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Cash-based physical therapy is no doubt better than the insurance-based PT service model for quite a few reasons. However, choosing one of them requires a careful study of each of their pros and cons. Let’s take a look at these insights in-depth and also peek into the guide for starting cash-based PT clinics.
Generally, physical therapy practices are assumed to be insurance-based services because a large percentage of therapists continue to follow this model. However, the insurance-based model is now seeming troublesome due to restrictions associated with third-party payers.
According to statistics, the physical therapy market in the US is witnessing a high growth trend with a projected rise from $46.75 billion in the year 2023 to a staggering $87.83 billion by 2031, with a CAGR of 8.2%. Amid the prediction that the PT market will expand tremendously in the coming years, an increasing number of practitioners are exploring ways to streamline their businesses by opting for a better, hassle-free model like the cash-based PT model.
When a decision has to be made between cash-based PT and medicare services, it's important to consider the pros and cons of these models. Let's delve into the details of cash-based physical therapy services right away!
Cash-based or out-of-network PT, at its core, is a model where physical therapists and clinics offer services directly to patients without involving insurance providers in the billing process. Patients pay out-of-pocket for the services they receive. It offers a personalized treatment experience, with more flexibility because it's free from the constraints of insurance-based billing process.
One of the most integral services in healthcare is physical therapy. It enhances muscle and joint functioning with effective exercises that alleviate pain, improve bodily movements, and boost overall health. Therefore, it not only becomes necessary for practitioners to adopt latest trends but also implement a service model that benefits both, the patients and therapists equally.
Of the two models, there are several reasons why clinics and therapists are gravitating towards cash-based PT:
1. Simplified billing
Eliminating the need to deal with the limitations of insurance-based model streamlines the billing process. It reduces administrative overhead and the likelihood of billing errors.
Furthermore, with the use of innovative technologies, the clinic will see faster reimbursements, zero need for paperwork and enhanced cash flow. It greatly lowers the workload on the clinic and allows therapists to focus more on patient care.
2. Improved patient experience
Consider an instance wherein a patient requires immediate treatment for unbearable joint pain or any similar ailments. In such cases, quicker, cash-based physical therapy services will be preferred to insurance-based models to steer clear of treatment limitations, third-party involvement, hidden costs and delayed claims. In situations like these, owning a cash-based PT will offer a competitive edge over the others and attract more patients to the clinic by word-of-mouth owing to the excellent patient experience it offers.
3. Improved patient—therapist relationship
Direct payment fosters a more personal relationship between the therapist and the patient. With transparent pricing, flexible and easy appointment scheduling, and zero interference of any third-party, patients can be relieved throughout the treatment journey. This leads to a better understanding of the patient needs and provision of more tailored treatments to achieve optimum health.
4. Potential for increased revenue
PT clinics are generally seen to operate with tight margins; the last few years saw the margins crush further due to more decline in costs and reimbursements. This led to practitioners either operating with high financial risk or closing the practice altogether! Adopting cash-based PT clinics has helped solve this major problem. With direct billing in cash-based PT practice, clinics can set their own rates in accordance with the services offered. This often means a more predictable income and potential for higher profit margins.
5. Increased patient value
The total revenue generated by a patient throughout their journey with a PT clinic is referred to as Patient Lifetime Value (LTV). Maximizing LTV is proven to be more efficient and cost-effective when compared to bringing in more new patients. Cash-based PT can increase Patient Lifetime Value in two ways:
While there are undeniable benefits of the cash-based PT model, there are also challenges to consider:
1. Convincing patients
Since insurance offers coverage for major health issues, it gives a feeling of financial security and stability to patients. This is why many patients may take a step back before opting for a PT clinic without insurance coverage. The therapist plays a vital role here. From easy appointment scheduling and quality care to receiving a more personalized care approach, it's crucial that the PT communicates the value and benefits that cash-based PT clinics offer to patients. This will build their confidence in cash-based physical therapy services.
2. Regulatory hurdles
Some states have stringent regulations around cash-based practices. Any clinic that has adopted the cash-based model should strictly adhere to regulatory conditions, such as
It's essential to be informed and compliant with these regulations as well as other ethical and legal rules and obligations.
3. Competitive market
With more clinics adopting this model, it's vital to showcase the business USP's and offer unique value to patients. To stay ahead of the curve, the PT clinic should implement excellent marketing strategies, consistently engage with the target market, grow the existing network, use innovative systems like SPRY, diversify the offerings, stay up-to-date on the latest trends, and consider upgrading to latest medical services such as Focused Shock Wave Therapy, LightForce Therapy Lasers, Direct Current (DC) Electrical Stimulation Device, and others.
4. Limited patient accessibility
Cash-based PT practice means patients have to pay directly for their treatments. Many patients might not be able to afford direct cash payments and this will indirectly limit the number of patients. So it becomes essential to put efforts into marketing and attracting more patients who are open to this service model. Nevertheless, a cash based PT practice isn't limited to payments by cash. Yes, that's right! The services can be paid for via credit, check, Health Savings Account (HSA), debit, Health Reimbursement Amount (HRA) or Flexible Spending Accounts (FSA) as well.
5. More responsibilities
When there's direct communication with patients in a cash-based PT, the therapist has to manage all the responsibilities like scheduling appointments, working out payments, and providing documentation about patient visits and treatment.
With proper planning and implementation of right systems, therapists can streamline the processes and sail through seamlessly.
Can PT practices without insurance really work? Yes, it can. Transitioning to or starting a cash-based clinic requires careful planning.
Here's a blueprint:
1. Market research
Research the local market. Understand patient demographics, needs, and willingness to adopt a cash-based model. There may be busy working professionals, senior citizens or even athletes with varying healthcare needs. Conduct surveys, interact with people, participate actively in health forums and engage in community events. This will greatly help understand the target market and tailor the services in line with their requirements.
2. Set clear pricing
Ensure that the cash-based PT clinic offers competitive and transparent pricing, and reflects the value offered. It's essential to study the neighborhood's economic data, understand their spending mindset, and affordability for direct payment healthcare services. Once this data is available, it's important to design appropriate patient care services to suit the financial realities of the target demographic.
3. Outreach and education
Educate your existing patients about the change. Conducting workshops, informational sessions, sharing marketing materials, and designing an effective patient/community outreach program can greatly offer mutual benefit in staying informed about the services, addressing disparities, and strengthening relationships. In these programs, therapists can focus on educating people about healthy living habits, prevention of injuries, conducting health screening events, organizing blood donation campaigns, mentoring kids regarding healthcare, and educating about various related factors.
4. Compliance check
Every cash-based PT practice must adhere to all state and local regulations concerning this service model. From state-wise practice acts and HIPAA to possessing a practice license and complying with other legalities, the practitioner must ensure that all the regulations are strictly adhered to.
5. Monitor and iterate
Once the cash-based PT is set up, it's crucial to review the business model regularly, gather feedback, and make changes to serve patients better. Furthermore, therapists must upgrade their clinic to suit the current trends, explore ways to improve marketing and growth, create a welcoming clinic space, and streamline the business with smart integration such as the implementation of SPRY digital patient intake.
Cash-based PT is an innovative model that offers both challenges and opportunities for physical therapists and clinics. By understanding its intricacies and planning strategically, it's possible to provide exceptional care while optimizing business performance. Once cash-based PT practice is implemented, there are ample ways in which one can grow the business and increase revenue.
Are you interested to gain further insights into the future of physical therapy? Stay tuned for more comprehensive guides and industry-leading content.
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