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SCALABILITY, PART 3: Does DPC Scalability Matter?

DPC Journal Highlights Articles & Educational Pertaining to Economics of DPC Model ... Read More ...
DPC Journal Intelligence Infographic, 2016

DPC Journal Intelligence Infographic, 2016

By Michael Tetreault, Editor

Editor-In-Chief of The DPC Journal, Michael Tetreault. Author

Editor-In-Chief of The DPC Journal, Michael Tetreault. Author

JUNE 2, 2016 – Are too many DPC physicians moonlighting? Why is it that only about 8% of DPC physicians nationally report that their practice 100% supports them and their family? To that end, almost half of those same moonlighting physicians report that they work at their local urgent care to help makes ends meet for their families.[1a] Despite weakness in the overall economy (according to some analysts), spending in DPC practices, ancillary testing and services, and related healthcare products and prescriptions remains strong. However, DPC doctors face a number of new competitors seeking to peel away significant amounts of revenue from areas that had once been the exclusive domain of DPC Clinics. In particular, MRI, CAT Scans and pharmacy sales, the second biggest revenue generators for some larger DPC practices — which are under attack by big box hospitals with well-known names operating under low-cost/high-volume sales models.

“Our health care system has created a monster,” says Ellie Campbell, D.O. of Campbell Family Medicine who operates a DPC practice in Cumming, GA, a northern metropolitan suburb of Atlanta, GA. “We have trained patients to request a drug for every bug and a pill for every ill, and that if they want it they should be able to get it NOW. We have irrevocably devalued the education, expertise, and experience of primary care physicians, and permanently  diluted the relationship that patients used to have with their family doctor.  This is evident in the growth of some of the urgent/family care centers and “minute clinics” that are sprouting up everywhere.”

healthcare-table-biggest-walkin-clinics_1024x402Today, the phrase scalability in the business world is a very common discussion. Controversies arise in business over this term for many reasons. Some important. Some seemingly trivial. But in every Direct Primary Care (DPC) practice, over time, physicians say that there are “gravitational pulls” that tug you in the wrong direction or in some cases, the right direction, that can lead you onto a path that enables your practice to “scale.”

So lets unpack what this means and how you can get closer to “scaling” your practice.

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“The most important thing to remember … and so much depends on this one thing … do you have the organizational ability (meaning people to help you inside your organization) to grow your practice beyond it’s four walls? Who is going to outwardly express your inward message about your practice to the community of listeners waiting to hear about you?” ~DocPreneur Institute, October, 2015, by a DPC Mentor/Coach to Startup Physicians

Even Mayo wasn’t built in a day.

Technology companies, like Google, Apple and Microsoft, have perfected this type of scalable business model. Even the Mayo Clinic, whose Concierge Medicine and Executive Health and Wellness programs are highly utilized programs. Their initial costs for developing their advertising platform and operational systems are high, but once it was on the market, they signed up users or sold copies of the related software with relatively minimal cost increases. In order to emulate the examples of such successful, highly scalable business models, consider adjusting your current business model so an initial investment in technology will support exponential sales growth down the road. [1b]

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(ABOVE) DPC physicians and Concierge Doctors gather at the ATLANTA, GA “Concierge Medicine Assembly” to discuss issues relevant to the practical aspects of membership medicine, scale, startup, financing and policy. PHOTO COURTESY of CONCIERGEMEDICINETODAY.COM.

As we meet with, talk to and educate physicians, their staff and in some cases, their communities of patients, we see a common thread. As physicians get started, there’s always a comparison trap and it can be discouraging. You should never compare your beginning to someone else’s middle. Think about that for a moment. Think of the largest, greatest DPC doctors you know. How long have they been doing what they’ve been doing now? You can’t expect to open up day one and shortcut their early beginnings. Sure, there are some things that can be navigated more quickly now that knowledge and experience is on your side, but give yourself permission to walk your practice [i.e. business] through those growing pains. That’s how you begin to learn what works and what doesn’t.

How many times have you sat down with a friend, a colleague or even your family and heard something like … “We’re going to be the next Apple …” or “Think about the potential of that audience …. if I do this, then we can be this …”

We think we have to be experts right away. But in reality, what we really need to think about is what gives you the most joy?  What’s your passion?

