Not only can cash-only medical practices survive, but they can thrive. More and more doctors are quitting the “insurance” game and dealing directly with patients on financial matters.
How does a cash-only practice work?
Also known as direct care, patients pay an annual or monthly fee for access to their doctor. That fee often covers routine procedures and exams, such as office visits, tests, or remote monitoring. Patients get round-the-clock access to their doctor, plus longer office visits, and often same-day appointments.
What do patients think?
We interviewed one individual that actually participates in a medical sharing program. Since she is technically “uninsured,” she must negotiate a cash-only payment each time she sees a doctor or visits the hospital.
“I’ve discovered that it is actually less expensive for me to pay the cash payment than it would be to pay for insurance and then the co-pay or deductible. Last year I had a thyroid biopsy. The hospital charged me $500 upfront and let me make payments on a balance of $500. When I received the bill in the mail, I was very surprised to see that they had an actual cost of $12,000 that they had discounted due to “self-pay. If I were to sign up for my husband’s insurance plan at work, I would have to pay $13,000 a year just for me, with a $5000 deductible. I also see savings at the doctor’s office. My doctor is not a direct-care physician, but he does take self-pay or cash patients. My last physical, with tests, only cost me $125.”
The takeaway from this is that patients are finding value in a cash-only model. Even doctors that accept insurance can still serve cash-only patients.
Charging Less but Making More
With the increase in time spent with each patient, cash-only doctors typically see fewer patients. However, with emerging technologies and telemedicine, fewer patients actually need to come to the office for the revenue stream to stay steady. The flat fee ensures revenues even when patients are not sick.
Depending on the cost of insurance, the patient can potentially save money. So does the doctor, by reducing the time spent with each patient. He is then available to those who need more urgent care.
5 Benefits to Cutting Out Insurance Companies
Many advocates of direct care point to these benefits as reasons for switching to the direct care model.
- Insurance companies don’t reimburse doctors enough to allow for longer doctor’s visits.
- It takes additional time and personnel just to submit the insurance claims, increasing overhead, and thereby reducing profits.
- Nobody tells you what kind of care you can provide. Remote monitoring, telemedicine, even house calls are all up to the provider.
- Longer time with patients means that you can build a relationship and really get to know them. This makes treatment easier and customer retention is easier since they don’t have to worry about insurance changes at work forcing them to switch doctors.
Not all Direct-Care Patients Are Un-Insured
Many patients who visit cash-only practices do have some form of insurance for emergency care or hospital visits. However, for many, the benefit of higher-quality care is worth the small amount they might have saved from using insurance after co-pays and deductibles.
Concierge and/or Cash Only
For doctors, the switch to cash only is a big step. Initially, the number of patients may drop and marketing and education costs may climb.
If a practice sees a lot of people on Medicaid, then they may find that their patients cannot pay the out of pocket expenses.
For some, easing into the direct care model by offering a mixed approach may be the answer. For example, an allergist could operate a “cash only” practice but submit certain items, such as remote monitoring, to insurance rather than charge a flat fee for the service.
One thing is evident, innovations in medicine are helping to shift the old business models and we have seen that cash-only is a viable option for those who are interested.