In today’s ever-changing and constricting managed-care environment, many chiropractors find themselves thinking, “There must be a better way.” Some have turned to cash-based practices and report higher collections, fewer hassles, decreased overhead and more enjoyment in practice. Others have jumped on the bandwagon too quickly, without carefully evaluating whether a cash-based practice matches their practice goals, personality, and the state of managed care in their local community.
The structure of cash practices can range from the honor system of a box on the wall, to negotiated fees or set fees. No matter what the set-up, these practices share possible pitfalls and potential rewards.
If you are curious about exactly how a cash practice works or are considering changing from an insurance-based payment system to a cash arrangement, it pays – in time and money – to know the issues up front.
Explore Your Local Insurance Environment
Although managed care has exploded in the past two decades, there are still pockets throughout the country that are not yet highly represented by managed- care plans. Whereas in some states, such as Minnesota, managed care represents 75% to 80% of the insurance market, in other states it is as low as 20%.
It makes sense to check out your local community to see how strong managed care is in the region. If you are just setting up a practice, a key marketing consideration should be the nature of managed care in the regions you’re considering. There are some parts of the country, primarily in the Southeast and rural areas, where it is easier to work effectively with insurers.
In addition to gauging the prevalence of managed care in your area, find out the specific types of plans offered. Not all managed-care plans are created equal. Some simply set a fixed dollar amount for chiropractic services for the year. Others specify a number of visits (with a broad range in the size of caps from company to company). Others set a fee-per-visit maximum. And still others are highly intrusive and dictate exactly what kind of care you can offer, for how long and at what fee. Some companies try to micromanage your practice, while you may find others offer enough breathing space for you to feel comfortable working with them and serving your patients.
Consider the Financial, Philosophical Implications
Some practitioners change from insurance to cash primarily because it makes financial sense for them. Others are motivated by the alignment they see between their chiropractic philosophy and charging a simple fee for service, rather than providing reimbursement codes and substantiating reasons for care with an insurance provider.
Most agree, however, that both issues are likely to arise as you embark on the change. You need to consider the implications for you personally before moving forward. No one else can tell you which system is right for you.
When Dr. Felicia Stewart opened her North Carolina practice in the late 1980s, she felt that billing insurance was probably the only reliable way to get paid. She later found out first-hand that a cash practice can work, and that converting from insurance to cash was not as overwhelming as she thought it would be.
“When the transition from insurance payment to cash payment was all said and done, I realized it was a 90% mental shift on my part and only about a 10% shift on my patients’ parts,” Stewart explains. “Making the switch helped to focus my practice on people who want to be there and who are there for the right reasons,” she says.
Dr. Mark Ohlstein of New Jersey says his decision to switch to a cash-based practice was part philosophical and part financial. “When I learned the philosophy of chiropractic as that of correcting vertebral subluxations to enhance life expression, it made so much sense to me that I changed almost everything about the way I practiced – including how I charge for my services,” he says. “To the best of my understanding, insurance is really designed to pay for a diagnosed musculoskeletal condition. When that was no longer the focus of my practice, billing insurance was no longer an option.”
Other practitioners say they are more focused on simplifying their practice procedures and getting out from under the restrictions of insurance company regulations, reporting requirements and paperwork.
Paring Down Your Expenses
“More than likely, there are going to be some patients who leave the practice during a transition from insurance to cash, and the chiropractor has to plan for that,” says Dr. Joe Strauss, who has run a highly successful box-on-the-wall practice for more than 30 years in Levittown, Pa.
“In today’s managed-care climate, I think people have grown much more accustomed to paying at least some portion of their health-care bills,” Strauss says. “But if a practitioner is used to charging high fees for insurance reimbursement, he or she may have to tighten the belt a bit in the transition to cash.”
For many practitioners, transitioning to a cash practice offers plenty of opportunity and cost savings, often with little impact on lifestyle. “I went from a staff of three and an outside billing service to just my dog and me in the office,” Ohlstein says. “I used to have a cabinet with 48 slots cut in it for each of the forms we used for filing insurance. Now I have three information sheets. I could probably triple the number of people I see in my already-busy office and still not need more staff.” Some doctors also report they can cut down on costly square footage because of the decrease in staff, equipment and record storage.