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“This new practice has been truly liberating. I am working harder than ever getting it off the ground but my time with Patients is wonderful. And I get to be creative again in how I develop the practice, something that was lost from my previous office.” ~Dr. Alicia Cunningham, Vermont

More often than not, when we talk to physicians who are stuck in their frustrating career each week, they have no idea what they are good at anymore. How can we expect them to rise to the level of Wall Street moguls in a short time and build clinics and practices that are suddenly worth hundreds of thousands of dollars or even investment ready? Worse yet, young physicians have loads of enthusiasm and are fairly pessimistic about their future, even if a promising career in DPC might be for them. Polling figures alone from The DPC Journal note that physicians in DPC are often split 50:50 as to whether or not it is a good idea for medical residents to hang their shingle right out of school and start a DPC Practice. They are stuck in the deep, dark gap of their day job and awaiting the day that the light of their dream job will soon appear. But for now, entrepreneurial medical practice models such as micro-clinics, DPC and Concierge Medicine practices are their only way out of this valley.

marketing md book adPatients can feel when a doctor truly cares about them and loves his or her business. Creating authentic relationships with people [i.e. patients] takes time, trust, and commitment. Before we think about “scalability,” lets build the container first.

According to one definition in the Oxford Dictionary, “Scalability” is the capability of a system, network, or process to handle a growing amount of work, or its potential to be enlarged in order to accommodate that growth. [2]

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If you’ve ever watched an episode of the TV Show, Shark Tank you’ve seen the sharks ask the entrepreneurs, “Is it scalable”. Suddenly, the energy in the room deflates as reality quickly sets in. The entrepreneurs try to provide data to prove their business model is scalable by showing sales, partnerships, endorsements and revenue figures.

If You’re Thinking of “Scale” … Ask Yourself, “What do you want to be when you grow up?”

Before you can decide if your DPC Practice is scalable, you should ask yourself a simple question. This question might sound similar to a question we all were all asked as kids, “What do you want to be when you grow up?”

Click here to get connected with a Coach/Mentor in DPC.

Click here to get connected with a Coach/Mentor in DPC.

For many of us, this question seems juvenile to us at this point in our lifetime. What does this question have to do with “scaling” my DPC practice? Well, you’d probably be surprised to know that a lot of DPC Practices actually don’t need or even want to scale. They simply want to maintain and provide a generous income and lifestyle for those hard working individuals in the practice for a certain amount of time until someday, someone [hopefully] comes along and says … “I think you should retire …” or “How would you like to sell your practice to me?”

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Unpacking this hypothesis even further and putting some data around this, did you know that when we [The DPC Journal] asked more than 214 DPC Physicians from August – September 2015, “How many employees do you have (including you, the doctor)?” more than 70% reported they are satisfied with their 1.5-3 employee operation. Additionally, 18% noted that they are not planning to hire any additional staff and “like it just the way it is.” Even more alarming is the polling data coming forth here that found nearly 66% of DPC Clinics were not hiring because they said “I can’t afford it. Not enough patients.”

New Book, 2015 Edition: Essential Startup Steps For Doctors Considering A Career Transition.

New Book, 2015 Edition: Essential Startup Steps For Doctors Considering A Career Transition.

Consider how other Membership Medicine Doctors entered into the marketplace over the past few years. According to a Concierge Medicine Today 2015 Poll, the majority of both DPC and Concierge Physicians used Personal Assets (savings, house, 401 K, etc) to finance and fund their entry into Membership Medical Care businesses.

So now that the air has been let out of the balloon, where do we go from here?

Sadly, as we’ve learned over the years from countless discussions and personal one-on-one interviews with both Concierge Doctors and DPC physicians, there is only one absolutely, unequivocally wrong step everyone can make that will keep them in that valley of ‘average’ – so to speak. And that is, staying where you are and ‘doing nothing.’

Simply put, we need more doctors leaning into their giftedness and enjoying their work each day.

