Professional services
Medical Practice Membership Revenue Calculator
Works membership revenue, where the model has regulatory boundaries worth knowing first.
Result
Agreements often earn little on the fee alone. They are worth having for the access, the retention and the work members buy without shopping around, so judging them on the fee margin alone undervalues them.
Get a Free Business AuditHow the calculation works
Members times the periodic fee, less the cost of delivering what the membership includes, giving contribution with retention determining the surviving base. Membership models trade fee-for-service volume for predictable revenue and a smaller panel, which changes the practice's economics fundamentally rather than adding a revenue line.
What moves the number
- Members and the fee, against the panel size that supports.
- What the membership includes and the time it consumes.
- Retention, which compounds the base.
- Whether the practice also bills payers.
Where this one goes wrong
A membership fee charged for services already covered under a payer contract raises serious problems, and arrangements involving Medicare patients in particular require care about what the fee may cover and how the practice participates. Membership and retainer models also touch state insurance regulation in some states, since a promise of future care for a periodic fee can resemble insurance. These are questions for counsel before launch rather than after. Commercially, the model only works if the panel is small enough to deliver what was promised.
Before you quote
- Obtain legal review of the model before offering it.
- Do not charge membership fees for services a payer contract covers.
- Set the panel size by what the promise can actually deliver.
Where the rules come from
Questions
About this calculator
Can a practice charge a membership fee to insured patients?
Not for services already covered under the payer contract, and arrangements involving Medicare patients require particular care about what the fee covers and how the practice participates. This needs legal review before launch rather than afterwards.
Is a membership model regulated as insurance?
It can be, in some states, because a promise of future care for a periodic fee resembles insurance. Several states have legislated to exempt direct primary care arrangements specifically, and the position varies, so the state's own rules decide it.
What makes a membership model fail commercially?
A panel too large to deliver what was promised. The value members pay for is access, and a practice that signs up more members than its access promise can support loses them quickly and reputationally, which is harder to recover than a slow start.
The formula
recurring revenue = members x annual fee; total profit adds the margin on pull-through work
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How to use this calculator
- Agreements in force. Enter your own figure; the page starts at 180.
- Annual fee ($). Enter your own figure; the page starts at $0.
- Cost to deliver one ($). Enter your own figure; the page starts at $0.
- Renewal rate (%). Enter your own figure; the page starts at 76%.
- Extra work per member per year ($). Repairs and replacements members buy because you are already there.
- Margin on that work (%). Enter your own figure; the page starts at 58%.
The result updates as you type, so you can try a figure, see what it does to recurring revenue, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Agreements in force | 180 |
| Annual fee | $0 |
| Cost to deliver one | $0 |
| Renewal rate | 76% |
| Extra work per member per year | $190 |
| Margin on that work | 58% |
What comes out
| Result | Value |
|---|---|
| Recurring revenue main result | $0 |
| Profit on the agreements | $0 |
| Profit on pull-through work | $19,836 |
| Total gross profit | $19,836 |
| Members still there next year | 137 |
$0 of recurring revenue, earning $0 on the agreements themselves and $19,836 on the work members bring back. The second number is usually the reason to sell them.
What each figure means
- Agreements in force
- A number, between 0 and 100000, starting at 180.
- Annual fee ($)
- A money amount, starting at $0.
- Cost to deliver one ($)
- A money amount, starting at $0.
- Renewal rate (%)
- A percentage, between 0 and 100, starting at 76%.
- Extra work per member per year ($)
- Repairs and replacements members buy because you are already there.
- Margin on that work (%)
- A percentage, between 0 and 95, starting at 58%.
What the results tell you
| Result | What it is |
|---|---|
| Recurring revenue | The headline result. A money figure. |
| Profit on the agreements | A money figure. |
| Profit on pull-through work | A money figure. |
| Total gross profit | A money figure. |
| Members still there next year | A number. |
Estimating is the easy part
The jobs you never hear about cost more than the ones you mis-measure. BDEVY builds the marketing, systems and automation that bring them in.