By Michael Tetreault, Editor
When DPC (Direct Primary Care) Physician readers were asked last month (Dec. 2017), “Do you plan to increase your monthly membership/subscription fee?”, nearly 37% of DPC Physicians polled said “NO. Staying the same as the 2015, 2016 and 2017 calendar years.” Additionally, 61% of DPC Physicians said “No. It will remain the same as the 2017 calendar year.”
Are we left to now read these tea leaves as 61% of DPC Clinics adjust for inflation roughly every other year in the subscription-based pricing model? And, are we now to presume that 37% of DPC Physicians have not adjusted their monthly or annual fees in the the past three to four years?
Huh. I’m now left with the Thinker emoji. Do you agree? Is this good? Or, is this bad? Let’s discuss in the moments we have together below.
Like so many other service oriented businesses, the failure rate in DPC within the first year is high. When former DPC Physicians are asked over the past three years, Why My DPC Practice Failed? they tell us at The DPC Journal that “Lack of Interested Patients” is the number one reason they failed. Tied for second and third was “Marketing Costs Were Too high” and “Lack of Business Acumen/Bad Judgement on Their Part.”
Lets look at one example we all now, like and trust, Amazon and its most commonly known annual subscription program, PRIME. For the first time since Amazon introduced its PRIME offering in 2005, Amazon announced in 2014 that it would increase the price of its unlimited two-day shipping service, Amazon Prime, from $79 to $99 per year. While they may have incurred a few canceled accounts, this adjustment was inevitable. But, they didn’t stop there. The membership fee for a one time annual payment of Amazon Prime is $99 per year or if customers prefer to pay monthly, it is now $10.99 per month. They also stated that the first 30 days of the annual subscription are free, and you can cancel anytime. Students can get a generous price break, however. Amazon Student accounts get many of the same Prime benefits, and it’s free for the first six months.
Now before you compare say Amazon, to DPC, lets stop right there. Amazon is using an up-selling strategy to gain more market share and increase revenues by adding more value to its PRIME Membership. Access to PRIME does not mean access to everything. Other popular items, say in your practice may be a CT Scan or certain lab work orders or a drug test may or may not be included in your monthly fee. Usually, these offerings vary from practice to practice and state and local laws. This up-selling or cross selling strategy is something we do not see happening in most, DPC clinic environments. Today, Amazon is and using an age-old up-selling or sometimes called, cross-selling business strategy with its subscribers. Upselling is essentially a sales technique where a seller induces the customer to purchase more expensive items, upgrades or other add-ons in an attempt to make a more profitable sale.
For example, packaged as a part of the $99 annual Amazon Prime membership, Amazon Prime Instant Video allows unlimited streaming of thousands of television shows and movies but it does not include some of the seasonal, new or popular tv shows or movies you may want to watch or thought would be included. So once again, if you’re considering equating Amazon to DPC, think again. We hear and observe from our Patient readers and Physician readership that DPC is much more like Netflix than Amazon.
In a recent New York Times article entitled Can Netflix Survive In the New World It Created? by JOE NOCERA, he interviewed the founders and strategic leaders at Netflix and discovered some very interesting and insightful lessons which DPC can takeaway for themselves as well. Those lessons include:
- Moment(s) of Stability – A current moment in time [e.g. the marketplace of business culture] as a “period of stability.” Nocera writes, Netflix has spent much of its existence zigging and zagging, responding to the pressures of the marketplace. “When we were in the DVD business,” Reed Hastings, Netflix’s chairman and chief executive said, “it was hard to see how we would get to streaming.” Then it was hard to see how to go from a domestic company to a global one. And how to go from a company that licensed shows to one that had its own original shows. Now it knew exactly where it was going.
- Execution Challenges – “Our challenges are execution challenges,” Hastings of Netlfix noted. Asked what the competitive landscape would look like five years in the future, he returned to the analogy he used earlier with the evolution of the telephone. Landlines had been losing out to mobile phones for the past 15 years, he said, but it had been a gradual process. The same, he believed, would be true of television. Sound familiar to some of the challenges arising or fought in the past few years recently by other DPC Physicians you’ve read about or talked to?
- Everyone is Waiting for It [e.g. DPC for example] to Explode, But It Won’t. It will have moments of gradual rise and falls but in an upward trajectory. It wasn’t meant to suddenly rise to the top. The acceptance of change in our healthcare culture and the way care is delivered will be gradually adopted, not suddenly in one year or even a decade. – “There won’t be a dramatic tipping point,” Hastings said of Netflix in the NYT article. “What you will see is that the bundle gets used less and less.” Back in 2006, the company set up a way to distribute independent films, called Red Envelope Entertainment, but it failed, and Hastings shut it down. (“We would have been better off spending the money on DVDs,” he told me.) Now it was going to give original content another try — with much higher stakes.
