If you haven’t already used it, there is a fantastic Linked In group for Private PT Practice Owners that has a ton of great information and interaction. It was started by Nitin Chhoda PT, who many of you may have already heard of and learned from. If you haven’t, I encourage you to visit his site and start interacting with him.
I bring up this group because I was answering a question/concern of one of the members and realized it would make for a good blog post.
How do you make the jump to a cash physical therapy practice?
His statement went something along the lines of:
I would like to know how everyone is doing their marketing to drive the cash-paying patients to your practice, and how you compete with all the other clinics accepting all insurance plans. The cash-pay system sounds great, but taking the first step away from total insurance reliance is hard to do.
His hesitance and concern about stepping away from the insurance/medicare world is one I hear all the time. “Going cash-pay would be amazing, but what if it doesn’t work?!! What if I fail and go bankrupt?” Sound familiar? I’m am certainly not here to say that every PT Practice Owner who tries to add cash services or fully convert to private pay will be successful. Of course some will fail! However, I think more would be successful with it than many expect, and getting past some initial fears is often the first step on the path to this success.
Making a move toward a private-pay model
So let’s get back to the first part of his question … Based on all the blogs on this site and all the information in my cash-practice guidebook, the answer to “How do you market and compete…” is extremely long. But here was my response:
“You are not alone or unjustified in your concern about taking that first step away from insurance reimbursement. However, if you already have a profitable practice, you can take ‘baby steps’ without risking your bottom line. You can add treatment sessions to your day that are dedicated to cash-pay patients, and continue seeing the same number of insurance-based patients. Yes, it means longer days, but as you build your cash population, you can start to REPLACE insurance-based spots with cash-based ones.
Marketing a cash PT practice based on results and quality
As for how to market to this population, a detailed answer to that goes way beyond the space limitations of these forum posts. However, Thomas made a very good point above that if you provide great service, much of your business will come from word-of-mouth. And if you are completely cash-based (like Thomas and I are), you compete less with insurance-based practices than you think. Why? Because most of the prospective patients who are willing to pay out-of-pocket are quite different than those who would only go where they can use their insurance. In essence, you are targeting a very different market than insurance-based PT clinics. Sure, there is some cross-over, but not enough to be concerned about.
The way you compete with other clinics to attract those patients who would be willing to go either way is that you offer something significantly different. For me, it comes down to the results I get and the amount of time I spend with each patient. Having an hour one-on-one with your PT in every session is a rare thing, and is attractive to those patients who put a high priority on high-level performance and fast results (not necessarily just people with a big financial surplus). I just wrote an article on exactly this topic for the Private Practice Section magazine that will publish later this year, so keep an eye out for that if you’re a PPS member.
In an insurance-based clinic, the majority of your marketing is to referring Physicians. For me personally, I haven’t spent a dime or any significant time on marketing to Physicians. I do things to encourage word-of-mouth referrals, I do things to be found with internet searches, and I market to fitness and wellness professionals who have clientele I already know are willing to pay cash to feel and look better.”
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If you already offer private-pay services at your PT clinic, what do you do to market these services and gain new clients?
Interested in the cash-based private practice model?
Click Here to learn how to start your own Cash-Based Practice
i would like to get some more advice on opening a cash flow phsical therapy clinic please e-mail me at your earliest convience.
Thank You
Jasmine Bowden
Thanks for reaching out, Jasmine. Just emailed you
Great post Jarod. I always enjoy reading these. We do see both self-pay and insurance patients. I don’t market to physicians. It just doesn’t work. I believe most patients find our services through someone we have treated in the past. Patients really value the full hour treatments. We only accept 4 insurances. If we have contracted rates with insurance companies, I believe our cash fees should be slightly higher to not “undercut” the insurance companies. There is so much to know when you have your own practice and I thank you for all your insight.
Ben
HandCrafted Physical Therapy
My pleasure, Ben. There is a lot of discussion on this topic of “what cash rates should/can (legally) be, when you accept both insurance and cash-based patients.” I’m gathering more and more info on the topic and will post something about it this year for sure. Since my clinic is 100% private-pay, it’s not something I have to deal with so I need to research more before posting.
Dr. Carter,
I have been trying to find information in my state (Wisconsin) about legality of having both cash paying patients and insurance covered patients in the same practice. Unfortunately I keep getting conflicting answers regarding this topic from other providers and the state association.
The information provided in my state is minimally helpful and seems to focus solely on discounting services to patients who are covered by insurance, thus subject to the ‘insurance company’s policies’.
Many also warn me that I could be audited by ‘any’ insurance company if I charge a lesser amount for cash payment services, and required to reimburse to the insurance companies the amount they previously paid me above my ‘cash’ amount.
I then posed questions regarding discounts in 2 separate situations using a ‘prompt-pay’ or same day pay scenario. The first involves a patient with no insurance. The second involves a usually unreachable annual deductible.
1. A patient has no insurance. I provide them a “Prompt-Pay” option that if they pay on the day of the service they would be allowed a xx% discount off my normal fee for service. If they paid after the day of service they would be required to pay the entire charge (only one fee schedule at my office). This would not apply to Medicare.
