$$ talk, my favorite
General money talk + a foray into payment models
First, money, in general
Money has historically been one of my least favorite and most avoided thought topics. As someone who is purpose-driven, I enjoy thinking about the outcome of my endeavors in terms of human benefit rather than financial outcome. That being said, I’ve learned that financial security, and the freedom it imparts, is not only important to me personally, but key to the success and sustainability of my endeavors.
A little context. I am the youngest child of a refugee/immigrant family, born in the United States after my parents’ efforts and strategy earned them financial security. I carry some ingrained frugal habits, but I never grew up with lack. Up until the last couple of years, I have always assumed that there was a “right” way to manage money and that I didn’t have the right temperament or mental chops to do it right.
It turns out (surprise!) that I am actually capable of understanding my own financial situation and making decisions based on my personal values and what is important to me. I could go on a rant here about how professional industries—medicine included—can make things more confusing for their own benefit (i.e. jargon, feeding disempowerment, espousing black/white thinking), but I will leave it for another time.
A couple things that helped me along:
Expanding my mind/learning from others’ expertise: Several years ago, in a blind flurry of activity motivated by intense emotional distress/divorce, I signed up for several sessions with a fiery Asian American financial coach based in Nevada. It consisted of 3-5 virtual sessions during which I felt alternately self-conscious, defensive, empowered, and sweaty, and she patiently walked me through templates and basic strategies to understand my spending and assets at a granular level. Off I galloped, documenting all of my spending in monthly spreadsheets. The data I gathered helped me better understand my spending patterns and better forecast budgetary needs for the future.
During this time, I also read The Psychology of Money by Morgan Housel (recommended to me by DeeAnne Chomiak). The combined effect of these activities freed me from (1) the constant anxiety (rooted in ignorance/avoidance) that I was spending too much and (2) the notion that there is a standardized “right” way to use, think about, and manage money. Here is a nice visual summary of The Psychology of Money, if you don’t have the bandwidth to read it right now:
I should note that one of you read and recommended I Will Teach You to be Rich by Ramit Sethi, which I intend to read as well. The title is a bit much, but it seems like a clear, concise, and practical resource.
Practicing independence/developing my compass: The concept of money and money management is fraught with emotional associations. In my case, I was used to deferring to my family for direction. Although taking in others’ input can be helpful, it’s important to invest time developing your internal compass independent of others’ philosophies. Your financial philosophy/plan should reflect your own circumstances, goals, and personal values, not others’ ideas of what they should be. One question I ask myself over and over: what is enough?
Taking inventory with my partner: As it became more and more clear that we were going to build a life and businesses together, Colin and I sat down and inventoried our personal finances. We had avoided it for years because talking about money is awkward and uncomfortable. It can bring up all sorts of things: different values and strategies, emotions, insecurities, power dynamics… But we felt much better after going through the exercise. It turns out that both of us are relatively conservative spenders, take pleasure in being resourceful, and are tolerant of a modest lifestyle in service of having less pressure to make a bunch of money, fewer expenses/bills to keep track of, and more savings to rely on during times of transition (such as this one). We learned that though our financial strategies seem very different on the surface, they are complementary in the larger scheme.
Now, solo practice payment models
This topic deserves its own post, but it’s less intimidating for me to start the discussion here, so that is what I’ll do. First, I should mention the first fundamental decision I’ve been faced with:
Insurance-based payment,
Direct pay, versus
Hybrid of the two (i.e. contracting with some insurance plans, also taking direct pay patients)
If you haven’t noticed, I don’t really believe in “right” answers, but based on my observations, it is extremely difficult to start up an insurance-based solo/small practice in the current healthcare ecosystem. The administrative requirements involved in insurance relationships basically requires an administrative hire. An exception is if you inherit a running practice + facilities + staff — not my scenario. As someone who believes in starting lean with as little incurred debt as possible, I don’t consider contracting with insurance companies an option right now.
We’ll see if health policy changes and artificial intelligence advances shift this in coming years.
This leaves direct pay vs. hybrid. Again, any contracting with insurance companies increases overhead and administrative burden, and unless I sense/hear about a large community need for me to be a hybrid practice, I’ll move forward with direct pay. It is a simpler, more transparent payment model, conducive to a young solo practitioner starting lean.
What follows are loose thoughts on a couple direct payment models I’ve come across and researched over the last several years while chewing on how I can create a sustainable life as an independent doctor and what I want my financial relationship with my community and patients to look and feel like. This is going to be an ongoing topic of documentation and discussion.
Monthly membership fee: The “monthly membership fee” has become a hallmark of direct pay practices, adopted by solo practices as well as big corporations like OneMedical. This concept may sound relatively straight forward, but I’ve observed a lot of diversity in how people design and structure their payment models. For example, Dr. Michel Accad, an advisor/friend of mine, has a relatively straightforward fee schedule posted on his website ($375 initiation fee, then $125/month). Another practice in Santa Cruz, California has a more complex tiered model, $100 initiation fee plus:
Current reflections: Some form of monthly membership fee will likely be a part of my payment model. A few concepts I’m chewing on:
Pricing: My strategy thus far has been to consider what net annual income is *enough* for me, my family, and my goals. Then, I plan to work backwards from there to determine the associated gross annual income (i.e. adding in expenses and taxes). I created a rudimentary spreadsheet that allows me to play around with the relationships between the following variables:
take home pay (yearly)
take home pay (monthly)
ballpark monthly expenses (including approximate taxes, rent, etc.)
membership prices (per patient per month), and
number of patients.
I anticipate that this spreadsheet will get more detailed and precise as I get closer to opening my practice.
Accommodating diverse financial situations: Many direct primary care practitioners end up giving a fair amount of free care. I assume this will occur once in a while, but I also need my practice to be self-sustainable. How do I accommodate people with unstable financial situations while also getting paid fairly for my services?
Robin Hood: Early on in researching direct primary care, I spoke with a family physician who co-founded a medical clinic in San Jose, California. At that time, she was experimenting with a Robin Hood payment model, where she offered concierge medicine services to those who could afford it, simultaneously providing free care and services to the surrounding underserved community (where her family and she lived, as well). It was several years ago that we spoke, and at the time, the model was not yet self-sustainable, and she was still relying on grant money.
Current reflections: There’s something appealing about the idealism of this model, but I personally don’t like the idea of having one set of patients that pays a premium and another that is receiving free care. I’d worry about the pressure to care for people differently depending on how much they are paying. For that reason, this model is probably out for me, but I’d be interested in others making it work.
Would a blinded sliding scale monthly membership work?
Keep in mind, this is me in dream state, but I’m imagining an interface where my patients could interact with a sliding scale, say $50-$100, and choose how much to pay each month depending on their current financial situation and medical needs. Ideally, to prevent differential treatment, I would not be able to see how much they paid, just whether they did or did not. All of this would be honor system (i.e. I do not want to sort through your W-2s), and I’d have to plan it such that I’d be okay financially if everyone chose to pay the minimum every month. I think it has a chance of working in a smaller community where patients get to know their doctor as a whole person.
I’ll pause here and leave more payment model discussion for a later date. A few of you are interested in ways to connect re: independent practice planning and/or future of medicine talk. I suspect these types of forums will come in time as our community grows. They are on my mind.
Thanks for being here to receive my built-up brain matter.
To thinking about money… just enough,
Michelle