DPC Income Projections

[deleted547631]

I'm interested to learn more about the income and business overhead numbers for direct primary care. Here's a scenario that I feel is what to expect based on numbers and percentages that I've read that are being bounced around. Assumptions: 100% accounts receivable. Overhead includes staff salaries (one LPN, one office scheduler and their benefits), medical malpractice insurance, office rent and utilities, equipment (computer and office EMR subscription), and medical supplies. Two weeks vacation (hence, 11.5 multiplier).

Average patient panel = 600 individuals

Average aggregate monthly charge per patient (range $40 - $79 per month depending on age for adults, $10 pediatric) = $60

Extra per month billing for house calls, additional procedures, profit on labs, etc = $1,000 (no reference for this figure)

Overhead percentage = 30%

([(600 * $60) + $1,000] * 11.5) * .7 = $297,850 net income after overhead

Are these numbers fairly close to what one could expect? Are overhead percentage and aggregate per subscriber monthly fee accurate? Please chime in! @AtlasMD

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[Mad Jack]

Your overhead is going to be way over 30% if you're running solo. With multiple providers, your estimates seem reasonable.

 

[deleted547631]

Your overhead is going to be way over 30% if you're running solo. With multiple providers, your estimates seem reasonable.

Thanks, @Mad Jack!

What overhead percentage do you think would be a more reasonable expectation for solo?

My overhead assumption above, at 30%, comes to $127,650. I figure LPN salary plus benefits at $52K, office scheduler salary plus benefits at $46K, leaving $29,650 for rent/utils/supplies/malprac/EMR subscription. For rent, probably no more than 600-800 sqft required for a reception area, two exam rooms with tables, Dr's office, small lounge, two bathrooms. I looked on Loopnet for rent examples but I really think an older, small converted house could suffice.

 

[Mad Jack]

Well, to get a more accurate picture of your overhead, what exactly do you envision your practice being like, and where would you intend to open it?

 

[VA Hopeful Dr]

I'm interested to learn more about the income and business overhead numbers for direct primary care. Here's a scenario that I feel is what to expect based on numbers and percentages that I've read that are being bounced around. Assumptions: 100% accounts receivable. Overhead includes staff salaries (one LPN, one office scheduler and their benefits), medical malpractice insurance, office rent and utilities, equipment (computer and office EMR subscription), and medical supplies. Two weeks vacation (hence, 11.5 multiplier).

Average patient panel = 600 individuals

Average aggregate monthly charge per patient (range $40 - $79 per month depending on age for adults, $10 pediatric) = $60

Extra per month billing for house calls, additional procedures, profit on labs, etc = $1,000 (no reference for this figure)

Overhead percentage = 30%

([(600 * $60) + $1,000] * 11.5) * .7 = $297,850 net income after overhead

Are these numbers fairly close to what one could expect? Are overhead percentage and aggregate per subscriber monthly fee accurate? Please chime in! @AtlasMD

Couple things I see wrong here (I just opened a DPC under the Atlas model, so take this with a grain of salt).

If its just going to be you, you don't need 2 employees. I'm running with just myself and a CMA (LPNs are more expensive and under SC law can't actually do anything extra). Having a back up PRN person should your main employee get sick is a good idea (I have one), but I don't think you need a separate scheduler.

The monthly fee seems about right. I use $50 as my base for math, but that's just because I'm shamelessly copying Atlas

This might just be me, but I'm not really adding any additional costs if I can help it. I round up all labs that are more than 10 cents over the nearest dollar, but no more than that. I don't expect that to make me any money to speak of - mainly covers costs of alcohol pads and band-aids. I mark up meds I dispense by 10%, again to cover label and bottle costs. All in office labs are included, as are non-vaccination injections (kenalog for joints, decadron for asthma, rocephin, toradol, stuff like that). All procedures are included - lacerations, I&D, biopsies, and so on. I don't do house calls (lawyer advised, may change later on), but wouldn't charge for this either.

That said, the income can be very very good. At full capacity (600 people at $50 each), I expect to gross around 240k. But, I'm spending way too much on rent so you could do better than I am if you have a more reasonable lease.

