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The DPC equation: members times monthly fee, minus overhead, versus your W-2

Summary

How many patients a direct primary care practice needs to replace a salary comes down to three numbers: the monthly membership fee, the practice's annual overhead, and the income being replaced. Divide income plus overhead by twelve times the fee. At $150 a month, the federal ceiling for keeping members HSA-eligible, a member is worth $1,800 a year and each $100,000 of gross revenue takes about 56 members. In some states, statute sets the fee mechanics, and fees vary widely by market.

By Gale Editorial · Updated 2026-09-02. Every figure cited to a dated source. How we write.

The equation, and its three inputs

Members times monthly fee, times twelve, is gross revenue. Subtract annual overhead and what remains is the practice's pre-tax income, the number that stands against your W-2. Rearranged: the panel you need is your target income plus annual overhead, divided by twelve times the monthly fee. That is the whole model.

It is the ordinary small-business break-even shape. The Small Business Administration's break-even formula divides fixed costs by price minus variable cost per unit 1; in a membership practice the monthly fee is the price, overhead is the fixed cost, and the variable cost is what one more member consumes in absorbed labs, supplies, and card-processing percentage. The variable cost is small, and it adds up. Put an arbitrary $100 fee against an arbitrary $200 a year of per-member cost, both stand-ins that no source here supplies, and the contribution is $1,000 a year; the break-even panel is computed on the contribution, so a practice that ignores the variable term sets its target about 17 percent low at those numbers.

Two cautions travel with the equation: in some states the fee is a regulated object with specific statutory rules, so the arithmetic ends at your own state's text. And the equation prices a steady state; reaching the panel, then holding it against departures, is arithmetic of its own.

What monthly fee can you defensibly plug in?

Fee data worth trusting is scarce in the sources behind this page, and the most concrete of it is collected by a regulator in one state. Washington's registered direct practices report fees to the state insurance commissioner, and the 2025 report covers 99 of them: an average monthly fee of $185.65, up 20.3 percent from $154.29 in 2024, across a range that ran from $40 to $2,000 a month 2. That average is one state's regulated sample, and the qualification matters as much as the figure.

The distribution says more than the average. More than half of those practices, 52 of 99, priced between $61 and $120 a month, and county averages ran from $56 in Stevens County to $331 in King County 2. The same service category supports a nearly sixfold spread inside one state's borders, which is the argument for pricing from your own overhead and your own market. A registry average can also move because the roster changed rather than because prices did, so treat the level as the usable number and the one-year trend with suspicion.

A federal number has had gravity since January 2026, and it is $150. Public Law 119-21 amended the HSA statute so that a direct primary care service arrangement, defined as one whose sole compensation for the care is a fixed periodic fee, is not treated as a disqualifying health plan while the aggregate monthly fee per individual stays at or under $150, twice that for an arrangement covering more than one person, with the caps inflation-indexed for taxable years beginning after 2026 3. It is a tax-eligibility line rather than a price control. You may charge more; a member funding an HSA has a reason to care whether you do, and the full mechanics of DPC fees and the HSA are a page of their own.

A hybrid that bills insurance alongside a membership fee runs on different arithmetic entirely, and the DPC or concierge fork is worth settling before you price anything, because the statutory definition above turns on the fixed fee being the sole compensation 3.

Members per $100,000 of gross revenue

A monthly fee becomes annual revenue per member when you multiply by twelve, and after that the panel arithmetic is division. At the $150 federal ceiling a member is worth $1,800 a year, so every $100,000 of gross takes 56 members. The table runs five fee points: three from Washington's 2025 regulator data 2, the federal ceiling 3, and a round $100 for scale. Members are rounded up, since a fraction of a member pays no dues.

Monthly feeRevenue per member, per yearMembers per $100,000 of gross
$56 (Stevens County 2025 average)$672149
$100 (round number)$1,20084
$150 (federal HSA ceiling)$1,80056
$185.65 (Washington 2025 statewide average)$2,227.8045
$331 (King County 2025 average)$3,97226

Now suppose the income you are replacing is $250,000 and the overhead estimate is $110,000; both are stand-ins for yours. The practice must gross $360,000 a year. At the $150 ceiling that is 200 members; at $100 a month it is 300; at Washington's statewide average it is about 162. The fee decision moves the panel target more than any other single choice, which is why it deserves real scrutiny, not a number copied from another practice's website.

