The Appeal of Cash Only Medical Practices
By James Egidio
Introduction
How Does a Cash Only Medical Practice Work?
Research is Key
Marketing a Cash Only Medical Practice
Benefits of a Cash Only Medical Practice
Summary
Introduction
All over the nation, physicians are starting their professional careers, excited about the opportunity to care for their patients and optimistic about the income potential. However, not far into their practice, these physicians soon face the reality of modern healthcare – and realize the industry is not nearly this simple. The typical workday for modern doctors includes a steady flow of patients, interrupted only by the completion of stacks of insurance claims and billing paperwork.
For physicians who are ready to make a change regarding today’s volatile healthcare environment, there are several valuable marketing tools that can assist with making medical practices more efficient. The first step is to look into modern healthcare marketing strategies that steer away from the traditional medical practice model. One such healthcare marketing strategy is to establish a cash only medical practice. This type of medical practice is one that accepts only cash payments and/or only a few select insurance companies for services rendered.
With the increasing number of United States’ citizens with little or no health insurance, cash only medical practices are blossoming. This niche medical practice is moving forward to accommodate the large, untapped population of patients who are more than willing to pay out of pocket for medical services. Patients are enjoying paying significantly less for routine visits to the doctor and basic tests by visiting cash only medical practices.
Cash is quickly becoming the secret to the formula for driving down healthcare costs and improving access to physicians for a growing segment of the population. Eighty to ninety percent of those who make visits to a cash only medical practice will not be covered by health insurance. Those who do have health insurance will likely just have catastrophic coverage with a high deductible, and opt to pay cash for regular physician office visits.
While cash only medical practices are becoming one of the most popular medical marketing tools of today, interested physicians should note that making the transition takes research, patience and the willingness to make some initial sacrifices.
How Does a Cash Only Medical Practice Work?
Within a cash only medical practice setting there are several “niche markets” that are targeting patients willing to pay out of pocket. These niche markets include general medical practice (and all other non-invasive surgical specialties); medical house calls, pain management; opiate detoxification; plastic and cosmetic surgery (including Botox®, breast augmentation, liposuction, face lifts, Restylane therapy); hair transplants, erectile dysfunction; laser eye surgery and more.
While most (up to 95%) cash only medical services are either elective services or acute simple to low complexity, and even sometimes medium complexity medical conditions that are being treated, there is a new trend of cash only or uninsured surgical clinics that are cropping up across the nation. Some of these centers have names such as Low Cost or Discount Surgery, Affordable Surgeries, and Medical Discounts.
It is also important to know that no two cash pay practices are exactly alike. After carefully researching the various types of this niche medical practice, you may choose a variation of one of the following:
• An entirely cash pay medical practice: Some physicians decide to stop accepting insurance claims altogether, completely transitioning to a cash only medical practice.
• Limited insurance acceptance. In order to keep certain patients or to maintain current income, physicians can make the decision to continue accepting claims from particular insurance companies; perhaps those with limited paperwork or with higher-than-average charge schedules. Many cash only practices continue to accept Medicare patients, as well.
• A concierge medical practice. One of the newest and most innovative cash only medical practices is a concierge service. Under this type of cash pay, patients pay a certain amount every year in order to be considered enrolled in the service, and they then pay a small fee for every office visit.
The cash only medical practice will only continue to grow into one of the most profitable, pleasing ways to do business for a physician. This model not only benefits the physician, but the growing number of patients who are lacking health insurance and/or proper medical care.
Research is Key
One of the most vital things to know about cash only medical practices is that they require an extensive amount of initial research in order for physicians to make a smooth transition. Physicians should utilize as much healthcare marketing publications as possible prior to making any final decision. There are various options for this type of practice; such as a completely cash pay office, or an office that allows for particular insurance company claims or Medicare. However you decide to model your practice, it is wise to begin with a turn-key model that is already firmly established.
Before ending contracts with insurance companies and starting a cash only medical practice, it is vital to consider the fact that there may be a need for a physician to continue to accept insurance claims for some time as they make the transition to cash pay; as well as the fact that he or she may need to work part-time in another medical practice or clinic in order to maintain their income while they build their cash-pay clientele.
Once a physician has made a final decision to start his or her own cash only medical practice, the first group that needs to be informed is the office staff. Modern physicians traditionally have at least once person who is in charge of insurance claims and billing paperwork; and this is one of the people who will be most affected by the transition to a cash only medical practice. Sometimes this office professional can adjust their responsibilities to accommodate this new business model, otherwise you may need to simply make staffing changes (and perhaps even staff downsizing).
Additionally, the physician’s patients will need to be among the first informed of the new practice policies. Some long-standing patients may express frustration about the direction your office is heading, while others are likely to appreciate the new streamlined nature of your medical practice. Most physicians who make the transition to a cash only practice recognize that it will take a few months to make a complete transition, as their current panel of patients adjusts to the new procedures.
For physicians who need assistance educating patients about cash only policies, there are select companies out there that specialize in medical marketing strategies. Hiring one of these companies during this transition time may prove invaluable to physicians for both maintaining relationships with current patients as well as building their new cash only medical practice.
In order to determine if a cash only medical practice or house call medical practice is right for you, there are some key questions to ask yourself. These questions include:
• Can the local market support this type of practice?
• Would existing patients be willing to transition to the cash-only practice?
• What services would you offer?
• Would lab tests be a part of the practice?
• Would you see the patients in the hospital?
• How much would you charge?
• What financial outlay would be required to stay solvent during the transition period?
• What overhead is vital to the practice, and how many patients will be necessary to cover these expenses?
• What would your obligations be to your current patients?
