How One DPC Practice Built a Financially Sustainable Healthcare Model - Without Insurance
- Maryal Concepcion
- Mar 1
- 7 min read
DIRECT PRIMARY CARE | HEALTHCARE ECONOMICS | PHYSICIAN BUSINESS
Dr. Matthew Hitchcock of Hitchcock Medical Group in Chattanooga, Tennessee has spent over a decade proving that direct primary care (DPC) is not just a better way to practice medicine, it's a smarter business model. Here's how he did it, and what it means for the future of primary care economics.
The Problem: Primary Care Is Treated as a Loss Leader, Not an Asset
In the traditional fee-for-service insurance model, primary care physicians are rarely valued for what they do in the exam room. The real money is downstream: lab orders, imaging referrals, specialist visits, and elective surgeries that primary care generates for hospital systems. That misalignment between where value is created and where it's captured is at the root of America's primary care crisis.
"Primary care is treated as a loss leader," says Dr. Hitchcock. "Larger systems want to buy up primary care not for its intrinsic value, but for all the downstream revenue it generates. The unit of care isn't the doctor-patient relationship... it's what value it can bring later."
This insight, forged over years of practicing in both military medicine and traditional fee-for-service settings, is what drove Dr. Hitchcock to launch Hitchcock Medical Group as a pure direct primary care practice more than a decade ago. No insurance billing. No downstream incentives. Just a membership-based model built around one thing: the doctor-patient relationship.
What Is Direct Primary Care? A Quick Primer
Direct primary care (DPC) is a healthcare model in which patients pay a flat monthly membership fee - typically between $50 and $150 - directly to their physician. In exchange, they get unlimited access to their doctor: same-day appointments, telehealth, direct texting, and extended visits that can last an hour or more.
There are no insurance claims, no co-pays, and no billing codes. It's a capitated model (meaning the physician is paid whether the patient is seen or not) which flips the incentive structure entirely. The physician's goal becomes keeping patients healthy and out of expensive care settings, not maximizing visit volume.
DPC practices typically cap their panel at 300–600 patients, compared to 2,000–3,000 in a traditional insurance-based primary care practice. Smaller panels mean more time, better care, and dramatically lower burnout rates for physicians.
The Hitchcock Model: Building Economic Sustainability Layer by Layer
What makes Hitchcock Medical Group a compelling case study in DPC economics isn't just the membership model — it's the deliberate, sequenced way Dr. Hitchcock built financial sustainability over time. He describes it as solving friction points one at a time.
Layer 1: The DPC Membership Foundation
The core of the business is the DPC membership. Patients pay a predictable monthly fee for access to their physician. This creates stable, recurring revenue — a stark contrast to the unpredictable reimbursement cycles of insurance-based practices. From day one, Dr. Hitchcock operated as a pure DPC practice, choosing not to take a hybrid approach with partial insurance billing. "We jumped in with both feet," he says. "Pure DPC. No hybrid."
Layer 2: In-House Pharmacy
As the practice grew from a solo physician to a multi-provider group, medication dispensing, a common DPC perk, became a significant operational burden. What had once taken minutes now required nearly a full-time staff member to manage refill requests, ordering, labeling, and inventory.
The solution came from an unexpected source: a retail pharmacist unhappy with his job who reached out cold. Dr. Hitchcock brought him on as a contractor one day per week, and watched the efficiency gains immediately. That eventually grew into a fully licensed retail pharmacy which now serves not only DPC members but outside patients and even other DPC practices in the Chattanooga area.
The economics are significant: the pharmacy generates revenue independent of DPC membership, diversifying the practice's income streams and creating community visibility that drives new patient acquisition.
Layer 3: Cash-Only Imaging Center
The imaging center, co-founded with a radiologist from medical school, may be the most powerful economic differentiator in the Hitchcock model. Offering CT scans, X-rays, and ultrasounds at transparent cash prices, the center eliminates prior authorizations entirely and dramatically compresses wait times.
Consider the real-world economics: a CT scan at a traditional imaging center in Chattanooga costs patients upward of $2,000. At Hitchcock's imaging center? $350 available the same day. For a patient presenting with abdominal pain, that means a same-morning phone call, a 30-minute in-office visit, a walk-down-the-hall CT, a texted radiologist review, and a surgical consultation booked the same afternoon — all without a single insurance authorization.
"The wheels come off when you have a patient in agony and insurance tells you it will take seven to ten days to determine if a CT is medically necessary," Dr. Hitchcock says. "Their answer was, 'If it's that urgent, just send him to the ER.' There's no cost savings in that at all."
Obtaining the necessary certificate of need and state licensure was a nearly two-year process — a regulatory hurdle Dr. Hitchcock notes actually suppresses competition in the imaging space. But clearing it created a durable economic moat for the practice.
Why Primary Care Cannot Be the Profit Engine, And What Should Be Instead
One of the most important economic insights Dr. Hitchcock shares is counterintuitive: in a sustainable DPC model, the primary care membership should not be the primary profit driver. It sets the foundation, but trying to extract significant margin from primary care memberships is a recipe for the same dysfunction that plagues insurance-based medicine.
