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You’ve probably noticed that changes in third-party healthcare coverage have resulted in a resurgence of cash-only practices in the chiropractic industry.
Given that deductibles and patient co-pays are at an all-time high, many DCs are considering setting up or changing to a cash-reimbursement practice model. In fact, there’s a good chance your practice is already headed in that direction.
Increasingly, patients are purchasing insurance policies that only cover potentially catastrophic injuries or illnesses and accepting the fact that office visits and lower-cost modalities are their burdens to bear. The usual model of paying for such visits with insurance is starting to become a thing of the past.
What’s more, when the patient is personally involved with reimbursement, they think twice before scheduling elective services. Unfortunately, they often skip important visits to their healthcare providers, potentially putting their health at risk.
Current healthcare and insurance trends show that when patients must pay to play, the utilization rate goes down and cost reductions occur. But what the insurance industry and lawmakers often fail to recognize is that preventative medicine is the least costly care of all. By eliminating preventive care, everyone pays more for ignoring their health needs.
The cash alternative
You can operate as a cash practice and also accept insurance at the same time. There is no need to pigeonhole your practice with a payment model. What business today declares it only accepts cash and lives to tell about it? Not many. A better option is to establish your cash reimbursement policy as an alternative payment method.
A successful office should be ready to accept all forms of payment including cash, checks, credit cards, Apple Pay, PayPal, and other online solutions that offer a range of payment options. In addition, there are payment portals that provide electronic patient statements and a one-click payment option on mobile devices. In today’s world, people want choices (and they usually want electronic ones).
The idea that you can ignore the insurance side of your business disregards the fact that 90 percent of the U.S. population carries some form of health insurance. You’ll hear some doctors boast that they eliminated their billing staff because they no longer file insurance claims. This is impossible—someone is being billed and therefore someone has the job of billing and collecting, meaning you can’t eliminate staff.
A better system
A well-designed practice management system can also greatly simplify administrative duties. But many practices fail to take advantage of this technology. Instead, they manually enter charges and payments, mail paper statements, and in some cases even hand write receipts.
Moreover, many offices are still calling insurance carriers on the phone to determine the status of coverage or claims. The list of inefficiencies you’ll find in the typical chiropractic practice is surpassed only by the long list of excuses as to why they “can’t change.”
In fact, the tools available to manage a practice have never been better or more advanced. You often hear chiropractors bemoaning the fact that their reimbursements are going down and business isn’t what it used to be. It’s hard to disagree—things used to be tremendously different.
The influx of cash from the carriers used to be so great in chiropractic that no one had to really know how to run a successful business. Many were successful in spite of themselves.
Today that has changed. The smart and the strong will not only survive, but they will thrive and these are the practitioners who are growing. The good news is that the tools needed to engender this change are readily available.
Forbes magazine looked at the financial statements of 300,000 small businesses and rated chiropractic No. 2 on the list of the most profitable. Chiropractic can be a surprisingly good profession and it is also a highly profitable for some. That said, if the same article were written in 1990, chiropractic would likely take over the top spot.
But things have changed, and chiropractors need to sharpen their management systems and become more efficient and effective. Otherwise, wasteful practices will find their 15 percent pretax margins disappear.
A smarter model
Offering cash plans to your patients is an emerging concept that shows promise. In this model, patients make a monthly payment to the practice and they contract for a specific level of service. In some cases, there may be a monthly cap on visits.
In others, the number of visits may be unlimited and more akin to a health-club model where there are no limits or barriers—or even appointments to make. This model works for some practices that have the right demographic.
If your practice is set up in an affluent area where patients have more disposable income, the cash-plan model works well. It is driven by numbers, however; if you have a few hundred patients paying $100 a month, you’ll be making $240,000 to $360,000 a year (a good start).
If you opt for a more aggressive model that only charges $75 a month but you have 1,000 patients signed up, that turns into $900,000 a year coming in to your practice.
On the other hand, accounting for multiple billing profiles can be a nightmare when you’re trying to remember who was billed when, what their caps on services are, whether their plans are renewable, and so on. To manage this kind of problem, you need the right tools. Fortunately, there is software available today that’s flexible enough to manage all the varieties of plans you can offer.
Setting the bar
Pricing your cash plan correctly involves a few tradeoffs you’ll need to consider carefully. With this type of model, a high monthly fee will cause patients to re-evaluate it every month. The payment should be so comfortable that a patient won’t think twice about the perceived value.
If a patient is on a payment plan such as the one described above, the value proposition is “dollars paid versus utilization.” Drip email campaigns remind patients about their plan and give them compelling reasons to visit your office. Don’t be fooled into thinking that it’s more profitable if a patient pays and stop seeing you.
Patients who pay but don’t make use of their plans become losers for your practice—not just because you lose these patients but also because word-of-mouth advertising is the best marketing tool, and patients dropping off your system will cause another to never sign up in the first place.
And there are software systems readily available to assist you with all of this, from patient management to billing, from cash plans to third-party payments. You don’t have to eat the whole apple in one bite, but at least take a nibble now and then and in time all you’ll be in charge of an efficient, contemporary, and highly profitable practice.
Russ Thompson is CEO of DB Consultants, a Chiropractic Software Company providing software and solutions since 1984.
About DB Consultants
DB Consultants has been dedicated to helping chiropractic offices for our entire history. We truly understand the needs of chiropractic offices like yours, because we have been refining our solutions for over 30 years. DBC offers epic support and proven EHR software created specifically for chiropractors. Call 610-820-0440 or click here for your free demonstration