States of Healthcare

Interview with Dr. Jerome Aya-ay, Physician, Direct Primary Care Practice CEO and Co-Founder

“Healthcare should be the most honest business, but it is not. The only person that the patient knows to blame is the doctor. As physicians, we want to do the best by our patients, so we order the lab tests, imaging studies, or interventions needed but we do not know how much it costs. In the end it creates financial fear for the patient, and it creates some unfortunate mistrust.” 

– Dr. Jerome Aya-ay

The American Dream of Medicine

Years before Dr. Jerome Aya-ay became a physician, the profession shaped his life. In the 1960s America countered a growing and pervasive rural physician shortage by recruiting physicians from the Philippines including Jerome’s father. 

“My dad had fifty cents in his pocket when my parents landed in America. He trained in a Brooklyn hospital for his internal medicine and cardiology residency. Three of us were born in Brooklyn and initially lived in the basement of the hospital. Then he had to serve an area of need, which brought us to rural Grantsville, West Virginia where he served the community for thirty years,” Jerome shares. 

Clinicians from the Philippines are trained in English and can earn much higher wages in the United States, United Kingdom, Canada, or Australia. According to an analysis of 2021 census data, Filipino physicians accounted for 4% of immigrant physicians in the United States and Filipino nurses accounted for 27% of immigrant nurses in the United States.

So many nurses have been recruited out of the country that according to the Philippines’s Ministry of Health, as of 2021, 51% of licensed Filipino nurses emigrated from the country to work elsewhere, creating a steep domestic workforce shortage. 

Separate from the tangible visa pathway that medical professions offer Filipino clinicians, there has been a wider cultural phenomenon entangling physician-hood with the American dream, especially for immigrant families. A 2024 study from KFF found that second generation immigrants (i.e., the adult children of immigrants) make up 13% of the physician and advanced practice provider workforce in America despite representing only 6% of the population. 

The Road to Family Medicine 

Jerome emphasizes that his journey from college at Notre Dame to a master’s degree and then medical school at Marshall University was circuitous, including odd jobs at a tanning salon and a radio station as well as owning a food delivery business. 

Jerome selected family medicine as his specialty, motivated by having watched his father care for patients from childhood to advanced age across a range of pathologies. He completed his residency at Spartanburg Regional, a community hospital in northwest South Carolina. 

During residency, Jerome and his fellow resident later turned business partner Chris McCarthy noticed that their clinical training did not account for the reality of many of their patients. 

“In residency many of our patients were underinsured, uninsured, or on Medicaid. I learned how to prescribe and order imaging but when the patient came back, they would say ‘hey I didn’t get the medicine because of the cost.’ They would choose to get food for their family over their meds,” Jerome recounts. 

Jerome and Chris began to interrogate how much medicines and healthcare services cost versus how much patients were charged. 

“Healthcare should be the most honest business, but it is not. The only person that the patient knows to blame is the doctor,” Jerome reflects. “As physicians, we want to do the best by our patients, so we order the lab tests, imaging studies, or interventions needed but we do not know how much it costs. In the end it creates financial fear for the patient, and it creates some unfortunate mistrust.” 

Jerome and Chris emerged from their residency planning to create a primary care ecosystem that offered affordable, accessible, and honest care. This became the basis of Palmetto Proactive Healthcare, a physician-owned, direct primary care family medicine practice that now has four locations across South Carolina and employs seven physicians. 

Palmetto Proactive: Direct Primary Care

Direct primary care (DPC) is a growing primary care healthcare delivery model that operates as a subscription service outside of traditional insurance. A large draw to the model is that costs are predictable and transparent, eliminating the black box of medical billing. 

Clinicians typically collect informed consent from patients prior to treatment. However, patients then agree to care without knowing how much it will cost, even though the expense could be significant and detrimental. Jerome and other DPC supporters view this as hindering a patient’s true ability to consent. Jerome identifies “informed financial consent” as one of the benefits of the model, a phrase coined by fellow DPC physician Michelle Cooke. 

Member patients at Palmetto Proactive pay $80 per month for their membership, which covers all primary care with same or next day sick visits, chronic disease management, flu shots and more. Skin procedures, labs, and radiology are also offered for transparent low prices near the wholesale cost.

Because of the payment structure, the practice’s physicians typically see eight to twelve patients daily, compared to the twenty to thirty caseload of a traditional practice family physician. This allows for more time to be spent on patient care.

“For nurses, doctors, or anyone caring for patients, the thing that we need is time. We need time to think, listen, digest the information, and build a relationship,” Jerome explains. 