Its best to break down overhead costs...

Malpractice is about 10k/year
I've been told to estimate benefits at about half again salary, so your 54k seems about right
If you're in an office building, utilities are often included in rent - mine are which simplifies things. In my area, and SC is fairly cheap, medical office space is about $22/square foot - so for you let's say 22k/year
If you use the AtlasMD EMR, its $300/month (3600/year)
Quest supplies almost everything I need for labs
Start up equipment for 2 rooms (and granted I have way more capability than I will likely need) was about 45k. That covers likely enough supplies to last the first year or more but I anticipate about 6k/year in supplies at capacity (overestimating, but better that way to my mind)

So add that up, 140k. Subtract that from your 300000/year and you end up at about your number.

 

[Mad Jack]

To give you an example of typical overhead for a non-DPC provider, here's what you'd have. You would be best served by hiring a nurse that would also serve as the secretary, but they would likely expect a salary premium for this, so budget 65k for them. Your equipment costs will be much lower than this guy, probably in line with VA's estimate of 6k a year, but you'll have a significant amount of initial overhead initially to buy your office equipment. Building costs with utilities will vary largely based on area, as will malpractice. VA's is closer to 10k, while in higher cost states it might be as high as 40k. Office costs may be as low as 25k in the Midwest or as high as 100k if you're in a city. Health and disability insurance will vary depending on your preexisting conditions and level of coverage, could run you 10k, could run you 40k. So realistically, you're looking at a range of 6+65+10+25+10 or 116k for a lean practice in a cheap suburb, with cheap health insurance and low malpractice, or 100+40+6+65+40 or 251k for a big city practice in a city with high malpractice costs and high premiums for health insurance and disability. These are just some rough estimates, obviously- if you want better figures, look into local malpractice premiums, health insurance costs, office rental fees, and employee salaries in the area in which you hope to practice. Oh, also, I forgot EMR- if you use Atlas.md EMR, it'll add 3.6k/year to either estimate.

 

[deleted547631]

Well, to get a more accurate picture of your overhead, what exactly do you envision your practice being like, and where would you intend to open it?

As lean as reasonably possible without putting off an overly stingy feel in a small city / big town (e.g. Boise, ID or Bend, OR). Basically, very close to AtlasMD's or Dr Brian Forrest's practice. If I can get away with two people or less on payroll that would be optimal. Atlas's EMR would be used as well as Skype / Facetime for telemed followups.

 

[deleted547631]

Couple things I see wrong here (I just opened a DPC under the Atlas model, so take this with a grain of salt).

If its just going to be you, you don't need 2 employees. I'm running with just myself and a CMA (LPNs are more expensive and under SC law can't actually do anything extra). Having a back up PRN person should your main employee get sick is a good idea (I have one), but I don't think you need a separate scheduler.

The monthly fee seems about right. I use $50 as my base for math, but that's just because I'm shamelessly copying Atlas

This might just be me, but I'm not really adding any additional costs if I can help it. I round up all labs that are more than 10 cents over the nearest dollar, but no more than that. I don't expect that to make me any money to speak of - mainly covers costs of alcohol pads and band-aids. I mark up meds I dispense by 10%, again to cover label and bottle costs. All in office labs are included, as are non-vaccination injections (kenalog for joints, decadron for asthma, rocephin, toradol, stuff like that). All procedures are included - lacerations, I&D, biopsies, and so on. I don't do house calls (lawyer advised, may change later on), but wouldn't charge for this either.

That said, the income can be very very good. At full capacity (600 people at $50 each), I expect to gross around 240k. But, I'm spending way too much on rent so you could do better than I am if you have a more reasonable lease.

Its best to break down overhead costs...

