Just about everyday, I get some great questions about starting and growing a direct primary care practice. A colleague just read my book and asked the following questions:
How much money do you need to start a direct primary care practice?
This is a question I recently received from someone interested in the direct primary care movement. And, it's a good question. I'll start by saying that I've addressed this question in great detail in my course on Writing a Business Plan for your Direct Primary Care practice.
So, for a full answer to this question, please go to our Take Action page and check out the Business Plan course!
To answer the question more directly, a direct primary care practice can be started with $5,000 or with $50,000. It depends on how expensive your lease is, how many staff members you have, how much equipment you need to buy, and how resourceful you are.
For many doctors in the direct primary care movement, they know how important it is to keep their overhead low. A lower overhead leads to a lower price point for patients and therefore a more sustainable medical practice.
For me, I launched my practice with about $20,000 in the bank. I bought a $700 exam table, a $1,700 EKG machine, and a $700 pulmonary function test (PFT) machine. I spent about $600 each month on rent, $450 each month on my malpractice insurance, $300 monthly on the electronic medical record system, $500 monthly on medications, and $500 monthly on lab work. Those were the biggest expenses when I started, and my monthly expenses for the first few months of practice were in the $3,000 monthly range.
This low overhead made it easy to break even for operations, and I broke even for operations with around 85 patients or 85 members in my practice.
A quick breakdown of the Startup Costs for our Direct Primary Care Practice
How much money do you need to start a direct primary care practice? Here's some basic numbers during my first few months of operation with our direct primary care practice at Plum Health DPC:
One-time purchases:
Exam table $700
EKG Machine $1,700
Legal services/patient contracts $2,500
PFT Machine $700
Bookcase $200
Comfy Chair $200
Basic supplies and equipment: $1,000
Small Business courses/educational resources on how to operate a business successfully: $1,000
Monthly costs:
Lease on a space $600 monthly
Malpractice Insurance $450 monthly
Electronic medical record system $300 monthly
Cost to purchase medications $500 monthly
Cost of laboratory services $500 monthly
Cost of misc supplies and equipment $500 monthly
In my first 9 months of practice, my overhead costs averaged at $3,664 monthly.
By month 9, my revenue was at $7,679.10, aka profitable!
Conclusion: You could start a very simple DPC Practice for $5,000 to $10,000, because we started our direct primary care practice for a relatively small amount of money.
Again, I take a deeper dive into these startup costs for a direct primary care practice in our business plan course.
#Startup #DirectPrimaryCare #StartupCosts #Overhead #ProfitAndLoss
What is the typical startup cost for a direct primary care practice?
Every direct primary care practice is different! When you’ve seen one DPC practice, you’ve seen one DPC practice, meaning that each clinic is going to be unique based on geography, demographics, state laws, and the doctor’s preferences. Therefore, there’s going to be a wide range in startup costs for a Direct Primary Care practice.
If you’re just buying supplies to furnish a small office, you should plan on spending $10,000. If you need legal help to set up contracts, you should add in $2,500. If you include things like your first month’s rent, malpractice insurance, the cost of your electronic medical record, internet, utilities, and phone lines, you should budget an additional $5,000. If you have a medical assistant on staff, you can plan on spending $3,500 each month for their salary. So, startup costs for a modest one or two room office might be $17,500 without a staff member or $21,000 with a staff member, which could include your first month of operation.
What is the average malpractice insurance cost for a family medicine doctor?
The next question is harder for me to answer. I only know what my experience has been like. For me, I purchased malpractice insurance for $450 each month. I was told that Wayne County’s malpractice insurance rate is the highest in the State of Michigan, so this cost is likely much lower in other areas of the state.
The price of the policy does decrease as we add more doctors in the practice.
Are you able to make a decent living as a direct primary care doctor?
Yes! Yes, you can make a good amount of money as a direct primary care doctor. It depends on how good you are at running a business, the cost of your overhead expenses, the prices you charge your patients, and the number of staff members that you have.
The person who asked this question went on to say: “ You have roughly 500 patients paying you about $69 each month, which comes out to only $34,000 each month! And then you have overhead costs like rent, utilities, taxes, staff payroll, etc… Additionally, you’re placing yourself on call for your patients around the clock. Is it worth it?”
For me, I didn’t start a direct primary care practice to make money. I started my direct primary care practice to take care of my patients on my own terms, to develop a fulfilling practice of medicine, and to treat my neighbors and patients with kindness and respect. I definitely want to make money and I need to make money to be successful, but it’s not the main motivation for my practice. In fact, nothing pays like autonomy - I can practice medicine how it’s supposed to be practice and I am not at the mercy of a giant hospital system telling me what to do or how many patients I must see in an hour or in a day.
How is direct primary care different than concierge medicine?
That’s another can of worms, and I’ll leave you this blog post that I wrote for Plum Health DPC, which is one of the most frequently visited pages on our blog and a top hit on Google when you search for DPC vs concierge medicine. Here’s that blog post!
How do you offer your direct primary care services to small businesses?
We offer the membership services to small businesses in our neighborhood. We have several small businesses enrolled in our services at Plum Health DPC. The employer usually pays for the monthly costs of the employees, and the employees pay for any additional services like labs, meds, or imaging services. Here’s our sales page for employer groups via Plum Health DPC.
How can I learn more about starting a direct primary care practice?
If you want to learn more about starting and growing your direct primary care practice, look no further than our courses on how to start and grow your direct primary care practice. We at Startup DPC have begun compiling some of the best content available on this blog and in our courses.
The best place to start is to take our Direct Primary Care Business Plan course, available here. From there, you can learn how to attract new patients to your direct primary care practice and how to find the perfect location or build out the practice of your dreams.
How can I find a Great Direct Primary Care doctor?
If you’re looking for a great direct primary care doctor and you’re in the Detroit area, we’re at Plum Health DPC. If you’re not in the Detroit area, there’s a great website called the DPC Mapper where you can find a DPC doctor near you!
Thanks for reading and watching, and best of luck in your direct primary care journey!
-Paul Thomas, MD