The NYT article continues to say … Although news coverage now tends to focus on its shows, Netflix remains every bit as much an engineering company as it is a content company. There is a reason that its shows rarely suffer from streaming glitches, even though, at peak times, they can sometimes account for 37 percent of internet traffic: in 2011 Netflix engineers set up their own content-delivery network, with servers in more than 1,000 locations. Its user interface is relentlessly tested and tweaked to make it more appealing to users. Netflix has the ability to track what people watch, at what time of day, whether they watch all the way through or stop after 10 minutes. Netflix uses “personalization” algorithms to put shows in front of its subscribers that are likely to appeal to them. Nathanson, the analyst, says: “They are a tech company. Their strength is that they have a really good product.”
- The Doctor remains the primary reason a Patient will want subscription-based healthcare, not all the other stuff.
For now, even as Hulu and Amazon were emerging as rivals, he claimed that the true competition was still for users’ time: not just the time they spent watching cable but the time they spent reading books, attending concerts. Hastings was aware that even after the bundle is vanquished, the disruption of his industry will be far from complete. “Prospective threats?” he mused when I asked him about all the competition. “Movies and television could become like opera and novels, because there are so many other forms of entertainment. Someday, movies and TV shows will be historic relics. But that might not be for another 100 years.”
So where do we go from here in 2018?
Some Physicians, while we can say with great trend line certainty over the past three years, are a minority (e.g. less than 20%) of those polled who want DPC to remain at a fixed price point of less than $99/pmpm. They tell the DPC Journal in the past 90-days that “Yes, DPC should be in part, defined by price alone. And, it should remain under $99/pmpm [or less]. Furthermore, those in this 20% category state that they do not want Physicians identifying with the brand of “DPC” to accept any health plan dollars from insurance companies or Medicare. Will that idea take hold for most Physician’s entering DPC in the next year to three to come? Time will tell but the forecast is actually leaning towards two camps. Those include:
- Employer partnerships operating in metropolitan and suburban markets and;
- Independent/solo clinics operating in suburban and rural markets (many of which are now operated by DOs, MDs, and even PAs).
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Neither of the two listed above are bent on a fixed price point or plan dollar acceptance. Additionally, our DPC Journal Physician readers in the past quarter and now into 2018 say that what they want out of DPC is the following:
- Price shouldn’t matter. Each Doctor is different. Let them define their own value in the free market.
- It [e.g. DPC] should not be limited by pricing. Value is determined by services, education, demography and it is about direct patient-to-physician connection.
Some in DPC see employers as the long-term scalability play with the help of hybrid healthcare delivery models as the future of DPC. According to Advisory Board in the fall of 2017, they stated that large employers expect 5 percent growth in health care benefit costs for 2018, a National Business Group on Health survey finds. The survey found that employers expect to pay for about 70 percent of the cost associated with providing employees health benefits, while employees would be responsible for the remaining 30 percent, which would average about $4,400 dollars per employee. Employees would pay those costs via premiums, out-of-pocket health care costs, and health savings account contributions, “Wonkblog” reports.
With the new year in front of us, challenging you and others to innovate, how will you propel your DPC clinic forward?
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- Hire A Professional Photographer – The first of our 2018 marketing and branding strategies relates to your marketing budget. If you’re going to put money towards marketing collateral in 2018, make it professional photos. What’s the old adage, ‘A picture is worth a thousand words?’ Today, those words still ring true. Think about this, if a Patient walked into your practice and started taking photographs on their phone, would you be proud of the photos or embarrassed? Are there fresh scents in the air or messy stacks of paper, dust mites and marks on the wall you haven’t attended to? Once you have assembled these professional images, don’t forget to share the photos online. With every post you make, be sure your number one goal is unveiling pictures so impressive your Patients will pick up the phone and call you!
- Start a Monthly or Weekly Walking Group – Loyalty Patients want to know you care outside the office for their health. When was the last time you were at a park of a mall (yeah, I said mall…) and invited a group of your most loyal Patients to join you in a FitBit challenge, or something similar? These types of programs have long been the darlings of successful medical doctors.
- Include Yelp In Your Social Media Strategy – Over the years, Yelp has gained a reputation as the number one Internet rating and review site. This applies to DPC and all Physicians as well. Believe it or not, we recently saw a Physician with over 805+ reviews from Patients within his community! Telling your Patients to give you a review while they are leaving your practice is a great way to be guaranteed to get reviewed even if you don’t create an account. Make sure you’re listening to and participating in the conversation as well online by responding thoughtfully to all reviews, both positive and negative. Make sure your profile is complete by adding information such as: a professional Photo; Typical operational hours; Common Parking Locations; Prices; Amenities (e.g. Wi-Fi/Seating/Phone charging/etc.)