An arrangement covering more than one individual keeps its HSA treatment up to twice the cap 3, $300 a month in aggregate, so a household agreement at that line brings in $3,600 a year whether it covers two people or four. Every added person under one agreement lowers revenue per patient and raises clinical load, so household pricing deserves the same deliberate math as the individual fee.

Overhead, and the line it lands on

Overhead is the input you will estimate worst on day one, and the estimate belongs in two piles. The SBA's startup-cost guidance splits spending into one-time costs and recurring monthly ones, and advises counting at least a year of the monthly kind before you open the doors 4. For a membership practice the recurring pile is rent, malpractice coverage, clinical supplies, software subscriptions, absorbed labs, and the processor's percentage of every fee that clears.

Rent and malpractice premiums arrive whether the panel holds 40 members or 400, which makes them the fixed costs in the break-even formula; absorbed labs and processing percentages scale with the list, which makes them the per-member subtraction from each fee. An afternoon spent sorting projected spending into those two piles makes every number that follows it more trustworthy.

The line that ends the calculation is a tax form. A solo practice run as a sole proprietorship figures its net profit or loss on Schedule C of Form 1040: membership fees in, deductible business expenses out 5. That net figure is the pre-tax income the equation solves for, and it is the number that faces your W-2.

Which salary are you replacing?

The salary half of the equation should come from your own paperwork. Pull your last W-2, or the offer letter you are weighing against the leap, and resist reasoning from a national physician-pay figure: pay varies enough by state and setting that a national number describes nobody's decision. If you want the market backdrop, the Bureau of Labor Statistics publishes state-level wage estimates for family medicine physicians in its Occupational Employment and Wage Statistics tables.

Whichever figure you pick, write down what came attached to it. Employer-paid health coverage, a retirement match, CME money, paid time away: each was compensation that never appeared in the salary line, and the practice's Schedule C net has to buy the replacements at retail. A benefits statement from your current employer turns that from a guess into a list with dollar amounts, and the entity and self-employment-tax questions it raises are the math to run with a CPA, with your panel number in hand. Replace the whole package, or know which parts you are deciding to live without.

The panel is a flow with a clinical ceiling

A panel target is a level to hold, and members leave. They move, change jobs, gain employer coverage, or drift after a healthy year. Assume some share of the panel turns over annually, so the recruiting that fills it never fully stops, and revenue in the ramp years runs below the full-panel figure while overhead does not wait. The churn arithmetic of holding a panel level is its own page in this cluster.

At eight net new members a month, a 200-member panel is a 25-month project; at twenty a month it is ten months. Neither rate is a benchmark, and no reliable one appears in the sources cited here; they are stand-ins to replace with what your own market produces in its first quarter, and the lease, the software contracts, and the malpractice premium should be sized for the slower case.

The ceiling above the target is clinical. The service the fee sells is time, shorter waits and longer visits, and it degrades quietly as the list grows. What one clinician can carry at a given service level is caseload math, a separate calculation, and the right order is to run it first: a panel your revenue model wants and your calendar cannot serve converts, member by member, into churn. Seen from the patient's side the same constraint is access as the value story, the reason members pay at all. Hold the two numbers apart: the revenue target is the panel you need, the caseload ceiling is the panel you can serve, and the practice works only at fees where the first sits below the second.

Your state writes the rules of the fee

Read your state's statute before the arithmetic becomes a signed agreement. Washington's law requires a direct practice to charge its fee monthly, to cover every primary care service named in the agreement with it, to raise it for an existing patient no more than once a year, and to give at least 60 days' notice of any change; the statute sets no dollar cap 6.

Arizona's statute answers different questions, capping advance prepayment at twelve months of periodic fees, requiring the refund of unearned fees when an agreement ends early, and letting a health care insurer or other third party pay the fee without converting the agreement into insurance 7.

Neither text governs anywhere else. The lookup is your state legislature's code, searched for direct primary care or direct practice, often under the insurance title or the medical practice act; your medical board or insurance department page usually summarizes what applies, including whether a registration step exists, which is the apparatus behind Washington's fee report 2. A state with no statute at all is the case that earns counsel. Whether a membership agreement there reads as unlicensed insurance is exactly the question to put to a lawyer, draft in hand, before the first member signs.

