Do it right and the MDPP can really pay off
When discussing Medicare's Diabetes Prevention Program with health club managers, they eventually always ask me: “How much money can we really get back from Medicare on this program?” Here are some insights into how this program can be a lucrative offering to positively affect your bottom line.
Working with a Medicare reimbursement schedule is often new territory for fitness clubs. First, let’s get a handle on what reimbursements are possible and then we’ll talk more about the full revenue impact of the program.
| Performance Goal |
If participant loses 5%
|
Without 5% weight loss
|
|---|---|---|
| 1st session attended | $25 | $25 |
| 4 sessions attended in Months 1-6 | $50 | $50 |
| 9 sessions attended in Months 1-6 | $90 | $90 |
| 2 sessions attended in Months 7-9 | $60 | $15 |
| 2 sessions attended in Months 10-12 | $60 | $15 |
| 5% weight loss achieved | $160 | ineligible |
| 9% weight loss achieved | $25 | ineligible |
| Total Year One Possible Reimbursement | $470 | $195 |
| 2 sessions in Months 13-15 | $50 | ineligible |
| 2 sessions in Months 16-18 | $50 | ineligible |
| 2 sessions in Months 19-21 | $50 | ineligible |
| 2 sessions in Months 22-24 | $50 | ineligible |
| Total Reimbursement for Entire Program | $670 | $195 |
Under the heading of making hay while the sun is shining, you can see that the potential to earn reimbursements from year one is the highest. Your initial time investments are higher but participant engagement is likely to be higher during that first year, too. Therefore, it's crucial to capture early enthusiasm to help cement a new healthy lifestyle and keep them coming back for the program sessions. Participant retention is going to be a key marker to watch as your program ages and more people are moving through the phases.
Medicare strictly disallows a fitness center from requiring that a Medicare beneficiary purchase a club membership. However, if you are already offering a short-term program like Exercise is Medicine, p.r.e.p. or 60 for $60 you can extend that offer to your DPP enrollees as a supplemental program. This will allow them to have full access to your facility for the duration of the fitness program, help them become comfortable with the club environment and gain the confidence they need to go ahead and purchase a regular membership. A DPP participant can always simply elect to purchase a regular membership contract, too. Sometimes, it’s nice to have that extra layer of hand-holding to get them past any anxiety that might exist.
Let’s take a look at a simple model to see potential revenue for a 10-member cohort (a group of participants) using some industry averages for membership fees and other charges:
| Expected Revenue |
Assumptions
|
First Year
|
Lifetime
(30 mo) |
|---|---|---|---|
| Reimbursement per Participant |
5% weight lost
|
$470 | $670 |
| Fitness Program Revenue |
Two-month temp membership @ $60
|
$60 | $60 |
| Additional Services |
Upsell merchandise, cafe, etc.
|
$200 | $500 |
| Annual Membership Dues |
If converted, $50 per month
|
$600 | $1500 |
| Total Revenue per Participant |
Without annual membership
|
$730 | $1,230 |
|
If converted to annual membership
|
$1,330 | $2,730 | |
| Revenue per 10 Person Cohort |
50% conversion rate
|
$10,300 | $19,800 |
| Total Annual Revenue |
6 Cohorts per Year
|
$61,800 |
As you can see, it’s entirely possible to make the numbers work for your facility. The cost to get started can vary widely and can be minimalist or robust. The choice is yours to decide how much to invest on the outset, the costs of running and marketing the program from week to week and training your teams. You’re the authority on that side of things, so I’ll leave it to you to determine how you want to grow the margins.
And while the bottom line can look really good, what looks even better (and what keeps me coming to work everyday) is the knowledge that I’m helping people reverse course and find a healthy way to live before diabetes ruins their quality of life.
While there is a lot of information about the MDPP on the web, sometimes it helps to have a partner to help. Hopefully these tables have given you sense of the potential revenue for the Medicare Diabetes Prevention Program. If you’re thinking about adding MDPP to your program offerings or are ready to get started, feel free to read more at welldhealth.com, setup a demo or reach out to info@welldhealth.com.