Includes a Formula that Helps You Determine the Best Model for You
By Sonja Horner, Healthcare Business Innovator | Outcomes Advocate
JANUARY 9, 2015 – The simplest way to define the differences between Direct Primary Care (DPC) and Concierge Medicine can be defined by a clock. Yes, I know we want to believe that when we move away from the 5-7 minute visits in a traditional model, that we are throwing away the clock but truthfully we are simply expanding the arms on the clock. The amount of time a physician has available to see patients each day and how that time is used continues to be the primary source of revenue for a practice, regardless of the model. The reality is that a physician’s schedule needs to be filled each day by a certain number of patients or guaranteed membership revenue to make the practice’s model viable. Let’s create an example to demonstrate how both models, DPC and Concierge Medicine, work differently when attempting to reach the same goal of $800,000 in gross revenue.
A Direct Primary Care physician who would like to work 48 weeks per year at 40 hours a week, will need to see 16 patients a day at $1,000 per member per year to reach a gross revenue of $800,000 (*). That assumes a full practice at 800 members with 2.4 hours of time per member. This allotment of time is ample for primary care services (colds, flu, check-ups), as well as follow-ups and the administrative work that is required.
Stay with me, I know this sounds a little like a word problem from the sixth grade, but it will make sense in just a minute.
A Concierge Medicine physician who would like to work 48 weeks per year at 40 hours a week, will need to see 8 patients a day at $2,000 per member per year to reach a gross revenue of $800,000 (*). This scenario also assumes a full practice, but the number of members needed to complete the panel is 400. This smaller member panel provides the physician with 4.8 hours of time per member. This allotment of time may be used to provide primary care services, interpret advanced labs, investigate symptoms, coordinate care and perform the required administrative work.(*) The revenue assumptions reflect membership dollars and assume no revenue from commercial insurance carriers in both the DPC and Concierge examples.
The good news is that both models are flexible enough to fit your vision of how you would like to deliver care, but if the price in either of these models decreases the number of members needed to meet the $800,000 goal will also increase (Please use this formula to calculate your scenario, as $800,000 is a placeholder).
The #1 rule in successfully designing your new membership based practice is to start with defining the services you would like to provide to produce the patient outcomes you hope to achieve, then pick the model that best fits your “clock”, your marketplace and equally important covers your overhead.