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Health care strategist Dana Y. Lujan discusses her article “Is direct primary care sustainable in a downturn?” Dana explains how the rising cost of living and subscription fatigue are challenging the retail model of direct primary care for middle-class families. She contrasts this fragility with the stability of employer-sponsored models where organizations absorb the cost to ensure consistent access for their workforce. The conversation highlights the critical need to align medical business models with the actual economic capabilities of the communities they serve rather than relying solely on ideological goals. Join us to explore how financial strategy determines the longevity of patient care.

This episode is presented by Scholar Advising, a fee-only financial advising firm specializing in providing advice for DIY investors. If you want clear, actionable strategies and confidence that your financial decisions are built on objective advice without AUM fees or commissions, Scholar is designed for you. Physicians often navigate complex compensation structures, including W-2 income, 1099 work, production bonuses, and practice ownership. Scholar’s highly credentialed advisors guide high-earners through decisions like optimizing investments for long-term tax efficiency and expert strategies for financial independence. Every recommendation is tailored to the financial realities physicians face.

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Transcript

Kevin Pho: Hi. Welcome to the show. Subscribe at KevinMD.com/podcast. Today, we welcome back Dana Y. Lujan. She is a health care strategist. Today’s KevinMD article is “Is direct primary care sustainable in a downturn?” Dana, welcome back to the show.

Dana Y. Lujan: Well, thank you, Dr. Pho, for having me.

Kevin Pho: Tell us what this latest article is about.

Dana Y. Lujan: This article was prompted by a very public debate around HSA eligibility for direct primary care membership. What caught my attention was not the debate itself, but the response to it. The conversation focused heavily on regulations and philosophy, but almost no one paused to examine the underlying economics. Before continuing a broader employer discussion, I realized it was important to step back and clarify a foundational distinction. Retail DPC and employer-sponsored DPC operate under very different economic models, and treating them as interchangeable leads to confusion around affordability and sustainability.

Kevin Pho: Give us a distinction between those two models just for some context before we talk about your article.

Dana Y. Lujan: With retail DPC, that is based on household discretionary income. As long as your household income is stable month after month, you are going to be able to afford the membership or subscription model for a retail DPC. On the employer-sponsored DPC side, it is funded by your organizational strategy and benefit design. Who is paying always determines the stability of the type of economic model that you have for your plan.

Kevin Pho: We have talked about retail DPC multiple times on this podcast, but for those who aren’t familiar with that model, just give us a range of typical subscription prices for common retail DPC practices.

Dana Y. Lujan: You have your single individual anywhere between $70 to $150 a month per person. Then you have your family, maybe two adults plus one child, at $300, and then you tack on additional fees which are like $45. It just really depends on which market you are in and what the provider is offering. This includes unlimited visits and no insurance billing. It is a very narrow plan. You are looking at 600 patients, and when your patient calls in and needs to be seen right away, either they get seen that day or the next day.

Kevin Pho: When it comes to an economic downturn, and for a segment of the population this would classify as a downturn as inflation is rising and the cost of pretty much everything is rising, how does that affect the viability of retail DPC practices?

Dana Y. Lujan: Then you have to look at it as behavioral economics. Behavioral economics explains how a family prioritizes spending when budgets tighten. When discretionary income contracts, preventive care subscriptions are affected. As a family or even as an individual, let’s say if rent goes up $200 and my DPC plan is $150 and I am not seeing a provider every single month, I am going to say: “I am not going to be part of the plan because my rent went up. I need to put that money towards it.”

There are those nuances. Because our society is so subscription-based, retail DPC becomes a question of: “Can we afford to cut it out?” Do we utilize it? When the economy is stable and when your income is stable, you can tolerate saying: “I don’t see this doctor often, but we have a great relationship. They can’t see me today, but they can see me in two days.” There are nuances that you are able to tolerate, but when your budget starts tightening, that is when it starts becoming a little bit more about: “Do we really need it, or do we not?”

Kevin Pho: From the perspective of the DPC practice itself, does that mean they typically locate in areas that are socioeconomically less affected by any economic downturns?

Dana Y. Lujan: Yes. If your office is in an affluent neighborhood or a neighborhood where, even if the economy is not so great, they are still able to afford that subscription plan, then you are OK. But let’s say you are in a middle-class area. When I say middle class, I don’t mean upper class. Middle-class America right now is getting hit tremendously by this inflation.

Kevin Pho: What are some levers that the DPC practice can potentially pull when it comes to economic downturns or if they find themselves in a middle-class area? Is there anything financially they can do to help the financial viability of their practice?

Dana Y. Lujan: This is why retail DPC practices diversify through employer contracting, small businesses, and mid-sized businesses. You are not just set on the retail DPC. If you ask most of these DPC providers, they prefer direct-to-consumer because it is simple. When you start venturing out into the employer perspective, small to medium-sized businesses, you don’t know what you are venturing into regarding what kind of accountability and paperwork will be required. When I say accountability, I don’t mean clinical; I mean paperwork and quality metrics that the employer might set aside for that funding.