Set Reasonable Fees
“I found it a lot easier to build my practice from the ground up with a cash approach,” explains Dr. Pat White,
who has operated a cash practice in Philadelphia since he opened his doors 15 years ago. “I never had a lot of overhead to carry and I could set fees at a level that made care available to almost everyone in my community. When you know your fees are reasonable, it makes it so much easier to look your patients in the eye and honestly discuss payment right up front. They know they can come regardless of what type of insurance they might have – and even if they don’t have insurance.”
Strauss says that in general, cash practitioners rely on seeing a larger volume of patients who are paying lower fees. “Some people might look upon that as working harder, but I have the attitude that getting involved in and serving your community are what make practice fun and rewarding,” he says.
Some practitioners find it intimidating to ask patients for money directly, rather than collecting from an insurance company. Chiropractors who have traditionally employed staff members to handle insurance paperwork and billing may have no experience talking with patients directly about payment. To be successful in a cash practice, you have to feel comfortable being straightforward with patients about collecting fees for your services.
Commit Yourself to Patient Education
One of the most valuable aspects of a cash practice, according to Strauss, is that discussing your fee system provides an opportunity to communicate early on the concept that chiropractic is not part of the medical model.
“When payment is not enmeshed within the traditional medical insurance paradigm, it is easier to instill in people the idea that chiropractic is not about treating symptoms and that their health is part of their responsibility,” Strauss explains.
Ohlstein says it’s important to educate patients about the purpose of chiropractic and why you do what you do in your office. “I don’t think any practice will succeed or fail based on fee system alone,” he says. “You can’t even give chiropractic away if people don’t know why they’re coming. But when the money is coming out of their own pockets, it’s even more important than ever that they understand what they are getting in return,” he says.
The potential benefits of switching to a cash-based practice include practical concerns such as decreased expenses, as well as an increased personal satisfaction that many practitioners say comes from bringing the business side of their practice more in tune with their personal style and professional objectives.
Many doctors believe that switching from insurance to cash will create a temporary drop in income due to lower fees and the loss of patients who are unwilling to pay for care out-of-pocket. However, many practitioners who have gone to cash-only report the opposite experience.
“I didn’t see any initial drop in income when I made the switch,” Stewart says. “I think I actually saw a rise in income. I thought I had good collection systems when I was dealing with insurers, but the truth is, sometimes you get so tired of fighting with them and justifying care that you give up and write off the loss. It takes a certain level of confidence in yourself and your services to blatantly discuss fees up front and ask for direct payment, but it’s well worth the effort,” she says.
Ohlstein says he has never experienced a dip in income. “I knew I would need to see a certain number of people to make the practice work and I was willing to put the energy into practice-building that I needed to do that. It has taken more effort to maintain the same income level, but my practice is far more enjoyable,” he says.
One motivation behind Dr. Perry Rush’s recent decision to change to a cash practice in his South Carolina office was a desire to get out from under the thumb of the insurance companies. “My office staff grew to hate dealing with the insurers and constantly getting the run-around,” he says. “I also started to feel that the whole experience lessened my sense of worth. It was difficult to invest in new equipment and improve my practice when I couldn’t predict what my income would be.
“The first month of implementation with a cash system, I experienced the highest collection rate in the history of my practice,” Rush says. “I no longer have to face the hassles of dealing with insurance companies and waiting for them to pay. I also don’t feel that I have to go outside my practice objectives to rationalize to a third party why someone will benefit from chiropractic care.”
Sense of Purpose
“I’m very happy with the results in my practice since I switched in January,” Rush explains. “No one ever has to avoid coming in to the office because they feel embarrassed about an outstanding bill or because they have cashed insurance checks that should have been paid directly to me. I feel much freer to communicate the real purpose and value of chiropractic.”
Stewart recalls, “Once I took the plunge, set a date and began talking to my patients about my new fee system, I realized how liberating it could be.” She adds: “When you really get into making the change, it’s not as scary as you think it will be.”
Even after 30-plus years “in the trenches,” Strauss reports strong satisfaction in seeing and helping as many patients as possible through his box-on-the-wall practice. “I’ve made my work one of the greatest pleasures and joys in life,” he says. “That’s the surest way I know to succeed.”
Finding the right fit between your practice and the most appropriate payment system is key to financial success, as well as your level of comfort and professional satisfaction.