Most physicians are familiar with the direct primary care approach, but whether the economics hold up is a harder issue to address.
Understanding the Economics of Direct Primary Care
Josh Umbehr, M.D., co-founder of Atlas MD in Wichita, Kansas, has spent years helping other physicians make the jump to direct primary care. He recently sat down with Medical Economics Associate Editor Austin Littrell to discuss the real math of a direct primary care practice.
Umbehr moved into direct primary care straight out of residency in 2010. He has spent the years since helping other physicians make the same jump. According to the report, Umbehr’s experience has given him a unique perspective on the economics of direct primary care.
The Math Behind Direct Primary Care
The basic math of a direct primary care practice is simpler than physicians expect. With roughly 600 patients at $50 a month across 12 months, the overhead is around 20% to 25%. Additionally, there is usually one staff member for every one to two physicians, and most of the revenue lands as income.
Panel size is also an important consideration. While concierge medicine often involves smaller panels, direct primary care rewards a fair price across a larger panel, right-sized to what one physician can handle in a day.
This approach allows physicians to focus on providing quality care to a larger number of patients. Setting prices is also an important aspect of direct primary care.
Related: Year of Insight: Advances in Perioperative Medicine
Umbehr notes that pricing should be based on what hospitals earn per physician, and that having a partner can help reduce overhead. Clinics that push prices highest often struggle to grow, while the affordable ones fill up quickly.
The Future of Direct Primary Care
According to Umbehr, the window for insurance-based primary care is closing fast.
Umbehr also notes that artificial intelligence will play a significant role in the future of primary care. By decreasing the work and allowing for open-evidence lookups, AI can help reduce referral volume and free physicians to focus on the parts of care that build trust.
One of the biggest misconceptions about direct primary care is that it demands business genius or means abandoning lower-income patients. However, Umbehr argues that a physician’s duty to do no harm should extend to doing no financial harm, and that direct primary care can be a more affordable and accessible option for many patients.
In terms of patient relationships, direct primary care allows for hour-long conversations, backed by calls, texts, and emails. This approach helps build trust and transparency, which is essential for providing quality care.
As healthcare care models continue to evolve, Umbehr expects to see more innovation in the next five to 10 years than in the last 20 or 30.
