Creating a Sustainable Direct Primary Care Practice

It has been three and a half years since I made the jump from a "normal" insurance-based practice to a direct primary care (DPC) practice. To clarify, we take no payment from third-party payers (insurance or government), instead charging a flat monthly fee for all care, ranging between $35 and $65 per month (depending on age). We charge no copays, do most common procedures for no additional charge, and offer "client bill" labs (the patient pays us and we pay the lab a negotiated price) with minimal mark-up (CBC is $4.50, TSH is $8).

While this may seem an impossible business model, at 725 patients, we are profitable enough to pay me a "reasonable" salary (one that pays my bills and lets me save some) that is rapidly increasing. My collections this past month were more than $8,000 higher than a year ago, with minimal increase to office overhead. Furthermore, my quality of life and level of the care I can give is far better than it ever was in my old practice (I average around 10 patient office visits per day). I am happier, my patient satisfaction is very high (with very few patients leaving the practice), and my staff tells me they'd quit before they'd go back to the old type of practice.

If this all sounds like a fantasy, the part that I am omitting is how difficult it was to get to this point. The object of this article is not to explain the details of my practice (I've done that in previous articles), but to give some advice for those considering making the change from the hamster wheel of insurance-run primary care to the relative freedom of direct primary care. Not all who try DPC succeed. So what are the most important things to do to create a sustainable practice?

1. Have a vision

Over the last few years in my previous practice, I was increasingly despondent about the quality of care I was giving. I was desperately trying to give excellent care in a system that was alienating me from my patients. I saw DPC as the antidote for that struggle. Instead of being rewarded for sickness, procedures, and brief office visits, I was rewarded for education, spending time with people, and keeping people healthy (all of which allow me to grow my panel).

My vision gave me the ability to get through the times when money was tight. Having a much better relationship with my patients was enough of a salve to put up with small balances in my bank accounts. Additionally, my vision was contagious, causing many of my patients to evangelize their family and friends on my behalf. Happy customers are good advertisement, but true believers are even more so.


2. Get your staff to share your vision

I employ two medical assistants, both of whom worked for me in my old practice. This is very lucky for me, as I knew I was getting people who would not only work hard, but ones who would buy into the vision I had for patient-centered care. This is really important because, as opposed to the insurance-based practice where the doctor is the only real revenue generator, my office staff has a huge impact on patient satisfaction and retention (which directly impacts revenue). They don't just work for me; they themselves are passionate about the care we give and so feel a unique sort of ownership. They are empowered and they have an emotional stake in our success, and that makes things much easier.

The good news is that the quality of life for office staff is far better than anything they've ever experienced, so getting them to buy in is not that hard. But acknowledging that they are not just "support staff," but true care providers gives you workers who will go the extra lengths necessary to keep patients satisfied. In a start-up of a new business, you don't have time to babysit your staff. Give them vision and purpose, and you not only have less to worry about, but you have a huge ally as you build your practice.


3. Set your prices right

The most common error I see in failed DPC practices is that they charge too much. While it may seem like a necessity to increase cash flow more quickly, setting prices too high leads to several problems that can stifle growth and doom a practice. High prices are going to select against the patients you most want to attract. In a subscription model, the ideal customer is one who has low demand and high satisfaction with the product you offer. For example: Setting prices too high for a younger population (under 30), who are largely healthy, will discourage those who are healthy to pay your monthly fee. Far more healthy 20-somethings will pay $30 per month than $50 a month, and the ones who are willing to pay that much will often be the ones with the most medical problems. It's better to have 30 healthy people at $30 per month than 10 demanding people at $50 per month, both in the revenue and the work those patients will require. As people get older and have more problems, this rate can go up, as it is easier for people to believe they may get sick and need your service.

On the other hand, we recently raised our fees by $5 per month, as I didn't feel I was growing my salary enough to cover my personal expenses. This change netted more than a $3,000 increase in my salary, but still didn't affect my patient growth, or cause anyone to leave my practice. So it is possible to price things too low, but it is far easier to recover from that mistake than that of over-charging.

The struggle to build a successful DPC practice is absolutely worth it. Those who start now are definitely in a better position than I was, as there are far more people to learn from and many more products that make adoption of DPC easier. Still, there has to be a certain level of belief in what you are doing, as well as a willingness to go through some lean times to find that gold at the end of the rainbow. I can't say I'm there quite yet, but I'm getting real close. Yes, it works. Yes, it is much, much better.

Robert Lamberts, MD,who is board certified in internal medicine and pediatrics, practices in Augusta, Ga. In October, 2012, he left his "traditional" primary-care practice and opened a cash-only "direct care" practice.  Lamberts can be reached at rob.lamberts@gmail.com. To read more about DPC visit Dr. Lamberts' author page.