Skip to content
  • About
  • Contact
  • Contribute
  • Book
  • Careers
  • Podcast
  • Recommended
  • Speaking
  • All
  • Physician
  • Practice
  • Policy
  • Finance
  • Conditions
  • .edu
  • Patient
  • Meds
  • Tech
  • Social
  • Video
    • All
    • Physician
    • Practice
    • Policy
    • Finance
    • Conditions
    • .edu
    • Patient
    • Meds
    • Tech
    • Social
    • Video
    • About
    • Contact
    • Contribute
    • Book
    • Careers
    • Podcast
    • Recommended
    • Speaking

How to start your own cash-pay medical practice

Rushi Nagalla and Sandhya V. Koppula, MD
Physician
June 27, 2024
Share
Tweet
Share

You wish to spend more time with patients while giving high-quality care. You’re tired of dealing with health plans’ red tape. Maybe a colleague boasted that he could charge $300 to $400 per consult out of pocket. To which you say, “You know what, I can do that too!” We don’t blame you. However, when starting our cash-pay clinic, we juggled several elements during the transition. We distilled that planning into four parts, you must consider before launching that journey. This will prevent you from making the same mistakes we did and help patients understand your cash-pay clinic setup.

You can’t undo a cash pay or direct primary care (DPC) clinic with a control + Z keystroke.

1. Ask yourself, why? Why do you want to do this? Yes, really. Is the pursuit of cash pay for you? Your patients? Your team? To reclaim sanity? To make more money? To ease major stress? Do you want more control over your time (and maybe your life)? Don’t consider going 100 percent private if you are unclear on any of these aims.

2. Envision the patients you want to see. Medicine is a local practice at heart. Knowing your community within 20 to 30+ miles of the clinic is a great first step for proper targeting. Like any prolific office, seek new patients—but choose them well.

Let’s do a brief exercise. Patient caricatures grant insights, especially so for cash-pay clinics. Write a list of what your ideal patient “personas” are. How do these patients spend their day? What is their home life situation? Do they pour milk before cereal? What do they do for work? Start there. Avoid focusing on age alone.

The best personas have two complements. Think salt and pepper or Reese’s peanut butter and chocolate. Make sure there is a clear link between where the patient comes from (e.g., their profession, social background, aspirations, etc.) and what you offer (XYZ outpatient service tailored to said patients). Channel your diagnostic observation skills. Have your manager take notes too. Your first draft personas will be precisely wrong but vaguely right. Iterate them to be mostly correct. For any cash-pay office, there will be some bias toward the affluent. Not everyone has spare cash for health care—that’s the reality. But do not assume that you will only serve your local Kardashians. There’s more variety in socio-economic background than you may expect. Keep an open mind for other demographics you haven’t reached yet.

Given that medical bills are a leading cause of personal bankruptcy in the U.S., it’s no surprise that patients view health care as an expense. Take yourself for example. You probably have medical insurance. Over 92 percent of U.S. residents have some form of health coverage. That plan is paid for either directly (your premium) or indirectly (your taxes). Said insurers then promise that your care will be handled at minimal extra expense. You’re already paying for the insurance, which is supposed to work for you. So why bother shelling out more dough? And now the private pay doctors lament, “But I provide X, Y, and Z to my patients above and beyond expectations!” Don’t waste your breath on patients being close-minded about out-of-network setups.

So who do you target instead? Certain patients consider their health to be an investment, not an expense. They view their doctor as a lifelong partner, not a one-visit dictator, of their care. Prevention and process become just as important as treatment. These patients are willing and able to pay for high-quality care, even if their income exceeds U.S. GDP per capita. For example, if you have expertise in skin cancers, leverage that to the hilt. Carry the years’ worth of trust built up among your most loyal intergenerational patients with a white glove. You can lose these patients in ten seconds. Regardless of what personas resonate best with your services, cultivate the proper mindset among all your patient groups. Again, position your services as an investment, not an expense. This is the essence of patient demographic targeting.

