Direct Primary Care for Startups

I wrote a post on concierge medicine and direct primary care (DPC) in March 2013. It didn’t get into much detail about why DPC is such a great target for new digital health companies and services, only that it makes sense for providers given the  practice and payer market.

Since that post, I’ve had discussions with DPC docs, docs thinking about DPC (research linked in that last post expects ~10 percent of physicians to add aspects of DPC to their practices), practice management groups targeting DPC, and even a few investors evaluation DPC as a segment of the market.

I’ve come to realize that 1) DPC is an ideal target for new digital health services, and 2) DPC is not being targeted by many new digital health services (it’s not saturated). On that last point, the two companies I know that are specifically building services for DPC are Hint Health and Atlas.MD, though I’m sure there are more.

Here’s why I love DPC as a launching point and test base for new technologies.

  • Churn is felt personally. Probably more so than any other area of healthcare, losing patients in DPC directly impacts the bottom line. DPC providers are not salaried — they have to maintain a specific number of patients (not too few and not too many) to stay in business. That means DPC providers think about keeping patients happy and healthy as a central part of their job. Services that help providers manage those relationships are valuable and have clear ROI.
  • High-risk change of practice. Completely changing over from a traditional practice to DPC is high risk. DPC providers need to drop their main source of revenue and sell their DPC service to a certain number of patients in order to break even. To do this, providers planning the move to DPC need help. There are services, both human and tech-enabled, that enable providers to partially add DPC to an existing practice, but more opportunities exist to assist providers moving to DPC.
  • Shared responsibilities. One of the most fascinating conversations I had with a successful DPC providers was about firing patients. He told me he does not hesitate to kick patients out of his practice if they are not following care instructions. He feels it’s a burden on his time and that if patients aren’t sharing in the responsibility for care then they aren’t going to stay with him anyway. Outside of DPC, the main time I hear about firing patients is when patients are abusive to office staff, not when they aren’t adherent. Tools that assist patients and providers sharing in care responsibility would work well in DPC.
  • Engaged patients and doctors. This relates to several other points, but it’s worth calling out. Most patients that are a part of DPC are actively seeking out DPC, and through self selection, are engaged in their care.
  • Savings are felt personally. Similar to churn, which affects the top line, saving on costs affect the bottom line and are felt personally. Technology that makes care, follow-up, and communication more efficient are valuable to DPC today.
  • Fewer layers to navigate a sale. Less on the care model and more on the nature of DPC, DPC practices are generally small and have fewer layers that need to be navigated to get a pilot or talk to a decision maker. Selling to a solo DPC is the opposite, in a good way, of selling to the VA.
  • No “who is going to pay for this” complexity. Billing and reimbursement is straightforward in DPC. It’s a lot easier to show the ROI than calculate it in a payer-based environment.

What’s so great about DPC is that many of the reasons it is appealing are more closely related to the direction the larger healthcare system is going. Accountable care, risk-based contracts, and bundled payments all share incentives with DPC. Technology tested with DPC can be ported to non-DPC, and selling and proving the value with DPC is easier than non-DPC.

There are challenges associated with selling and scaling a business targeting DPC. The major ones I can think of are that DPCs are generally small practices, many of them solo, that you need to sell office to office. There are some some scaled DPC organizations like One Medical Group and MedLion. I’m not sure those are ideal targets, but those are worth a shot. Most companies will need to find small DPC offices or groups to work with, and scaling to more practices will take time.

There are a growing number of conferences on DPC. That’s a great way to find prospects for products or try to discover what the challenges are for DPC.

Despite those challenges, companies looking to test new technologies and tech-enabled services specifically for trends in healthcare would do well to look at DPC and talk to DPC practitioners. I expected to see a lot more growth in this area, and I’m surprised that I haven’t to date.

TGphoto

Travis Good, MD/MBA, is co-founder of Catalyze. More about me.

  • Dr. Q, MedLion

    Great article, with a thorough analysis of DPC characteristics. I wouldn’t classify One Medical as a DPC company, however, as patients are still charged for medical medical visits via insurance in addition to the subscription. Agreed, lots of room for explosive growth. MedLion’s practice network grew from four states to 16 in just last 11 months, and growth will accelerate over next 12-24 months for us. Lots of room for help with innovative digital products. At MedLion, we also created our own technology with MedWand (MedWand.com).

↑ Back to top

Founding Sponsors

Platinum Sponsors