FINANCE: 5 Areas To Include In Your DPC Clinic Budgeting.

By Catherine Sykes, Publisher, Managing Director, The DPC Journal

Catherine Sykes, DPC Journal Publisher and Managing Director

Catherine Sykes, DPC Journal Publisher and Managing Director, Author and Entrepreneur

OCT 15, 2015 – When you begin planning for the start of a Direct Primary Care (DPC) practice, you need to understand the various expenses you’ll need to plan for. Even if you have previous experience in the medical service industry, you probably aren’t aware of all the things you’ll need to plan for when it comes to operating a DPC practice. Because of the difference in the business models, size of staff, equipment, outsourcing of labs, etc., you will want to consider the following expenses and budgeting for your new practice.

5 Areas To Include In Your Direct Primary Care (DPC) Budgeting

1. Startup Costs For A DPC Practice

There are a lot of things you’ll need to purchase up front that aren’t cheap. First and foremost, you’ll need an office. Whether or not you’re going to operate out of a colleagues office space, moonlight as a mobile doctor or go all-in and sign a lease, an office space can be one of your top two most costly expenses per year for any DPC doctor.

After you have your office, you’ll need to outfit it with the equipment you need to service the patients you plan to treat. If you’re selling vaccines, you’re going to need a refrigerator and possibly a temperature monitor and alarm in the event your office loses power and you don’t lose all of your hundreds or thousands of dollars of vaccines.

2. Legal Requirements For A DPC Practice

You’ll need to make sure you budget for all the legal requirements and address the many questions necessary to practice and to operate a DPC practice in your state. [Note: We have written and published plenty of articles from accomplished legal experts here in our publication over the years. See: LEGAL Section.] Beyond the contractual and general legal questions you need to ask an experienced healthcare attorney in your area, you will need to also budget for city, country, and/or state permits. These permits cost varying amounts, depending on where you operate, so make sure to check with every municipality you plan to operate in (if a mobile physician) to know the exact amount and how often those payments need to be made.

On top of your operational permits and business licenses, you will need to account for insurance. Most municipalities require some sort of insurance for your DPC practice. The specific type and amount of insurance you have varies by state and city as well. Plus, you may decide that you want extra coverage that isn’t required. Talk to your insurance agent to make sure you have accounted for the coverage you need.


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3. Monthly Costs For A DPC Practice

There are a number of ongoing costs you’ll need to budget for as well. Are you paying employees? You’ll have to budget, membership billing, payroll/accounting and customer service engagement system. This may be an all-in-one tool or purchased separately. I encourage you to talk to other DPC physician owner/operators about what they use and the service subscription costs of online, cloud-based payroll services. There are so many out there on the market now to choose from. Purchasing an encrypted, firewall protected and backup system is also crucial. If you don’t have these tools in place, you don’t have a product to sell or a way to manage your practice operations and patients.

You’ll need phone and internet also. Fortunately, there are a lot more options to save costs … but a smart phone alone will not suffice. Yes, people still fax. People send PDF attachments, images and more. You’ll need a sufficient phone system, with voice mail capabilities and high-speed Internet at the very least.

4. Recurring Costs For A DPC Practice

Other costs will occur frequently that you’ll need to budget. One of the most expensive things you’ll need to think about the cost to heat/cool your offices. Commercial natural gas rates are much higher for businesses than you are used to at private residences. Depending on how often you open your doors, you may find yourself going through a lot of therms and electrical watts quite often.

Also, unless you are well versed and skilled in medical equipment maintenance, you are going to have additional costs maintaining computers, servers, backup systems and your in-office medical equipment. These items are critical to account and budget for so you don’t have to spend time that could be spent acquiring new patients or treating existing patients.

5. Extra Costs For A DPC Practice

It’s extremely important that you budget for extra expenses. If you don’t, you’ll be scrambling when problems come up. Remember, while 90% of DPC practices are doing better than the previous year (2013-2014), according to The DPC Journal, that doesn’t mean that you might not end up being the 1/10 that is going to close the doors because of improper planning and budgeting. Consider adding an extra 5-10 percent of your budget each month for unexpected happenings. This gives you a buffer if there’s a problem. Some things to consider are extremely large set-up fees, specialized medical equipment, having to hire a new employee, legal fees, accountant fees, marketing and more. By the way, yes, I said marketing. Successful DPC practices tell you you should budget no less than 7% of your annual gross revenue for marketing, local promotion, graphics, and patient acquisition.

Each of these expenses can cause a lot of trouble if you haven’t put money aside for problems.

In all the years of writing about concierge medicine and Direct Primary Care (DPC) practices, we have never suggested that running one of these practices is an easy job, but over the years of covering this industry, we can tell you physicians who do the things we’ve just listed, find owning, operating and working in a concierge medicine practice is extremely rewarding.

If you carefully develop a budget for your DPC practice before you ever sign any lease or contract, you’ll have a much better chance of success.

If you’ve run into additional costs we’ve not discussed about or things you’ve included in your DPC practice budgeting, please feel free to share them in the comment section below.

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