Comparing DPC Pricing: Key Insights from a Recent Survey

When considering the pricing structure for Direct Primary Care practices, having access to references and benchmarks can be incredibly helpful. Understanding how other practices set their prices and adjust them over time can provide valuable insights for both new and established DPC practitioners. 

Dr. Michael Hobbs from Lakes Pediatrics has put together a comprehensive survey and gathered 152 responses that shed light on various aspects of DPC pricing. This post covers the main findings and features an interview with the author of the study.

DPC Pricing: Profile of Survey Respondents

The survey reveals that the majority of respondents (77.6%) practice Family Medicine, followed by Internal Medicine at 15.1%, Pediatrics at 4.7%, and Med-Peds at 2.6%. 

In terms of experience, 28.9% of respondents have been in a pure DPC practice for less than a year, 29.6% for 1-3 years, 17.8% for 3-5 years, and 23.7% for more than 5 years. This indicates a wide range of experience levels among DPC practitioners, from newcomers to veterans.

Fixed vs. Variable DPC Pricing

When it comes to pricing models, 26.3% of respondents use fixed pricing per member, while 73.7% opt for variable pricing. 

Among those with variable pricing, 65.8% offer lower prices for younger ages, and 10.8% have discounts for each additional member. Other variations include higher prices for younger ages, pricing based on individual complexity, and tiered pricing with additional services.

The average member cost in variable pricing is predominantly $75-100 (41.8%), followed by $50-75 (23.4%) and $100-150 (21.3%). Interestingly, only 31.6% of respondents have a maximum per family cost, indicating that many practices allow family costs to add up without a cap.

For those with fixed pricing, the most common monthly rate is $75-100 per member (43.3%), followed by $100-150 (26.7%) and $150-200 (10%).

Changes in DPC Pricing

Pricing adjustments are common among DPC practices. 58.6% of respondents have changed their prices since starting, with 98.9% of these changes being price increases.

When setting their original pricing, practitioners considered various factors: 48.7% based it on what others in their location charge, 40.1% based it on covering costs, and 38.8% aimed for a price that wouldn’t turn people away. Additionally, 31.6% looked at national pricing benchmarks, and 20.4% picked a number that felt right.

When changing prices, 45.4% did so because they weren’t making enough money, and 26.8% found their costs were higher than expected. Feedback from patients (19.6%) and other DPC doctors (14.4%) also influenced pricing changes.

Sign-Up Charges

Sign-up charges are common, with 59.9% of practices implementing one. The amounts vary, with the most common being $75-100 per member (27.8%), followed by $100-150 (21.1%) and $50-75 (18.9%).

DPC Contract Model

Most DPC practices (76.3%) do not require a contract that mandates a minimum period for patients to join. Among those that do, the most common minimum duration is 3 months (47.4%), followed by 12 months (23.7%) and 6 months (15.8%).

Rejoin Fees

For patients who leave and want to rejoin the practice, 77% of respondents charge a rejoin fee. The fee is typically $100-200 (47.5%), with others charging more than $200 (36.4%).

Interview with Dr. Michael Hobbs, Author of the DPC Pricing Survey

We are excited to bring you an insightful conversation with Dr. Michael Hobbs, a board-certified Pediatrician and the founder of Lakes Pediatrics in Minnesota. With a passion for providing exceptional care to his young patients, Dr. Hobbs has built a reputation for his dedication to child health and his innovative approach to pediatric care.

Recently, he led a comprehensive survey on DPC Pricing Comparison, gathering insights from 152 respondents. Join us as we delve into his personal journey, and the significant findings from his recent research.

What inspired you to transition to the DPC model, and how has your experience been so far?

The experience in the DPC model has been great for both me and for patients and their families. I was in a private practice group for almost 20 years, and there was increasing friction for patients in the clinic. It was becoming harder for patients to see their physician and harder for me to provide the care that I wanted to give. 

So, I started looking at other options. Instead of moving to a different clinic in the fee-for-service world, I thought, OK, I've got some time left in my career. I'm going to try this Direct Primary Care, and it's been fabulous for creating good accessibility and availability for families. It's fun because almost daily, some parents are surprised and shocked by what can happen, and they sometimes don't believe it.

Could you please share more about the particularities of the patient-physician relationship in Pediatrics?

So in Pediatrics, sometimes a little bit more than in adult medicine, having a sick child can influence more than just the child's day. If you're an individual and you get sick, it impacts your day. But if you're a 2-year-old in daycare or a school-age kid in school and you get sick, it can throw your mom's day off, your dad's day off, and the whole family can get thrown off. 

Being able to see a physician that you know, and get the information that you need efficiently and quickly, is really helpful to both the patient and the family because it saves them lost time at work and lost PTO. In Pediatric Direct Primary Care, it's even more convenient. They can text me a question, and I can give them an answer, sometimes saving them an entire visit.

Now moving to the survey, what motivated you to conduct this research on the DPC pricing? 

The biggest motivation for me was that there were a lot of opinions and not a lot of data, right? I was talking with some other physicians in DPC, and they were like, well, how much does the average clinic charge, and where are we at with that? 

I said, you know what, I'll just quickly throw this together. I pulled up Google, created the survey, and posted it to the DPC docs community on Facebook, asking if they could fill it out. I tried to keep it short and simple, collecting a bit of detailed data that might be helpful to people, but mostly just getting some broad strokes on average pricing changes. 