2. A patient, usually with a very high deductible that is seldom met, requests that I do not submit their bills to their insurance company. I also offer them a “Prompt-Pay” option that if they pay on the day of the service they would be allowed a xx% discount. If they paid after the day of service they would be required to pay the entire charge (only one fee schedule at my office). This would not apply to Medicare.
Would a ‘Prompt-Pay’ option as indicated above be legal? …sensible?
Even though you do not market to physicians, you still must get referrals… correct? I am confused about direct access, cash pay, etc. Even though you see everyone on cash pay basis, you are limited by direct access? Could you please expand on this…. greatly appreciated. And I know states are different but would love some insight!
Thanks!!
Cassie
Thanks for the questions, Cassie. A PT practice’s business model does not change the requirements or regulations of your practice in terms of your State Practice Act or any other applicable State Laws. I’m often asked, “Hey, if I convert to a cash practice, does that mean I’ll no longer need a referral to treat my patients?” The referral requirements and other laws of your state are the same whether you bill insurance or not. Those rules do not change and it has nothing to do with whether or not your patients are seeing you on a private-pay basis.
So with all that said, yes I still have to get a referral before initiating treatment with any patient. So when a new patient calls to set up our first session, if they do not already have a referral for PT, they have to go get one. And very little of my business comes from direct Physician referrals, it is very common that new patients call and do not yet have a referral. It sucks! I then go into the process described in this post to figure out the best way for them to get a referral.
How are you convincing patients financially that paying cash is better for them than billing insurance? I read the 5 reasons, but how do justify mathematically? The fact that we see patients for much fewer visits?
Thanks for the question Rebecca, and I apologize for the delayed reply.
Well, these numbers will of course change based on what you are charging and what the patient’s copay/coverage is, but let’s look at a hypothetical scenario:
For those with a high deductible, they will likely be paying as much (or possibly way more) for each visit to a standard insurance-based clinic until that deductible is met. Then it becomes quite easy to convince them that it makes sense to go cash-pay for the longer one-on-one visits and higher-level care you can provide in your cash practice (and your clinic’s receipts can be sent as self-claims to be applied toward the deductible the same way they would if the insurance-based clinic sent them. But please note: some insurance plans have in-network AND out-of-network deductibles in which case the application towards a deductible is not as much of a selling point since you are out-of-network)
If they are paying a copay for PT (let’s say $25/visit) but only receiving about 30 minutes of one-on-one care (usually less), and being asked to get 2-3 treatments a week for 6-8 weeks. That would equate to $300 on the very low end and $600 on the high end. Let’s say with your treatment techniques and longer sessions, you can get the same results with one treatment per week for 4-6 weeks, charging $100/visit; the range they’d be paying you is from $400 – $600.
So the amounts they pay can end up quite similar, and depending on how quickly you can get them better (and how high their copays are), they can actually save money by going the cash-pay route.
Something else to consider (and remind them of) is the TIME cost of having to go to the PT clinic for so many more treatments when using insurance.
And finally, don’t forget to mention that your services are HSA/FSA-eligible medical expenses, just like any other PT clinic, so they should consider the savings of being able to pay with pre-tax dollars (if they have an HSA/FSA plan). An literal example of this savings: $100 treatment fee x 25% tax bracket x 7.65% = $32.65 in savings … somewhat equivalent to only having to pay $68 for your treatment sessions.
And let’s not forget about the value of feeling better sooner. Though some would not put an actual financial amount of that value, it should still be brought to their attention (on your website, when you’re speaking with prospective patients, etc), because this is a significant point.
This all of course relies on you being able to consistently get people better faster than the average PT who is limited in the time they can spend with the patient in each session. If you are not providing a service that is truly higher value and more effective than the average, insurance-based offerings in your area, it doesn’t matter how the math works out.
I’m debating doing a month or so of discounted services, but don’t want to decrease the value of what I’m providing. I know some people with do a free eval, but with the athletic population that I treat sometimes one session is all they need. Do you have any ideas on ways to discount services or provide a little incentive without taking away the value of services?
Perhaps consider offering treatment packages at a discount. They buy a 3-treatment package and get $5-10 off each one, BUT they are committing to seeing you three times. even if they only need one treatment for a current issue, they have some for future issues or you can look at their whole body, identify injury predispositions, and spend a couple sessions on those. My guess is that if you’re looking at discounting your services, you’re not keeping a completely full schedule … this approach will help fill in the cash flow gaps and still provide something enticing to buy more sessions.
What is required to accept hsa/fsa payments? Do I need to use a specific service or will something like an iphine square work?
Hey Allan,
So sorry for the delayed reply on your question. I use a phone plug-in credit card swiper like the one you describe above (I use the PayPal swiper), and generally I do not have any issues with HSA/FSA card payments. Oddly though, sometimes PayPal will not let those payments go through even though I am listed as a medical service. If I were you, I would simply reach out to Square, or whatever provider you are going to use, and asked them directly about what needs to be done to ensure those payments can go through for your services.