Re: Revenue model

[Guest guest]

Hi Chad,

I'm sure it's an old joke by now, but you certainly went with a better name

in Petoskey Health rather than Costley Health.

When our group broke up, we went through multiple discussions about what to

name the new practice.

The top themes were to name it after....

Location --> Queens Healthcare, Aspen Healthcare, etc

Regional--> Front Range Healthcare, Elk Mountain Healthcare

Quality --> Best Healthcare, Ontime Healthcare

After the Doctor --> ergo Locke Family Medicine

We decided to name it after our selves since it is just my wife and I -- we

figured we had " branded " ourselves in the community already with our name.

When patients refer to us, they aren't saying -- Go to ABC Clinic, they have

a nice system.

They say -- go see and , they are great docs -- at least we hope

so.

I think many options work.

Some limit expansion -- a local name may not work down the road.

A doctor named clinic may not work if one adds new docs - unless you are the

Mayo Clinic.

Just some ramblings on naming practices.

Good luck with the no-insurance angle.

Locke, MD

Revenue model

HI all:

I'm launching a practice in Atlanta late this year. Previous post about the

name has been

solved: Petoskey Health, LLC (tagline - " Exceptional Primary Care " . Long

story on the name but short is it's one part of a larger branding approach.

Would love your input on my revenue model. I'm not going to accept

insurance - brain just not hard-wired to deal with the nonsense. I'm

exploring a blended revenue model of retainer fees and per visit charges. I

believe the keys are simplicity and striking the right balance between

access for those with lesser frequency of care needs and incentives for

those with greater needs to join the practice rather than visiting it

frequently on a fee- for-service basis. Trouble is that I'm off-the-chart

passionate about prevention - and any fee for service structure fights

against training patients about proactive, primary prevention. Here's the

current concept (very open to not only suggestion but outright criticism if

it seems unworkable):

$3 per day retainer for full-membership in the practice. This buys you 2-3

visits per year including a full physical (leading to a " wellness plan " for

the year), direct access via phone or email (i.e. some reasonable number of

annual " virtual visits " per year - ?3-4?). And the promise that the doctor

won't have a panel size greater than 600 patients.

Goal of 20% of the eventual 600 patients on a reduced fee (probably sliding

scale based upon income)

Maybe a fee structure that differs by age - but I'm somewhat reticent of

those as they add complexity and the risk of offending people based on

chronological age - especially as biological age varies so much based upon

health behaviors.

Ideally, that would be the end of it with the exception of some per time

charge for patients who need (or just want) more direct interaction with the

doc than what's outlined above. I just want to put some reasonable limit on

what people feel they're entitled to for their $3 per day.

Fee for service:

Especially in the beginning when cash flow will be negative due to a pure

start-up, I'm inclined to accept patients on a fee for visit/service basis.

This has to be done cautiously as I believe it can seriously undermine the

overall goal of a retainer-based practice. Could it be as simple as charge

a certain amount based upon time? (e.g. $50 per 15 minutes). I don't like

the " I'm keeping track of how long this is taking " set-up for both patient

and doctor - but I also have no desire to get into visit coding. I've lived

that life and I'm running away from it.

That's enough for now...I have a thousand things on my " to figure out " list

but hope this starts a conversation prior to IMP camp in a couple of weeks.

Thanks for any opinions/insights...

Chad Costley

------------------------------------

[Guest guest]

Chad,

Some thoughts:

1) How much do you want to make? It seems to me that 600 patients at

$3/day = $657,000/year. Even if your overhead is around $200,000 (really high

for an imp), that leaves you with a salary of $457,000/year. If you are making

that much, why worry about charging a fee per visit or even worse charging a

fee for every visit above x number/year? To me that seems potentially confusing

for the staff (if you have any) and the patient. Yes, you may have the patient

who “abuses” the system and needs to be seen regularly, but who

cares? You should have the time to manage all the issues, do gentle problem

solving, etc.

2) If you are concerned about offering reduced fee services within

your retainer practice, have you considered the “Robin Hood model”

initiated by Bob Forrester? In it, you set up your practice as a non-profit,

charge a retainer fee to most, but use the extra income to offer free care to

the uninsured in your community. See more at www.stlukesfp.org

3) Who will take care of your patients outside your office? Will you

be following them to the hospital? If they are going to pay a premium you may

want to make sure this end is well covered. What about referrals? How are you

going to make sure the patients are handed off to the specialists without

hiccups?

Congratulation on your

practice design. I hope some of these

thoughts and questions are helpful.

Revenue model

HI all:

I'm launching a practice in Atlanta late this year. Previous post about the

name has been

solved: Petoskey Health, LLC (tagline - " Exceptional Primary Care " .

Long story on the

name but short is it's one part of a larger branding approach.

