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Transitioning to a Direct-pay Medical Practice

Transitioning to a Direct-pay Medical Practice

Imagine practicing medicine without dealing with each payer's set of rules, barriers, and protocols. No longer would you and your staff spend time verifying patient insurance and resolving questions about coverage, engaging in often fruitless fights over reimbursement rates, and waiting months for payments that sometimes never come.

For family physician Paul Dibble, that world is his reality. In August of 2011, he said so long to his fee-for-service practice in Grand Rapids, Mich., and moved to Magnolia, Texas. There he opened Simple Traditions Family Health PLLC, a solo direct-pay practice that does not accept insurance.

"I felt like we were spending so much time trying to meet the insurance requirements that we weren't able to provide good patient care," says Dibble of his prior fee-for-service practice. "You end up having to cut corners because you just can't spend as much time with patients."

His frustrations with the model, combined with the passage of the Affordable Care Act and the subsequent upholding of it by the Supreme Court, convinced him it was time to make a change. "I think it's going to be very difficult for a small private practice to compete ... they're going to have to join forces with the larger organizations, which I didn't want to do," says Dibble. "I didn't want to be just an employed physician in a large organization. I like the small private practice, I wanted to maintain that, but I didn't see that that was going to be possible in the traditional model. I saw with the direct-pay option that it was a way for a small private practice to survive in the new landscape, if you will."

Dibble is not alone in looking to direct pay as an alternative to traditional fee-for-service reimbursement. About half of the nearly 1,000 respondents to our 2012 Great American Physician Survey said direct pay might be worth a try if it made sense economically. Fourteen percent said they are considering it, have considered it, or already working in such a practice model. Here's how Dibble made the transition to direct pay and how it is affecting his practice style, his patients, and his revenue.

Setting down roots

Dibble's decision to transition was not a quick one. He spent a lot of time researching how such a model works, and researching how to start up a new practice in general. "Some of those details I hadn't done before and so I had to learn them as I went," says Dibble, noting that time spent talking with other physicians who had successfully transitioned to new practice models was particularly helpful.

While Dibble's decision to move to Texas was partly family related, he says he also felt it would be a great place to start his new venture because of the friendly practice and business environment the state offers. Within the state, Magnolia drew him in, in part, because of its relatively high percentage of uninsured individuals who would be attracted to a medical practice offering low-cost services. Dibble says he also felt certain characteristics of the population, such as a high number of individuals seeking alternative treatments, indicated many would be attracted to an alternative practice model. "It's a little hard to describe exactly what to look for specifically, but people who are looking for something different than the typical," he says.

Pricing it out

Dibble knew the fees he would charge patients for services would play a big role in determining whether enough of Magnolia's population would be attracted to his practice. So in addition to researching location, he spent a lot of time looking into fees charged at other direct-pay practices, in addition to calculating how much he would need to charge to keep his practice afloat. "With that research I was able to come to a pretty close price [for services] and I haven't really had to modify it much from the beginning," he says.

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