I was recently on a LinkedIn forum, and the following statement was made about the out-of-network business model: “The cash-based practice will be almost non-existent when Obamacare is 100% implemented. We already have it in Massachusetts, and ever since it was implemented, there has evolved an entitlement mentality. That mentality: regardless of the value you provide, I can always find someone who provides exceptional value and NOT have to pay.” (I just want to note that reading this statement alone may sound a little malicious, but it was not meant that way and was made by a colleague of ours whom I respect a great deal).
Here was my response:
Why Obamacare Will Not Hurt My Physical Therapy Practice
I completely disagree with your statement, but before I explain why, I need to give you a quick overview of my physical therapy practice and experience in the cash-based realm… My practice is 100% cash-based, all sessions are a full hour one-on-one with me, cost $150, and I stay fully booked. Here is the key point as to why the implementation of Obamacare will not change that for me: over 93% of my patients do already have insurance and choose to not use it in order to get treatment at my clinic.
Different Mindset of Private-Pay Patients in Insurance-Based vs. Cash-Based Clinics
I can see how an insurance-based practice owner could come to the conclusion that cash-paying patients will largely disappear with Obamacare. Most of the people paying cash in those clinics are doing so simply because they do not have insurance, and must be cash-pay patients.
The cash-paying patients of a private-pay physical therapy clinic are quite different than those of an insurance-based clinic. They usually have health insurance, but they are willing to pay out-of-pocket for a service they perceive as higher value than insurance-based PT services. They are simply not part of the population who refuse to pay more “regardless of the value you provide.”
Even for really phenomenal practitioners, it’s hard to create a service that would be perceived as higher value than mine when they have to see multiple patients per hour and especially if they have to delegate treatment to techs or assistants. I’m not saying these things arrogantly or as if I’m a better PT than most others out there… there are tons of physical therapists who I’m sure could provide equal or better results than I do if they had a full hour with each patient.
Speaking of patient mindset … we don’t have to wait for Obamacare implementation in order to see an “entitlement mentality” among the general population when it comes to physical therapy. In a successful cash practice, your market/patient population are not the people with that mentality; and when the uninsured become insured in 2014, it’s not going to change the mindset of those who seek out my care.
Unless cash-based practices are someday made illegal (which would be the opposite of the free-market capitalism this country was founded on), my practice and my ability to treat patients in the way I feel is best, will not be heavily affected by the changes everyone seems so concerned about.
Do you have concerns about Obamacare and your current/future PT practice? Tell us about them in the comments below and share this post with your colleagues.
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Thank you Jarod for your ray of hope and optimism! This gave me a boost I’m sorely needing!
My pleasure, Gina.
And I love your website url!
Thanks Jarod! I’ve gotten great feedback about the name 🙂
I completely agree with your perspective on cash payers. I live in Miami where we have 21 consecutive days of direct access. I have dabbled in the past with providing home delivered cash services and had patients with insurance willing to pay upwards of $200 an hour. Massage therapist charge $80-$100 and more to deliver there hour services and as professionals with masters or doctorates education I believe we are worth so much more. Our clinical skills and time need to be valued and the insurance system doesn’t afford us the opportunity to be the great clinicians the we can be. Too much volume leads to poorer outcomes.
Thanks for presenting true vision and hope to the profession.
My pleasure, Matthew. Thanks for the input. I think our profession/ colleagues (on average) have a bad habit of undervaluing ourselves/services, and this has largely been driven by third-party payers
Well you are on the same forums as me at times and may have seen a post of mine or two suggesting everyone start acting like the self reliant professional everyone wants to be treated as. As you state here and in other posts. The present mentality of relying on someone else like the physician to refer, something else like the insurance industry to pay or the government to change state practice acts is not what is going to get you patients. Quality and effectiveness will even only go so far if you do not actively pursue those who want to get better using a well educated and effective licensed PT but do not know about you. You just need to get over the fact that being on a list of providers is not the only way to get your name out there.
Truthfully,cash based is the only thing that makes sense to me now when I ratio quality of life vs quantity of patients. I think all of this dependency on the system as is held, like most knots in our patient’s muscles. For most it is fear of pain, change or self accountability.
Hi Dr. Jarod,
In the month of June I will be opening a cash based pediatric practice. I strongly agree with your statement. Many tell me that because I will be treating children this will be hard once Obamacare is implemented, but I don’t agree. After researching the area where I am in NC as the market around me, I think my fee is very fair and I have find lots of parents looking for a different choice. I wonder what do you think? I will be charging $90 per hr or $45 for 1/2 sessions, being that infants may not tolerate longer sessions, this for all interventions. I also provide wellness classes for children with impairments. Thank you for all you input.
How do you get people to think of PT as something to pay cash for rather than searching around for their perceived “equivalent” that is covered by their insurance?
