Are you sick and tired of declining payments, red tape and rising overhead? A growing number of healthcare providers are opting out of the third party payers system and have switched to a cash-based practice.

The emerging business model is called a variety of names: cash-based, cash-only, concierge-based, membership-based or out of network practice are a few. Therapy practices most often identify themselves usually as cash-based or out of network. Whatever the name, these self identified therapists have opted out of the insurance system completely in order to set themselves free from insurance middle men and government regulations. 

This is an important distinction to make. For several decades there have been hybrid clinics that have offered cash only wellness services in addition to the traditional insurance-based therapy services. Medical fitness centers have expanded all over the country and offer fitness and wellness services such as cardiac rehab, yoga, personal training, medical spa, massage, pool programs and group fitness classes. The owners range from mom & pop private practices with an integrated fitness center to large hospital and retirement communities offering elaborate facilities, staff and programs.

My own practice was located in a small rural community with a high percentage  Medicare eligible patients. I made the decision to that in order to serve these patients our clinic would submit claims to Medicare. It is a judgement call that each practice owner must make in the best interests of their community and business. However, we did offer a cash-based medical fitness center as a value added service to our older clients. The membership fees help to off set the lost revenue from decreased insurance reimbursement.

The cash-based therapy practice model I am describing is a small therapy practice of one or two owners that has made the leap to opt out of the insurance system completely. There are usually three main reasons why therapists go the route of cash-based practice:

1. Personal Freedom

2. Professional Freedom

3. Financial Freedom

Let’s take a closer look at these 3 new freedoms:

1. Personal Freedom: Without the seemingly endless load of insurance requirements and regulations therapist have more face time with their clients. Therapists are usually experts in a specialization that matches the needs of their ideal client. Less overhead allows cash-only therapists to help a fewer number of patients to get the outcomes that they both they want. Better outcomes lead to better client and therapist satisfaction.
2. Professional Freedom: The third party reimbursement rules often dictate how therapists treat their clients. Therapists feel pressure to utilize certain procedures based upon reimbursement rather than evidence for effectiveness. Decreased reimbursements have contributed to pressure on therapists to meet productivity quotas that compete with standards of quality. Therapists in a cash-based model have freedom to treat clients according to the latest evidence and work with clients suited to their expertise.

3. Financial Freedom: There are thousands of outstanding therapists who get results that are buried beneath the fee-for-service model who are actually penalized for getting patients better in a cost effective time frame. In the cash-based practice cost conscious, expert therapists are rewarded directly by the consumer for delivering quality and effective care.

Most traditional practices enrolled in insurance networks require large staffs to process the paperwork. The higher overhead, often 60% of revenues mean that therapists must see more patients and have more paperwork. The extra workload takes time away from direct patient care. When therapists choose to go cash only it greatly reduces their paperwork and overhead. This allows more time with patients and less time spent on non-essential paperwork.

Therapists who adopt a cash-based business model get paid for the value they deliver to their clients. The economics are remarkably straightforward. If you don’t consistently help clients achieve their health goals you don’t grow your business. Therapists often feel a sense of reward for being accountable for the results they deliver. Most therapists being respected for their expertise and hard work is more important than the dollar sign. 
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Most therapistis being respected for their expertise and hard work is more important than the dollar sign.–Paul Potter PT

They willingly take the risk to work for themselves and they have seen the payoffs worth the sacrifice. The shift in technology, consumer demand and the economy has provided a playing field where talented, hard working therapists can have success while doing the work they love. If you feel strangled from all the red tape and unable to do your best work as a therapist you might want to consider the freedoms of a cash-based practice.

If money were no object, what kind of practice would you build?