In a marketplace as complex as the healthcare industry, it’s no wonder that many patients and physicians are dissatisfied with the status quo when it comes to how and when patients are charged for the care they receive. In response, an increasing number of physicians are transitioning to a partial or completely cash-only medical practice.
No large-scale studies have been completed regarding the growth of cash-only medicine, but the American Association of Private Physicians estimates that around 6,000 practices have fully or partially converted to cash-only medicine, representing less than 1 percent of all practices in the country. In a recent Medscape survey, 9 percent of primary care physicians and specialists said they had converted to cash-only or concierge medicine.
What Is a Cash-Only Medical Practice?
The phenomenon of a cash-only medical practice has so far taken one of four general forms, each of which may offer pros and cons depending on the specifics of your current practice.
Strictly Cash Only
In a strictly cash-only practice, you simply draw up a cash bill consisting of all the charges incurred during a patient’s visit. Typically, cash-only physicians require full payment at the time of service, but you’re free to structure any due dates or payment alternatives according to your own preference.
Fee for Care
The Fee for Care (FFC) business model is a form of “concierge medicine,” a more structured alternative to a cash-only medical practice. In the FFC model, your patients pay you an annual or quarterly retainer fee. That retainer not only guarantees their access to your services, but is also usually structured to cover some portion of typical preventative care like routine tests, simple medications for colds and flus, and similar charges. Any other charges that aren’t covered by the retainer amount are billed as a straight cash charge on top of the FFC fee.
In most cases, physicians use the FFC structure as a primary care model, and calibrate the retainer fee to cover the cost of all typical primary care (minus some tests, radiological services and similar add-ons) that an average patient is likely to incur each year.
Fee For Service Extra Care
The Fee For Service Extra Care (FFEC) model is very similar to the FFC model, but instead of charging the patient directly for extra services, you instead charge the patient’s insurance provider for anything that isn’t covered by the concierge retainer.
FFEC models are also commonly used to charge the patient’s Health Savings Account, although there’s no technical reason HSAs can’t also be used in a modified form of the FFC or strictly cash models, as well.
A hybrid model might contain any variation of the features in the previous models, and is typically used to further define which types of services or additional care costs are covered by a patient’s insurer or health care account. Hybrid models may include the addition of a retainer fee, or may operate on a strictly cash-only basis for care visits that don’t incur any charges that would otherwise be covered by an insurer.
What Are the Benefits of a Cash-Only Medical Practice?
Physicians who have already converted to a cash-only or concierge practice overwhelmingly say that the single biggest benefit is severing their ties with the insurance companies. In an increasingly complex regulatory and payment environment, many of those physicians realized that they were spending an inordinate amount of time and capital dedicated solely to the administrative work of billing insurance companies and ensuring they were paid for their work.
Many physicians also expressed a desire to free themselves from the time constraints imposed on patient visits, especially when they’re required to meet a certain number of patients every day simply to make enough money. In some cases, those doctors had been reduced to only being able to see each patient for five or fewer minutes before moving on to the next.
By cutting ties with insurance companies and billing patients directly instead, physicians are free to drastically decrease their total patient load. In doing so, those physicians are able to meet with each patient for a longer period of time, and believe the quality of the care they’re able to provide has increased accordingly.
What Are the Downsides of a Cash-Only Medical Practice?
The biggest downside of the cash-only model is that it requires your patients to be able to afford the out-of-pocket expense. In many cases, patients won’t end up paying any more than they would have in order to meet their insurance deductible to begin with, but that’s not always true. Additionally, patients who rely on government insurance programs that subsidize or completely pay for their insurance are completely locked out of the cash-only model.
Depending on the specifics of your practice, you may discover that managing cash payments isn’t much easier than dealing with the insurance companies. The freedom provided by cash-only models can become a double-edged sword, in that the model decreases your insurance administrative costs but can increase the costs and responsibilities inherent in taking on more responsibility as a business owner.
Ultimately, determining whether a cash-only medical practice is a good fit comes down to your personal judgment. If you believe that you can save money and increase the quality of the care you provide by cutting ties with the insurance companies, the model might be a good fit.
Goldin Peiser & Peiser has extensive experience working with medical practices of all sizes. Please contact us if you are interested in discussing how we can help you maintain a successful and quality medical practice.
Note: This content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article.