Malpractice is about 10k/year
I've been told to estimate benefits at about half again salary, so your 54k seems about right
If you're in an office building, utilities are often included in rent - mine are which simplifies things. In my area, and SC is fairly cheap, medical office space is about $22/square foot - so for you let's say 22k/year
If you use the AtlasMD EMR, its $300/month (3600/year)
Quest supplies almost everything I need for labs
Start up equipment for 2 rooms (and granted I have way more capability than I will likely need) was about 45k. That covers likely enough supplies to last the first year or more but I anticipate about 6k/year in supplies at capacity (overestimating, but better that way to my mind)

So add that up, 140k. Subtract that from your 300000/year and you end up at about your number.

I love this! Sounds like you have a lean and mean practice which is totally what I'd be after. It looks like I was a bit off on my rent/utils expectations. Is there are certain overhead percentage target you've had in mind once a full panel is established, @VA Hopeful Dr? Your numbers are strong.

 

[Mad Jack]

As lean as reasonably possible without putting off an overly stingy feel in a small city / big town (e.g. Boise, ID or Bend, OR). Basically, very close to AtlasMD's or Dr Brian Forrest's practice. If I can get away with two people or less on payroll that would be optimal. Atlas's EMR would be used as well as Skype / Facetime for telemed followups.

Two staff members is overkill for a one person DPC practice.

 

[Postictal Raiden]

To give you an example of typical overhead for a non-DPC provider, here's what you'd have. You would be best served by hiring a nurse that would also serve as the secretary, but they would likely expect a salary premium for this, so budget 65k for them. Your equipment costs will be much lower than this guy, probably in line with VA's estimate of 6k a year, but you'll have a significant amount of initial overhead initially to buy your office equipment. Building costs with utilities will vary largely based on area, as will malpractice. VA's is closer to 10k, while in higher cost states it might be as high as 40k. Office costs may be as low as 25k in the Midwest or as high as 100k if you're in a city. Health and disability insurance will vary depending on your preexisting conditions and level of coverage, could run you 10k, could run you 40k. So realistically, you're looking at a range of 6+65+10+25+10 or 116k for a lean practice in a cheap suburb, with cheap health insurance and low malpractice, or 100+40+6+65+40 or 251k for a big city practice in a city with high malpractice costs and high premiums for health insurance and disability. These are just some rough estimates, obviously- if you want better figures, look into local malpractice premiums, health insurance costs, office rental fees, and employee salaries in the area in which you hope to practice. Oh, also, I forgot EMR- if you use Atlas.md EMR, it'll add 3.6k/year to either estimate.

The overhead costs are deducted from the pre-tax revenue.

 

[Mad Jack]

The overhead costs are deducted from the pre-tax revenue.

Expenses work that way- you're only taxed on net profit, not gross profit, if you've structured your business appropriately. That's why we have so many companies that make billions and pay no taxes due to year end net losses.

 

[VA Hopeful Dr]

I love this! Sounds like you have a lean and mean practice which is totally what I'd be after. It looks like I was a bit off on my rent/utils expectations. Is there are certain overhead percentage target you've had in mind once a full panel is established, @VA Hopeful Dr? Your numbers are strong.

I don't have a set percentage goal (though I probably should). I'm really just trying to keep overhead as low as I can. I think that will work better in the long run though - if I get the practice set up and running in a way that I'm happy with, then the overhead doesn't seem as important.

 

[primadonna22274]

This is so darn cool. Bookmarking for future reference.

Sent from my SAMSUNG-SM-N910A using Tapatalk

 

[THS]

I don't want to derail this thread, but as a dental student, I am wondering if 30% is a typical overhead for a DPC? For a successful dental practice, 50% is a "benchmark" overhead, with 20%-25% being staff salaries. Our materials costs and lab fees are probably the reason for having a higher OH, as well as needing to hire assistants.
I am interested in running a "lean and mean" practice with as little OH as possible. I will be following this thread to see another perspective on startups. This will be refreshing. Good luck!

Sent from my SAMSUNG-SM-G850A using Tapatalk

 

[VA Hopeful Dr]

I don't want to derail this thread, but as a dental student, I am wondering if 30% is a typical overhead for a DPC? For a successful dental practice, 50% is a "benchmark" overhead, with 20%-25% being staff salaries. Our materials costs and lab fees are probably the reason for having a higher OH, as well as needing to hire assistants.
I am interested in running a "lean and mean" practice with as little OH as possible. I will be following this thread to see another perspective on startups. This will be refreshing. Good luck!

