When launching a direct care practice, there are a number of decisions that have to be made, including where to locate the practice and how many staff members will be required for the practice to run smoothly. Two very important decisions focus on price and services.
Direct care practices operate on membership fees. Those fees must be structured such that the practice will operate efficiently and successfully, retaining and growing the patient panel. The membership fees must also be viewed by patients as affordable and as offering appropriate value. Direct care practices do not accept insurance payments so the membership fees will fund the operations in total.
Elation Health’s Direct Care Playbook offers guidance on setting membership fees that make sense for the practice and the patient. Membership fees range widely and can vary on an individual and family basis. Accounting for age, geography, and local patient demographics are all key inputs to effective pricing strategy.
Direct care physicians also need to decide how much they need to make to keep their practice afloat, and how much they would like to make in an ideal situation. This calculation can be accomplished taking:
- Sum all expenses (salaries, office space, and all other operating expenses)
- Divide by anticipated size of the patient panel
Assume a baseline of 300-500 patients per physician as an average panel size. This calculation will give a practice a break-even price point, and the physician can then consider desired take home pay as a final input in setting pricing for their practice. When choosing a fee schedule, consider the overhead of managing more complex pricing or if staff will have the technology to support your chosen pricing schedule.
As to which services to offer, most direct care practices offer basic primary care services as well as treatment for minor injury or illness. Some even include diagnostic and laboratory services in the basic membership fees. Most direct care physicians will also offer “enhanced services” such as “real time access via advanced communication technology to their personal physician, extended visits, in some cases home-based medical visits, and highly personalized, coordinated, and comprehensive care administration.”
The decisions as to which services to offer and the level of membership fees to charge are dependent on each other. The direct care physician must be able to support the practice with the membership fee revenue, providing services that patients need and want in a cost-efficient manner.