Toyota didn't beat Mercedes by getting cheaper. It beat Mercedes by getting closer to the customer first. Here's the six-year research obsession behind the Lexus LS 400, and why undercutting your way to a full panel is a strategy that has already failed in a dozen other industries, and what Harvard's own pricing research says to do instead. By Michael Tetreault, Editor-In-Chief, Concierge Medicine Today "I'm a car guy, so bear with me on this one. There will be some good points [in this article], I promise. I know enough about engines to self-diagnose and wrench on them myself. Driving an old car with lifter problems through North Dakota and southern Canada in the '90s will teach you that." ~Michael Tetreault Today's article isn't about concierge medicine directly. It's about a distant cousin in the subscription-based healthcare world, direct primary care, or DPC. Over the past two decades, I've noticed more and more that there is a moment almost every DPC or low-cost, membership-based practice hits around year two or three, when the patient panel quietly stalls (catch the car pun). Growth that used to feel automatic starts to flatten out, and you notice it before you can quite explain it. That's usually right about when a competitor down the road launches at $59 to $93 a month, and a quiet voice in your head says: just drop the price. Fill the seats. Worry about margin later. That instinct is understandable. It is also, according to decades of business research and a growing body of data inside concierge and membership medicine itself, one of the fastest ways to damage the very practice you built to serve patients better. This is not a scolding. It is a strategy conversation, grounded in evidence, for low-cost subscription-based physicians who left, or are considering leaving, the insurance-driven system specifically to build something sustainable that has a low cost for the patients because you feel your altruistic nature pulling you to do so. But, if the goal is sustainability, the tactic matters. What "racing to the bottom" actually means Let's zoom out for a moment. A price war is what happens when competitors inside the same market repeatedly cut prices to undercut one another, creating a cycle where each side matches or beats the last cut. This "price-cutting momentum" pulls in competitors who feel forced to follow the initial price cut, and while it can create short-term benefits for the buyer, it erodes the profit margins of everyone competing. Harvard Business School researchers Akshay Rao and Mark Bergen, writing in Harvard Business Review, built a career studying exactly this dynamic across industries. Their conclusion, echoed by strategists since, is blunt: most price wars are avoidable, and the businesses that start them or get pulled into them rarely come out ahead. The Kinsta business blog, summarizing HBR's own internal analysis of the question, put it plainly: when businesses were asked whether they should engage in a price war, the overwhelming answer was "no." Instead, the research points toward differentiation as the more durable response to a low-cost competitor. There is a second, quieter finding in that same research that some physicians should sit with. Price itself shapes how a buyer perceives value, and a price set too low signals that the product is cheap, in the way a price set too high can signal it is a ripoff. In other words, the discount that was supposed to win the patient can be the very thing that tells the patient your care is not worth much. It's indeed, a delicate balance and it's different for every practice and every doctor. Why? Because of who you work for and serve: the patient. Every patient is different. Every practice is different. That makes this topic challenging but it's a conversation worth having because I want to see your practice thrive and more importantly, survive in your community. The framework underneath the instinct Michael Porter, the Harvard strategist whose work still anchors most first-year MBA curricula, described three durable paths to competitive advantage: cost leadership, differentiation, or a focused niche strategy. A company chooses to compete either through lower costs than its rivals or by differentiating itself along dimensions the customer actually values, in order to command a higher price. What Porter warned against was the position most panic-driven price cuts land a practice in. Porter's phrase for it is "stuck in the middle," and it describes an organization trying to be all things to all people, with no distinct competitive advantage as a result. Businesses caught here typically perform the worst in their industry precisely because they never committed to one strength. A DPC practice that quietly lowers its price to compete on cost, while still trying to deliver same-day access, unhurried visits, and so-called affordable white-glove service, is not competing on cost leadership. It is trying to sell a premium product at a discount price, and the math does not hold. Today, a medical practice or a company stuck in this position cannot beat a true cost leader on price, because it never built the operational discipline or scale to sustain that price, and it cannot beat a differentiator on the experience it promised, because the discipline required to deliver that experience costs money. Both promises erode at once. What the data inside DPC and low-cost membership medicine is already showing This is not theoretical for DPC and low-cost membership medicine practices. It is visible in the industry's own numbers. The 2026 State of DPC survey, distributed through the DPC Alliance and Hint Health's network, found a direct relationship between panel size and price. Practices with fewer than 200 patients averaged $105.93 per member per month, practices with 201 to 500 patients averaged $99.28, and practices with more than 500 patients averaged $77.74 per member per month. Read plainly, the larger the panel, the lower the average price charged per patient. That pattern is exactly what Porter's framework predicts happens to practices chasing volume without a differentiation strategy to protect price. It is worth noting this figure comes from Hint Health, a technology vendor with a commercial interest in DPC's growth, so it should be read as directional industry data rather than an independent audit. It is nonetheless the most comprehensive dataset the movement currently has. At the same time, the broader market is not short on room to compete on value instead of price. More than half of private healthcare consumers rank the cost of care as the most dissatisfying part of their current healthcare experience, and DPC's growth has been driven in large part by employers and patients who are tired of opaque, escalating costs elsewhere in the system, not by DPC being the cheapest option on paper. Employers now fund the majority, roughly 60 percent, of active DPC memberships, according to Hint Health's 2026 trends report, which signals that the buyers filling panels today are increasingly sophisticated purchasers evaluating value, retention, and outcomes, not simply hunting for the lowest sticker price. Regional pricing tells a similar story. Northeast DPC pricing rose 33 percent over five years, from $60 to $80 a month, even as national demand for the model accelerated. Practices in that region did not grow by discounting. They grew while raising price, in a market that was simultaneously expanding. The altruism problem no one names out loud Here is the part of this conversation that is specific to medicine and does not show up in a typical business school case study on price wars. Physicians are trained, deliberately and repeatedly, to put the patient's welfare ahead of their own. Medical professionalism itself is defined in the literature by principles of excellence, accountability, altruism, integrity, and humanism, all oriented around the patient relationship. That formation is not incidental. It is the point of medical education, and it is a genuine strength of the profession that should never be coached out of a physician. But that same formation has a side effect worth naming honestly. A rigorous study out of the University of Cologne and University of Rennes, published in the Journal of Health Economics, measured patient-regarding altruism in 733 medical students at different stages of training. The researchers found that patient-regarding altruism is highest among freshmen, declines significantly through the middle years of medical study, and rises again in the final year as students begin assisting in clinical practice. Students with lower income expectations showed higher altruism scores overall. Sit with that last finding. The training that makes physicians excellent, trustworthy, patient-first clinicians also correlates with a documented discomfort around charging what care is actually worth. That discomfort is admirable in the exam room. It becomes a strategic liability in the business office, where it quietly nudges a physician toward the lowest defensible price rather than the price that reflects the value delivered, the access provided, and the sustainability required to keep serving that same patient for the next twenty years. This is not a call to abandon altruism. It is a call to separate two different questions that get tangled together under stress: am I a good doctor and am I running a sustainable practice. A price built out of guilt is not more altruistic than a price built out of strategy. A closed practice serves no one. What other industries learned the hard way Medicine is not the first field to face this exact temptation, and the businesses that raced to the bottom on price rarely tell a happy ending. Rao and Bergen's HBR research spans industries from B2B and agribusiness to healthcare and the nonprofit sector, and the throughline in that body of work is consistent: firms that respond t
