Happy Halloween everyone. I’m going to dive into something I’ve written about before but seems to be such an important topic, I’ll continue to revisit it many times. It can be either a prevalent roadblock or a path-clearing guide to cash-based success depending on whether or not you’ve mastered it. Though it can carry a number of labels, I choose to call it “mindset.” When we look at the topic of “mindset” in the cash-based business model, there are two primary subtopics:
1) Practice owner/practitioner mindset
2) Patient mindset
This post will look at an important component of practitioner mindset … especially those who currently own or work in an insurance-based clinic and want to convert to the private-pay model.
The Insurance-Based Practice Owner Mindset
In a recent discussion at a LinkedIn Group Forum, I found myself addressing a very common misconception among insurance-based practice owners. A practice owner I highly respect is currently looking at cash-pay options but is being held back by the idea that everyone expects insurance to pay for their physical therapy.
He stated things like, “Being the very best at what you do and being known for that obviously isn’t enough, so how did you do it?” He explained that he has a practice in a state where 100% of people are insured, and is in an area of that state where there are a large amount of high-quality options for physical therapy. I’ll paraphrase some further comments and questions:
Are most patients in your area HMO, PPO, POS, etc.? In ours, it’s HMO, so the idea of them seeking care outside AND inside the HMOs and subsequent reimbursement is zero … The simple idea of paying cash is inconceivable to almost every patient we have. Each person I talk to – even some very wealthy patients we have – believes that he/she would only pay cash for care if they had no other option for high-quality care. Three wealthy patients that I asked directly told me they come to us because they believe we’re the best. But if I didn’t take their insurance they’d go to the next best, because in our area there are a lot of high-quality caregivers … Does 100% of the legal population in your area have health insurance coverage of some sort?
The Cash-Based Practice Owner Mindset
My paraphrased response:
Before I specifically answer some of the questions you asked above, I can tell from your questions and comments that I should first discuss a key paradigm shift that occurs with moving from an insurance-based model to a cash-based model:
Not only must the practice owner shift their mindset about PT and the services they offer, but the patients you attract to a cash-based practice will also have a very different mindset than what you are used to.
I think a key thing to realize here is that when you are building/transitioning to a cash practice, or are trying to build the cash-based segment of your patient population, you will likely be wasting your time in targeting your current patient population and your current referral sources, because most of them (as you pointed out) do have such a strong “entitlement mindset” and feel that physical therapy is something that should always be covered by insurance.
The majority of wealthy people in Austin would not come to my physical therapy practice for treatment because I don’t bill insurance. It’s not about wealth or the type of insurance someone has; it’s about mindset. It’s the same in basically any population, and if you’ve been surrounded your whole career with people who would never go out-of-network for physical therapy, then it would be easy to develop the idea that a cash-based practice is impossible in your area.
You seem to be convinced that 100% of the people in your state would be against going out of network to pay for physical therapy simply because 100% of them have insurance. Actually, I hear similar statements from practice owners in most states.
You asked, “Are most patients in your area HMO. PPO, POS, etc.?” and,
“Does 100% of the legal population in your area have health insurance coverage of some sort?” I really do not know what mix of third-party payers and insurance types the people in my area tend to have. In my situation, it doesn’t really matter because I’m not marketing to people who are dead set on using their insurance for physical therapy. I don’t know the percentage of insured versus uninsured in my area, but I can tell you that over 95% of my patients ARE INSURED, and they choose to forgo using that insurance to get treatment at my clinic.
What I’m trying to say is this: I believe (and have seen evidence in my colleagues’ cash practices too) that in any population, even in states with 100% insurance coverage, there is a small segment of that population who will be willing to pay more out-of-pocket for something they perceive as being the highest value they can receive. If you decide to transition toward a cash-pay model, you will have to market your cash-based services to this different segment of the population… Those who do not have that limiting entitlement mentality you’ve been surrounded by in your current clinic.
They are out there, and if you offer something highly valuable that they cannot find elsewhere, then you can have a successful cash-based practice.
How to offer something unique, and target those individuals with your marketing, is beyond the scope of this post but is explained in incredible detail throughout this website and my Cash Practice Guidebook.
On the topic of Linked In Groups and discussions, if you haven’t already, please join us at the Cash Based Physical Therapy Linked in Group and join the conversation.