In this episode of “DPC Pediatrician,” Dr. Phil Boucher and Dr. Marina Capella dive into a topic that every pediatrician considering Direct Primary Care (DPC) wants to know: How long does it take to become profitable? They discuss the financial realities of starting a DPC practice, sharing their experiences and offering insights into the factors influencing profitability. From planning for slower months to knowing your overhead costs, this episode provides actionable advice for anyone navigating the financial side of DPC.
Link to Podcast: How Long Does It Take to Become Profitable in Pediatric Direct Primary Care?
Welcome to DPC Pediatrician. We’re Dr. Phil Boucher and Dr. Marina Capella, two DPC pediatricians who are on a mission to share our love of direct primary care with you. Hey everyone, welcome back to another episode of DPC Pediatricians. We today are talking about money and that’s because it’s a big important thing for starting business in general.
0:23
And the question that we hear a lot from people is about profitability. Like when are you going to be profitable? And what that looked like, because it’s important, right? You want to be profitable and you’re out to stay in business and keep the lights on and take care of your people.
0:39
But you do have to make enough money to make that a reality. And so I think it’s something that most… clinicians are not used to thinking about because they just sign on the dotted line and they get their paycheck when they go into practice and are guaranteed this much,
0:52
or they have productivity related bonuses and everything along those lines. But when you’re starting your own business, you actually have to figure out how to make more money than you spend. And so then it becomes like, oh, how long does it actually take?
1:06
So I don’t know if you can share a little bit about your experience or your thoughts around this when you were starting your practice.
1:14
Yes, absolutely. I would say that I am an example of someone who took longer than expected to kind of start becoming profitable. And I did have some safety mechanisms in place. I think that’s one of the things I’d like to emphasize that for many people,
1:30
it’s important to maybe have a side gig or maybe make sure that you and your spouse, if you have a spouse, have looked at your finances and you’re going to be okay for a year or maybe two before you really start bringing in an income. I took longer than I wanted to to become profitable.
1:46
The first nine months, I’m going to be completely honest, were… A lot of crickets, like a handful of members. I was doing a handful of fee for service visits, just flat fee visits, because I offered that in the beginning. Well, I still do. But I tried to offer that in order to get people through the door.
2:04
And it was just I mean, it was quiet. And I Part of it is me because I’m more of an introvert and I find it hard to get out there and really market. And it was really uncomfortable in the beginning to talk about my services.
2:19
It felt kind of braggy if I started talking about how great my clinic and my services were. So it was really slow the first nine months. And then finally, I started to get creative. I started to do autism evaluations. I started to offer services. immigration, medical exams.
2:34
I did a couple of other things to just get people through the door because I thought, I don’t want to give up. I’m not going to let just like a slow beginning just crush my dream. I’m going to figure it out. And even if that means doing something temporarily just to get money and stay afloat,
2:51
then I’m going to do that. So I did have to do that. I got creative. And those revenue sources actually were quite good. And after about a year, a year and a half, that’s when word of mouth really started to spread for me. And I wouldn’t say that it was just like a rapid rise in memberships.
3:08
But now it’s been a steady rise in memberships for most months. And so it continues growing. And as I continue growing my memberships, even three years out, I reduce the number of those other things that I do. So But I’m very profitable and I’m paying myself. I’m now paying three employees and a contracted physician.
3:28
So it took longer than expected.
3:29
Yeah.
3:31
One of my safety nets in order to do that, though, was to have a side gig. I was working in pediatric urgent care for about the first year.
3:38
Yeah, I think that there’s so many things to unpack there. But I think the biggest thing is expect that it’s going to take a while. And then you’ll be hopefully pleasantly surprised that it didn’t take as long as you expected. But I think that in part, people think, well, everybody’s going to follow me because they love me.
3:56
And they do love you. Absolutely. But then they love not paying extra money and having their insurance that they’re used to. And so it does take a while. Like we still, I mean, I’m three years in now and we still have patients that I saw in my old fee-for-service practice that finally said, okay,
4:15
it’s finally been enough and we’re ready to make the leap. And why didn’t we make the leap sooner? But it does take a long time for those to come on board. I think there’s some statistic about like five to 10% of your patient panel will follow you just in the broad sense. And that’s probably-
4:33
more for family practice. It’s probably a little bit less for pediatrics, despite the stronger relationships. Usually the cost is a little bit higher for pediatrics for all the reasons that we’ve talked about on previous episodes. And so that requires a little bit more calculus and handholding for patients to understand why they would make that transition.