3. Know your timeline. From experience, we went cash pay in three months but had to rip off many band-aids at once. We terminated all insurance plans, including Medicare, in one swoop. We do not recommend this drastic violence of action. It’s a smoother process to peel off insurance contracts, a few at a time, over 6 to 12 months. We did not have that luxury. But you might—treasure that time. Exercise selectivity in cutting the lowest value-add and lowest volume health plans first. Larger plans such as Aetna and Medicare drastically impact your patient panel. Save them for last. Build up experience with appeasing patients from the smaller plans you remove first. Explore if a “hybrid” out-of-network dynamic works for the clinic. But avoid being hybrid forever. This will confuse new and established patients, especially if you drop some but not all commercial plans under the same parent. There is an exception: terminating government payers but keeping all other insurers. It’s not uncommon for specialty practices to pack the schedule with higher-paying commercial plans over Medicare. The moral issues of alienating these members can be its own story.

Blocking appropriate time matters. Terminating plans can take longer than expected. You may have a contractual obligation to care for certain members in-network up through a specific date. Other health plans may be flexible with termination requests, but some cool-off periods may be at least three months. Consult your lawyer or state medical association for best practices here.

4. Choose your business model wisely. Cash-pay medicine is much more than asking patients to “show me the money!” Patients should understand what they are paying for ahead of time. Here’s a brief summary table (pending a more detailed guide).

Most existing private pay clinics choose a paygo or concierge model. Reimbursement must align with the nature of your specialty. A neurosurgeon probably shouldn’t have a retainer. Family medicine doctors fare better with a concierge setup over paygo. Your location and ideal patient pool can allow for some exceptions.

Beyond this list: the road ahead. You’re more prepared than before but maybe a little overwhelmed. Going cash pay is a huge decision—if possible, take your time in making this choice. And then 100 percent commit when ready.

ADVERTISEMENT

Rushi Nagalla is co-founder of a dermatology practice. Sandhya V. Koppula is a dermatologist.

Prev

Changing the medical system with empathy [PODCAST]

June 26, 2024 Kevin 0
…
Next

Studying medicine in a time of deep medical distrust: Why I remain hopeful

June 27, 2024 Kevin 0
…

Tagged as: Practice Management

Post navigation

< Previous Post
Changing the medical system with empathy [PODCAST]
Next Post >
Studying medicine in a time of deep medical distrust: Why I remain hopeful

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

More by Rushi Nagalla and Sandhya V. Koppula, MD

  • Mastering patient inquiries: Streamline your practice communication

    Rushi Nagalla and Sandhya V. Koppula, MD

Related Posts

  • Medical school is more than practice problems

    Kira Kopacz
  • From numbness to empathy: a reflection on medical practice

    Katayun Fethat
  • Why building your social media following is critical to your practice’s success

    Sheila Nazarian, MD
  • Is it noble or selfish to never practice medicine after getting a medical degree?

    Arthur Lazarus, MD, MBA
  • Interstate licensure for telehealth can fuel medical practice growth

    Chad Anguilm, MBA, David L. Feldman, MD, MBA, and Remi Stone, JD
  • How the COVID-19 pandemic highlights the need for social media training in medical education 

    Oscar Chen, Sera Choi, and Clara Seong

More in Physician

  • Why we fear being forgotten more than death itself

    Patrick Hudson, MD
  • From basketball to bedside: Finding connection through March Madness

    Caitlin J. McCarthy, MD
  • The invisible weight carried by Black female physicians

    Trisza Leann Ray, DO
  • A female doctor’s day: exhaustion, sacrifice, and a single moment of joy

    Dr. Damane Zehra
  • The hidden cost of malpractice: Why doctors are losing control

    Howard Smith, MD
  • How scales of justice saved a doctor-patient relationship

    Neil Baum, MD
  • Most Popular

  • Past Week

    • The broken health care system doesn’t have to break you

      Jessie Mahoney, MD | Physician
    • How scales of justice saved a doctor-patient relationship

      Neil Baum, MD | Physician
    • How dismantling DEI endangers the future of medical care

      Shashank Madhu and Christian Tallo | Education
    • Why shared decision-making in medicine often fails

      M. Bennet Broner, PhD | Conditions
    • “Think twice, heal once”: Why medical decision-making needs a second opinion from your slower brain (and AI)

      Harvey Castro, MD, MBA | Tech
    • Do Jewish students face rising bias in holistic admissions?

