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What to Expect if You Become a Direct Pay Medical Practice


I think most of us yearn for having more freedom both financially and clinically with our patients. Enter direct pay practice models.

There's a lot of buzz about how to take your practice by the reigns and start charging your patients directly for the services you provide. We all can appreciate that the current insurance-run and government-mandated system of healthcare is failing ourselves and our patients on many levels. Reimbursements are becoming much more difficult to obtain forcing us to increase the volume of patients we see which ultimately increases our liability. At the same time, we are losing control of the physician-patient relationship as we are forced to submit to government and insurance oversight.

All-in-all, I think most of us yearn for having more freedom both financially and clinically with our patients. Enter direct pay practice models. With a direct pay type of practice, you can say goodbye to any oversight and intrusion, releasing you to practice in a free environment where you and your patient - only - decide what is best. No more insurance claims, no more audits, no more stress of having to code this way or that way. Also, no more hidden fees - the patient knows up front exactly the costs of services and agrees to pay them.

I am sure you have read countless articles about this topic. And you are likely thinking that this all sounds so good, but at the same time, your fear of losing your patient base scares and intimidates you to the point that you do nothing. You freeze and as a result, you stay where you are, trapped in a system that makes it difficult to practice the type of medicine you envisioned.

I hope that my article today will help disperse some of the scariness out of the direct pay model. And rest assured, I am not an academic who preaches the hypothetical. Rather, I run my own practice and have been doing so for six years now and transitioned my practice from an insurance-based practice to a direct pay practice over one year ago.

Here are my observations about this process: I hope you find them useful and can learn a thing or two:

• Expect to lose most of your patient base: When I announced my transition, I had about 4,500 active patients. Once the dust cleared, I only had 200 or so.

• Expect to attract many new patients quickly: I did not spend one penny on advertising and quickly grew to where I now have about 700 active patients - that is an average of 41 new patients per month!

• Patients want options: Don't settle for the idea that you have to price your services only one way; I offer many different service plans and pay-as-you-go options and my patients embrace this.

• Offer service plans as well as pay-as-you-go options: Most new patients do not want to sign up for a plan, but most returning patients want a plan. The plans I offer are more economical for patients, but the new patients are hesitant at first.

• Play around with different price structures: Every geographic area is different and so it is worth playing around with what you charge for what.

• Expect your salary to decline the first year you transition: Losing patients and regrowing your practice does take a toll.

• Expect by year two to be making more money than you did under the insurance-based practice; it only takes about a year for word to get out in your community and then watch out as your practice takes off.

• In order to really succeed under this model, you must focus on VALUE: Patients will gladly pay out of pocket to have your full attention, to be able to access you when they want and how they want to - so offer email and texting services and spend A LOT of time listening to them.

• Embrace social media to help your practice thrive and grow: Write a blog, make videos for You Tube and be active on your Facebook Fan Page Wall---all of which serves to show yourself off as a human being.

• Let some of your staff go: Yes, this is a difficult transition, but one of the true ways to increase revenue is to actually decrease your expenditures. No more insurance billing means you don't need staff to do that ever again.

• Enjoy the experience: Running a small business is difficult and stressful, but so rewarding. When you stop relying on others (insurance, government) to pay you, you will truly learn how to provide valuable service affordably and efficiently.

Find out more about Craig Koniver and our other Practice Notes bloggers.

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