It’s 2014! Holy Crap! In some ways I feel like it’s only been a few years since we said goodbye to the 90’s. A lot has changed in the past 14 years, and though there are certainly some “early adopters” out there in the cash-based practice model, it’s a relatively new and increasingly popular interest for most practice owners. In this post, I want to talk about the number one reason most practice owners will not be successful in the private-pay business model.
Drum roll please…
Why most are unsuccessful with the cash-based model
The most common reason that current/future practice owners interested in the cash-based business model will never have success in this type of practice is that most of them will never try. When I speak with other practice owners, the only thing that seems as prevalent as their excitement about the private-pay model is their fear of deviating from the insurance-based one … the fear of failure; the fear of change; the fear of losing a business and a steady income. These are not invalid or unfounded fears, but unfortunately, people tend to be much more motivated by the fear of negative outcomes than the possibility of positive ones.
You could make the wrong decisions, take the wrong action, have the wrong mindset, deliver a less-than-phenomenal service, etc., and all those things could cause you to fail in this business model. However, I think that the above reasons for possible failure will not be responsible for nearly as much lack of success as non-action.
Here’s the deal: I’m huge on “taking action.” Those of you on my email list just saw that last week with the e-book discount and free consulting I gave to those willing to take action right away. The beginning of the year is a great time to emphasize the point that nothing happens without taking action. Though that statement may sound ridiculous to some of you reading this (and feels a little funny typing it out), there is no doubt that a huge portion of the population needs to hear it over and over again.
Growing risks for traditional practices
If the landscape of private practice, legislation, and especially reimbursement rates were not really changing, this wouldn’t be such a big deal. I wouldn’t really be concerned about it and neither would you. I wouldn’t feel compelled to write posts like this that probably turn some people off. I would stick to the posts about marketing tactics, referral diversification, etc. However, these things are changing, and unfortunately they are not changing for the better. How bad will it have to get before your profit margins are in the single digits? How bad will it have to get before you are forced to make a change?
I’m not saying that all current and future practice owners should strive for a 100% cash-based practice. In my opinion, 100% cash-based practices are not possible in all areas and in all different practice scenarios. What I’m saying is that due to what’s already happening to reimbursements, and what is very likely to come, every practice needs to decrease its reliance on third-party payors. This does not have to happen solely by dropping insurance contracts either. There may be a number of solid reasons for you to stay in network with most or all of your current carriers. If that is the case with your practice, my suggestion would be to at least explore the possibilities of setting up cash-based ancillary services and products.
Interested in the cash-based private practice model?
The take home point is this:
Don’t wait till your back is against the wall to take action and diversify your revenue streams. [Click to Tweet]
By then it may already be too late.