I think that helps because when you're a new physician starting a new clinic, one of your questions is, how do I price this? You look at other doctor's websites and ask around, and there's a lot of ranges. It gets tied into the whole concierge model, like what makes it concierge, what makes it Direct Care, and is there a cutoff? 

So I thought, let's just get some data. It was really a great turnout, and it was nice to see people respond. It's also nice to share that data with others, so they have it available.

The survey shows that 73.7% of respondents use variable pricing. What are the main benefits and challenges of adopting a variable pricing model compared to fixed pricing?

It's a good question because it actually can lead to some of the confusion. One of the most concrete examples is that a lot of family medicine doctors will charge adults a certain rate and they actually discount children, whereas in Pediatrics, we are sometimes charging a higher rate for infants and toddlers, and then it can drop down sometimes with older kids. 

But in Pediatrics, we are most frequently charging way more than the discounted price of some of the family medicine practices. I think that's helpful to know because, if you're a consumer or a parent and you start Googling DPC practices, it's going to get confusing quickly, like, OK, wait, they only charge $40 for a kid, and you're charging $90 for a kid. 

So I think it helps, when you're setting your prices, to be able to say, OK, this is why, this is how we do it. The average consumer may not know that a family medicine physician who discounts children doesn't do vaccines or doesn't do something like that, whereas pediatricians are basically almost required to give vaccines, and so that may change their pricing model a little bit. I think that's one of the biggest differences.

When setting up the initial pricing for a new DPC practice, what criteria did you consider? 

I think it's going to vary depending on other practices in your area. For me, I was the first pediatric DPC practice in my area, so I wanted to ensure my pricing was attractive.

Minnesotans, in particular, love their health insurance and need a good reason to pay out of pocket. 

So, I looked at national averages and found $80 to be a common price. I decided to price slightly below that to offer an incentive, emphasizing that my service is new and below the national average.

In other areas with established practices, those clinics might have waitlists, allowing you to have more price flexibility and charge a bit more. These established clinics set a standard and show the market what they can offer, making it easier for new practices to enter.

According to the survey, 58.6% of respondents have changed their prices since starting, with most increases occurring. What factors do you believe are driving these price increases in the DPC model?

I think what you're seeing with that is kind of the basic price flexibility. When the demand starts to go up, the prices will go up with it. I noticed that in my own practice, I've increased my prices since I started. I was getting a lot of patients coming in quickly. I thought one way to slow that down is to increase the price a little bit. 

You also, I think, will sort of readjust midstream because you're trying to figure out your expenses, your overhead costs, and you may get six months or one year in and say, OK, this is less, this is more than I thought it might be. Or you might add new services or new offerings for families, and that will increase the price too.

The survey indicates that 59.9% of DPC practices have a sign-up charge, with the most common range being $75-100 per member. How do sign-up charges impact patient enrollment and retention in your experience?

In my experience and from what I've learned from others who do this, a sign-up charge can create a barrier for some families. Depending on your strategy, if you're trying to get more people in quickly, you might decide not to have a sign-up charge. 

However, as you start to get more full and your administrative costs go up, you might want to add a speed bump. This speed bump can be a sign-up charge, which serves as a psychological commitment. By making this charge, families feel more committed than if they were simply paying the first month and moving forward.

Your survey found that most DPC practices do not require a minimum contract period. What are your thoughts about this?

I don't have a minimum contract for anyone to sign because, psychologically, I wanted them to feel like I'm providing them value. But again, there is also a psychological step where you can say, OK, you've made a commitment to sign a year-long contract, and you, as a patient, are more invested in it versus just paying for a few months and seeing how it goes.

How can DPC practices use the survey data to improve their pricing strategies?

I think it's very simple. You can see where you stand compared to your peers, especially from a pricing standpoint for new practices coming in. And there are more of them all the time. They need a little information because some of these decisions can really influence how well you can survive for that first year or two when you're building up your practice. 

I think it's helpful to get some of that data out there. It might be nice to do this annually so we can see where people are at in a year and follow through time. I imagine that other places will pick up some of this data and run with it, as large organizations are always curious about this information too. So we'll see where it goes.

How do you see the DPC model evolving in the next 5-10 years?

The trend is definitely that more physicians are going into Direct Care, and I think more people are coming into DPC from residency instead of transitioning from established practices. That's really great to see because it means new doctors are looking at the model too. 

It's going to keep growing as more providers feel the stress of the fee-for-service model, struggling to take care of patients the way they want to and facing stressors they didn't anticipate when they chose to practice medicine. 

DPC allows physicians and patients to get what they want out of the system. I think it's really great, and we'll start to see it being recognized more officially by entities like Medicare, Medicaid, and maybe even insurance providing a benefit for it. 

In my area, when I try to market it, people understand what concierge medicine is but not Direct Primary Care. So, there's some learning to do on the patient side too.

Do you have any final messages for those who are just starting out or for those with an established practice looking to grow?

I think the things that I'd like to see, and what I tell people who are considering it, is to remember that you can make it what you want it to be, right? It's the best opportunity to express yourself as a physician, offer the care you want, and attract the people you want. 

There are a lot of different opinions out there about ways to do things. I would encourage people to think hard about what they want it to be. When you're authentic with who you are and what you're presenting, it's a lot easier to market that than when you're trying to sell something that isn't true to yourself.