4:54
And so when you’re doing the math, thinking about that, and then the overhead really comes into the picture. And the overhead is something that a lot of Physicians have no idea what that looks like when you’re starting a practice. Whether you’re starting a fee-for-service practice,
5:08
whether you’re in a big organization or a private practice or a solo DPC, what are all those costs? And that plays a huge role in how long it takes to get profitable. And you have a great guide that breaks down all of that so that people can see,
5:23
here’s all the things that I think are going to be expensive. I think all of these supplies and things like that are going to be what’s expensive. But really, what are the top three? Rent for your space. vaccines and staff are gonna be your biggest expenses when you’re starting out.
5:41
So if you can minimize those, then you’re gonna be profitable much faster. There’s all the things, the stickers, the tongue depressors, like those are hardly a line item when it comes to anything compared to those big three expenses. of your rent, your vaccines, and your staff and your people. The EMR then would be probably in fourth,
6:01
and your tech stack of how you’re going to communicate, how you’re going to track, how you’re going to bill people, all those sorts of things. The technology thing would probably be fourth on the list. I don’t know if there’s any other big ones that I’m not thinking of off the top of my head.
6:12
I would say if you’re going to hire something like a tax advisor, a bookkeeper, those things can add up. Malpractice, depending on What you get can add up to, I pay about, I don’t know, $6,500 a year for an occurrence-based policy. But there are different types of policies out there. And that’s where the DPC, Pediatrician Startup Guide,
6:31
like you mentioned, comes in handy because it kind of explains the differences between those. But one thing you mentioned that I think is important to talk about. So you came from a position of having been in private practice in the fee-for-service world and then transitioning to your own DPC.
6:47
So you had people in the community who knew you, right? And I think there are two types of people, people who are starting out just like you did, where you have a panel of patients who may or may not follow you, or at least a percentage will. And then for me, I was actually new in the community.
7:03
I had worked urgent care but it was at different locations throughout the county. And so people didn’t really know me locally. And I do see that definitely playing a role because it’s harder if you’re not known in the community, definitely. So you need to have even more of a safety net.
7:19
You need to plan for even longer to really get up and running. Whereas if you’re coming from your situation. It’s not easy because like you said, only five to 10% will follow you immediately, but at least there’s a little bit of a starting critical mass, I guess.
7:35
Definitely. And I think that that should play a role when you’re thinking about what’s my first year going to look like in terms of, am I going to have a physical location or is it going to be like in home? In home is a great way to minimize expenses, especially if you’re not known in the community and
7:53
And you’re telling people, I can come to your house for your sick kid. I can come to your house for your newborn. Totally different experience. That drastically reduces one of the biggest spends, which is your office space and your rent and everything along those lines.
8:06
And so if you don’t have a prior history or a longstanding history, a lot of patients are that already know you, then that might be a consideration to get yourself profitable more quickly. And I know a lot of pediatricians that have done that and then transitioned to a
8:20
physical space or just stayed on the in-home and virtual care and loved it. And families love that too. And you can really do a lot of good and be really profitable without having that physical location as a way to start off quickly with growing your profitability and then pivot from there.
8:40
If you’re coming from a large patient panel and you’re saying to yourself, well, I want my patients to have a similar experience, then you’re probably going to lean more towards having a physical location. We started our first physical location. We didn’t have like a bathroom. They had to go out to like a shared hallway space.
9:02
And people ask about that a lot in the groups too. Like, is that okay? Absolutely. Nobody cares about those sorts of things. Like they’re not like touring the place and be like, well, how does my kid go to the bathroom? Well, of course you have a solution to that because you have to go to the bathroom.
9:14
Your staff have to go to the bathroom. You need water and all those sorts of things. But we didn’t have like water in our space. We had to go out to the hallway to get water. Those are things that are not a big deal to people and things that you might get hung up on that really
9:28
don’t need to play a role in your short or long term decision making. But it allowed us to have a physical space where then patients were used to, okay, I go into the office, I see the doctor. That sort of thing. So I think there’s so many different shades to it.
9:42
And there’s so many different ways that you can set it up depending on your financial circumstances to keep things leaner or to lean into some of the savings that you have or know that there’s going to be some more meager months before things start rolling.
