A few months ago, I wouldn’t have thought I’d be writing a series of blog posts and a guidebook on Cash-Based PT practices. It’s interesting how one thing can lead to another …
I had written ‘The PT Project’ to enquire if they or any of their readers knew how the new Healthcare Legislation would affect Cash-Based PT Practices. More specifically, would it become illegal to refuse insurance if everyone is mandated to purchase it? I asked because I started a cash-based practice in April 2010 which has quickly become very busy and successful, and I cringe at the idea of returning to an insurance-based model. The folks at The PT Project assured me that the government couldn’t force practitioners to accept insurance. They also said that many others in our field may be moving toward a Cash-Based model due to the coming changes, and then asked me to fill them in on why and how I started a Cash-Based practice.
Social Security and Medicare crisis
There is ample information available that details the dire situation our Social Security and Medicare systems face. I was recently reading a great article titled “The Global Budget Race” in Wilson Quarterly that eloquently describes this unfortunate scenario. To help answer the “why I started a Cash practice” question above, I’d like to include some excerpts from the article to give an overview of where we stand as a country, what’s likely to change, and how it will affect the PT field and health care practitioners in general …
“Last year, Medicare and Medicaid made up almost 22 percent of the federal budget … By 2050, together with the additional costs of the new health care law, they will expand to 48 percent of the budget.” … “ Not even its strongest proponents claim that the new health care law, the Patient Protection and Affordable Care Act, will solve our long-term health care spending problems. Even if all its provisions work as predicted, the CBO (Congressional Budget Office) estimates that over the next 20 years, it will reduce health care expenditures by ‘only’ $1.1 trillion. That’s a truly massive sum, of course, but in 2030, it is expected to amount to only a half-percentage-point reduction in total health care expenditures as a share of GDP, not enough to produce a substantial change in the long-term financial prognosis.” The authors go on to say that, “The hard work of cost containment has not even begun. According to President Obama, the new law took into account ‘every idea out there about how to reduce or at least slow the cost of health care over time.’ Barring some breathtaking new developments, perhaps in prevention or low-cost technology, future belt tightening will pose even more unattractive choices.” In analyzing the current health care reforms, it was said that, “By far the biggest ‘savings’ in the Obama health care law come from a cut in payments to private physicians, hospitals, and health care providers generally. All take a big hit under the new law – and much commentary has focused on whether political pressure will lead Congress to reverse these reductions. The long-term trend seems clear, though: Taxpayers in the future will not pay providers as much as they do now.”
Besharov, D., Call, D., (2010, Autumn). The Global Budget Race. The Wilson Quarterly, 34, 38-50.
This last statement appears an inevitable reality for providers within the Medicare and Health Insurance systems, but what about those providers in cash-based practices? I can’t predict the future, but it seems that those within the Insurance/Medicare system are having their livelihoods increasingly shaped by politicians. While those with cash-practices, or those with at least have some cash-based services, have a better chance of actually increasing their income over time.
The future favors cash-based practices
The fact is that government spending on HealthCare must, and will, be cut drastically in the future (whether or not the new legislation is repealed or changed). There is simply no way that reimbursement levels and benefits for our growing and aging population can continue the way they are now, and the system not go completely bankrupt. If you think things can continue in their current form, and without politically impossible tax increases, please contact the Congressional Budget Office in Washington DC. I am sure they would like to hear your ideas. With the coming changes, it is likely that reimbursement for tertiary services like PT will take some of the biggest hits.
Since insurance companies tend to follow suit with changes in Medicare, we cannot expect to continue making the same income that we do now using the same model we currently follow (even if you decide to no longer accept Medicare, and only take regular insurance). Not only will our field see a decrease in reimbursement in the future, but patients will have less benefits and avenues for getting the treatment they need and want. Anyone out there remember the Balanced Budget Act of 1997? I didn’t have to live through it as a PT but I certainly heard a lot about it and the effects it had on our field. When I read reports like those above, I can’t help but wonder if the coming changes will be even worse … and longer lasting.
Starting a Cash Practice
So when The PT Project asked me why and how I started a cash-based physical therapy practice, there are two primary parts to the answer of Why: 1) I want to have the best possible chance of keeping a nice income doing what I love, even when the sobering changes mentioned above hit our field. 2) I want my decisions about patient care to always be 100% about what they need; not about what gets reimbursed.
How did I start less than a year ago, charge $120/hr, refuse insurance, get and stay fully booked? The answer to that question goes far beyond what can be relayed in a few blog posts, so I’m working hard to finish a guidebook on starting a cash-based practice. In the meantime, the next month or so of weekly blog posts will include excerpts from the book and other helpful info/videos. If our field is going to make it through the coming changes relatively unscathed, we’re going to have to get creative and make changes. I truly hope the information I’m providing here will help many PTs continue doing our important work and make a good living along the way.