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A Lean Startup in Direct Primary Care

I’ve been trying to talk a buddy into a Direct Primary Care practice. He is personable, efficient, knowledgeable, and he lives in a great city for that particular practice model. Since one of his fears is the startup cost, I decided to write this guide on a lean startup in Direct Primary Care.

It’s not just the startup cost of a DPC practice but also the loss of income. He has a large primary care panel at a major medical group in his town. The work isn’t satisfying and the people he works with leave a lot to be desired.

To address the loss of income, I’ll discuss bridging the DPC practice with some telemedicine work and moonlighting.

The Direct Primary Care Model

Direct Primary Care is the concept of cutting out the middleman. No insurer and, for the most part, no Medicaid or Medicare. You contract with the patient directly by charging them a monthly retainer. In return, you provide them with all of their healthcare needs.

Your patients will be a mix of those who won’t have any health insurance and those who will have high deductible health insurance plans.

Almost all of the patients who are interested in DPC, care to know their physician personally. They want to know as much about this person as necessary. That’s why I have emphasized branding yourself as a physician.

And patients want access. They want their doctor to be as accessible as Amazon, as accessible as their email account. Texting, calling, video, email … their doctor should be one click away.

The DPC Physician

DPC’s name obviously refers to primary care physicians but there is no reason why a Direct Care practice can’t exist for dentists, gastroenterologists, allergist, dermatologists, sports medicine doctors, nephrologists, and even hospitalists.

Some DPC docs will want to offer a concierge practice. Others just want to have a more relaxed patient visit. But all DPC docs will want autonomy over their income, time, and practice styles.

You don’t have to be rich to start a DPC practice. In fact, it’s one of the business models in healthcare which requires very few resources. I should mention here that physicians might just be the sort of group who believe that spending more means higher chance of success.

In fact, I believe that focusing on a lean startup in Direct Primary Care will increase your chance of success. Just don’t be too cheap later to invest in your clinic to help it grow and evolve with your patients.

A Lean Startup in Direct Primary Care

By lean I am referring to starting your practice for around $10,000. That’s all in, including your overhead and your burn-rate.

It’s certainly possible to build out a DPC for $300,000 with all the bells and whistles. But I want to present you with a way to do this on the cheap. Not to cheap out, but to avoid upfront spending until you have the patient volume to justify future spending.

I’ll present 3 ways to start a DPC practice for very little money.

1. Office Practice

You won’t need a lot of foot traffic for a DPC practice. In fact, it’s probably best to be off the beaten path. This allows you much cheaper rent, easier parking options for patients, and less competition.

Your clients will come from other practices, such as specialists. You can reach out to various groups and tell them what you’re about and what you offer. Or you can market yourself online, the way I have done with my health coaching business.

You won’t need much more than 500 sqft. And in the beginning, you won’t need a front office person. Those are probably the 2 biggest overheads you’ll deal with.

Legal fees might be somewhere around $5,000 which includes drawing up contracts between you and your patients, the office lease, etc. That’s on the high end. It’s quite possible to do this for around $2,000.

Your malpractice will be quite low. It tends to ramp up as you grow your practice. And many insurers know that DPC’s have lower risk of malpractice. Starting rates are usually $1,800-2,200/year.

As for equipement, you can buy used shit damn near everywhere. You can get an EKG machine for $60. Otoscopes and ophthalmoscopes, if you don’t have them, sell used for $25 on ebay.

I discuss a lean startup in DPC because my brother in law successfully started his own urgent care for less than $15,000. UC’s are much more resource intensive and you need the buildout to attract more patients. That’s not the case with a DPC.

If you’re going to be doing wound cultures and take Pap specimens, most of your lab contracts will provide these for free. As for medication, those are incredibly inexpensive once you setup a contract with a medical supplier. You’ll get a massive catalog of everything an office needs and you can order PRN.

2. Traveling Practice

To save even more money, and to really hone in on what you want your practice to focus on, skip the office and start a traveling practice. You can see patients in their homes, at their businesses, in nursing homes, and at the hospital.

Think of hospice patients, those with disabilities, children with behavioral issues, elderly patients, and busy parents. A decent percentage of this population will gladly pay for the convenience of their own private doctor.

Rural medicine is something I’ve always had an interest in. You can travel out to the countryside and take care of migrant workers or farmers.

Finally, there is the workman’s comp or employee health model. A large factory or IT site might have a large office out in the middle of nowhere. You could contract with that business and be the doctor for a certain number of patients.

3. Virtual Practice

I believe that a DPC practice works best when you can see your patients in person. But you can start your practice by basing it off of a virtual model.

You can find patients who are interested in seeing you. Maybe you can go and meet them in person at a cafe or in their home for that initial meet & greet. After that, many of them might have their needs met through a virtual practice, such as through telemedicine.

This will give you some lead-time so that you can decide on what part of town you want to open your practice in. And you’ll figure out the kind of niche practice you might want and the size of the office you’ll want to lease.

Covering Your Overhead

One downside to starting a new practice is that it takes a few months before it takes off. With a FFS practice, the insurance companies will often bombard you with patients; it’s easy to go from zero to 1,000 patients in less than 3 months.

In a DPC, you have to go out and actively find your patients in the beginning. Sure, later on you’ll benefit from a strong word of mouth campaign, if you are personable and treat your first cohort well.

A big advantage to a DPC practice is that you don’t need a lot of patients. Usually somewhere around 200-600 is more than enough. This will leave you a lot of time to do some telemedicine on the side or pick up some urgent care or ER shifts.

I created a fantastic telemedicine course on how to maximize your income as a telemedicine doctor. You should be earning at least $200/hr, if not closer to $250, as a telemedicine doctor.

Monthly Patient Fee

With 25 DPC patients, you should be able to earn around $3,000 per month and possibly as much as $5,000, depending on your neighborhood and patient population.

With 150 DPC patients, you’re in the neighborhood of $18,000-$40,000/month.

I know that some DPC’s only charge $75-100/month per patient. But this is extremely low for what you’ll be providing for your patients. If you can hone your sales technique, you should be able to charge double that amount.

For your healthy patients, they’ll essentially forgo the need for any health insurance. And for the unhealthy ones, you’ll save them a lot of unnecessary testing and far better outcomes than their cattle farm medical group.

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