Should You Implement a Self-Pay Strategy?
Interested in implementing a private-pay strategy for your private practice? At first glance, the idea seems to teeter on blasphemy. Is it really possible to not accept insurance and deal only with self-paying clients 100% of the time?
The answer is yes. In fact, it’s a growing trend that a lot of practices are now embracing – forgoing managed care for a more direct relationship with clients.
Of course, there are pros and cons to a self-pay strategy. Below, we’ll dive into the particulars and help you decide if this strategy will work best for your private practice. Let’s discuss the pros first.
Self-Pay Clients are More Motivated
In general, self-pay clients are highly motivated individuals who want to actively and aggressively pursue a course of treatment. There’s something about paying out of pocket that motivates a client to take a more active role in their health… in general.
Compared to a minimal office visit co-pay that your client may pay out, the idea of shelling out three to four times that amount as a self-pay client will give them more of a reason to follow your healthcare instructions. Clients willing to self-pay are also more motivated to see results from their in-office visits.
Your clients will want to be with you, actively working on a solution because there’s more of an incentive to do so.
No Diagnosis Necessary
There are times when you don’t know what diagnosis to give. However, if you don’t give a diagnosis, the insurance company won’t pay. The insurance company has a specific set of rules to abide by and that includes not paying for a treatment plan when there isn’t a set diagnosis.
What do you do if you just don’t know enough about a patient to offer a specific diagnosis? Do you guess what it could be or do you just settle for the initial consultation fee?
Obviously, you can’t guess, but what do you do if you know you need to see the client again to make an informed diagnosis?
With a self-pay client, you’re not bound to diagnosis. As long as the client agrees, you have the flexibility to see your client multiple times before assigning a diagnosis. You’ll have a better handle on what’s going on and you won’t have to get stuck in the ethical hell of a guessed diagnosis.
You Charge What You Like
With self-pay clients, it’s a whole new world– there’s no one to tell you no or where to go or say you’re only dreaming. You can charge exactly how much you’d like for your services.
The insurance company cannot tell you what you should charge, or rather what they will pay regardless of how much you charge. You set your prices and expect the entire fee paid upon completion of services.
The only fine print here is this: you should charge what your clients are willing or able to pay. Although you’re welcome to charge $1000 for a consultation, how many clients will pay that amount?
It’s crucial to find the perfect price points when you set up a self-pay strategy for your private practice. Check out this post where we discuss how to determine your price points: How Much is Too Much? Find Essential Price Points and Avoid Overcharging
Fewer Patients = Higher Quality
You’re able to see who you want to see and create a more valuable experience for that client. When dealing with insurance companies, you’re always aware of the limits of what you can provide (and expect to get paid for). You also know that you’re getting paid less than you’re worth. In some cases, this amount is a lot less– by as much as 50%.
You didn’t get into medicine to get rich, but you didn’t do it to break even, either. You deserve to be compensated what you’re worth, and that’s usually never what the insurance company is willing to pay.
By accepting clients who are willing to pay your fees, you may see 50% fewer clients but still average the same amount or more.
Why Self-Pay May Not Work for Your Private Practice
Let’s briefly discuss the two main reasons why a self-pay model may not work for you.
No insurance means fewer referral clients. The insurance company works as a marketer for your private practice. Just by being listed on an insurance network, you have greater visibility with a large pool of people.
It’s hard to ask for cash. There’s a mental barrier around cash that blocks many private practices from actively seeking self-pay clients. For some, it’s hard, impolite, or just plain awkward to talk money.
Those are the biggest reasons against choosing the self-pay strategy. Now, let’s discuss the best practices for this payment model:
Best Practices for a Self-Pay Private Practice
To implement a self-pay strategy in your private practice, you should follow a certain set of rules to make the experience pleasant for you, your staff, and your clients. Let’s go over them below.
+Create a Price List for Your Services
One of the first steps to accepting payment for your clients is to let them know exactly how much you charge for each service you provide. Complete transparency is key to winning here. Your clients should understand what you provide and how much you expect to get paid.
It may be difficult to know how to create the perfect price list for your private practice. A good idea is to understand what your competitors charge. Do you know the fees of any colleagues who work in the area?
While you can’t get together and plan out how much you’ll charge (that’s collusion and it’s highly illegal – PDF), you can find out what they charge and consider your pricing strategy accordingly.
Also, make it a habit to review your fees at least annually, but it can’t hurt to look over it every three to four months. Make sure that you’re covering your expenses but also making enough to reinvest in your private practice.
+Post Your Price List
Set pricing expectations early and often. Make sure your price list is highly visible. Your price list should take a prominent place in your office, and also have a dedicated page on your website. Make your price list obvious and unavoidable.
This practice also helps you pre-qualify potential clients who can determine whether your service fees are compatible with their budget.
Also, do the same for your payment policy. Detail when you expect payment, if you offer discounts for payments received before service, how you handle returned checks, and what forms of payment you accept (credit cards, debit cards, checks, etc).
Taking it an extra step, include your price list and your payment policy as part of your intake process. Have clients initial or sign to acknowledge that they read your payment policy. Be sure to keep their signed copy of the payment policy on file.
Depending on your current clients and the demographics in your area that you service, it may be necessary to translate your payment policy and price list into a different language, including braille.
+Get Paid Immediately
Don’t put off your payment. Accept payments immediately and efficiently with the help of TheraNest’s mental health billing software. Pre-authorize charges, if you can.
Also, make it very easy for your clients to pay. Instead of offering only one way to pay bills (in person with your cashier), set up a way to accept payments online, too.
You should accept a wide variety of payment types.
If you’re still not sure whether accepting insurance or adding the option of self-pay is right for your practice, be sure to check out Dr. Jarod Carter’s thorough blog on the topic of setting up a cash based practice. This post discusses the legalities of cash pay pricing while still in-network. It’s a must-read if you’ll be doing both.