derided--and dismissed--as an elitist fad. But as managed care has tightened its grip on medical costs, physicians' workloads have exploded and reimbursements have fallen. Malpractice premiums have also soared, further squeezing doctors' income. Internists and family practitioners have been hit particularly hard. The average primary-care physician now sees a patient every ten minutes, according to the American Academy of Family Practice. Internists' net income fell 16% between 1998 and 2000, according to Medical Economics' Continuing Survey. Last year the Journal of Family Practice reported that more than a quarter of the primary-care physicians it surveyed expected to quit within the next two years.

To a doctor fed up with trying to manage a medical practice, MDVIP offers a business model that is boldly counterintuitive: fewer patients, more money. Physicians' patient loads are limited to 600. Patients' annual fee of $1,500 covers a comprehensive annual physical and other preventive care, such as weight-loss and smoking-cessation counseling. (In Southern California and at the new hospital clinic in Boston, the fee is $1,800.) All other treatment for acute or chronic illness or disease is covered by a patient's private insurance or Medicare. MDVIP and the physician divide the fee; The company gets $500, the physician gets $1,000. If both parents are enrolled, coverage is free for their children under 25. Even with a patient load of only 600, a physician in the network will pull in an annual income of at least $600,000, and that doesn't include the reimbursements she earns performing medical procedures or treating ailments. That is four times the average annual income of a primary-care physician.

Concierge medicine first made headlines in 1996 with the launch of a practice by a former team doctor for the NBA's Seattle Supersonics, who was convinced that people would pay for the kind of extraordinary medical care usually reserved for professional athletes. He charges each patient an annual fee of $10,000. His firm, MD2, now has two offices in Seattle and is opening a third in Portland, Ore. Other doctors have tried to start similar practices but have met with mixed success. Selling the idea to patients takes time and money; few doctors have the expertise to manage such a business. Still, the American Society of Concierge Physicians, founded last fall, estimates that 200 physicians are Operating such practices. MDVIP dominates the market; one out of every four doctors in concierge practices belongs to its network.

MDVIP says it gets 20 applicants for every physician it accepts. Slackers--and those seeking to ease into retirement--are quickly eliminated. "Joining MDVIP does not mean more time on the golf course," Dr. Edward Goldman, president of the network, says. "Taking good care of a small number of patients is still hard work." He also points out, "Not a lot of doctors are cut out for this kind of practice. Some doctors love the personal interaction with a patient, and others prefer them out cold on an operating table."

MDVIP is looking for physicians with ten to 20 years of experience who cater to devoted patients in relatively affluent areas. From a practice of 2,500 to 3,000, MDVIP will seek to recruit 600 willing to pay a fee to remain patients. Among the questions asked of patients: Does the physician spend enough time with you discussing your health concerns? Is the office staff pleasant? MDVIP also analyzes the patient roster carefully for demographic information. Baby-boomer professionals are the ones most likely to pay to join an MDVIP practice. Those 75 and older are another big market, often joining at the urging of their adult children.

Physicians--and their nurses and office managers--who are admitted to the network undergo substantial retraining. "Doctors and nurses are so overworked that they've come to regard the patient as the enemy," says Dr. Goldman. "We have to work hard to change that attitude." So newcomers spend a week at the company's headquarters having their bedside manners polished. The company motto: The patient is now a paying customer. (MDVIP deliberated carefully before setting the annual per-patient fee at $1,500. "We priced the service at about the cost of a health-club membership," Dr. Goldman says. "Baby-boomers understand the concept of spending money to maintain their health.")

MDVIP patients enjoy a lot of old-fashioned--and newfangled--benefits. They get a comprehensive annual physical with plenty of time afterward to discuss the findings with the doctor. Doctors regularly call patients to check on whether they are following suggestions to lose weight or stop smoking. When a patient is referred to a specialist, MDVIP nurses call the patient after the appointment to see if the visit went well.

MDVIP bars its physicians from using answering machines and allows them to use answering services only on rare occasions. All MDVIP doctors are available to their patients around the clock; patients get their home phone numbers and their cellphone numbers. "My wife was recently diagnosed with a serious illness, and our doctor was on top of the situation from the start," says Bob Locke, 64, a Boca Raton real estate broker who joined several years ago. "He recommended the specialists, and his office made the appointments for us. He followed up on all the tests. In fact, he called us in the car on our way home after the CT scan. When you're scared and nervous, that's the best medicine in the world." Locke has enrolled his 90-year-old mother.

