Feel like throwing all your billing paperwork in the trash? More doctors are doing just that.

Cash-only practices — which generally accept no private insurance or Medicare, with patients paying a discounted fee out-of-pocket at the time of service — are hot.

How hot? Let's not exaggerate: More than nine of 10 physicians had at least one contract with a managed-care company in 2001, the most recent year for which data are available, according the Center for Studying Health System Change.

But the cash-only surge has mostly happened since then, and it's clear such clinics are quickly gaining popularity. For example, SimpleCare, an IPA for cash-only physicians, now has 259 members in its home state of Washington, plus others in nearly every other state. And we've been hearing a lot more about the trend here at Physicians Practice — from physicians who've done it (like Dr. David Albenberg, who's featured in our cover story) and those who want to.

But be careful before you jump on the bandwagon. Managed care payments account for 40 percent of revenue in most practices, according to the American Medical Association. That is a lot of revenue to lose, and most cash-only physicians I know do have lower revenue than those who contract with payers.  However, they also have slashed the overhead associated with coding, working denials, and all the rest.

Although it seems in keeping with the times to expect patients to pay more for healthcare, it may strike some patients as absurd for you to charge them full price for a service they can get elsewhere for a small copay. Then again, with employers pushing premium increases onto employees in the form of higher deductibles and copays that can be as high as $50, paying $40 out-of-pocket for an office visit is a bargain, especially when it comes with better service. Investigate the deductibles and copays of patients in your neighborhood.

The un- and under-insured are another obvious market. They are not all poor or unemployed — according to the Kaiser Family Foundation, 72 percent of the uninsured are in a family with one full-time worker.

And be aware that cash makes more sense for nonprocedural practices; it's easier for patients to cover an office visit than major surgery. Specialists like psychiatrists, dermatologists focused on cosmetic procedures, and others whose services are not typically covered by managed care anyway will have an easier time of it, too.

The biggest hurdle I see for physicians traveling the cash-only road is the need to stand out from the crowd along the way. If doctors are going to buy into the idea of market-based medicine, they also need to be prepared to prove that their quality, service, and even prices are better than those of their competitors. Today, patients have very few ways of making educated buying decisions regarding healthcare. And physicians have hardly embraced efforts to compare outcomes or otherwise measure quality. But one can't depend on the consumer marketplace and not expect consumer accountability.

Send your feedback on this or other topics you'd like to see covered here to Pamela Moore,
senior editor, practice management, at
pmoore@physicianspractice.com, or join the online conversation at http://groups.msn.com/PhysiciansPracticeRabbleRousers.

This article originally appeared in the May 2004 issue of Physicians Practice.