Letter from the Editor: “What Lesson Can Two Chocolate Companies Tell Us About DPC Pricing and Your VALUE to a Local Community?”

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

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

I recently had a conversation with a physician who mentioned that the retail healthcare clinics moved into town. They mentioned that they had their Office Manager call and “secret shop” pricing … then, they in-turn, lowered their fees to match the competition. Is this a strategy or a race to the bottom? Your colleagues in both Concierge Medicine and Direct Primary Care would say to this … “Recognize your worth. You are worth more than you think … and once patients and your local community understand that, they’ll gladly reward you!

When The DPC Journal from 2013- 2015 asked more than 50 former DPC doctors and their staff “Why did your DPC Practice Fail?” … the answers were not terribly surprising. Important conclusions came about however. Interestingly enough, nearly 60% of the doctors interviewed and surveyed noted that “lack of interested patients” was difficult to overcome AND, second “my rural demographics couldn’t support it.” Followed in third place was “lack of business acumen”. In conclusion, they all concurred that there is more to success in DPC than just having patients sign-up, exchange cell phone numbers, run a few tests, say you are going to provide same-day appointments, auto-pay and subscribe. There are critical business lessons that can be learned outside of DPC and inside today’s subscription business model culture that you should really investigate further. 

By Michael Tetreault, Editor-in-Chief

MARCH 10, 2016 – Monthly bills, particularly those that are automatically drafted from a persons bank account can quickly add up. In fact, automatic debits usually between $10 to $37 or more are typically the trigger dollar amounts and transactions from month-to-month that peak the interest and raise the eyebrows of the calculating, budget-minded person in a household who is looking at the routine expenditures, budget and constantly finding ways to trim spending. Notice, we said $37 or more. We’ll uncover the “or more” further in the moments we have together below.

“Honey, what’s the charge on the statement for $65 from AFM, Inc.?”

DID YOU KNOW? FUN FACT … “According to DPC Journal surveys and polling data conducted in 2016, 63% of DPC physicians are between the ages of 30-49 years old.”

With more and more interest in subscriptions and the recent ability to have a doctor for a low monthly fee under $100 per person “on monthly subscription”, the 25-45 year old demographic is increasing its use of subscriptions and DPC.

IMPORTANT CLARIFYING NOTE: Verified patient utilization numbers across the country in DPC can only be speculated at this time and are usually making proforma assumptions that all physicians have the same number of DPC patients inside their panels. This is not an accurate proforma assumption. In fact, we’ve found that most (73%) DPC physicians reported throughout 2015-2016 need between 200 – 500+ patients to reach maximum operating capacity. Fifty one percent between 300-500+ when you look even deeper.

Susan S.Wilder, MD and LifeScape Premier Medical Center is Phoenix & Scottsdale Arizona's premier concierge medical practice for your entire family's integrative health & wellness needs with board-certified, nationally recognized health care experts & on-site Sonora Quest Lab. "LifeScape is a philosophy of inspiring health and optimizing vitality at every age. Health is far more than just the absence of disease and our healthcare arsenal requires far more than a barrage of tests and a prescription pad. To be "LifeScaped" is a transformative experience involving listening, engaging, collaborating and reawakening hope." ~Susan WIlder, MD

Susan S.Wilder, MD and LifeScape Premier Medical Center is Phoenix & Scottsdale Arizona’s premier concierge medical practice for your entire family’s integrative health & wellness needs with board-certified, nationally recognized health care experts & on-site Sonora Quest Lab.
“LifeScape is a philosophy of inspiring health and optimizing vitality at every age. Health is far more than just the absence of disease and our healthcare arsenal requires far more than a barrage of tests and a prescription pad. To be “LifeScaped” is a transformative experience involving listening, engaging, collaborating and reawakening hope.” ~Susan WIlder, MD

“Direct primary care, and it’s forerunner Concierge Medicine, offer a spectrum of free-market, patient-centered, responses to a broken “insurer-centered” complex and costly healthcare system,” said Dr. Wilder, MD of Scottsdale, AZ in a recent interview with us. “They represent a win/win/win for patients, employers and providers and have proven to improve outcomes, service, and reduce overall health costs. The most intelligent consumers skip the middleman and invest in Physicians who work for them, rather than enable the “system” where the only winners are the medical industrial complex.”

