Running a concierge medical practice costs a lot less than you’d expect. While a variety of factors (location, space size, clientele, etc.) might push your overhead up or down, we’ve got our head around some numbers that will provide a great benchmark for transitioning concierge medical doctors.
First, you’ve got your business model figured out. For family doctors that will depend on the level of service you provide (we’re pushing for industry-wide standard of 24/7-access, unlimited visits, phone/email/social media correspondence and a host of inclusive procedures like setting bones, treating burns and abrasions, and more). We charge $50/mo for a healthy adult, with each doctor seeing 600 patients, and there is comfortable profit margin.
In our post on what equipment you’ll need to start your practice, we went over the prices of some mandatory and optional items. Of course, you could get your practice started on a shoestring budget, doing house calls with a stethoscope, but that doesn’t bode well profit-wise. Alternatively, you could invest more heavily on your space and equipment to create an indelible impression on your initial patients. If you can sustain it, maybe you slowly build your clientele, operating at a break even, or even a loss at first, knowing full well that once you have the clientele you WILL be making money. This is a personal decision based on the type of brand you want to build, your vision for your office, your competition, etc.
We routinely tell doctors that once you’re up and running, the ideal overhead of a lean office is approximately 30% of $360,000 or roughly $120,000 per year (This average gross income is based on a doctor seeing 600 patients at $50/mo + expected tests/labs/prescriptions). Our overhead is based on ~$10,000 per month with staff, half going to rent/utilities, the other half allotted for miscellaneous expenses (office supplies, insurance, prescription cost, machine maintenance, advertising). However, this expense is higher than what it needs to be because we’ve done much more advertising than your practice might actually need to operate at a profit.
The next headache you’ll want some proverbial aspirin for is insurance. You are operating a business and ultimately employing staff. We included this in the “other” half of our $5,000/mo expense. It’s a strange irony since we’re trying to get out of the insurance trap. However, you will need to adhere to state laws regarding employee rights/benefits, etc. If you have specific questions, or find anything troubling in your own research, send us an email. We’ll be glad to provide counsel, and anything we’ve learned from our experience in Kansas.
Lastly, you will need part of that $5,000 to account for staff (not doctors, for now let’s treat them like independent contractors, they make their own revenue and pay you a “fee” for conducting business through your practice). We believe that a concierge practice can function efficiently with one nurse for every three doctors. Even at a handsome salary, you will find that this expense is far less than what you’re dealing with through overburdened staff and third party billing.
Kevin MD goes over some winners and losers in the big picture of concierge medicine. Pay attention to his use of the term direct primary care. Although we use the term concierge medicine, he might instead call AtlasMD and the model we’re encouraging “direct primary care.”
If you’re in the mood for a more academic guffaw, try this article. While we understand that not everyone can transition to our model, the fact remains: we are making it work, and we’re keeping relatively low overhead. We especially laughed at the line that went, “We might like the idea of a lone Norman Rockwell physician (no one talks about the low overhead of a long-suffering wife doubling as receptionist and book-keeper)” For the record, AtlasMD does not employee any of their wives or husbands in administrative tasks. In fact, everyone pitches in.