5 Things I Wish I Knew Before I Started My Direct Primary Care (DPC) Practice
Editor’s Note: Dr. Daniel Hodge recently started a direct primary care practice after serving as an internal medicine specialist in the U.S. Navy. I’m grateful that he was willing to share his insights into how to go about starting a direct primary care practice, including some pitfalls to avoid. If you’re thinking about starting a direct primary care practice, this is a great article for you. If not, it’s still full of great insights for you!.
Taking the plunge to start my direct primary care (DPC) practice
After finishing another “fun-filled” outpatient clinic day, full of the usual denied prior authorizations, diabetic shoe requests, and unnecessary speciality referrals, I found myself losing hope in our medical system yet again. This was déja vu of the day prior.
Our health system was broken and I thought to myself, “How many more days can I will myself to get through this grind?” When a physician begins looking up landscaping job opportunities or pig farms for sale, it’s time for a change.
I couldn’t take any more of the bureaucracy of military medicine. So, I began looking for other career options after my military service. In that search, I stumbled upon Direct Primary Care (DPC). DPC is a growing healthcare movement in the United States focused on restoring the doctor-patient relationship and giving physicians autonomy from the fee-for-service world.
It sounded too good to be true!
But, I continued to read more about the promises of fewer patients, extended visit times, fewer administrative tasks, and no hassles of insurance.
I had to learn more about this direct primary care (DPC) model and Google quickly led me to the founder of the DPC movement, Dr. Garrison Bliss. He was an internist, like me, and was even advertising a new position at his clinic. He said he was “looking for a new, highly motivated young internist to help grow practice.”
After another terrible day of clinic, and with nothing to lose, I sent him an email. That email changed my life. After 6 or 7 correspondences, I hopped on a plane to Seattle to see his practice first-hand and from that day forward, I never looked back.
I dropped my plan to complete a fellowship, withdrew my application from ERAS, and decided to pursue a career in Direct Primary Care (DPC).
Here are the five things I wish I knew before starting my own direct primary care (DPC) practice:
1. Do not underestimate your start-up costs when starting a direct primary care (DPC) clinic
Having a sound business plan is important for fully formulating your plan, identifying your target market, and understanding your profit-loss projections. During this initial planning phase, I was fortunate enough to have a full-time job with the United States Navy. So, I could spend my evenings planning and refining my clinic launch.
The business plan was a cumbersome process but helped me define my target audience and refine my marketing. Also, it helped me balance my expectations for the first year of business. I learned that it would take approximately 6 months to become profitable based on similar DPC models. Part of creating this business plan involved financial planning and closely analyzing start-up costs.
Learn from my story
Despite reading multiple DPC strategy templates, online blogs, and physician facebook groups, I underestimated my startup costs. Some of this was self-inflicted, but looking back, I remember several mentors offering the same warning. I thought my business plan was bulletproof and my time invested in researching and planning was bound to pay off.
Instead of renting a clinic space and having a fixed monthly expense, I had a unique opportunity to purchase a clinic building. The benefits of owning the building, having control of the layout, exterior, and parking situation were amazing but came at a cost.
A change in contractors and a lengthy renovation wish list resulted in greater than anticipated costs. While replacing the floors, ceilings, countertops, and HVAC system, to name a few, we ran into several unexpected issues. Unfortunately, this led to additional costs of approximately $15,000. While this may not seem like a large amount of money to some physicians, I definitely felt the squeeze as a physician who was about to lose his salary and start a new clinic in a new location with no existing patient base.
I recommend you buffer your startup costs by $10-20K, as something unexpected is bound to occur. Whether it’s unexpected equipment or supply costs, permitting issues, or building renovation problems, I recommend having a solid start up expense buffer as part of your DPC business plan.
2. Trust your gut. It has gotten you this far in life!
This second lesson took several experiences to fully understand and appreciate. As I mentioned above, I redesigned the clinic space while finishing my last year on active duty service. During the first several months into the project with a local contractor, I learned that he never submitted the appropriate permits, didn’t have active insurance, and failed to place the initial purchase order for the renovation. Unfortunately, this became a familiar scenario when choosing vendors and business services during my DPC clinic launch.
Learn from my story!
