Beginning in 1996, the Seattle-based Virginia Mason Medical Center, a nonprofit hospital, was confronted with a growing competitive threat to its primary care practice. In the city’s wealthy Eastside district, a number of doctors in private practice began launching “boutique” medical practices offering amenities such as 24-hour access to physicians, next-day appointments, and house calls in exchange for monthly retainer fees of as much as $1,000, sometimes on top of insurance premiums. “Our...

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