In terms of researching the local market, strategically positioning your cash only medical practice is vital for success. For instance, it is not a good idea to open up this type of practice in an area in which a considerable amount of the population is employed by a local firm that provides excellent healthcare plans. After all, it’s not all too likely for these people to opt out of their health insurance plans to pay cash instead. Nor it is a good idea to open up one in a lower income community where the majority of residents rely on Medicare or Medicaid. These residents are unlikely to pay cash when they receive assistance from their state.
Instead, the ideal market for the cash only medical practice consists largely of hardworking, middle class citizens who may have good jobs but cannot afford the high costs of health insurance premiums. This community is home to a large numbers of patients who are uninsured, as well as affluent patients with or without insurance, who would be likely to want to pay in cash for medical services. Research the types of healthcare plans offered in the area. Is the patient spending more money for their insurance premium than they would with paying cash for routine healthcare services?
Another important element to research is the process of working at or with local hospitals and laboratories. Because the physician who seeks to start a cash only medical practice will no longer be billing insurance companies for their services, he or she will need to research and take the time to work out the relationship he or she will have with the local hospital and/or laboratory. This venture is likely to take some time and creativity, since the cash pay model is relatively new.
Marketing a Cash Only Medical Practice
In order to keep a cash only medical practice healthy and growing, knowing how to successfully market it is essential for a most desirable outcome. After all, without strategic marketing, a business will fail to grow. If an owner of a cash only medical practice neglects to concentrate on marketing, its likelihood of failing in the short term is high.
There are several reasons for continuously marketing a cash only medical practice. Some of these reasons include increasing revenue or increasing market share, building patient volume, changing patient mix, managed care, lower reimbursement costs, and perhaps the addition of a new office location.
Marketing Do’s for Physicians:
• Set forth a well thought out, strategic marketing plan. In this plan, compile a set of specific goals in which certain objectives and action plans are defined to meet those goals. A good strategic medical practice marketing plan will allow one to look inside his or her cash only medical practice and evaluate the strengths, weaknesses, opportunities, and risks or threats. It will focus on tracking results, as results will be the key indicators as to what is working for the medical practice and what is not.
• Facilitate marketing efforts in a way that will educate patients, referring physicians, and the overall community about the cash only medical practice.
• Be tactful.
• Set realistic expectations.
Marketing Don’ts for Physicians
• Wait for patients to come to you. In the business of medicine, it is always better to be proactive with the customers, and not reactive. Today’s patients are increasingly demanding of quality care, timely service, and perhaps most importantly, customer satisfaction.
• Assume that marketing is advertising. They are two different things. Marketing refers to the systematic planning, implementation, and control of a variety of business activities that is carried out to bring together buyers and sellers. Advertising refers to the paid, public announcements of a persuasive message and/or a presentation or promotion by a business of its products to existing and potential customers.
• Take Advertising Lightly. If the cards are not played right, advertising can prove to be very costly for a business. Advertising is all about location – where the ad is placed; the audience – who receives your ads; and messaging – how the product and service is being conveyed. Medical professionals have to be particularly careful with ads, considering the fact that some frown upon advertising in this field, and herald it “flashy” and “unprofessional.” But those opinions should not sway you from implementing advertising medians that are consistent with your marketing effort.
• Expect results overnight. Like everything in business, achieving real results take time.
Benefits of a Cash Only Medical Practice
While many people assume that physicians today earn substantial incomes and enjoy large periods of leisure time, the reality is that most doctors put in long workdays and end up relinquishing a large portion of their fees to insurance companies and patient billing services. Negotiating prices and fees with insurance companies may mean that a doctor is asked to perform their work for less money, in addition to begin burdened with immense mountains of paperwork.
A typical physician will see between 25 and 35 patients per day in an effort to simply pay staff, coordinate with insurance companies and cover their office overhead. Many doctors begin to wonder if there is a better way to run their medical practice; and the truth is that there is another option: a cash only medical practice.
Unlike physicians who develop relationships and establish contracts with insurance companies, a cash only medical practice necessitates limited paperwork and can provide patients and physicians with some of the following benefits:
• Increased time with each patient: Because physicians will not have to pack their schedules with as many patients as they can in order to meet their overhead costs, they are able to spend more quality time with fewer patients every day.
• No need to pre-qualify tests and diagnostics. Doctors who work with insurance companies often need to obtain permission to complete certain diagnostic tests prior to completing them. A cash only medical practice is based on a two-way relationship between doctors and their patients; effectively removing the middle man (the insurance company) and streamlining service.
• Less paperwork. Whether a physician completes insurance and billing paperwork or there is a designated member of the office staff for these tasks, insurance forms undoubtedly take up a large portion of the activity of a typical medical practice. Many doctors who have chosen to run a cash only medical practice will admit that less paperwork is the primary reason they have chosen to sever their ties with insurance companies.
Summary
The cash only medical practice is a niche medical practice that will continue to grow in popularity among both physicians and patients in the United States. Cash only medical practices represent a special area of demand for a service that is less common, but growing rapidly.
With over 45 million Americans without health insurance, and millions more who are underinsured, cash only medical practices provide patients with affordable, accessible medical care performed by qualified physicians. These patients are the perfect match for physicians who are frustrated with managed-care contracts, endless paperwork, and low reimbursement rates.
Today, there is an increasing amount of support and marketing tools for physicians aspiring to start their own cash only medical practices. As physicians take the time to explore the niche medical practice field, it is important to recognize that such a transition will require research, patience, and versatility.
© 2008 Hippocrates Publishing. All rights reserved.
Click to Return to the Article Archive |
