Captive Insurance Seen as a Jump Start to DPC Model

Momentum is building for direct primary care (DPC) to serve as the linchpin for helping employers bend the cost curve in a meaningful way. It's done by turbocharging access to flat-rate preventive medicine with same-day or next-day appointments and scaling a concierge model for the masses.

The problem, however, is that DPC is in its embryonic stage—estimated to account for only about about 5 percent of primary care delivery in the US. Hint Health research suggests about 7,200 employers sponsor these arrangements, which make up roughly 58 percent of all DPC memberships nationwide.

While the model has earned praise, there's a disconnect to employer-provided healthcare that's hidden in plain sight. DPC is a monthly subscription-based service without traditional health insurance for self-insured employers that does not integrate with specialists and hospitals. That more expensive care would require another cost layer in the form of a group health plan or cash-pay option.

To plug this gap and improve operational efficiency, some enterprising leaders are layering captive insurance structures onto DPC arrangements to mitigate risk for a seamless approach. This method holds great promise, observes Mike Maglaras, a principal with Michael Maglaras & Company.

Connection is the operative word. When he's retained by physician practice holding companies to look into this arrangement, his first line of inquiry is whether their physicians are linked inside the system of a common medical record.

"That's the critical ingredient," he explains. "It's not the amount of capital. It's not the actuarial exercise. It's not an analysis of at-risk contracts. It's whether or not I, as a family physician, can refer you outward to an appropriate specialist under the rubric I'm creating for that employer where I can refer to you seamlessly, and you can refer back to me after you have encountered the patient."

Power in Numbers

An important threshold in the healthcare industry was crossed in January 2019. That's when Mr. Maglaras says more US physicians became employed by healthcare systems than worked in private practice.

"Would I invest today in companies that a decade from now, are going to have their main source of income from creating DPC models of existing, nonaligned, privately employed primary care physicians?" he asks. "I'd rather not waste my money."

Captives are increasingly serving as incubators for innovation that provide supportive environments wherein employers are road-testing solutions like DPC as part of a more integrated, first-dollar strategy, explains Mike Van Ham, senior vice president of health risk management at Captive Resources, LLC, often through a captive insurance program structure.

In the case of a medical stop-loss group captive, he says widening access to primary care services such as DPC that emphasize prevention and earlier interventions will lead to better front-end management of chronic disease and serious conditions such as cancer.

His team's focus is on the totality of medical spend—not just specific stop-loss hits—but also how first-dollar strategies can influence cost and outcomes across the entire population.

Mr. Van Ham sees more group captives pooling their resources to enable near-site clinics and DPC model offerings, with the captive insurance structure providing the financing mechanism to support these initiatives.

Leaning into prevention and screenings will help employers avoid treating health plan members after they've already entered the healthcare system at a higher acuity level, which he says will not only save money but also improve the patient experience and potential outcomes.

Establishing a DPC practice aligned with the geographic footprint of a captive sponsor's book of business can create long-term value, says Dale Sagen, vice president and business development leader of QBE North America.

"A unique, regionally based group captive that partners with a direct primary care physician can align resources, build a community of like-minded employers, and drive meaningful reductions in total benefit costs over the long run, inclusive of the monthly subscription fee," he explains.

Reversing Unsustainable Costs

Between rising rates on both fully insured health plans and stop-loss insurance for self-funded employers, it's a perfect time to consider structuring DPC around a captive insurance model, notes Thomas Wagner, founder and CEO of Zenith Risk Strategies, whose Apollo captive program does just that and was launched in June 2025.

"If you just go self-funded and use a booking network and don't do anything from a cost-containment standpoint, you're going to pay the same as you're paying fully insured," he says. "You're not going to pay any less."

Under the traditional DPC subscription-based model, Mr. Wagner says the math just doesn't add up.

Apollo actually took that conventional approach for the first 4 or 5 months before realizing a change was needed. It's now "just a monthly flat fee as a claim deducted from the aggregate but not a fee-for-service model," he explains, aligning more closely with a captive insurance approach to funding.

Apollo has DPC built into the front end of a high-performance network with care-navigation services and no out-of-pocket costs to the member for both primary and specialist care.

In order for a captive model to work well, he says it has to be designed to control the biggest part of an employer's medical spend, the claims bucket, by minimizing the cost of that care.

Avoiding Cross-Collateralization

For all of its accolades, the subscription-based DPC model has very little connective tissue with the rest of the health insurance ecosystem, explains Dave Krysiak, cofounder of Doctor Delivery.

Doctor Delivery underwrites aggregate risk and facilitates DPC memberships through a captive insurance cell structure, sharing the same incentives to control costs as employers and group health plan members.

Each group is run under its own risk profile with no cross-collateralization, claims volatility exposure, and administrative burden.

The captive acts as an infrastructure that enables a more advanced model to align incentives around preventive care and proactive population health.

While the Health Care Cost Institute estimates that just 4 percent of total healthcare spending goes toward primary care, Mr. Krysiak says the rest flows downstream and escalates quickly when primary care is underutilized or difficult to access.

Risky Business

While DPC represents a burgeoning opportunity for captives, uncertainty arises when downside risk is invoked between the retained layer and when reinsurance kicks in within a captive insurance program, Mr. Maglaras cautions.

"If you don't have a physician participatory stop-loss at-risk contract program, you will eventually lose the loyalty of your physician base," he says.