How to Price Your Direct Care Practice: Tips From the Experts

Set Yourself Up for Success

When setting up a new Direct Care practice, one of the most important decisions you have to make is how much to charge for your membership fee. If you charge too much, patients in your area may balk at the price, but if you charge too little, you won’t be able to keep the lights on.

Despite it being one of the most important decisions you need to make to get started, there isn’t a lot of information available out there to help you decide. To help you navigate the process of finding your pricing sweet spot, we spoke with a handful of provider experts from across the country to find out what went into pricing their practice. 

The Numbers

Research by Concierge Medicine Today shows that the 61 percent of Direct Care practices, which includes Concierge Medicine and Direct Primary Care practices, across the US charge patients less than $135. And, of those same practices, more than 40 percent charge less than $100 per month.

While Concierge practices can have a much larger spread, with prices anywhere from $300 per month to over $5,000 as the base price, the providers who we spoke with for this post charge anywhere from $30 for an individual to $150 for a family. The average membership fee for a 40-year old individual is a little less than $60 per month.  

Starting Out 

Know Your Location and Your Local Demographic 

Lauren Griffin, Practice Manager of Radley Griffin MD, says that pricing a practice “starts with where you’re located.” As an example, a practice in a more urban environment like Tampa, Florida, where her and husband Dr. Radley Griffin opened their practice 8 years ago, is a much different market than a small town in North Carolina. 

Lauren encourages you to take it one step further, going beyond your physical location, to understand your local demographic. According to Mrs. Griffin, providers need to take into consideration the market they will serve to help determine an appropriate and acceptable price point.

This is exactly the type of research that Dr. Thuc Huynh did before setting her prices at Good MD, in Rochester, New York. The local community consists of primarily blue-collar workers with a median income of roughly $30,000, and this helped her to decide on an affordable $30-$60-$90 model. Because she wanted to provide medical care that wasn’t cost prohibitive to people in the service industry and the arts, she decided that anyone under 21 years old would pay $30 per month, those who are 21 to 64 years old would pay $60, and those who are 65 and above would pay $90. 

Dr. Rob Lamberts, who opened the doors to his practice, Dr. Rob Lamberts, LLC, in Augusta, Georgia 2-years ago, says he heard $50 a month was a pretty common monthly fee charged by DPC practices. That sounded reasonable until he thought about whether that price was reasonable for someone in their 20’s, eventually deciding that it wasn’t. In thinking about this specific demographic, he settled on $30 for this younger demographic, which works out to $1 per day. 

Consider Buying a Marketing Study

Priya Kamani, MD, who does strategic healthcare consulting and has helped dozens of practices set their pricing, recommends buying a marketing study for your particular area. As Lauren Griffin mentioned, the price expectation of a patient in Manhattan may be very different than the expectation of a patient in a small town. Pricing yourself lower than expected in your particular region may even hurt you in terms of patient acquisition. 

For a few thousand dollars, you can get a report on things like average household income and buying habits in your area, which can be extremely helpful when determining your pricing or choosing a new location for your practice. 

Age- vs. Service-Based Pricing

One of the decisions you’ll have to make as a provider is whether to structure your pricing based on the age of the patient or on a certain level of service. 

For Dr. Devon Zoller, who co-founded Coho Medical Group in Bellevue, Washington, he didn’t personally like the idea of a tiered-pricing system based on level of service. He felt committed to the idea of treating everyone equally, and offering everything to everyone. He didn’t like the idea of treating patients differently because of what price they were paying. 

Many doctors feel the same way as Dr. Zoller, and opt to charge different prices based on the age of the patient. The theory behind this pricing model, is that the older the patient, the more likely they are to have chronic health issues which require more routine care. 

Decide How Much You Want to Make

Dr. Bruce Jung, is the founder of The Doc Shoppe in Corbin, Kentucky. While the local demographic in Corbin, a rural, indigent community, played a role in determining how much he would charge his patients, it was a simple, straightforward equation that helped him to determine his current pricing model. 

First, he looked at how much he wanted to make annually. Next, he added up all his practice expenses, things like salary for his nurse, rent, and other ancillary costs. Once he had added these two things together, he divided this number by the number of patients he could comfortably see (in his case between 600 to 700), and landed on a monthly fee of $50. 

By deciding how much you want to make and determining your expenses, you’ll be able to get a good sense of how much you need to charge to make those numbers. 

Research Other Practices

Many providers, prior to launching their practice look to other established practices in their local area. For Dr. Jung, he expanded his research to include national models like Atlas MD. Lauren Griffin, echoes how helpful it is for providers to research local practices to get a sense of what the market will bear. 

For Dr. Devon Zoller, his research uncovered that some practices choose to price their practice using what he refers to as the a’la carte model. In the a’la carte model, patients pay a lower monthly fee, but are required to pay additional fees for office visits and other services. 

After thinking long and hard about whether to adopt the a’la carte model, Dr. Zoller decided he wanted to “keep things clean” and go with a $59, $79, and $99 model that included a set of pre-defined set of services like same and next day appointments and after-hours access to him via email and phone. 

Keep it Simple

Dr. Lamberts, says the key to determining your pricing is to keep it simple. While it may be tempting to offer discounts for patients who pay up-front for 6 months or a year, he says, you run the risk of complicating the billing and causing yourself administrative headaches. 

What was your process for setting up your pricing? How did you get started? Share your thoughts in the comments below.