I’ve learned to make sound decisions in the moment with the best information available, but be prepared to change course if that information changes. I had to change several relationships during the startup. I switched banks, changed contractors, and fired the business accountants. As I reflect on all of these scenarios, there was a common thread. It was something that is difficult to describe other than a ‘gut feel.’ I admit that is not a technical term but my best attempt at describing the feeling. In all of these situations, I found myself having long conversations with my wife and explaining that something just didn’t feel right for various reasons. I often let these issues fester for weeks or months and tried to rationalize the delayed email responses, lack of technical drawings, or problems with delivering the promised services.
This gut feel goes both ways and will help you identify beneficial relationships. I was lucky to find a great nurse with better organizational skills than my own. She also has great connections in the local community and has been instrumental in steering me in the right direction to make business decisions as we officially opened our doors. During these first few months, we have tackled many obstacles and answered many of the questions that caused me such anxiety during the start-up.
Be prepared to reverse a decision or change a relationship. Your gut feeling typically reflects your intuition. If something doesn’t feel right, listen to that inner voice and make the change early before wasting your time and going down a road of frustration.
3. Create Different Streams Of Income
When I initially set out to design my business plan, my main revenue generator was monthly membership fees through my direct primary care practice. This was similar to a gym membership model at a fixed monthly rate. The benefit of this approach compared to the fee for service (insurance model) industry is that it allows you to accurately predict your monthly revenue.
For example, I knew I needed 217 patients to replace my current salary and cover my projected monthly overhead. Compare this to the insurance model where a physician needs to see 20-30+ patients a day and then bills insurance some arbitrary amount of money based on ICD-10 or CPT codes and then several months later they may get some percentage of what they actually billed.
Having been away from the area for more than a decade, I had several concerns with starting a business in a different state, not having a patient panel to follow me to my new practice, and leaving the larger healthcare system.
So, I developed another plan.
Similar to having a diversified portfolio in investing, I decided to diversify my employment approach. I saved my leave (military jargon for vacation days) and used them to work locum tenens hospitalist shifts. I also joined several telehealth companies, including SteadyMD and Calibrate Health.
These opportunities helped offload my start up costs and also allowed me to maintain my current lifestyle without a dramatic change when I launched my DPC practice. I even applied and was offered a part-time hospitalist job at a local, maximum security state penitentiary. Although I declined the offer, I was lucky to have such avenues of income available as I started up my business.
As I began seeing patients in my new space, I also found several unanticipated streams of income including pharmacy and laboratory services. These were a huge benefit to my patients and although the margins were not large, I generated several thousand dollars in pharmaceutical sales in my first few months of direct primary care practice. During the pandemic, there was also a shift in clinical practice and growing demand for telehealth services. SteadyMD and Calibrate Health were well positioned and my cloud-based practice with these groups grew substantially.
I encourage anyone looking to start a DPC practice to diversify their income streams and find 3-5 additional side hustles to generate additional revenue.
4. Learn To Sell Your DPC Membership in 30 Seconds
One of the hardest parts of growing a new business, particularly in the healthcare landscape and in a community that is unfamiliar with direct primary care, is the time-intensive task of having to explain your approach to medicine. The benefits of DPC membership, such as extended visit times, improved access to care, and no wait times, take time to explain to potential patients who are already paying hefty prices for marginal health insurance benefits. I quickly learned why TikTok is so successful – our attention span is only about 15 to 30 seconds.
I noticed things usually went well with my DPC pitch until I brought up the monthly membership fee.
That comment was invariably followed with, “that is like concierge medicine”. At the beginning, this drove me nuts and I would spend the next several minutes trying to explain the nuances and differences between concierge medicine and direct primary care (DPC). I would explain how concierge medicine was actually double dipping with billing your insurance and charging a retainer fee/long-term contract whereas direct primary care is a monthly membership model that you can cancel any time.
Just like you reading this, people lost interest quickly. Instead of battling the concierge concept, I borrowed an approach from Paul Thomas at Plum health in Detroit Michigan. He described direct primary care as “concierge for all,” instead of creating friction or battling potential customers.
I decided to leverage the terminology to improve my pitch. I spent many hours in front of a mirror (reminiscing of my days as an intern on my first month of inpatient medical wards at Walter Reed) practicing my 30 second patient presentation.