Would love your input on my revenue model. I'm not going to accept insurance -

brain

just not hard-wired to deal with the nonsense. I'm exploring a blended revenue

model of

retainer fees and per visit charges. I believe the keys are simplicity and

striking the right

balance between access for those with lesser frequency of care needs and

incentives for

those with greater needs to join the practice rather than visiting it

frequently on a fee-

for-service basis. Trouble is that I'm off-the-chart passionate about

prevention - and any

fee for service structure fights against training patients about proactive,

primary

prevention. Here's the current concept (very open to not only suggestion but

outright

criticism if it seems unworkable):

$3 per day retainer for full-membership in the practice. This buys you 2-3

visits per year

including a full physical (leading to a " wellness plan " for the

year), direct access via phone

or email (i.e. some reasonable number of annual " virtual visits " per

year - ?3-4?). And the

promise that the doctor won't have a panel size greater than 600 patients.

Goal of 20% of the eventual 600 patients on a reduced fee (probably sliding

scale based

upon income)

Maybe a fee structure that differs by age - but I'm somewhat reticent of those

as they add

complexity and the risk of offending people based on chronological age -

especially as

biological age varies so much based upon health behaviors.

Ideally, that would be the end of it with the exception of some per time charge

for patients

who need (or just want) more direct interaction with the doc than what's

outlined above. I

just want to put some reasonable limit on what people feel they're entitled to

for their $3

per day.

Fee for service:

Especially in the beginning when cash flow will be negative due to a pure

start-up, I'm

inclined to accept patients on a fee for visit/service basis. This has to be

done cautiously

as I believe it can seriously undermine the overall goal of a retainer-based

practice. Could

it be as simple as charge a certain amount based upon time? (e.g. $50 per 15

minutes). I

don't like the " I'm keeping track of how long this is taking " set-up

for both patient and

doctor - but I also have no desire to get into visit coding. I've lived that

life and I'm

running away from it.

That's enough for now...I have a thousand things on my " to figure

out " list but hope this

starts a conversation prior to IMP camp in a couple of weeks.

Thanks for any opinions/insights...

Chad Costley

[Guest guest]

Thanks :

Excellent food for thought. This may sound strange - but I haven't really spent

that much

time thinking about how much I want to make. I believe the best way to model a

business

is to start from what the value you're offering is worth to your client. Build

the model and

see if the income at the end is acceptable. Trying to build a model to drive an

income goal

often leads to wrong business assumptions that don't pan out - or to

underpricing - the

most common mistake small businesses make. I will say that I believe that to

some extent

primary care doctors are undervalued by society in part because we instinctively

undervalue what we offer. I know some very ethical, quality specialists who

care deeply

for the patients but do not apologize for making 3-400k per year - they feel

that this is

fair compensation for the work they do and the education they endured to do it.

Primary

care culture isn't there - and probably shouldn't be - but it's worth thinking

about.

Having said that - I do not anticipate making the kind of money you rightly

calculated

from the details I threw out. Here are a couple of tweaks to your math that may

put it

back in perspective: I'm modeling based upon 480 patients paying the retainer,

not the

full 600 given my strong belief in providing care for the poor. I'm also not at

all convinced

that the $3 per day figure is realistic - I'm exploring that now through

informal

discussions with prospective patients and will be putting together focus groups

soon to

test the pricing. I do wonder, however, if we can make a case that having an

excellent

relationship with your physician is worth more than your Starbucks coffee or

your pack of

cigarettes. It seems as if we ought to be able to make that case. If the real

number is $2 -

and the patient number is 480 - and it does require a full-time staff person to

provide the

kind of service I envision (plan on exploring that concept at IMP camp) - you

can see how

the net income quickly falls significantly below the $200k mark. This isn't

about getting

rich...I'm realistic.

I have heard of the Robin Hood model and will explore it - as it does capture a

lot of

philosophy - that being that $2-3k per year is not a lot of money to some

patients - but

that we have an absolute obligation to try to address the national embarrassment

that is

lack of quality care for the poor. FYI - I'm currently practicing as an

employee for a clinic

for the uninsured.

I plan on " following " patients into the hospital in a sense. I didn't mention

it in my

description, but part of the offering is going to be a " patient advocacy " role

for

hospitalized patients. I'll let the hospitalists care for them - but those

hospitalists are

going to get to know me very well as an advocate and translator for my patients.

Love the help...keep it coming if you will.

Best,

Chad

>

> Chad,

> Some thoughts:

> 1) How much do you want to make? It seems to me that 600 patients

> at $3/day = $657,000/year. Even if your overhead is around $200,000

> (really high for an imp), that leaves you with a salary of

> $457,000/year. If you are making that much, why worry about charging a

> fee per visit or even worse charging a fee for every visit above x

> number/year? To me that seems potentially confusing for the staff (if

> you have any) and the patient. Yes, you may have the patient who

> " abuses " the system and needs to be seen regularly, but who cares? You

> should have the time to manage all the issues, do gentle problem

> solving, etc.