Sent from my SAMSUNG-SM-G850A using Tapatalk

The biggest cost saving is reduced staff. I don't have a billing person, an office manager, a medical records person, or a receptionist. I have me and a medical assistant.

 

[VA Hopeful Dr]

This is so darn cool. Bookmarking for future reference.

Sent from my SAMSUNG-SM-N910A using Tapatalk

By the time you finish residency, I'll be needing a partner over here in Columbia

 

[THS]

The biggest cost saving is reduced staff. I don't have a billing person, an office manager, a medical records person, or a receptionist. I have me and a medical assistant.

How much time per week do you spend on managerial tasks instead of seeing patients? Do you do this during "normal" work hours, thereby reducing the patients you are seeing? Or do you do this after hours?

I would love to do my own managerial tasks, but fear I would have to take a day off or hire an associate to see patients while I do this. I want to keep as many clinic hours as possible.

 

[Mad Jack]

How much time per week do you spend on managerial tasks instead of seeing patients? Do you do this during "normal" work hours, thereby reducing the patients you are seeing? Or do you do this after hours?

I would love to do my own managerial tasks, but fear I would have to take a day off or hire an associate to see patients while I do this. I want to keep as many clinic hours as possible.

DPC relies on monthly fees from patients. This allows you to be getting paid whether you are seeing patients or not, and allows you to keep a panel a third to a quarter the size of a traditional practice. Having such a small panel gives you plenty of time for the managerial stuff, and the monthly fees ensure that you're not losing anything by doing such paperwork yourself. Dentistry, by its very nature, is a fee for service sort of thing, so the model doesn't really carry over well.

 

[VA Hopeful Dr]

How much time per week do you spend on managerial tasks instead of seeing patients? Do you do this during "normal" work hours, thereby reducing the patients you are seeing? Or do you do this after hours?

I would love to do my own managerial tasks, but fear I would have to take a day off or hire an associate to see patients while I do this. I want to keep as many clinic hours as possible.

There is surprisingly little to actually do once you get rid of insurance and government regulations. Probably no more than a few hours per week, and even at full capacity I don't expect to be seeing patients every hour of the week.

Now admittedly, I do outsource my payroll to my accountant but I don't think that would be much more time.

 

[primadonna22274]

By the time you finish residency, I'll be needing a partner over here in Columbia

Totally wanna come see your operation buddy! I have a 3 yr NHSC loan repayment obligation but after that.... options abound

Sent from my SAMSUNG-SM-N910A using Tapatalk

 

[deleted547631]

I don't want to derail this thread, but as a dental student, I am wondering if 30% is a typical overhead for a DPC? For a successful dental practice, 50% is a "benchmark" overhead, with 20%-25% being staff salaries. Our materials costs and lab fees are probably the reason for having a higher OH, as well as needing to hire assistants.
I am interested in running a "lean and mean" practice with as little OH as possible. I will be following this thread to see another perspective on startups. This will be refreshing. Good luck!

Sent from my SAMSUNG-SM-G850A using Tapatalk

You'll enjoy like this article about a general dentist having his practice overhead average at 43%: http://www.dentaltown.com/dentaltown/Article.aspx?i=301&aid=4086

 

[Red Lobster Actual]

I don't do house calls (lawyer advised, may change later on), but wouldn't charge for this either.

This is interesting. Why did our legal brethren advise against house calls?

 

[VA Hopeful Dr]

This is interesting. Why did our legal brethren advise against house calls?

Me and a patient alone in their house? If they claimed I forced myself on them or assaulted them, its my word against theirs. I likely wouldn't go to jail over it, but, as we've seen, the media circus would not be good for me.

 

[Red Lobster Actual]

Me and a patient alone in their house? If they claimed I forced myself on them or assaulted them, its my word against theirs. I likely wouldn't go to jail over it, but, as we've seen, the media circus would not be good for me.