That’s a good question, Jennifer. I have actually tried to answer that question in a variety of ways throughout this site, so instead of re-typing a lot of it, I would encourage you to search the different blog posts for a more detailed answer…
But in short, you have to “highlight” (via your different forms of marketing) how your practice is different from the insurance-based competition around you. Longer one-on-one treatment sessions, faster results, fewer visits needed, etc. Those forms of marketing are quite numerous: how you encourage current patients to spread the word about your clinic, your networking interactions with other business owners, your website and different social media platforms, your interactions with referring physicians, and the list goes on. I try not to promote my eBook when it’s not totally appropriate, but in this case I can honestly say that one of the main focuses of the book is answering exactly what you asked… because survival of a cash-based practice would be unlikely if you don’t appropriately answer that question and execute what needs to be done to set your practice part.
Dr. Jarod,
I finally took the plunge and started doing some cash based therapy on the side, I work in a nursing home and some home health, but found a hole in my area that needed OP care. After trying to get approved for local insurances and medicare I found it easier to just say “I charge Cash!” So far it has been going well. I push one type of service, Myokinesthetics, which I have had great results with for pain, ROM and neuro problems. It is a quick tx usually up to 30 minutes at most. I will treat what ever comes my way but because it is my 3rd job I am trying to keep it at a speciality. If it grows I will move more cash pay. Thanks for your site.
Dan
Congrats, Dan! and best of luck with the continued growth of your cash-based side business
Sorry. I forgot to add that I have medicare pts willing to pay cash for my services again proving your point that just because someone has insurance they may still be willing to pay out of pocket.
Thanks again for site and encouragement.
Dan
I agree with your position however I have another take on cashed based practice. I don’t recall seeing the anything in Obama care that will require OP PT/OT/ST to be a covered service or what the out of pocket cost will be for patients. I see cash based practice as one mostly free from and Insurance Company practice requirements or restrictions. I for one believe that a PT can deliver high quality outcomes and see more than one patient an hour. You would get the same $150/hour payment if you have 3 patients in your clinic doing their rehab at the same time (call it group if you want or not). Your only requirement is to comply with your state practice act. I would much rather see that many patients and save them to cost and at $50+/-/session the out of pocket cost would be the same or even less than standard Insurance coverage. The only thing you have to do is get the patients and referrals to seek you services and at $50/session that is not difficult.
Thanks for the comment Russell.
One of the beauties of the cash-based business model is that, rather than insurance companies influencing/dictating the schedule/treatment-model you choose, YOU choose what you feel is the best approach for your patients and yourself. I like your idea and think it would work very well in a more therex-based clinic. The main reason I spend an hour with each patient in every session is that the majority of the treatment I provide in my clinic is manual therapy (though I could certainly do 30 minute sessions if I wanted). I know of other out-of-network PTs who follow a schedule much like the one you described, and it works very well.
Best of luck and keep us updated on your progress in this model.
Thanks for this article, Jarod. I was hoping you were as optimistic as I am about all of this…
Tracy
My pleasure, Tracy. There will always be opportunity for those willing to be flexible and creative!
One thing I am educating my friends/family/patients about is that with the super high deductible plans that are now more the rule than the exception, if they usually don’t meet their deductible, they will most likely come out ahead on a cash-based service. I received PT a while back from a mentor who worked for a POPTS and with the high deductible, my sessions were over $300/hr – and he was seeing 2 patients at a time!
Thanks for the input, Stephanie… keep educating the people!
Love this blog. Cash based practice is the way to go. Have also implemented health and wellness. Really like your professionalism Dr J keep this going.
Thanks so much Dr Liz!
Does the ACA require PT clinics to have electrical safety test done to PT equipment?
Thanks for the question, Lawrence, but I have no idea. Not really in my realm or within the context of this website, so it’s probably a question best asked of those who are administering ACA.
Hi,
My daughter was in to see her PT for a tweaked knee she had from playing volleyball. She wants to be a PT and was asking hers about it. She said she would not go back in to this field again and would advise against anyone else going in to it. A PHD is required and that could mean upwards of $175,000 in debt. Her last intern cant find a job now and has over $175K in student debt. She said the reimbursement rates in NV are lower than for medicare. They are having a hard time making it right now. It was a little discouraging for my daughter to hear that but I think she is still interested in pursuing that career path..
Thanks for the input, Peter. yes, the debt to income potential ratio has been quickly moving in the wrong direction for some time now. However, that doesn’t mean you can’t get a DPT was much less than $175K in debt, and still make quite a good living in this field. The whole point of the cash-based business model is due to exactly what you described above… an unsustainable decline in reimbursements for PT services. so practice owners will have to get creative in how they decrease their reliance on third-party payers.
As for the intern who “can’t find a job”… there is an absolute TON of work for any licensed physical therapist and this will likely continue to be the case. Perhaps she can’t find a job that she feels is absolutely perfect, but there is certainly plenty of jobs out there that she could get… Even if she’s a terrible PT (unfortunately).
As for your daughter, I would encourage her to read this post and make sure to check out all the comments on the post as well: https://drjarodcarter.com/is_pt_school_worth_it/