The direct primary care business model does not accept insurance or participate in Medicare or Medicaid; rather, this model charges patients a monthly out-of-pocket fee for primary care services. (11) Typically the monthly fee covers services such as evaluations, annual check-ups, and other basic primary care, but it can also include office-based laboratory or radiology tests. (5) Continue reading to learn how to start a direct primary care practice.
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Presently, there are 1,858 direct primary care practices in the United States, and that number is expected to continue to grow. (7) Why has the direct primary care business model become so popular among physicians? It is appealing to physicians experiencing burnout and those who want to spend more time with patients and less time filling out insurance paperwork. (6)
According to the American Academy of Family Physicians (AAFP), the benefits of the direct primary care business model include:
- The physician can spend more time with each patient.
- There is a simplified revenue structure.
- There is decreased practice overhead.
- The administrative burden is reduced. (2)
Direct primary care business plan
Some aspects of starting a direct care practice are similar to opening any type of clinic, which requires an office, staff, and electronic health records (EHR) software. Regarding staff, finding an office manager who has experience with the direct care practice model will be beneficial.
Once the office site, EHR, and staff are chosen, the direct care practice needs to determine the services that will be offered and the monthly cost to cover those services. The monthly fee range depends on the age of the patient and can be anywhere from $25 to $85 per month, with the 2015 average just under $78. (8) While this model of care can offer patients considerable cost savings, many patients choose to also have a high deductible health plan to pay for services that are not covered by the direct care practice such as major surgery, cancer, or other catastrophic health events. (10)
When it comes to finances, it’s important to understand that switching to a direct care practice from the traditional fee-for-service model can be financially disruptive and will also require an understanding of compliance issues in your state. (10) Having a financial and legal plan in place before making the switch is vital.
Transitioning to a direct care practice will also require time to educate existing patients on the benefits of this model, emphasizing increased physician time, reduced patient costs, and potentially better health outcomes. Due to the physician’s ethical mandate, it is also imperative to help patients who will not stay with the clinic find a new primary care physician. (1) To that end, networking with other primary care physicians in the community will likely be necessary.
Once you have foundational aspects in place (e.g., financial plan, office site, staff), it’s time to think about marketing. Be sure to create a professional-looking website and develop a strong marketing plan. As with any business, word of mouth is key, so focusing on delivering high-quality care will be important.
Whether you are starting a new direct care practice or transitioning from a fee-for-service clinical practice, these organizations offer additional resources:
Direct primary care pharmacy
Planning how you will dispense medications to patients is another important consideration when starting a direct primary care practice. Direct care clinics have two options:
- Dispense medications directly: The AAFP reports that 61% of direct care clinics have a pharmacy. Depending on the practice, offering discounted medications to members may be an appealing added value to patients.
- Refer patients to an online or local pharmacy: If there are pharmacies close to your practice or you are fond of an online program offering discounts, this may be an attractive option. (9)
In some cases, with the direct primary care pharmacy, prescription medications are often dispensed at a lower cost or even included as a part of the monthly membership fee. (12)
The bottom line
It was previously thought that improving healthcare required a focus on three areas: enhancing the patient experience, improving health outcomes, and reducing costs. (4) The direct primary care business model adds a fourth imperative: improving the work life and health of the physicians and staff. Lifestyle medicine (integrative medicine) excels in all four areas, making the direct care practice an appealing option for many healthcare practitioners. (10)
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