Common questions

Divide annual fixed costs by one member's yearly contribution: twelve times the monthly fee, minus what serving that member costs in absorbed labs, supplies, and processing. A practice with $120,000 of fixed costs, a $100 fee, and $200 of per-member variable cost, figures chosen only to show the shape, breaks even at 120 members. Break-even is only the floor; the panel that replaces a salary sits above it by exactly the income you intend to draw.

No trustworthy national average appears in the sources behind this page. The concrete data is Washington's, where registered practices reported an average of $185.65 a month in 2025, up from $154.29 the year before, more than half of them priced between $61 and $120, and county averages spanning $56 to $331. That is one state's regulated sample. Price from your own overhead and market.

No. The $150 figure is a federal tax line, effective for months beginning after December 31, 2025. At or under it, and twice that for an arrangement covering more than one person, a fixed-fee arrangement is not treated as a health plan that blocks HSA eligibility; the caps are inflation-indexed for taxable years beginning after 2026. A practice may charge more. Members who fund HSAs then have an eligibility problem, and that trade belongs in your pricing decision.

The revenue equation sets no ceiling; the promise of access does. A panel must stay small enough to deliver the same-week visits and unhurried appointments the fee sells, and that number turns on visit length, member acuity, and administrative load. No reliable national benchmark for DPC panel size exists in the sources this page draws on, so build the ceiling from your own calendar arithmetic and let it cap the revenue model.

Yes. Members move, change jobs, gain employer coverage, or lapse; assume some share of the list turns over each year, so recruiting continues after the panel first fills. Model the ramp too: a practice growing from zero runs months or years below its full-panel revenue while rent and coverage bill at full price. A target with no churn allowance and no ramp plan describes the best month the practice will ever have.

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References

  1. 1.U.S. Small Business Administration (2026). Calculate your startup costs: Break-even point. U.S. Small Business Administration (sba.gov). linkThe break-even formula (fixed costs divided by price minus variable cost per unit) that the panel-size identity instantiates.
  2. 2.Washington State Office of the Insurance Commissioner (2025). Direct practices in Washington state: Annual report to the Legislature. Washington State Office of the Insurance Commissioner (OIC). link ✓Washington's 2025 regulator-collected fee data: the $185.65 average monthly fee (up 20.3% from $154.29), the $40 to $2,000 range, the 52-of-99 share priced between $61 and $120, the Stevens County ($56) and King County ($331) averages, and the fact that the report covers registered practices.
  3. 3.119th Congress (2025). Public Law 119-21 -- An Act To provide for reconciliation pursuant to title II of H. Con. Res. 14 (Sec. 71308, Treatment of Direct Primary Care Service Arrangements). U.S. Statutes at Large, 139 Stat. 326-327 (via congress.gov). link ✓The federal HSA treatment of DPC: a fixed-periodic-fee arrangement is not a disqualifying health plan while the aggregate monthly fee stays at or under $150 per individual (twice that for an arrangement covering more than one person), effective for months beginning after December 31, 2025, with caps inflation-indexed for taxable years beginning after 2026, and the sole-compensation definition.
  4. 4.U.S. Small Business Administration (2026). Plan your business — Calculate your startup costs. SBA.gov. link ✓Organizing overhead into one-time versus recurring monthly costs and counting at least a year of monthly expenses before opening.
  5. 5.Internal Revenue Service (2025). Tax Guide for Small Business (For Individuals Who Use Schedule C). Internal Revenue Service, Publication 334. link ✓Schedule C (Form 1040) as where a sole-proprietor practice figures its net profit or loss.
  6. 6.Washington State Legislature (2007). Chapter 48.150 RCW: Direct Patient-Provider Primary Health Care -- RCW 48.150.030, Direct fee.. Revised Code of Washington (RCW), Washington State Legislature. linkWashington's direct-fee mechanics: a monthly fee covering the agreement's primary care services, no more than one increase per year with 60 days' advance notice, and no statutory dollar cap.
  7. 7.Arizona State Legislature (2025). 44-1799.94. Direct primary care agreements; fees. Arizona Revised Statutes, Title 44, Chapter 11. link ✓Arizona's rules: advance prepayment capped at twelve months, refund of unearned fees on termination, and third-party payment permitted without the agreement becoming insurance.

https://www.gale.care/for-providers/se-dpc-panel-revenue-math · 7 sources. Competitor details are cited to dated public sources and maintained as they change; figures are estimates, not commitments. Synthetic demonstration.

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