Progress Notes Issue 52: Should I Open a Cash Practice?
NP Business™ Tip: Should I Open A Cash Practice? When Nurse Practitioners and Physician's Assistants look at opening practices, they often ask about the feasibility of opening a cash practice. This question comes up for all types of practices: primary care, house call, urgent care/walk in, specialty niche practices (examples bio-identical hormone treatment, weight loss programs), assisted living and more. This is a great question and it deserves discussion. First, let's talk about the downside of a cash practice.
- When you don't take insurance, it locks some patients out of your practice. They have insurance, and they want to use it.
- Marketing: insurance companies do provide you with a small amount of mostly passive marketing. They either assign or refer patients to you and often will have your practice information on their website.
Not a lot of negatives, though the first one can be big. Now let's address the positive aspects of a cash practice.
- You don't have the hassle of dealing with insurance companies. As many know, billing insurance companies is fraught with problems. Your codes may be incorrect, you may forget to add the correct modifier, they don't cover that procedure, etc. The person may have lost their coverage the day before you saw them, or months later, the insurance company can come back to you and reverse their decision to pay you…taking back the money they already paid for services already rendered.
- Reduction in overhead (the cost of billing and then following up on your billings).
- You can charge patients a lower fee for services.
- You are not bound by insurance rules.
- You can potentially spend more time with patients.
- Start up is quicker as you are not dealing with credentialing.
- If you are in a location where insurance companies require you to bill through a collaborating physician, you can avoid this problem.
Some further thoughts… While we want to provide services for everyone in our community, the simple truth is, you cannot, and this should not be your sole reason for choosing cash practice or not. Many practices consider billing insurance companies a courtesy they extend to their patients. There was a time when patients paid for services up front, followed by a time when they routinely submitted claims to their insurance company. This is a business decision (albeit peppered with plenty of ethical and societal implications). When you have a practice, you must understand it's a business. To be in business, you must have cash flow - regardless of where it comes from. The decision to go "cash" or not is yours alone to make. However, you need to carefully do an analysis of your community to know if your community can support a cash practice. NPBO Action Steps:
- Do a community assessment. How many people in your community are covered with insurance? How many are not? What are their needs and are they being met? Is anyone in your community providing the same services you can provide? Is it a cash practice? What are the fees associated with that practice. Is there a large number of unemployed and/or under-insured?
- Practice assessment. What does your overhead look like? What is your bottom line reimbursement? What is a good reimbursement that would allow you to comfortably run your business, make a reasonable profit, and (depending on your desires) be socially responsible?
- What would it look like if you did a mixture of payment sources? Perhaps limit it to a few insurances and do mostly cash? What about cash for some services and insurance for others.
- Write down all the "what ifs" and play with it. Does it feel realistic? What feels do-able?
Health care is changing. I'm sure this is not the end of the discussion as it's a question that is asked all the time. © 2010, Barbara C. Phillips, NP. All Rights Reserved.
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