Palmetto Patients

When deciding where to open their practice in Spartanburg in 2010, Jerome and Chris looked for a site within a couple blocks of a CVS, Walmart, and Starbucks. They have held onto this framework when selecting additional practice locations across the Upstate (population: 1.6M), or Upcountry, region in South Carolina (population: 5.5M). 

Spartanburg (population: 39,000) is named for the local Revolutionary War Spartan Regiment militia and its residents are referred to as Spartans. The city hosts the corporate headquarters of 24-hour diner chain Denny’s, an imposing tower that mixes brutalist and post-modern architecture and is the tallest building in the city (a local photographer chronicles the behemoth through the Instagram account @dennyslooming). In 2023, the median family income in Spartanburg was $51,000 versus the national equivalent of $81,000. 

“What we see basically follows the 80/20 rule. 20% of patients are diabetics, hypertensive, or have known coronary artery disease that we can manage so they do not have a big heart attack down the road. Then 80% are relatively healthy and need us for allergies, sinus infections, lacerations, sprained ankles, or other acute needs,” Jerome describes. 

In the early days of Palmetto Proactive, most patients paid for their subscription, but now ~70% of patients have their subscription covered by their employer. The Affordable Care Act requirement that companies offer full time employees health insurance has an exemption for small companies with fewer than fifty employees. Jerome has found that local mom-and-pop businesses, including HVAC, construction, plumbing, and landscaping businesses, that want to offer employees some access to healthcare are a great fit for the practice. The practice also treats older patients who are enrolled in Medicare Part A for hospital coverage only and use their Palmetto Proactive subscription to access outpatient care.

Another shift in patient demographics has been insurance status. Jerome’s patients used to predominantly be part of the 9% of South Carolinians who are uninsured (South Carolina is one of the ten remaining states that did not expand Medicaid). Now many of his patients have high deductible health plans that essentially only cover catastrophic care. 

“The people in the middle class with high deductible health plans just do not want to go bankrupt. These people with $3,000-$10,000 deductibles shop around for care or feel the pain. If they go to a doctor at the hospital once for a basic visit, the visit and regular labs in some cases cost $800. That gets you almost a whole year of membership at Palmetto,” Jerome explains. 

Mergers, Acquisitions, and Medicine

Distinct from the DPC model, Palmetto Proactive is also part of a declining portion of primary care practices that are still physician-owned.

In 2023, 78% of American physicians were employed by hospitals or health systems, compared to 26% in 2012. Likewise, in 2022 48% of primary care physicians were affiliated with hospitals and 2% affiliated with private equity firms. Other corporate entities, including CVS Health and Amazon, have also made major acquisitions of primary care chains, as detailed in this 2023 New York Times piece. 

The Harvard Center for Primary Care’s 2019 report The Corporatization of Primary Care highlights that improved standardization and more consistent quality are positives of corporate-owned practices. However, the report also notes that corporate-owned entities typically tie physician compensation to the volume of care they deliver, creating a misalignment of incentives built on the fee-for-service reimbursement structure rather than promoting improved outcomes for patients. 

“Clinicians do not have enough time to provide the best care when the healthcare system is built for metrics like throughput where the more encounters there are, the greater ability to bill,” Jerome explains. “We get called monthly by physicians wondering if we can help them open a practice or if we are hiring because physician burnout is a real thing.”

According to the American Academy of Family Physicians (AAFP), 51% of family physicians reported being burned out in 2022. Burnout is defined as a prolonged response to job stressors that entails exhaustion, cynicism, and inefficacy – a response obviously harmful to physicians and their patients alike. 

Any practice that prioritizes high volume, low value care and seven minute patient appointment targets would likely contribute to provider burnout, regardless of ownership structure. But one would think that physician practice owners would know better than to create provider work incentives that mimic slash and burn agriculture. This model may be profitable in the short-term, but it is certainly not built to last. 

The National Center for Health Workforce Analysis projected that there will be a shortage of 87,000 primary care physicians in the US by 2037, partly due to high burnout. In South Carolina there was one primary care physician for every 1,480 residents in 2022, compared to the national equivalent of 1:1,310. 

Many are working to disrupt the status quo. Jerome is a trustee with the South Carolina Medical Association and notes that they are trying to create a residency program that trains graduating physicians to open independent practices in rural areas of the state, bridging organizational and access gaps. 

Primary care is one of the most valuable forms of healthcare. Americans with access to a primary care physician have 33% lower healthcare costs and 19% lower odds of dying prematurely than those who only see a specialist. It is the largest specialty by volume, but accounts for only 7% of US healthcare spending. 

“In primary care, we are your first step for healthcare. It is our job to keep our patients healthy and out of the hospital, and we do our best,” Jerome summarizes.