> 2) If you are concerned about offering reduced fee services within

> your retainer practice, have you considered the " Robin Hood model "

> initiated by Bob Forrester? In it, you set up your practice as a

> non-profit, charge a retainer fee to most, but use the extra income to

> offer free care to the uninsured in your community. See more at

> www.stlukesfp.org <http://www.stlukesfp.org/>

> 3) Who will take care of your patients outside your office? Will

> you be following them to the hospital? If they are going to pay a

> premium you may want to make sure this end is well covered. What about

> referrals? How are you going to make sure the patients are handed off to

> the specialists without hiccups?

>

> Congratulation on your practice design. I hope some of these thoughts

> and questions are helpful.

>

>

> Revenue model

>

> HI all:

>

> I'm launching a practice in Atlanta late this year. Previous post about

> the name has been

> solved: Petoskey Health, LLC (tagline - " Exceptional Primary Care " . Long

> story on the

> name but short is it's one part of a larger branding approach.

>

> Would love your input on my revenue model. I'm not going to accept

> insurance - brain

> just not hard-wired to deal with the nonsense. I'm exploring a blended

> revenue model of

> retainer fees and per visit charges. I believe the keys are simplicity

> and striking the right

> balance between access for those with lesser frequency of care needs and

> incentives for

> those with greater needs to join the practice rather than visiting it

> frequently on a fee-

> for-service basis. Trouble is that I'm off-the-chart passionate about

> prevention - and any

> fee for service structure fights against training patients about

> proactive, primary

> prevention. Here's the current concept (very open to not only suggestion

> but outright

> criticism if it seems unworkable):

>

> $3 per day retainer for full-membership in the practice. This buys you

> 2-3 visits per year

> including a full physical (leading to a " wellness plan " for the year),

> direct access via phone

> or email (i.e. some reasonable number of annual " virtual visits " per

> year - ?3-4?). And the

> promise that the doctor won't have a panel size greater than 600

> patients.

>

> Goal of 20% of the eventual 600 patients on a reduced fee (probably

> sliding scale based

> upon income)

>

> Maybe a fee structure that differs by age - but I'm somewhat reticent of

> those as they add

> complexity and the risk of offending people based on chronological age -

> especially as

> biological age varies so much based upon health behaviors.

>

> Ideally, that would be the end of it with the exception of some per time

> charge for patients

> who need (or just want) more direct interaction with the doc than what's

> outlined above. I

> just want to put some reasonable limit on what people feel they're

> entitled to for their $3

> per day.

>

> Fee for service:

>

> Especially in the beginning when cash flow will be negative due to a

> pure start-up, I'm

> inclined to accept patients on a fee for visit/service basis. This has

> to be done cautiously

> as I believe it can seriously undermine the overall goal of a

> retainer-based practice. Could

> it be as simple as charge a certain amount based upon time? (e.g. $50

> per 15 minutes). I

> don't like the " I'm keeping track of how long this is taking " set-up for

> both patient and

> doctor - but I also have no desire to get into visit coding. I've lived

> that life and I'm

> running away from it.

>

> That's enough for now...I have a thousand things on my " to figure out "

> list but hope this

> starts a conversation prior to IMP camp in a couple of weeks.

>

> Thanks for any opinions/insights...

>

> Chad Costley

>

[Guest guest]

I think it sounds great. I wanted to

do that here in Colorado,

but the state regulations are quite prohibitive for small groups (up to 50

people) and squelched it for me.

A. Eads, M.D.

Pinnacle Family Medicine, PLLC

phone fax

P.O.

Box 7275

Woodland

Park, CO 80863

www.PinnacleFamilyMedicine.com

From:

[mailto: ]

On Behalf Of chadcostley

Sent: Tuesday, May 20, 2008 1:34

PM

To:

Subject:

Re: Revenue model

Some further thoughts:

- I am going to approach small employers (less than 50 employees) - many of

whom don't

provide insurance at all or are contributing to employee HSA/high deductible

insurance

plans. " How about decreasing your contribution to your employee's HSA -

but provide

$1000 per year toward their retainer at my practice for those who choose

it? " Or - you

can't afford to ensure your patients - but what if you offered them access to

my clinic's

care and let them buy very high deductible insurance plans for catastrophic

events - the

math can work. There may still be a gap for specialty care - but curently the

gap is

infinite as they have no insurance at all. Here's the sell in the HSA case:

many currently

contribute $1000+ to HSAs and employees can use that money very inefficiently -

direct

access to specialists they don't need, branded meds rather than generics, etc.

How much

is it worth to an employer to have employees who can have an efficient virtual

visit with

their doc rather than missing a half-day of work to sit in a waiting room in

order to get a

test result and a med refill?