This is exactly what his MBA analysis of One Medical revealed. Tracking their public financial statements while studying accounting, Dr. Hitchcock noticed that One Medical's per-patient losses increased as the company scaled. "It wasn't a scaling problem. It was a core business model problem," he explains. "They were trying to extract value from primary care itself, and that just doesn't work at scale."
In the Hitchcock model, primary care initially subsidized the imaging center and pharmacy during their early phases. Over time, those ancillary services became independent revenue generators freeing primary care to fulfill its true purpose: relationship-based, prevention-focused medicine without financial pressure to overserve or underserve patients.
The MBA Advantage: Speaking the Language of Finance
Dr. Hitchcock pursued his MBA roughly seven years into running Hitchcock Medical Group — not at the start, but once he recognized the gaps in his financial fluency. "When our lender asked for a P&L, I didn't know what that was," he admits. "The MBA taught me the language of business the same way medical school taught me the language of medicine."
That fluency paid dividends when planning capital investments like the imaging center. Dr. Hitchcock was able to build pro forma financial projections, model cash flow scenarios, and communicate directly with CFO-level stakeholders - skills that are rare among physicians but essential for anyone building a multi-service medical enterprise.
For physicians considering DPC, especially those eyeing ancillary service expansion, his advice is clear: get financially literate. You don't need an MBA, but you need to understand a balance sheet, a cash flow statement, and the concept of capital budgeting. It changes the ceiling of what you can build.
Can DPC Scale? The Economics of Getting It Right
The question of DPC scalability is hotly debated in physician communities. Dr. Hitchcock's answer is nuanced: yes, DPC can scale but not through large corporate consolidation, and not by treating primary care as the value-extraction engine.
The magic of DPC, he argues, lives at the one-to-three physician practice level. At that scale, the doctor-patient relationship remains personal, overhead stays manageable, and the capitated model creates aligned incentives. Add layers of management, national infrastructure, and investor return expectations, and you recreate the dysfunction of the insurance system in a different wrapper.
True scaling looks different: thousands of independent one-to-three physician DPC practices, supported by shared infrastructure for labs, imaging, pharmacy, and administrative services. Think of it as a franchise model without the franchise: small, physician-owned practices that remain autonomous but benefit from shared tools and systems.
"As much as if we could just get individual docs out there - one doc, two doc groups - and have those everywhere, that is really how you scale DPC," Dr. Hitchcock says. "There's definitely something magic about a one-to-two doc DPC practice that you lose when you go big corporate."
Health Insurance ≠ Healthcare: The Access Problem DPC Solves
Perhaps the most urgent economic argument for DPC in 2025 and 2026 is the growing number of Americans who simply cannot afford health insurance. Increasingly, Dr. Hitchcock is hearing from patients who have made the calculation: DPC membership plus a high-deductible catastrophic plan (or no insurance at all) is both more affordable and more functional than a traditional insurance plan.
"People are reaching out and saying, 'I can't afford health insurance this year. I'm going to have you because you can handle 99% of what's going to happen to me in a year,'" he says. "That has really positioned us in a unique place this year especially."
This is a profound economic shift. DPC is no longer just a premium concierge option for the wealthy - it's becoming a rational financial choice for middle-income Americans squeezed by insurance premiums that have outpaced wage growth for decades. The physician, the imaging center, and the pharmacy all bundled together at transparent, affordable prices is a genuine alternative to a broken system.
Key Takeaways for Physicians Considering DPC
1. Start pure, not hybrid.
The temptation to keep one foot in insurance billing often creates the worst of both worlds — administrative burden without the alignment benefits of a true capitated model.
2. Solve friction points with ancillary services.
Pharmacy and imaging aren't just patient perks — they're revenue diversification strategies that reduce dependence on membership fees and create community-facing value.
3. Don't make primary care carry the profit burden.
Let the membership model generate stable, predictable revenue. Build ancillary services to generate growth capital and financial resilience.
4. Get financially literate.
Understanding cash flow, capital budgeting, and pro formas isn't optional if you want to expand. Speak the language of finance or find a partner who does.
5. Think small to scale big.
The future of DPC isn't one giant corporation. It's thousands of small, physician-owned practices with shared infrastructure. That's the model that preserves what makes DPC work.
The Bottom Line
Dr. Matthew Hitchcock's practice is a living proof of concept: direct primary care, structured thoughtfully and expanded deliberately, can be economically sustainable, clinically excellent, and genuinely transformative for patients. The model doesn't require venture capital, private equity, or a national footprint. It requires a physician who understands both medicine and money — and who refuses to let anyone else define what good care looks like.
To hear the full conversation with Dr. Hitchcock — including his thoughts on VC and PE in healthcare, the future of DPC technology, and what he'd keep if primary care was stripped down to the studs — listen to his episode of My DPC Story.
RELATED TOPICS: Direct Primary Care · DPC Economics · Healthcare Business Model · Primary Care Physician Entrepreneurship · Cash-Pay Medicine · DPC Pharmacy · Independent Practice · Healthcare Reform · Physician Burnout Solutions · DPC Scaling
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