by Maria K Todd, MHA PhD
Physicians interested in starting or transitioning to a concierge medical practice or direct pay business model ask me who much it is going to cost to convert their existing practice.
All throughout the internet you can find people advertising "free stuff", including concierge medical practice transitions.
Let's do some math:
You decided your target is 400 patients who will pay you $1650 per year plus fee for services rendered either through their insurance coverage and copayments or co insurance or cash. The consultant offers to do this for free, so you don't have to lay out cash or tap the bank or friends and family for a loan. Is this a good deal?
- The consulting firm tells you they will take on all upfront costs and work to develop a customized concierge program that fits the needs of your practice. Which up front costs are they talking about, exactly? Theirs? or Yours? Do they mean a practice analysis of your current patient population? A market and demographic analysis? Developing your website? Staff training? Social media marketing and reputation management? Unique professional re-branding? A town hall meeting? Redirecting the patients who will not follow you to the new model? Dealing with the managed care plans with which you are contracted? Copying medical records and sending 30-day patient relationship termination notices? Finding a competent provider to accept your transfer out patients? Selling memberships and collecting payments and providing accounting records, membership transactional support, processing refunds, processing cancellations, answering questions about the amenities and additional services included in the fee, and how to best use their new personalized medical care program. What if you need a new logo, business name registration? Are those costs and tasks included in their definition of "upfront costs"?
- To entice you further, they tell you that they take 1/3rd of your $1650 fee per person, and you get 2/3rds. That sounds fair enough. But for how long? 1 year, 2 years? Probably not. In most cases, they take this amount for 3 to 5 years. Here's where we do the math: That's $550 per patient for 400 patients per year for a total of $660,000 for 3 years or 1.1 million in consulting fees over 5 years! And, if you don't have the potential to hit your targeted 400 patients reasonably soon, they won't accept you as a client and take the risk. But wait, there's more to this arrangement. And what happens if you don't maintain a panel of 400 patients as anticipated? Do they take more than 1/3rd to make up the difference? Some do. That means that if you don't get to your target of 400 in year one, year two, year three or ever, you may have to make up the difference of their estimated revenue in the years you come up short from the dollar target. Will you be prepared to pay that invoice on demand?
- The patient signs a contract with the consulting firm; not you. They own that contract for your concierge membership product!
- You can buy your way out of the contract by paying the estimated revenue to the firm for the whole deferred amount.
- You could fold the corporation and inform the patients you have to sign up with you under the new corporation. That's called theft and conversion and will get you sued.
- You could quit and they will reassign "their" members to another competing physician they've recruited to take advantage of their free deal. You don't get a say in the matter. The contracts are not yours, the patients are not yours, and the value of the ongoing business unit is not entirely yours.
It's your decision. You are the sole decision-maker of how you'll cover the cost of your practice transition. It's a value proposition that's very personal.
If you are seeking to reclaim your autonomy as a physician and own the membership agreements and the patient accounts and goodwill, perhaps you should consider paying for what you need, as you need it, and pace yourself according to the budget you can afford. That's the only business arrangement we offer to clients. If not, we wish you well in your future, but we aren't set up to operate under the business model of the free consultants out there. There's no right or wrong decision. It's personal. It's all good.
We will estimate the up front financial cost of transition, the amount you'll pay us, the amount you'll pay other consultants, the amounts you will need to execute your chosen marketing strategy and plan, the time and cost to delivery staff training, the amounts to set up your website and rebranding as a concierge, personalized or DPC practice, and be completely transparent with you to the extent known.
We offer you choices, but you'll decide what takes priority and who helps you. We act as your transition or startup manager to help you pull everything together. We'll work collaboratively across overarching creative, online, offline, and technical aspects of the transition, including branding, marketing, website design, payer contract conflicts reviews and any notifications to contracted plans that need to be made. We'll provide the membership materials, including contract templates. And, all team members who participate in helping you achieve your goals and aspirations bill independently but coordinate their output and deliverable with your project manager. You see every invoice and pay your consultants personally. If you have friends and family willing to contribute pro bono services, we have no restrictions as long as they collaborate at a professional level and on time.
If you have questions or would like to learn more about converting to a concierge medicine practice, please contact us.