      Anonymous | Education
  • Past 6 Months

    • What’s driving medical students away from primary care?

      ​​Vineeth Amba, MPH, Archita Goyal, and Wayne Altman, MD | Education
    • Internal Medicine 2025: inspiration at the annual meeting

      American College of Physicians | Physician
    • A faster path to becoming a doctor is possible—here’s how

      Ankit Jain | Education
    • Residency as rehearsal: the new pediatric hospitalist fellowship requirement scam

      Anonymous | Physician
    • Are quotas a solution to physician shortages?

      Jacob Murphy | Education
    • The hidden bias in how we treat chronic pain

      Richard A. Lawhern, PhD | Meds
  • Recent Posts

    • Surviving kidney disease and reforming patient care [PODCAST]

      The Podcast by KevinMD | Podcast
    • Why we fear being forgotten more than death itself

      Patrick Hudson, MD | Physician
    • My journey from misdiagnosis to living fully with APBD

      Jeff Cooper | Conditions
    • Antimicrobial resistance: a public health crisis that needs your voice [PODCAST]

      The Podcast by KevinMD | Podcast
    • Why a fourth year will not fix emergency medicine’s real problems

      Anna Heffron, MD, PhD & Polly Wiltz, DO | Education
    • Why shared decision-making in medicine often fails

      M. Bennet Broner, PhD | Conditions

Subscribe to KevinMD and never miss a story!

Get free updates delivered free to your inbox.


Find jobs at
Careers by KevinMD.com

Search thousands of physician, PA, NP, and CRNA jobs now.

Learn more

View 1 Comments >

Founded in 2004 by Kevin Pho, MD, KevinMD.com is the web’s leading platform where physicians, advanced practitioners, nurses, medical students, and patients share their insight and tell their stories.

Social

  • Like on Facebook
  • Follow on Twitter
  • Connect on Linkedin
  • Subscribe on Youtube
  • Instagram

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

  • Most Popular

  • Past Week

    • The broken health care system doesn’t have to break you

      Jessie Mahoney, MD | Physician
    • How scales of justice saved a doctor-patient relationship

      Neil Baum, MD | Physician
    • How dismantling DEI endangers the future of medical care

      Shashank Madhu and Christian Tallo | Education
    • Why shared decision-making in medicine often fails

      M. Bennet Broner, PhD | Conditions
    • “Think twice, heal once”: Why medical decision-making needs a second opinion from your slower brain (and AI)

      Harvey Castro, MD, MBA | Tech
    • Do Jewish students face rising bias in holistic admissions?

      Anonymous | Education
  • Past 6 Months

    • What’s driving medical students away from primary care?

      ​​Vineeth Amba, MPH, Archita Goyal, and Wayne Altman, MD | Education
    • Internal Medicine 2025: inspiration at the annual meeting

      American College of Physicians | Physician
    • A faster path to becoming a doctor is possible—here’s how

      Ankit Jain | Education
    • Residency as rehearsal: the new pediatric hospitalist fellowship requirement scam

      Anonymous | Physician
    • Are quotas a solution to physician shortages?

      Jacob Murphy | Education
    • The hidden bias in how we treat chronic pain

      Richard A. Lawhern, PhD | Meds
  • Recent Posts

    • Surviving kidney disease and reforming patient care [PODCAST]

      The Podcast by KevinMD | Podcast
    • Why we fear being forgotten more than death itself

      Patrick Hudson, MD | Physician
    • My journey from misdiagnosis to living fully with APBD

      Jeff Cooper | Conditions
    • Antimicrobial resistance: a public health crisis that needs your voice [PODCAST]

      The Podcast by KevinMD | Podcast
    • Why a fourth year will not fix emergency medicine’s real problems

      Anna Heffron, MD, PhD & Polly Wiltz, DO | Education
    • Why shared decision-making in medicine often fails

      M. Bennet Broner, PhD | Conditions

MedPage Today Professional

An Everyday Health Property Medpage Today
  • Terms of Use | Disclaimer
  • Privacy Policy
  • DMCA Policy
All Content © KevinMD, LLC
Site by Outthink Group

How to start your own cash-pay medical practice
1 comments

Comments are moderated before they are published. Please read the comment policy.

Loading Comments...