I have met very few people who have a plan for their lives. Most are passive spectators, watching their lives unfold a day at a time. They may plan their careers, the building of a new home, or even a vacation. But it never occurs to them to plan their lives. As a result, many end up discouraged and disillusioned, wondering where they went wrong. But it doesn’t have to be this way. You can live your life on purpose. It begins by creating a “Life Plan.” This won’t insulate you from life’s many adversities and unexpected twists and turns, but it will help you become an active participant in your life, intentionally shaping your own future.” – Michael Hyatt, Creating a Life

Years into your career you thought medicine was going to be rewarding financially, emotionally, psychologically, socially and possibly spiritually. To add further support to this need for doctors “leaning in” and finding a career in medicine rewarding, our sister publication worked with prominent University and Medical Institutions at The Concierge Medicine Research Collective and found that nearly 60% of doctors in the past four years (2011-2015) are wrestling with their career choice and considering leaving medicine entirely. One doctor even said “it has always been my wife’s dream to have a floral arrangement business. I’m going to leave my practice and help her because things are so bad.”

Is it okay to be frustrated with your job? Absolutely. But is it okay to be frustrated with your job and not do anything about it? Absolutely not.

If these are the every day conversations and thoughts of our country’s physicians on their way to work, at the dinner table or with their spouse as their head hits the pillow every night, we need more doctors entering the marketplace and using their strengths to helps others, while at the same time, earning a decent wage.

According to a DPC Journal, anonymous DPC physician respondents, many of whom indicated they were in their first year of startup, conducted a poll with 72 respondents between April 2015 – July 2015 found that DPC Physician salaries are in many cases, on par at the moment, with other primary care and family compensation averages.

  • 14% of DPC Physicians respondents stated they Net less than $100,000 per year.
  • 46% of DPC Physicians Polled earn between $100,000-$200,000 per year.
  • 24% of DPC Physicians respondents stated they Net between $200,000-$250,000 per year.
  • 16% of DPC Physicians respondents stated they Net between $250,000-$450,000 per year.
Dr. Michael Murrary

Dr. Michael Murrary

DPC is something different. It’s certainly not more of the same type of medical experience where doctors and their staff have to look at a medical chart to know your name.

We need more husbands telling their friends, co-workers and family about their wife’s practice.

“My husband tells EVERYBODY about DPC,” said one respondent.

“Before making the switch to a concierge medicine model I truly didn’t look forward to Monday mornings,” says Michael Murray, M.D., Medical Director Cypress Concierge Medicine. “In fact, it was my wife that insisted  I look into it. We both knew that between the stress and increasing level of dread, I wouldn’t be able to stay at it for much more than a few years. That was over 5 years ago and I’m happier and more satisfied with my work than I have been in decades. I’ve easily got 10 more years before I’d consider leaving medicine. Becoming a concierge physician was absolutely the right choice for me.”

So why is DPC scalability a crucial component of a Membership Medicine Business Model?

In reality, it’s not, but the answer ultimately depends on the perspective of the doctor. A DPC Practice is a business and that business is now less dependent on the insurance, managed care and contractual reimbursements. DPC Practices tend to be self-funded, privately held and less likely to sell stock or go public. For these reasons investors, bankers, corporate lawyers and consulting professionals tend to overlook these types of businesses.

We have a different perspective regarding DPC scalability. Scalability is the ability to attract, service and maintain enough patients to provide the amount of income needed to support the doctor’s desired lifestyle.

dpc selft test 2015Perhaps the phrase scalability should be refined to include the phrase “degree of scalability”.

Whether you are a medical student building a mobile DPC Practice or moonlighting at an Urgent Care Clinic while working on your dream of sustaining one-day a successful DPC Clinic, don’t let the noise around you in the marketplace, pieces of legislation or hospital and insurance company mergers impact your DPC business plans. Instead, determine if your DPC Practice business model can support your desired financial goals.

In summary, perhaps you need to hit the reset button and rediscover what your ‘work’ in DPC is all about and where your joy comes from. If your financial proforma suggests there are enough patients who are willing and wanting to purchase your care and treatment at an amount that will cover your low overhead and administrative costs and leave you with an income that will satisfy your personal financial goals…well then, congratulations, you have a scalable DPC business and practice. When you accomplish this, you discover something remarkable – the idea that practicing medicine can be fulfilling again.  And when we understand work from this personal perspective, we discover the real meaning and purpose behind “scalability.”

Sources:

[1a] https://askthecollective.org/surveys-and-polls/

[1b] http://www.entrepreneur.com/article/243237

[2] http://www.oxforddictionaries.com/us/definition/american_english/scalable

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