Part 10: Scalability in DPC | 10% of DPC clinics fold before year two. Helpful Advice on Getting Your DPC Practice Past Year (1) One.

By Michael Tetreault, Editor

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APRIL 13, 2013 — One of the riskiest times for any business especially those in the direct-pay, private medical marketplace is when it first opens. In the first two years, three of every ten start ups go out of business according to the US SBA. Our research arm, The Collective surveyed direct-pay and cash-only doctors over the past two years and has found that over 10% of doctors starting a cash-based practice go out of business in the first two years also. And while the US SBA also claims that by five years, half those start ups are history, the direct primary care (DPC) industry is still so new, we still cannot confirm that this statistic applies with much certainty.

“Opening a [private-pay] practice was the most difficult thing I have ever done but it’s rewarding,” says Dr. Tiffany Sizemore-Ruiz, D.O. of Choice Physicians of South Florida located in Fort Lauderdale, FL. “It’s funny. In medical school, we think life will be easier as a resident. As a resident, we just cannot wait to “get out” and finally earn a salary. Then, when we are finally finished with training, we look around and go …now what? For me, it was an easy decision to have my own practice, but a tough achievement to follow through on. Running your own practice is one thing. Running a [private-pay] practice is something else. At times I felt like a sales person, attempting to persuade patients why my unique practice was right for them. Over time, these conversations become less and less frequent and it became more of me being the doctor and less of the salesperson.”

So how can you improve the odds that your practice start up will survive that tough first years? Here are seven (7) important steps to take:

  • Talk to your patients. The DPCJournal recently interviewed some thriving DPC physician practices and heard consistently that … ‘Not visiting with your patients when you are supposed to be providing face-to-face service with your patients will not help you retain these patients in the years to come.’
  • Step One in Starting Your DPC Practice Right — If you are one of the thousands of physicians, emergency room doctors or recent medical school graduates currently considering starting up a direct primary care medical practice selling exceptional service, time or home visits, the first thing you need to seriously consider is not your start-up budget, not the location and not the hours you will be working. The first thing you must consider is the services you will be selling and the business model you want to use. What’s the old adage, ‘plan your work – then work your plan.’ Patients, start-up capital, leased space and even employees will follow an confident leader with a plan.
  • Choose your location carefully. Whether you’re in a town where patients can see your practice on public streets or one where you will be located in a suite of offices, make sure your practice is where it needs to be to maximize “new” prospective patient interest.
  • Keep expenses down. Look for every possible way to save. This will allow you to keep going longer, hopefully until revenue starts to cover your practice expenses. Postpone unnecessary purchases, or pick up a broom and clean the office yourself. Do it all yourself, for as long as needed. Surveys from our organization, The DPC Journal reports that the majority of DPC and private, direct-pay practices employ less than 2 employees per year.
  • Plan for problems. The only thing as sure as death and taxes is that unexpected issues will crop up with your newly born private-pay medical business. Sit down and think about everything that could go wrong – then, make a plan for how you will survive each possible scenario. Talking with an attorney prior to having someone take legal action is and could be a very important step for your practice to survive in the years ahead.
  • Analyze your numbers. Even though it’s hard to find time in those crazy days after you first start signing up patients, it’s important to stop and look at your numbers to see where your practice is headed. With 10% of private-pay medical practices folding in the first two years, it’s vital to understand and forecast where your greatest potential is to grow your practice. If your practice is not going where you’d like it to, change course and surround yourself with good advisers, maybe other physicians in similar situations and medical practices can help. Most successful DPC medical practices go through multiple internal process changes before they find their groove.
  • STARTUP: Finding Capital For Your Direct Care Office in a Tough Economy — Although private-pay medical clinics and direct primary care doctors offices are popping up across the country, some hopeful owners are still struggling to get financing, and this has many “docpreneurs” wondering how to go about getting the cash they need to either start or maintain their medical business.

“I will, however, offer a few pieces of advice,” adds Ruiz. “One, do not get discouraged. These practices can take a very long time to build. But understand, that once a patient is [your] patient, and see how much time you dedicate to them, you can pretty much bet on the fact that they will be loyal to you (and vice versa) for life. My practice is going well, but I am not quite exactly where I want to be in terms of patient load. Be patient, they will come. Two, do not underestimate the power of marketing and publicity. There is nothing better than a good website and, in my eyes, nothing worse than a bad one. Remember, for as much as you google things…your patients will google you. Have a good on-line reputation and presence. Lastly, do not make promises you can’t keep. If you promise physician access 24/7, provide it. No to little wait times? Follow through. If you cannot keep your promises you have in turn lost your credibility. Be prepared for one heck of a roller coaster ride, but man is it worth it!”

Are you a cash-based or direct (primary) care doctor that has made it past the first year? How did you do it? Share your story in the comment section below. Are you a doctor struggling to survive, need more patients? Share your story below with others.

2 replies »

  1. I started out in September 2011 with low over head fee for service direct pay practice, with fixed pricing. I have since been working with local employers and have about 400 direct primary care retainer based patients this way. We have over 5000 charts since opening 4 years ago. I now have a full time NP and contract with a 1/3 time FP doc. We see about 25% new patients every month.
    Offering a specialized area (I am a board certified Obesity Medicine specialist) creates a cross marketing effect.
    Being willing to go talk to every group you can about what you are doing and why (chamber, rotary, BNI, etc). Tell your story thousands of times.
    Put customer service as first priority and let your patients refer people to you…
    We spend very little on advertising.

  2. I started a DPC practice from scratch 9 months ago. I am surviving on my savings which are close to depleted. My practice is on the Big Island of Hawaii – a state which mandates employer insurance coverage. We are suffering from primary care shortages of record proportions and yet I still can’t attract patients in the rural area in which I located my clinic. I have given talks to two local rotary clubs (got a few patients from there). My tiny cadre of patients is very positive about their experience. I have networked with the local specialists (all of whom already knew me from my hospitalist work). I even tried a direct mail marketing campaign twice with predictable results. I have opened up the practice to urgent care for tourists (1 of whom referred me to a local person who signed on). I am about to invite a specialty physical therapist to share some of my space to cut down on rent and increase foot traffic.
    I do feel there is a market for this here as there is a DPC doc in the next town who converted his practice and is building a nice little DPC practice – he is a great mentor.
    I am very discouraged and about to face the decision of whether to renew my clinic lease for another year or fold up.
    Advice is appreciated.

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