Fifteen months into a direct-pay practice, this physician recommends building a financial reserve first for any physician considering a similar path.
In previous articles (What to Charge at a Direct-pay Practice, Adopting a Direct-pay Practice, My Transition to a Direct-pay Practice) I have written about aspects to consider when opening a direct primary-care practice. Today I am going to discuss something fairly personal: I'm going to tell you about the bad side of running a direct-pay practice. While I am glad I have made this transition, I don't want to give anyone the impression that this has been all joy and fun. Here's my story:
According to the plan I made prior to opening my direct primary-care practice, I should now be on financially solid ground. I have weathered nearly 15 months without income from my previous practice and have seen steady growth in both patient numbers and practice revenue. I am paying my bills and have recently hired a second nurse. My total patient numbers are now over 450. That's the good news.
The bad news is that my estimate was completely wrong. I had very little personal income over the past 12 months, and to survive, I've had to spend most of my savings - including retirement savings. This is the reality of starting a new business; especially one that uses a new and different business model. This is the reality my accountant warned me about before I started. This is the reality anyone wanting to make such a transition must consider.
I do not have a problem with patient demand (in fact, my waiting list is over a month long). The slow financial growth has, in fact, been of my own making. I made four choices that have kept my financial situation tenuous:
1. I chose to limit the number of new patientsper week. I don't want the quality of my service for my established patients to suffer as I focus too heavily on new patients.
2. I do not accept walk-in visits. My practice vision is based on a having relationship with my patients, and this type of visit would be the antithesis to that vision.
3. I have opted to not raise my prices,even with strong demand for my services. There is a fine line between underpricing and overpricing services. As it stands, there are still patients who opt out of my services because they say they can't afford them. I disagree with their math, but the frequency of this makes me feel that going up on my rates would hurt revenue more than it would help.
4. I opted out of Medicare. I believed this was the only way I could care for Medicare patients in my model of care, yet it made it nearly impossible for me to moonlight and supplement my income.
These are not easy choices, but they seem to be the best course for me to take. Fortunately, with my forecasted growth over the next few months, I should be making a reasonable salary before my resources run out. I also should get fabulous financial aid for my daughter in college, since I didn't make much of anything last year. Yippee.
So what advice do I have for those considering the jump away from the E&M/CPT/ICD-code dance to the world where patient care is actually at the center?
1. Expect it to be hard. My accountant warned me about my year of austerity, but my optimism made it hard for me to believe him.
2. Line up moonlighting jobs before you make the switch, and consider all options of payment. My transition happened abruptly, and so I didn't have the time to consider all contingencies.
3. Keep the vision of what you want in front of you. I have been able to endure much fear and disappointment with the strength of my conviction that I was doing the right thing. Often the passion of these convictions was the energy I used to push through the hard times.
4. If you are not sure, wait. Things are in great flux right now and many of us "pioneers" are working to make the path for future physicians easier. I believe this practice model will change everything, and hope that eventually there will be a huge influx of physicians making the switch. This will only happen if better models are in place.
I hope this is both encouraging and discouraging. It is truly far more enjoyable to practice in a setting without the burden third-party payers bring. I love my job more than ever. However I can't enthusiastically recommend that every doc who reads this should follow my path - yet. That may change in the near future.
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. His writings on this and other topics can be read on his popular blog, "Musings of a Distractible Mind" http://more-distractible.org. Dr. Lamberts can be reached at firstname.lastname@example.org.