9:57
Yeah, you mentioned something that I think is important to point out, that is staff. So a lot of pediatricians in the DPC world, they start out pretty bare bones, right? They’re like, I can’t even I can barely afford my overhead in the beginning. So I’m not going to hire anyone. I think it is important, though,
10:13
over time to consider, hey, after a while, you’re going to get tired of faxing your own things and making your own copies and coordinating everything. So I think it’s smart to either think about a virtual assistant or eventually a medical assistant or someone in your office that can help.
10:30
Because you don’t want to contribute to your own burnout by trying to do everything yourself. That’s not really… why you’re a pediatrician to do office work right now for some people that’s going to be more tolerable than others for you it sounds like it was really important
10:45
from the outset to have staff how did that affect the time that it took for you to become profitable
10:51
It definitely slowed things down. And yes, for me, like I’m a big delegator. I have big, I mean, you know, as well as most people that I get lost in a lot of the details. And so having people that I can delegate to makes a big difference for me to be successful and to not get too frustrated,
11:09
to get too bored, to get too burnt out or anything along those lines. That is something that I just know about myself. So that was important, but it certainly did slow down profitability because then you’re paying for them. you’re paying for their benefits and things that go along with that. So that certainly plays a role in profitability.
11:24
And I think for me, coming from the community, being able to have people pre-enroll, I had a good idea at least of, okay, on day one, I have this many patients to start with and can cover expenses well enough to get things rolling. And that made a big difference for getting started and not feeling that initial
11:44
apprehension about doing it completely solo. Yeah.
11:47
Yeah, absolutely. So about how long did it take you to really start getting in a position where you wanted to be?
11:56
I think probably six months to feel really comfortable with where we were at. And then we’ve continued to grow from there. So every time that we grow, then we kind of get set back in terms of short term profitability with adding new staff and services and those sorts of things like those all do take, you know,
12:12
a financial burden that comes along with them. But I think that’s just part of planning all of that out to really is like, what are my fees going to be? What do I need to make sure that we’re charging and bringing in and new patients
12:25
and all of those different factors that play into it to feel comfortable from a profitability standpoint?
12:32
Yeah, absolutely. So what would you say to someone who came to you, a newbie who’s just thinking of starting out saying, hey, how long should I plan? I mean, how much savings should I have? How long should I plan to go without a paycheck?
12:45
Yeah. Well, the one thing that we didn’t talk about that I think is worth mentioning here is… Money is actually relatively cheap in terms of loans. And so I would encourage people to at least have a line of credit from a local bank. Local bank, meaning like a local business that values you as a community member.
13:04
It’s a great way to make sure that you don’t feel like you’re gonna be running so thin that you’re gonna be withdrawing from your 401k or things along those lines to pay your bills and like keep the lights on at your house.
13:13
I would strongly urge you to have those sorts of cushions that just give you the mental peace of mind that, okay, we have a way to make sure that we can keep buying groceries and those sorts of things. And so I would encourage people to get a line of credit from your local small business banking professional.
13:29
They love giving money to doctors because we’re reliable when it comes to paying our money back and not fleeing. But I would say it depends dramatically on if you’ve been in the community and what your plans are for your practice. If you’re planning on a home visits as the main way that you’re going to start with revenue,
13:47
then you can expect to… have a profit much sooner. If you’re having a physical location and the rent and everything like that, I would say plan for at least six to 12 months before you’re going to be taking home a reliable salary that you can count on and make contingency plans,
14:02
which certainly you will have the time to do as you grow your practice because your time, you’re going to have a lot more time on your hands.
14:10
Yeah. Now, we sometimes see in the DPC Facebook groups, you know, people posting, hey, I opened up my doors about two months ago and I’m really stressing out because I only have a handful of members and I’m doing this and I’m doing that and I’m doing this other thing and nothing seems to be working.
14:27
What do you think about that? I have some thoughts, too. But how do you reply to people who are in that phase of anxiety or they’re like, this isn’t working? I’m just a few months in, but it doesn’t feel like it’s working.