Worst case scenario it seems. I suppose if you make house calls while the patient has their family with them might not be so bad. Very interesting, I'll keep this in mind. Thank you Dr. VA!

 

[olivarynucleus]

By the time you finish residency, I'll be needing a partner over here in Columbia

If you wanted to do this type of thing as a psychiatrist, would you even need a MA? Can psychiatrist get away with just seeing patients in their home, with a prescription pad and EMR?

 

[deleted547631]

If you wanted to do this type of thing as a psychiatrist, would you even need a MA? Can psychiatrist get away with just seeing patients in their home, with a prescription pad and EMR?

I believe you could. A scheduling / answering service hooked up to email or text would probably be all that you'd need to cover what an office assistant would do. Med management or psychotherapy sessions could pull in $200+ per hour with very little overhead. Psychiatry is definitely poised for cash pay, direct pay model. I imagine it might take a little time to build up to this level from scratch but it's realistic.

 

[VA Hopeful Dr]

I believe you could. A scheduling / answering service hooked up to email or text would probably be all that you'd need to cover what an office assistant would do. Med management or psychotherapy sessions could pull in $200+ per hour with very little overhead. Psychiatry is definitely poised for cash pay, direct pay model. I imagine it might take a little time to build up to this level from scratch but it's realistic.

Exactly

 

[Doctor4Life1769]

By the time you finish residency, I'll be needing a partner over here in Columbia

How about in the next year?

 

[VA Hopeful Dr]

How about in the next year?

I'd love to think I'd be busy enough to need a partner that quickly, but I suspect that's being overly ambitious.

That said, what I have seen happen before is one doc starts the practice while another gets some other work in the same town (hospitalist, urgent care, something without much of a non-compete that can also act as a decent recruiting area) to make money and build up the practice. As soon as the first doc is busy enough, the second comes on board. The urgent care I'm moonlighting at is always looking for full-time physicians. My wife's hospitalist group is also currently hiring.

 

[Doctor4Life1769]

I'd love to think I'd be busy enough to need a partner that quickly, but I suspect that's being overly ambitious.

That said, what I have seen happen before is one doc starts the practice while another gets some other work in the same town (hospitalist, urgent care, something without much of a non-compete that can also act as a decent recruiting area) to make money and build up the practice. As soon as the first doc is busy enough, the second comes on board. The urgent care I'm moonlighting at is always looking for full-time physicians. My wife's hospitalist group is also currently hiring.

I'm not necessarily against making such a move.
While I do not necessarily wish to pursue a hospitalist job, I could always swing that given my current program's heavy inpatient experience (with open ICU). I am attracted to urgent care mainly for the broad and extensive experience, plus need to build quick rapport.

 

[VA Hopeful Dr]

I'm not necessarily against making such a move.
While I do not necessarily wish to pursue a hospitalist job, I could always swing that given my current program's heavy inpatient experience (with open ICU). I am attracted to urgent care mainly for the broad and extensive experience, plus need to build quick rapport.

I think that's wise. FM residencies are trending away from some of the acute care medicine that you see lots of in urgent care - fracture care, complex lacerations, acute abdominal pain, that sort of stuff. As much as I hated full-time urgent care, I'm much better at procedures than I was before I took the job.

The only trick with urgent care, and I'm expecting a Blue Dog appearance at any moment to back this up, is that your chronic care skills can atrophy quickly if you don't actively focus on keeping up.

 

[deleted87716]

The only trick with urgent care, and I'm expecting a Blue Dog appearance at any moment to back this up, is that your chronic care skills can atrophy quickly if you don't actively focus on keeping up.

 

[Doctor4Life1769]

I think that's wise. FM residencies are trending away from some of the acute care medicine that you see lots of in urgent care - fracture care, complex lacerations, acute abdominal pain, that sort of stuff. As much as I hated full-time urgent care, I'm much better at procedures than I was before I took the job.

The only trick with urgent care, and I'm expecting a Blue Dog appearance at any moment to back this up, is that your chronic care skills can atrophy quickly if you don't actively focus on keeping up.

