Reasonable Charges for a DPC Practice
Reasonable Charges for a DPC Practice
There are two things that set direct primary care apart from other types of practice: payment by patients instead of third-party payers, and monthly payment instead of fee-for-service. These differences account for the notable difference in focus and atmosphere, allowing longer appointments, open scheduling, and a shift from in-office care to care via phone calls or text messaging. These two features are the definition of DPC.
Despite this clear definition, however, there are still significant decisions to make when it comes to setting up a practice in this model. Because of this, there are significant differences between DPC practices. These decisions include:
• What are reasonable monthly charges?
• Should there be a copay for office visits?
• What services (if any) should be charged to the patient (beyond the monthly fee)?
Here's how I approached these decisions:
Setting a Monthly Fee
The limit that has been set for practices being defined as Direct Primary Care has been set at $100 per month. I am not sure who defined it this way, but it is rare for practices to even approach that number (mine range from $35 to $65 per month).
Where this number is set will significantly affect the type of patient attracted to the practice. Setting prices higher (obviously) tends to select against the poorer patients. But the less obvious effect of higher prices is to select a sicker, needier population. The average 25-year-old may be willing to pay $30/month for care, but $75 per month would scare away all but the sickest in that age bracket. In essence, setting prices too high can select out the very patient you want to attract: the healthy person who uses you only on occasion.
This doesn't seem to be the case as people get older and see a greater need for access to care, which is why most DPC practices tier their prices based on age. Younger, healthier people don't anticipate needing care, but will embrace it if it's cheap enough. Older (or sicker) people, on the other hand, will value care enough to pay more. This has led some to charge extra for certain disease states or lifestyle choices (smokers, obese people, diabetics, etc.). I didn't do that, partly because I wanted to keep things simple and partly because it seemed to push away those people who need me the most.
So, what to charge? I started low, increased my price by $5/month already (with no pushback from my patients), and anticipate doing a similar increase in the near future. I do think it's smart to keep prices low for people under 30 (and maybe 40) to attract a large base of healthier people. That being said, with 700 patients in my practice, a $5 increase nets a $3500 monthly increase in revenue, which is substantial.
Charging a Copay
Some see a co-pay for office visits as a way to increase revenue. This is not a good way to make more money. The vast majority of my revenue will be from monthly payments, and this revenue comes in whether or not I see people in my office. One of the most welcome changes in DPC is the fact that I am content when my office is empty, as I earn just as much and have openings for people with urgent problems. This access to me is important to my patients.
Some argue for a co-pay to discourage overuse. I have been open for nearly five years and have 700 patients, and I have not seen a problem with overuse. Besides I see underuse as more of a problem than overuse in our system. People only see the doctor when they are "sick enough," and often let problems go far too long before reaching out for care. I want them to reach out to me earlier (preferably via messaging) and have them avoid illness (and the expense that goes along with it). My patients want this too.
The bottom line: Co-pays don't serve a valuable purpose, and instead discourage the access to care that is so central to DPC.
Setting other Prices
Setting prices for procedures, labs, and medications dispensed in the office is actually pretty straightforward. Keep prices as low as possible, but cover your costs. Patients are very willing to pay $4 for a CBC or $1 for a month of blood pressure pills (which is our cost), and will brag to their friends for this low cost. Charging significantly more would not only hurt the word-of-mouth marketing done by our patients, but it would add very little to the monthly revenue. It is simply not worth it.
Your goal should always be to maximize the revenue from monthly fees. Set all of your other fees with that in mind. Hit the right numbers and you can not only enjoy medicine again, but you can make a pretty good income as you do so.