14:36
I think that, like you said, it does take time. And I think we have to look at the big, long picture. And if we’re getting super stressed in the weeds, then it’s hard to critically think about how can I find new members and how can I
14:49
find who my patients are going to be that are going to be referring and helping me to grow my business. So I always try and talk with people about just like looking at the big picture. You just started. It does take time and it can certainly be stressful when you’re like looking at
15:05
your count of new members and it’s not growing as rapidly as you thought it would, or you’re not having the successes that you thought would just come out of the gates, but make strides each week and each month to grow how you market and how you are able to
15:24
find those patients and be okay with experimenting and saying, okay, these in-person things that we were doing are bringing a lot of patients. Instagram, not so much. This, once I finally found this little niche of patients, it really opened up doors to me and be curious enough to say, okay, I’m going to try this and see,
15:41
and it might not work, but it might work. And it’s worth the effort to get a and figure out, is this where I can find a lot new patients or is this going to be a waste of time? I’ve had two really uncomfortable in-person things recently, which have been at our local children’s museum.
15:58
We were like, let’s go do some parenting events at the local children’s museum. And parents love to come, but they bring their kids and then they’re totally distracted. So I’m literally standing there and people are just wandering by. And I had one of my staff with me too.
16:10
And she’s like, I would have just left or cried or something like that. I’m like, I’m just going to stay here. It’s okay. I have the time. This might not be the right place or situation for attracting new members, but we can be out here in the community.
16:24
We can do things that work or maybe they don’t work quite so much. You have to be willing to have those uncomfortable moments to realize what actually does work to bring in new patients versus what doesn’t. I have a great video. that my staff took when I was at the children’s museum,
16:38
like literally talking about a parenting strategy that I like to teach. And people were just like walking by. There’s a kid that like walked right in front of me. It was so awkward and so embarrassing to just feel like I’m talking to no one. And there’s like a three-year-old that walks by and is like,
16:55
but moments like that make you just like proud. Okay. I can do this. And at the end of the day, some things work and some things don’t work and that’s okay. Yeah.
17:03
Yeah, I love two things that you mentioned that I think are worth emphasizing. A lot of success in business, including pediatric DPC, is getting comfortable being uncomfortable, right? And that’s true with a lot of skills, learning a new language or, you know, being a brand new resident, right? Like you get comfortable being uncomfortable.
17:23
But since we’ve already sort of been practicing most of us for a while, we’ve kind of gone back to that state of being comfortable and we have to get back out of that state, right? And it’s normal. It’s okay. It’s part of the process.
17:36
And the other thing you mentioned is that in order to find things that do work, you have to try a lot of things that don’t work, right? And that doesn’t mean you’re a failure. That’s just completely part of the process. And if you just go into it saying, hey,
17:49
some of the things I’m going to try are going to work, and some of them are not going to work, and that’s completely okay, then you experience less anxiety, less stress, because you’re like, okay, I was expecting that. And this is part of the process.
18:02
If it happens to Phil and it happens to Marie, it happens to probably most of us, then that’s okay.
18:09
Totally. Yep. Completely agree. I think that it’s okay that things don’t work. Like some things won’t work, but you will find some things that do work and then you can amp up those and decrease the things that don’t work.
18:20
And over time you’ll find, okay, this is the rhythm of what I’m needing to do to bring in new members. This is what I can expect this coming month with new members. And you’ll then have to be able to sleep much more easily and have a lot more peace when it comes to the finances.
18:34
Yeah, definitely. Yeah. One last thing I’ll add is just look at your numbers. You know, I think it’s really easy to, again, see success stories of people who opened up and then within two months their panels were full. And what a wonderful success story. And that’s fantastic. It really does happen sometimes.
18:50
But it’s better to play it on the safe side for yourself and make a budget for yourself of like two years. What is it going to look like? What are my expenses going to be? How much do I need for my personal spending and family spending?
19:05
And then what do I need to cover the overhead of my clinic? And realistically, if I need to, where can I pull money from? From savings, from a line of credit, like you mentioned, from other places? Because I think that’s where people get in trouble is when they don’t really look at the long-term possibilities.
19:21
And they just kind of assume, oh, it’s going to work within six months or even within 12 months. And sometimes that’s not the case. So if you want to play it safe, like do the math.
19:31
Do the math. And then you can rest easy knowing, okay, it’s okay that like, I’m kind of sitting here twiddling my thumbs a lot of the time. Like the math is okay. I will figure out how to make things happen, but it’s okay that I’m not super busy today.
19:47
Yeah, absolutely. Well, yeah. So I guess a short answer to this question of how long does it take to become profitable? It really is highly variable in your situation. Best case scenario within six months, but worst case scenario, sometimes we’re looking at like two years. So think about it and make sure it’s right for you.
20:06
You have plenty of time to figure these things out.
20:09
Yeah, exactly. All right. Well, thanks for listening, everyone. Until next time.
