What Should a DPC Physician Pay Themselves? 10 Numbers Every Direct Primary Care Owner Should Know
Most Direct Primary Care physicians can tell you their panel size, their EHR, and what went wrong in year one. Far fewer can tell you what they should be paying themselves.
That gap is the reason this episode of My DPC Story exists. Nate Goodman, CPA, is the founder of Goodman CPA, an accounting firm that has worked only with Direct Primary Care and Direct Specialty Care practices since 2024. He is also a DPC patient in the Black Mountains of North Carolina, which means he sees the model from both sides of the exam room door.
Below are the 10 numbers Nate says every DPC owner should know, whether you are still writing a business plan or ten years into practice. If you would rather run your own numbers, the My DPC Story team built a free DPC financial calculator with Nate. You can grab it at mydpcstory.com.
Nothing here is legal or tax advice. It is a starting point for the conversation you should be having with your own CPA.
1. What should a DPC membership rate be?
Nate uses two anchors when helping a physician set a membership price.
The first anchor is your household budget. What does your family need each month to cover the mortgage, groceries, and insurance? Then, what would you like to make on top of that? That number is the starting point for working backward to panel size and pricing.
The second anchor clears the emotional part of pricing. Pull the average household income for your area from census data. Americans spend about 12 percent of household income on healthcare, and Nate points to reports showing DPC members save around $200 a month compared to insurance-driven care. His benchmark: price a family of four at 5 to 7 percent of the average annual household income in your area.
2. How underpriced are most DPC practices?
Nate's answer is 30 to 50 percent, and it usually is not the sticker price on the website.
When Goodman CPA pulls actual billing data from a new client, the discounts and free memberships show up. A practice listing $125 to $150 for individuals and $250 for families can be averaging $50 to $70 per member per month once every discount is counted.
The fix is not to remove every discount. It is to see the real average price per membership, then build a strategy for the free and discounted panel so the practice stays sustainable.
3. How much should a DPC enrollment fee be?
One to two months of membership.
An enrollment fee protects you from the patient who joins for one visit and cancels. It also creates a capital fund. Monthly memberships cover fixed overhead and salaries, so if ten new patients each pay a one-month enrollment fee, that is money you can set aside for the next piece of equipment or the next service line instead of pulling it from operating cash.
4. What is a healthy DPC profit margin with employees?
Once you start hiring, Nate targets a profit margin of about 30 percent.
Every hire, whether a medical assistant, an office manager, or a second physician, comes with a loaded cost that has to be saved for in advance. A healthy panel before the hire is what makes that possible.
5. What profit margin can a solo micro practice reach?
A solo physician with no payroll can reach a 70 percent profit margin.
One detail most owners miss: if you have elected S corporation status and pay yourself a salary, that salary gets added back when calculating the true margin. As Nate puts it, that is your money too. This matters in states like California where a medical practice cannot be an LLC and physicians end up as employees of their own corporation.
6. How many months of cash should a DPC practice hold?
Two ways to think about it. Set aside 10 percent of revenue each month, or build an emergency fund equal to three to six months of total expenses, including your own pay.
Three months of runway is enough time to fix almost any problem, from a slow enrollment season to a hurricane taking your town offline. Without it, Nate has seen physicians turn to commercial loans at 30 percent interest that take years to pay off.
7. How much of collections can a DPC owner pay themselves?
From day one, Nate recommends the three-account version of Profit First: an operating account, an owner's pay account, and a tax account.
Move 20 percent of collections into owner's pay and 15 percent into the tax account. That leaves 65 percent for overhead. In most first-year practices the tax account ends up overfunded, which means a bonus at tax time instead of a scramble to cover a surprise bill.
8. When is a DPC practice ready to hire a second physician?
Two signals need to be true.
First, you can afford the new physician's salary today and have three months of that salary saved. Practicing the outflow before the hire builds the habit and creates a small emergency fund for the new position.
Second, your marketing has to be measurable. Word of mouth built your panel around you. It will not automatically transfer to a physician nobody in your community knows yet. Nate has watched practices pay a recruiting fee, bring on a second doctor, and then watch new patient flow stall because nobody had numbers on where patients were actually coming from.
9. What does a hire actually cost beyond salary?
Multiply base salary by 1.25 to 1.4.
Employer taxes alone add 8 to 10 percent. Add a 401(k) match, per-physician software licensing, payroll administration, and the clinic time you lose to training, and the real number lands well above the offer letter.
10. What is a normal DPC termination rate?
Subscription businesses average 2 to 3 percent annual cancellation. Anything above that deserves a closer look.
The problem is that owners watch enrollments closely and terminations rarely. Cancellations usually happen through an office manager or an online button, so the reason never reaches the physician. Dr. Concepcion's approach at her own practice: a personal phone call to every departing patient, confirming their card is off file and their next physician or refills are lined up. It has produced far more useful information than any survey link.
Bonus: LLC versus S corp for a DPC physician
A PLLC pays 15.3 percent self-employment tax on net income from day one. On $100,000 of profit, that is a $15,000 bill before income tax.
An S corporation lets you pay yourself a reasonable salary below net income, so the same physician paying a $60,000 salary would owe closer to $7,000. The tradeoffs are a second tax return, payroll software, and a smaller qualified business income deduction. Nate puts the break-even point at $60,000 to $80,000 in net income.
What to do before the end of the year
If you are reading this in the fall, three moves matter now.
Schedule 90 minutes with your CPA and project your tax bill so April is not a surprise. Make planned equipment or vehicle investments only if the cash is already set aside, since buying things purely to avoid tax means spending a dollar to save about 30 cents. And if you want a 401(k) for this tax year, the setup window closes in early October.
Run your own numbers
The free DPC financial calculator built by Nate Goodman and the My DPC Story team walks through membership pricing, enrollment fees, owner pay, cash reserves, and hiring costs using the benchmarks in this article. Download it at mydpcstory.com.
My DPC Story listeners also get 25 percent off onboarding fees for Goodman CPA's full services, including tax advisory and fractional monthly accounting. Use the link on the episode page.
Listen to the full conversation with Nate Goodman on the My DPC Story podcast wherever you get your podcasts.
Frequently asked questions
What should a DPC physician pay themselves? Nate Goodman recommends setting aside 20 percent of collections for owner's pay from day one, with 15 percent going to a tax account and 65 percent to operating expenses. As the panel grows and cash reserves reach three to six months of expenses, owner pay can increase.
How much should a Direct Primary Care membership cost? A common benchmark is 5 to 7 percent of the average annual household income in your area for a family of four, cross-checked against what your own household needs to earn.
What is a good profit margin for a DPC practice? Around 70 percent for a solo physician with no payroll, and around 30 percent once the practice has employees.
How much should a DPC enrollment fee be? One to two months of the membership price.
How much does it cost to hire a second physician in DPC? Plan on 1.25 to 1.4 times base salary once employer taxes, retirement match, software, and training time are included, plus three months of that salary saved before the start date.
Should a DPC physician be an LLC or an S corp? The S corp election usually starts paying for itself at $60,000 to $80,000 in net income. Some states, including California, require medical practices to be professional corporations rather than LLCs. Confirm with your CPA and state medical board.
What is a normal cancellation rate for a DPC practice? About 2 to 3 percent per year. Higher than that is a signal to look at pricing, patient experience, or staff communication.
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