December 30, 2012
Patient Base for a Cash Practice
Article from PhysicianTrends
Why would any healthcare provider want to operate a cash only practice? This approach would seem to limit the potential patient base to wealthy patients or patients who are healthy and don’t require the services of a doctor. This assumption is not necessarily true; there are many prospective patients who would value the services of a healthcare provider and would be willing to pay for them.
The growing number of people with Health Savings Accounts (HSAs) will utilize low cost cash only providers to maximize the benefits of their high deductible insurance plans. Most HSAs have deductibles over $5,000 that the patient is responsible for the first $5,000 of medical costs each year. This population of patients is eager to find and utilize the services of a low cost, high value healthcare provider.
The concept of the concierge practice also attracts a growing number of patients. The patient base of the concierge practice tends to be more affluent, but members also include busy persons who value their time more than money. A concierge practice limits the number of patients to a maximum number that the provider can reasonably manage on an ongoing basis.
For a monthly fee ranging from $500-$5,000 patients are guaranteed same day appointments and 24 hour access to a healthcare provider. Patients in a concierge practice expect and receive more time with the doctor, more personalized care and a better relationship with their doctor.
One concierge practice patient, a wealthy retired entrepreneur who owns a 165-foot yacht on the coast is a typical cash practice consumer. He drives one of his Italian sports cars more than two hours to access his doctor's care. When asked why he drove so far when he could choose any doctor he wanted, the patient told him, "I can't pay any other doctor enough to spend the time you spend with me."
At the same time, businesses are starting to approach cash only practitioners about providing healthcare for their employees. A local sushi restaurant, for instance, pays $379 per year per worker—far less than the national average insurance premium of about $5,000 a year per worker.
The restaurant's owner couldn’t afford full-blown insurance, but wanted to do something. So now, workers receive an annual physical and unlimited visits to the office for $20 per visit; the cost of a typical healthcare policy co-pay.
Some legal interpretations suggest that paying workers' health care fees at a doctor's office directly—as the sushi restaurant does—could satisfy the Obamacare mandate that businesses with 50 or more workers provide health care coverage for their employees beginning in 2014. "A lot of businesses are thinking that way," says Dr. Brian Forrest a North Carolina practitioner who operates a cash only practice "At least when the coverage police come around, you can say you’re doing something for your employees." It remains to be seen whether or not this type of arrangement holds up when tested in a court of law.
Even after the insurance mandate within the PPACA becomes law in 2014 there will still be millions of Americans without healthcare insurance either by choice or necessity. Many healthcare experts contend that there will still be millions of Americans without healthcare as businesses drop their healthcare insurance for employees since it will be cheaper to pay the fine than to provide healthcare insurance. Offering this population cash discounts for healthcare may attract a loyal patient base.
Doctors that have transitioned to cash only practices report that up to half of their patients have healthcare insurance. These patients choose to pay their doctor cash at the time of service and then file the paperwork to get reimbursed by their insurance company. These patients typically value the relationship with their doctor and are willing to pay for it.
There seems to be no shortage of patients who are willing to pay for their own healthcare. If you provide value for your patients, you can operate a successful cash only practice.