Patients get other benefits too. Medical records are encoded on a CD and updated regularly, so patients can have them handy if they become ill when traveling. MDVIP regularly polls patients enrolled in the network for feedback. That's what prompted the latest new benefit: an expert who reviews insurance applications. Some patients complained that they were being charged higher rates for life insurance because of past health problems such as heart attacks. MDVIP quickly hired a consultant--an insurance executive with MetLife--to review doctors' reports to insurers to make sure they highlight the positive, such as lowered cholesterol levels or recent weight loss.

MDVIP invests about $175,000 in a practice, spending a substantial sum wooing patients through wine-and-cheese receptions, glossy mailings, and TV and radio ads. The company also offers guidance on décor. Dr. Kaminetsky has a waiting room that is lushly appointed with expensive furniture, bowls of fruit, and a big-screen TV--and it is almost always empty. Gone is the reception desk with the Plexiglas to shield the office staff from the sickly. Nurses greet patients warmly by name and usher them into a private room. Patients never have to perch on an exam table, shivering in a paper gown, to have a discussion with the doctor. Dr. Kaminetsky outfitted a room as a cozy den with overstuffed furniture and plants; he says patients are more comfortable talking after the exam in a homey setting.

MDVIP is the brainchild of an unlikely group of partners. In November 2000, Boca Raton-based physician Robert Colton and Several of his partners wanted to try to launch a national network of luxury practices but needed funding and management talent. Among their patients, they found an eager investor and their first customer: Steve Geller, 63. Geller, now CEO of MDVIP, spent 40 years in the toy business before selling his company in 1986 and retiring to Florida. (Geller's company made plastic kitchen sets for little girls; he sold it to Mattel for more than $5 million.)

Geller says he was frustrated with the medical care he was getting in Florida. "I'm old, I'm fat, I smoke, and I'm rich," he says. "I got fed up with the lousy service I was getting from doctors. You wanna know the last straw? I was standing at the Plexiglas window in some guy's office trying to get the nurse's attention. And there's a sign taped to the window: DO NOT TAP ON THE WINDOW. I'm sick. She's ignoring me. And I'm afraid to tap on the window! What kind of business can survive with that kind of service? To hell with that!" Colton promptly brought in Dr. Goldman, 59, a family practitioner who had left medicine to run a practice-management company in the mid-1980s.

Early on, MDVIP drew criticism. Five Congressmen urged health and medical regulators to ban luxury practices as a violation of the rules of Medicare. (They ultimately failed.) Some of the first physicians to join the network faced complaints. In an Internet posting on a site called "DB Medical Rants" (, Mary Grunmeier, a real estate agent from Whippany, N.J., groused that her doctor dumped her as a patient last year to join MDVIP. "What kind of racket is this?" she wrote. "No referral. No postcard. Not even an offer to join." (MDVIP apologizes and says such incidents are rare; the company claims it arranges for alternate medical care for patients who opt not to join the network.)

Dr. Goldman and Geller spent several million in legal fees just to lay the legal and political groundwork for the company. Slowly they won over the conservative American Medical Association, among others. By 2003 the company had a dozen practices in some of the most affluent areas on the East and West coasts, including Santa Barbara, Short Hills, N.J., and Southampton, N.Y. In April it opened its newest practice in the most coveted zip code in the U.S.: 90210. Dr. Judith P. Delafield closed her traditional practice in Beverly Hills and reopened her office as part of MDVIP. Dr. Delafield says she agonized over the decision but, as she put it, "the forces of economics were overwhelming. I was working harder and harder, seeing more and more patients, just to maintain my income."

In joining MDVIP, though, doctors may be trading one form of bondage for another. After all, the patient becomes a customer--and the customer is king. To ensure consistent quality, MDVIP continually monitors its doctors. Investigators posing as new patients regularly book appointments and even visit their offices, then rate the quality of service. Standards are high. On one call to a doctor's office, a receptionist put an investigator on hold for 45 seconds. "I'll have to speak to him about that," says a frowning Dr. Goldman. "That is not acceptable."