- It can be tricky depending upon the HSA - but there are ways that patients

can use their

HSA $ for the retainer - some won't allow this if the doc doesn't participate

in the high

deductible coverage plan - but some will - and for those patients this can

become

appealing. " $1000 out of my HSA and I have access to a primary care doc

that knows me

well " ...interesting

- I completely agree that this won't appeal to everyone - but I live in a city

of 6 million

people - and only need 480 paying patients to make it work...

Chad

> >

> > Chad,

> > Some thoughts:

> > 1) How much do you want to make? It seems to me that 600 patients

> > at $3/day = $657,000/year. Even if your overhead is around $200,000

> > (really high for an imp), that leaves you with a salary of

> > $457,000/year. If you are making that much, why worry about charging

a

> > fee per visit or even worse charging a fee for every visit above x

> > number/year? To me that seems potentially confusing for the staff (if

> > you have any) and the patient. Yes, you may have the patient who

> > " abuses " the system and needs to be seen regularly, but who

cares? You

> > should have the time to manage all the issues, do gentle problem

> > solving, etc.

> > 2) If you are concerned about offering reduced fee services within

> > your retainer practice, have you considered the " Robin Hood

model "

> > initiated by Bob Forrester? In it, you set up your practice as a

> > non-profit, charge a retainer fee to most, but use the extra income

to

> > offer free care to the uninsured in your community. See more at

> > www.stlukesfp.org <http://www.stlukesf

<http://www.stlukesfp.org/>

> p.org/>

> > 3) Who will take care of your patients outside your office? Will

> > you be following them to the hospital? If they are going to pay a

> > premium you may want to make sure this end is well covered. What

about

> > referrals? How are you going to make sure the patients are handed off

> to

> > the specialists without hiccups?

> >

> > Congratulation on your practice design. I hope some of these thoughts

> > and questions are helpful.

> >

> >

> > Revenue model

> >

> > HI all:

> >

> > I'm launching a practice in Atlanta late this year. Previous post

> about

> > the name has been

> > solved: Petoskey Health, LLC (tagline - " Exceptional Primary

Care " .

> Long

> > story on the

> > name but short is it's one part of a larger branding approach.

> >

> > Would love your input on my revenue model. I'm not going to accept

> > insurance - brain

> > just not hard-wired to deal with the nonsense. I'm exploring a

blended

> > revenue model of

> > retainer fees and per visit charges. I believe the keys are

simplicity

> > and striking the right

> > balance between access for those with lesser frequency of care needs

> and

> > incentives for

> > those with greater needs to join the practice rather than visiting it

> > frequently on a fee-

> > for-service basis. Trouble is that I'm off-the-chart passionate about

> > prevention - and any

> > fee for service structure fights against training patients about

> > proactive, primary

> > prevention. Here's the current concept (very open to not only

> suggestion

> > but outright

> > criticism if it seems unworkable):

> >

> > $3 per day retainer for full-membership in the practice. This buys

you

> > 2-3 visits per year

> > including a full physical (leading to a " wellness plan " for

the year),

> > direct access via phone

> > or email (i.e. some reasonable number of annual " virtual

visits " per

> > year - ?3-4?). And the

> > promise that the doctor won't have a panel size greater than 600

> > patients.

> >

> > Goal of 20% of the eventual 600 patients on a reduced fee (probably

> > sliding scale based

> > upon income)

> >

> > Maybe a fee structure that differs by age - but I'm somewhat reticent

> of

> > those as they add

> > complexity and the risk of offending people based on chronological

age

> -

> > especially as

> > biological age varies so much based upon health behaviors.

> >

> > Ideally, that would be the end of it with the exception of some per

> time

> > charge for patients

> > who need (or just want) more direct interaction with the doc than

> what's

> > outlined above. I

> > just want to put some reasonable limit on what people feel they're

> > entitled to for their $3

> > per day.

> >

> > Fee for service:

> >

> > Especially in the beginning when cash flow will be negative due to a

> > pure start-up, I'm

> > inclined to accept patients on a fee for visit/service basis. This

has

> > to be done cautiously

> > as I believe it can seriously undermine the overall goal of a

> > retainer-based practice. Could

> > it be as simple as charge a certain amount based upon time? (e.g. $50

> > per 15 minutes). I

> > don't like the " I'm keeping track of how long this is

taking " set-up

> for

> > both patient and

> > doctor - but I also have no desire to get into visit coding. I've

> lived

> > that life and I'm

> > running away from it.

> >

> > That's enough for now...I have a thousand things on my " to

figure out "

> > list but hope this

> > starts a conversation prior to IMP camp in a couple of weeks.

> >

> > Thanks for any opinions/insights...

> >

> > Chad Costley

> >

>