Concierge Medicine Today

Focus on Membership Medicine Revenue.

By Pri-Med’s InLight EHR

Free Trial of In Light EHR -- Click Here.
Free Trial of In Light EHR — Click Here.

AUGUST 14, 2015 – Making the move to “membership medicine” is as much an economic decision as it is a professional choice. Depending on your level of success with this model of practice – which encompasses both Direct Primary Care (DPC) and Concierge Medicine – it can have either a positive or a negative impact your future earnings. You need to build a carefully considered business plan and financial model to avoid the risk of failure.

Your basic financial model has two main components: revenue and costs. We’ll focus on revenue in this blog, and then tackle costs in a follow-up blog.

See Fewer Patients with Equal or Greater Pay

Can you really see fewer patients, spend more time with each patient, and make more money?

The graphic below, originally published by Bloomberg Businessweek[1], shows that you can actually achieve more earnings by eliminating third-party payers like insurance and Medicare. This is mainly due to the reduction in software, services, and staff associated with billing.


Web-based EHR Designed For Concierge Medicine
Easily Manage Subscriptions and Payments.  Click Here to Watch a Short Demo.

Calculating Revenue

On the revenue side of the model, there are three questions you need to answer before you can even start to build a business plan.

  1. How many patients do you hope to recruit to the practice?
  2. How much you will charge patients per month?
  3. What services you will provide for that retainer fee, and what ancillary services you can offer to supplement your income?

How many patients do you want to see?

The typical fee-for-service primary care practice has more than 3000 patients. On average, most membership medicine practices have between 200 and 800 patients, with the median being about 400.

Most physicians assume they will see one patient per day for every 100 patients in their practice. Therefore, a panel of 400 patients would result in approximately four to five patient visits per day, a pace that allows physicians to spend virtually unlimited time with patients during office visits and handle email, texts, and other patient communications between visits.

How much will you charge per patient per month?

Membership Medicine generally requires each patient to pay a fee, whether annually, quarterly, or monthly. Monthly fees can range from just $50 for DPC, to hundreds of dollars for high-end Concierge.

Let’s consider a DPC practice charging only $60 per month with a provider who wants to earn a minimum annual salary of $100,000. Since the typical DPC practice is very small, often one provider and one office assistant, the profit/loss breakeven is usually about 300 patients, or about $216,000 in revenue. The provider and assistant both earn their salary and all other direct and overhead expenses are covered.

With the more typical 400 patients, which works out to $288,000 in annual revenue, the provider is now taking home an additional $60,000 in profit, or $160,000 in total income. With a still very reasonable panel of 600 patients, the provider earns a profit of $216,000, plus $100,000 in salary, for a total income of $316,000!

Don’t make your pricing too complex  

Some direct care practices create different tiers of membership, such as gold, silver, and bronze-level plans. For example, the gold plan might include one home visit and all office-based procedures and tests; the silver plan might include only certain procedures and tests; and the bronze plan would include only office visits and exclude all procedures and tests.

Here’s an example of a practice with a tiered plan that offers six different levels of medical services: Some practices might find this too complicated to administer, and some patients might be confused and intimated by too many choices.

Other practices keep it simple with age-based options for children, adults, and the elderly. Here is an example of a four-tier age-based plan; and a plan with five tiers based on age: Some practices have an even simpler approach, with just one or two plans.

Finally, you need to decide if your standard fees will cover the entirety of primary care services, including care management and care coordination, as well as services involving external organizations such as off-site diagnostic facilities.

Getting started

Looking at the patient membership plans referenced above will give you a good idea of the different approaches, but there are hundreds of other examples available through a simple search of the web. Do your research and then start to build your plan based on the examples that make the most sense for your particular needs.

Pri-Med’s InLight EHR, DPC Edition, includes flexible monthly management so you can easily manage your revenue stream. Click here to watch a short demo.



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