We (DPC Journal) talk to potential consumers and current patients of DPC quite often, actually, we hear from them in one form or another every day. For the most part, we find they anchor themselves around a physician who is typically no more than 10-years older than they are.

Subscription-based medical care delivery is not just happening in DPC either. It’s a free market healthcare delivery system which very much appeals to the 25-50 year old audience. Much like the popularity of other service subscriptions in the marketplace like Prime, Netflix or Costco, Subscription-based medical care performs the functions of several different services. It provides a fair amount of selection, cost-saving deals, family discounts, and its ultimately up to you to decide each month, quarter or year if you want to keep the same doctor. It puts the patient in control and tells them how much it costs.

So where else is the budget-minded patient seeking subscription-based healthcare if not from a hometown DPC doctors office? More and more subscription-based telehealth services from doctors, PAs and NPs are rising in use and popularity. We anticipate many more of these consumer-targeted, smart phone friendly, healthcare APP solutions to increase in the months to come.


New Gainesville (FL) health clinic staffed by PAs offers direct primary care

It is here where we begin to see the buying psychology of different age groups begin to act differently.

Do you bill your patients annually, quarterly or in some cases, monthly?

Characteristics Of Patient Visits To Retail Clinics, Primary Care Physician (PCP) Offices, And Emergency Departments (EDs)

Do you provide a telehealth application that also bills either you or the patient routinely?

DPC JOURNAL FAST FACT (2016): Did you know that we (The DPC Journal) have found that nearly 83% of patients using DPC prefer to billed monthly and that they are primarily between the age of 27 and 49? Gender distribution for DPC clinics is also fascinating. We’ve seen that typically, female DPC (and Concierge Medicine too) physician owner/operators acquire patients more quickly. This is primarily due in part to the Healthcare CEO of the family is usually “Mom.” 

So as we dig into payment arrangements and payment buying trends just outside of DPC, the case can be made in DPC for a variety of auto-billing strategies, each with pros and cons to all.

For example, you may have found yourself asking …

  • “Why would you bill your patients monthly when you are in essence, allowing them to say ‘No’ twelve times a year”
  • “Do you really want to give the patient the option to pay by check once a quarter?”
  • “Will they see value in the subscription?”
  • “Is having a “card on file” the best option when billing patients annually?”
  • “Will they cancel?”
  • “Is the annual or quarterly subscription payment going to be small enough to justify the need for your services next year?”
  • “If I bill my patients monthly, am I charging enough?”
  • “What about those over the past two to three years in subscription-based medical offices that struggle financially when the monthly price is less than $100. The 50+ crowd doesn’t have an issue with the billing but the Millennials and Gen-Xer’s are constantly calling and haggling over the fees.

Three (3) Advantages of “Card on File” for Membership Medicine Practices.

So many questions.

Now enter, the Subscription Purging trend.

If you bill your patients monthly and more than 60% of your patient panel is made up of this 25-45 year old audience, lean-in and pay attention for a moment.

Subscription Purging occurs when an individuals monthly subscriptions have accumulated to the point whereby they are emptying their wallet automatically (auto-pay). When that happens, this stops people in their tracks. They take the time to logon, login and manage their multiple subscriptions. It is important at this juncture to look at subscription-based pricing strategies and methodologies outside of the niche of DPC.

Here is where we find insight into business and can look deeper at its application to DPC moving forward.

A great book (among many we recommend you read — CLICK HERE FOR A LIST OF “Must Read” Books …), is Predictably Irrational by Dan Ariely. In this book, the author talks about an experiment studying the effects of the word Free on buying behavior.

You can read about the entire experiment in his book, but here’s the relevant part for this article. Researchers offered a group of students a Lindt Truffle for $0.26 and a Hershey’s Kiss for $0.01 cents and then observed buying behavior. The found that about 50% of participants went for the Kiss and 50% chose the Lindt Truffle. When researchers dropped the price of both chocolates by one cent, suddenly 90% of the students took the free Kiss, even though the relative price between the two was still the same. Researchers also ran tests in which they lowered the price from two cents to one cent to see if it increased demand for the Kiss, but it didn’t. They ran other tests where they lowered the price from free to negative one cent, but they still didn’t see any changes in buying behavior.