There were lots of errors and redos but no one to feel uncomfortable in front of, like the piercing look of an angry attending on rounds. Now I feel comfortable meeting potential patients or folks that randomly walk into my clinic asking, “are you taking new patients and do you take my insurance?” I know how to quickly shape the conversation and steer the discussion towards the benefits that my model creates compared to the current healthcare system.
I encourage you to spend the time to trim your DPC pitch to TikTok-esque attention spans.
5. Jump Off The Cliff
My last tip involves a concept of fully committing to the idea of creating a direct primary care (DPC) practice. The typical DPC roadmap goes something like this:
- DPC is a possible option.
- Let me think about it.
- I want to talk to family and colleagues about doing DPC.
- Let me research DPC more.
- Am I really sure this is the right thing to do?
- What if it doesn’t work out?
- I thoroughly hate my job. I am doing DPC or farming or something else, and I know my spouse would never support the farming idea, so let’s do DPC.
- Jump off the cliff and fully commit to DPC.
I found jumping off the cliff to be a good analogy to fully committing to direct primary care and creating my own practice.
I mean, who goes into solo practice anymore?
Who would give up a $100,000 signing bonus? Who would choose primary care? These and thousands of other similar questions ran through my mind for months and months. I was working to complete a fellowship application and had the entire application completed except for several letters of recommendation. It was not easy to call my mentor and tell them about my change of plans and to stop writing my letter of recommendation. This conversation was awkward, but I felt so invigorated afterwards, I had fully committed to my plan.
I withdrew my fellowship application, I signed my official request to resign active duty service, and then proceeded to opt out of Medicare. There was great relief after fully committing to this plan, followed several weeks later by extreme anxiety and doubt.
I found when I fully committed to doing direct primary care, I became fully invested and fully focused. I spent all of my free time thinking about my business plan, designing my clinic, thinking about clinic workflows, identifying target markets, and working on building my brand.
Still, I worried and stressed about many workflow issues prior to the official clinic launch. Hundreds of these questions went through my head on a daily basis. As I look back, I realized that my first attempt did not have to be my best attempt. The process is iterative and will improve as the clinic grows over time.
I recommend jumping off the cliff and fully committing to DPC. The fear of failure and the drive to succeed will propel you to success.
Starting Fourth Tree Health has been my favorite adventure since finishing medical school. I was thoroughly burnt out, depressed, and frustrated with our current healthcare system and needed a change.
In the system, I knew I could not practice medicine the way I wanted. Instead, I was trapped documenting in a medical record system, writing a note nobody would read, and clicking the boxes to make someone else money. Direct primary care gave me back my autonomy and reminded me of why I went into medicine in the first place. For the first time as an attending physician, I feel content. I am so glad I took a chance to explore the direct primary care model and hopefully these 5 tips will help you too.
- Podcast Episode 20 – Can You Have a Successful Direct Primary Care Practice and See Only 5 Patients Per Day? with Dr. Paul Thomas
- 3 Critical Website Elements That Will Help You Get More Traffic
- 5 Big Mistakes Physicians Make with Social Media
- How to Find the Right Team Members to Make Your Business Boom
Meet Dr. Daniel Hodge
Dr. Daniel Hodge, MD founded Fourth Tree Health in 2019 with a vision to change the delivery of primary care. He is excited to bring this clinic model to his hometown, a model that is free of restrictions from insurance regulation and bureaucracy. As a central PA native, Dr. Dan grew up in Camp Hill, PA, attending Cedar Cliff High School before going on to play basketball at Lebanon Valley College where he received a bachelor’s of science in biochemistry & molecular biology.
After college, Dr. Hodge received his medical doctorate from Eastern Virginia Medical School on a health professions scholarship from the United States Navy and trained at the military’s flagship hospital, Walter Reed National Military Medical Center, commonly referred to as “The President’s Hospital.” He was stationed at Naval Medical Center Camp Lejeune and achieved the rank of Lieutenant Commander, before moving back to Central PA. Dr. Hodge also works as an obesity specialist for a leading national tele-based primary care service. He holds dual board certification in internal medicine from the American Board of Internal Medicine (ABIM) and obesity medicine from the American Board of Obesity Medicine (ABOM)
Connect to Dr. Dan Hodge at
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