Run a cash-based chiropractic practice: Your guide to reducing insurance dependence

This article illustrates some practical steps to establishing a successful cash-based practice without incurring losses from accepting insurance.

It also covers retention principles and steps to implement automated systems for patient loyalty and recurring payments. Finally, it touches on the art of evaluating and phasing out insurance contracts, ensuring a smooth transition for both your practice and patients.  

Disclaimer: This guide serves solely as an informational resource on reducing reliance on insurance. It does not provide directives on pricing, the selection or rejection of specific insurance providers or the engagement or disengagement with particular insurance contracts. Any such actions would constitute a violation of federal law. 

I get it. Legal disclaimers aren’t the most exciting way to start an article. My aim is to assist you in assessing your current procedures and agreements, ensuring you’re establishing a profitable practice that can keep its doors open. 

In the ever-changing landscape of healthcare, chiropractic professionals are faced with the headaches of accepting insurance or the challenging conversations with patients about not accepting it.  

Did you know that on numerous occasions, when DCs sit down, run the numbers and evaluate the insurance companies they are in contract with, they may find it’s actually costing them to see those patients?  

I want to clarify that it does not have to be all one or the other. You can have a thriving, low-stress, high-retention cash-based practice and still accept some insurance. Even in my own practice, I was about 70% cash and 30% insurance. That 30% consisted of personal injury, Worker’s Comp and a few insurance companies I was out of network with but still allowed me to be profitable.  

This guide is designed to offer DCs practical steps not only to survive but thrive, enabling them to establish a successful cash-based practice without incurring losses from accepting insurance. It’s essential to approach this transition with a strategic mindset to ensure the well-being of both your practice and your patients. 

Understand target collection level

The first step toward reducing insurance dependence is determining your target collection level (TCL) or the minimum amount of money you need to collect per visit to be profitable. It’s not a goal. It’s a minimum benchmark. Think of it like a minimum speed limit to ensure you are going fast enough.  

TCL is determined by a simple formula based on your practice overhead, patient volume and desired percent overhead. Start by adding up your overhead for a given period of time and divide by the number of visits in that same time period. That will give you a number that represents your cost to see a patient. I think we can agree you want to make a profit, so your TCL should be above this cost. A simple thing to do is double the cost to calculate your TCL. So, if you determined it cost you $25 to see a patient, your TCL would be $50. Now, you know you need to collect at least $50 per visit to be profitable. 

This benchmark helps DCs understand the essential average amount they should be collecting at a minimum per visit. Knowing your TCL ensures your care plans remain profitable and allows you to make informed decisions about insurance contracts. This step provides a foundation for subsequent strategies. 

Implement retention principles

Retention is key to a successful transition away from insurance dependence. I’ve identified four pillars of retention and call them the “4F’s,” which are feedback, forecast care, frictionless payments and frequent contact.  

Feedback that’s intuitive: Use tools to provide patients feedback showing the need for care as well as the progress they are making. Use language and concepts they don’t need to have attended chiropractic school to understand. Showcasing their progress and reinforcing the need for continued care beyond symptoms is key.  

Forecast care: Develop compliant plans that forecast an all-inclusive approach, offering affordable payment options and covering both insured and non-covered services.  

Frictionless payments: Automate payments to eliminate the hassle for patients, ensuring a seamless experience at the front desk. 

Frequent contact: Automate patient education and email marketing and maintain regular communication to reinforce the benefits of chiropractic care. Stay top of mind.  

These principles serve as a safety net, fostering patient loyalty and creating a steady flow of recurring payments. Automated systems play a crucial role in streamlining patient interactions and education. Once you implement these principles into your practice, the groundwork is laid for your practice to naturally be less dependent on insurance, because your patients are staying with the practice, even after benefits have been exhausted. 

Evaluate contracts with insurance companies

With a strong, high-retention practice in place, it’s time to evaluate existing contracts with insurance companies. Keeping the TCL in mind, DCs can identify which contracts may be costing more than they bring in. If you decide a particular insurance company is not profitable for you, a careful, phased approach to canceling contracts is much better than flipping a switch and canceling all of them at once. I recommend if you make this decision, start with the least impactful insurance company first. 

Phased cancellation: Rather than canceling all contracts at once, review patient populations and identify the insurance companies with the least impact on the practice. Gradually phase out contracts, ensuring a smooth transition for both the practice and patients. 

Communication with patients: Be transparent with patients about the changing insurance landscape, offering affordable payment options, and if necessary, recommending enrollment in discount medical programs to assure continued access to chiropractic care. 

Final thoughts

Successfully reducing dependence on insurance necessitates a strategic and patient-centric approach. DCs can fortify their practices by comprehending the TCL, integrating retention principles and meticulously assessing and terminating insurance contracts. Through these measures, practitioners can cultivate a robust, cash-based practice that flourishes independently of traditional insurance models. This guide serves as a road map, empowering chiropractic professionals to navigate this transition with confidence and secure the enduring success of their practices. 

MILES BODZIN, DC, ran a successful high-retention wellness practice in San Diego, Calif., for nearly two decades. He retired from practice in 2011 to focus solely on helping DCs increase their patient retention. As founder and CEO of Cash Practice Systems, his leadership resulted in serving more than 6,000 DCs, being listed on the Inc. 5000, and being named one of San Diego Business Journal’s Most Admired CEOs. Bodzin may be booked for interviews and speaking engagements at bookings@cashpractice.com or reached directly at drbodzin@cashpractice.com. His inspiring story can be watched at TheCallingMovie.com.