Eventually, you should come up with your own experiments to test the effects patient and potential patient buying behavior. That’s just part of the creative process of business and how some doctors, change the buying patterns, pattern interrupts and metrics surrounding your income. If you take anything away from our time together today, take this … we don’t necessarily know what it is about the science of buyer psychology, but once you get someone to say the first yes, it is much easier to get the second yes. It’s as we say at The DocPreneur Institute, the “know, like and trust” factor. You get them started by saying yes to a small thing, then they are much more likely to say yes to a larger thing later.

That’s called a “Value Ladder” and is a conversation we will have another day.

DPC JOURNAL FAST FACT:Did you know that in a recent DPC Journal Poll (2016), more than 74% of DPC Physicians reported that last year (2015 calendar year), that they did NOT raise their fees whatsoever or could not afford to raise their fees?

The stats above raise an important question. Well, several in fact. Patient retention fears? Communicating value to patients, and more.

Don’t think that just because you saw this patient once in the past month that your subscription payment is immune. In many cases, some doctors offices do not have written contracts with a patient that lasts longer than 30-days.

For today however, is it time to rethink your patient contract and retention strategy? A decision to ponder and not one to be taken lightly. A lot of people are emptying their bank accounts and their wallets automatically each month for something they may not even remember signing up for and never use.

FAST FACT: American patients have seen an average of 18.7 different doctors during their lives, according to a survey conducted by GfK Roper for Practice Fusion

Experienced industry consultants, possibly an attorney, your accountant, your staff AND your spouse will be able to help you answer that strategic question. Or, at the very least, advise you that what and why what you are already doing is or isn’t working.

“If we don’t have these difficult conversations with our doctor,” says Samuel G., a patient inquiring about using DPC in Georgia in a recent interview with The DPC Journal. “We won’t understand what we are getting. Doctors, and their staff, have to understand that this is a new concept for us. It might be simple, but insurance is the law of the land now and I need to know how and why this works for my wife and I.”

Now that we’ve addressed some of buying trends, challenges and opportunities for doctors, lets unpack some solutions and give you three tools you can walk away with.

Tip #1 – Allow Your Patients to Manage Their Membership, Set-up Billing Online and provide the option of a Billing Frequency that works best for them.For example, if you have a 12-month or 13-month contract with a patient, allow them the option of paying you monthly by Credit Card. If you have a month-to-month contract with your patients which auto-renews at the first day or last day of the month, allow a card-on-file record to auto-draft and pay the bill for them, relieving the need and questionable bill, in many cases, out of the patients mind each month. Your billing and collections software service solution provider should be able to help you with this. If it’s too complicated, ask your accountant and trusted attorney about the correct state billing practice.

Tip #2 – What Name is Associated and Printed On the Billing Statement?

When subscription purging occurs, people will usually go to their bank statements or credit card statements. They will look at the subscriptions carefully which are being automatically billed to their card(s) and evaluate them line-item by line-item. So, what name or corporate identify are you using which is going to be printed on their statement(s)? Ask your Credit Care Processing Carrier what name is printed on the statement. You could be inadvertently losing money, creating billing confusion and causing patients (and your staff) unnecessary frustration when your billing identity is foreign to your patients memory recall.

Example: If your business name is “Archer Family Medicine, Inc.” … and the Credit Card Billing Statement cites “AFM, INC.” Billed You $130. Is that a recognizable name to your patients months later when they are in a money crunch?

Tip #3 – Communicate with your patients often. Go snail mail.

There’s nothing more old school than snail mail. No, I’m not talking about mailing out a paper billing statement. That’s what tax time is for. What I’m talking about is central to the relationship between a doctor and his/her patient. Building on the relationship and showing you care by putting a small note in the mail to your patients … even when they don’t call or see the inside of your practice that often.

Example: The last time Jane Doe was in, she complained about her flu symptoms. She also mentioned in passing that her son was in the school play.

What to do next?

Find a nice piece of personalized stationary, a small envelope that matches the monogrammed card and write a handwritten note to your patient … saying something to the fact that … “Hi Jane: The staff here and I hope you are feeling better. We haven’t seen you in a few weeks. We trust your sons school play was fun. See you soon!” Sincerely, Dr. John Q. Public

Remember, people don’t care how much you know, until they know how much you care. A message Concierge Medicine has delivered to countless patients for the past 20-years.

docpreneur coaching

Categories: Business, DPC News

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