It's especially the case for me since I didn't necessarily start out fully vested in FM.
My approach to primary care has drastically changed over the past year of my FM training. I used to look at the immediate and next steps but now I do tend to look more at general preventive stuff when counseling or seeing my patients. I enjoy doing procedures, but I haven't had too many thus far. I definitely wish to ramp up my experience in fracture care. I tried to get as many lac repairs in the ED this past year. UC will definitely help.

I received your message and I'll look into that. I will keep in touch with you, as well.

 

[olivarynucleus]

The biggest cost saving is reduced staff. I don't have a billing person, an office manager, a medical records person, or a receptionist. I have me and a medical assistant.

Is it a problem for your medical assistant to answer the phone, schedule, and perform clinical duties? Most patients think the receptionist in scrubs is a nurse anyway, so they wouldn't think its weird a nurse is answering the phone.

 

[Doctor4Life1769]

Is it a problem for your medical assistant to answer the phone, schedule, and perform clinical duties? Most patients think the receptionist in scrubs is a nurse anyway, so they wouldn't think its weird a nurse is answering the phone.

Huh? RNs are the ones who usually field calls and triage based on pt issues as elaborated by protocol.

 

[olivarynucleus]

Couple things I see wrong here (I just opened a DPC under the Atlas model, so take this with a grain of salt).

If its just going to be you, you don't need 2 employees. I'm running with just myself and a CMA (LPNs are more expensive and under SC law can't actually do anything extra). Having a back up PRN person should your main employee get sick is a good idea (I have one), but I don't think you need a separate scheduler.

The monthly fee seems about right. I use $50 as my base for math, but that's just because I'm shamelessly copying Atlas

This might just be me, but I'm not really adding any additional costs if I can help it. I round up all labs that are more than 10 cents over the nearest dollar, but no more than that. I don't expect that to make me any money to speak of - mainly covers costs of alcohol pads and band-aids. I mark up meds I dispense by 10%, again to cover label and bottle costs. All in office labs are included, as are non-vaccination injections (kenalog for joints, decadron for asthma, rocephin, toradol, stuff like that). All procedures are included - lacerations, I&D, biopsies, and so on. I don't do house calls (lawyer advised, may change later on), but wouldn't charge for this either.

That said, the income can be very very good. At full capacity (600 people at $50 each), I expect to gross around 240k. But, I'm spending way too much on rent so you could do better than I am if you have a more reasonable lease.

Its best to break down overhead costs...

Malpractice is about 10k/year
I've been told to estimate benefits at about half again salary, so your 54k seems about right
If you're in an office building, utilities are often included in rent - mine are which simplifies things. In my area, and SC is fairly cheap, medical office space is about $22/square foot - so for you let's say 22k/year
If you use the AtlasMD EMR, its $300/month (3600/year)
Quest supplies almost everything I need for labs
Start up equipment for 2 rooms (and granted I have way more capability than I will likely need) was about 45k. That covers likely enough supplies to last the first year or more but I anticipate about 6k/year in supplies at capacity (overestimating, but better that way to my mind)

So add that up, 140k. Subtract that from your 300000/year and you end up at about your number.

Are you having trouble getting to the 600 patient enrollment, and how do your patients feel about paying the fee?

 

[VA Hopeful Dr]

Are you having trouble getting to the 600 patient enrollment, and how do your patients feel about paying the fee?

I'm not even 2 months in, so I can't really say how hard it will be to get to 600.

As for the fee, most people are amazed at how cheap it is to join given what I'm offering.

 

[notinkansas]

Excellent piece on one doctor's experience
http://nymag.com/scienceofus/2015/06/how-physicians-make-money.html

 

[bonedrone14]

This is a great thread...thanks for posting and detailing all of this. I know that this is becoming more common for psych and FM to do...what about for someone doing an FM/Psych combined residency. From those of you actually working and doing this on one side or the other, is it feasible to have a blended DPC?

 

[Doctor4Life1769]

DPC is a huge topic of discussion at the FAFP