Kevin Pho: How difficult is it for a DPC practice to contract with an employer? You mentioned some bureaucracy, but for those who aren’t familiar, how difficult is it for a practice to find and contract with an employer?

Dana Y. Lujan: That is a very good question. I know in the market that I am in, if you spend five to 10 hours a week, you can find a small employer. A small employer might have a high-deductible plan or might not have insurance for their employees but would like to offer an incentive. This is kind of like a workaround. Depending on the market you are in and how advantageous you are with time, you are able to find those small employers rather quickly. It doesn’t happen overnight, but it does happen.

For instance, if it is a school district, they put out RFPs. Sometimes that can be within 90 days to six months, and then you are hauled in within the beginning of the year. Timing is essential. If you are a very small business, meaning probably up to a hundred employees, you can kind of roll that in within 30 to 60 days.

Kevin Pho: I know that you are a consultant and you help out DPC practices. What are you advising them when it comes to retail versus employer? Are you advising them to do a hybrid, a little bit of both so they compensate for each other? What kind of advice do you have for DPC practices that are just starting out?

Dana Y. Lujan: For DPC practices that are just starting up, I tell them always: Let’s do a hybrid right out the door. If we can get a small employer (and I actually look for ones that are under 25 employees), that is still incentive and revenue coming through the door while you are building up your retail side of the business. I try to go both. I am very good at knowing where the market is at, so I can cross-reference who I know or how to get through the door to help that client with the employer.

Kevin Pho: From the employer standpoint, what incentives do they have to choose a DPC practice versus a traditional menu of health options that most employers give their employees?

Dana Y. Lujan: If you are a small employer with no insurance, that is an incentive for your employees because sometimes your employees might not have insurance at all. Even if they pay a hundred dollars a month or you take on $50 a month, that is still an incentive because now they have a doctor to go to when they are sick. They get to build up that relationship and that trust.

If it is a mid-sized to large employer, a lot of the DPC physicians will say, “Hey, we drive costs down.” That is not actually true. What they do is help with utilization. That is the number one benefactor with having a primary care as well as a DPC: You help with that utilization. Does it sometimes draw costs down? Yes. But does it always? No, because when you are looking at the bigger picture of health care right now, it is pricing. You can help with utilization, but you can’t help with the hospital pricing or the pharmacy pricing.

Kevin Pho: When it comes to the hybrid model that you suggest DPC practices take, approximately what percentage do you recommend? Is it 50-50? Is it skewed one way or the other towards retail versus contract? What would be an ideal mix?

Dana Y. Lujan: I think it really goes back to the provider and what they are looking for. The reason why I say that is because if you have one employer that is 250 patients and you are striving to 600, that is the majority. Then you have to fit the rest of the retail. Let’s say you have another employer that is another 250; well, then that is only 100 retail. But let’s say these other employers decide they are going to relocate their business to the other side of America; then you lose 250. You have to kind of play it where the majority of your practice is pretty much retail, and then you have your employer contracts where it is a significant amount but not so significant that if they decide to go a different way with their contracts, you are left struggling.

Kevin Pho: For those DPC practices that fail, especially during economic downturns, is the reason simply that they just don’t have the right mix of retail versus employer customers? Is it skewed too much one way or the other? What are you seeing as the main reason?

Dana Y. Lujan: No. I think the reason why a lot of these DPCs fail within the first two to three years is because when they first started off (and I am not speaking about the new doctors; it is doctors who are transitioning), they probably didn’t have a ramp-up period of really solidifying their mix between retail and employer. So that is always the number one reason.

Number two is market analysis. If your market analysis is off, let’s say you are transitioning or you are a new provider and you are going into a market but you notice six other DPCs all around you, that makes it very hard to obtain new patients because you are all after the same thing.

Number three I have seen is the pricing. Sometimes I will wonder whenever I see a DPC: “Oh, your price is 50. OK, how is this happening?” Then I see their menu, and it is a menu. I’m like: “OK, why do you have this? You are putting yourself at 50, then you have all this menu with different pricing. What are you trying to accomplish?” Their clarity is off. You need clarity because I am not going into a restaurant to order; I am trying to find a doctor to build that relationship and trust. It is a mixture of things in that regard.

Kevin Pho: We are talking to Dana Y. Lujan. She is a health care strategist. Today’s KevinMD article is “Is direct primary care sustainable in a downturn?” Dana, let’s add some take-home messages that you want to leave with the KevinMD audience.

Dana Y. Lujan: Access improves care, but economics determines sustainability. Think like a CEO, validate like a CFO, and be clear about who is paying, who benefits, and how savings are captured.

Kevin Pho: Dana, as always, thank you so much for sharing your perspective and insight and thanks again for coming back on the show.

Dana Y. Lujan: Thank you for having me again.