EP425: Three Ways for “Regular” Clinical Practices to Take Cash When It’s Cheaper for a Patient Than Using Their Insurance, With Marshall Allen

For a full transcript of this episode, click here.

This show today is for physicians or other clinicians or providers who are still taking insurance—those who are going about their day being pretty normal ... but at the same time, they’re noticing one and/or two things potentially going on.

Here’s thing one: They may be seeing patients struggling to afford care, especially patients with commercial insurance and huge deductibles. And/Or thing two: They may have patients actually coming in and asking to pay cash. It’s definitely becoming known in some circles that about half the time the cash price for something is actually cheaper than the “negotiated” rate with an insurance carrier. And this has really become an actionable insight for patients who haven’t yet met their deductible, and some high percentage of patients—maybe upwards of 90% of patients—won’t meet their deductible in any given plan year.

So, all of this is probably some pretty obvious foreshadowing, but let’s run through two maybe quick reasons why a practice might want to contemplate ways to make it easier for patients to pay cash when it is, in fact, cheaper for that patient to pay cash than it is for them to go through their insurance. Now, a clarifying point here: We are not talking here about that patient always paying cash heretofore … like, never using their insurance ever again, even if they get hit by a bus. No. We’re talking about the patient coming in for some office visit or service, and today, they want to pay with a wad of money they take out of their wallet and hand you. That is the end of the transaction that we’re talking about here.

So, here’s the first of let’s just say two reasons that a practice might want to entertain taking cash from insured (technically, at least) patients. First reason: We have a situation in this country where 48% of insured commercial patients say that they are delaying or forgoing care due to cost or fear of cost. Sometimes I say this 48% number to a clinician, and they will reply, “Well, that’s not in my practice or in my hospital; our patients show up.” To which I reply, “Yeah, because the patients abandoning care are not the patients that are coming in. They are abandoning care.”

Now, the second reason a “normie” practice might want to be thinking about how to help patients get the best possible price here is maybe less intuitive, but it’s a financial motivation for the practice.

I just saw Eric Vanderhoef. He wrote on a Listserv recently, and this is what he wrote:

Patient no-shows and cancellations cost healthcare providers as much as $7500 per month. That’s a loss of $375 per patient.

Hmmm … okay. Keep this in mind: The whole cancellations costing providers upwards of $7500 a month would help reduce this. Coincidentally, I was talking to Paula Muto, MD (she’s the founder of UBERDOC) about this exact same topic the other day—just the crazy no-show rates that many practices experience—and she made some really good points, which are exactly in line with the Tebra report Eric Vanderhoef referenced above.

She said that if a patient knows exactly how much a physician visit is going to cost—because they’re paying cash and the price is set between the doctor and the patient, so the price is the price, the end—no-shows will go down, and this is especially true when the appointment is tomorrow and not six months from now when appointments are booking these days. It’s kind of not normal for anybody to know what’s gonna be happening in lives six months from now, so no wonder patients fail to show.

Dr. Muto is recommending maybe having a couple of slots open every day for patients who want to pay cash. Doing this could help improve some—not all, for sure, but some—practice cash flow issues which are caused by the no-show thing or the getting paid by the insurance carrier net whatever months later after a billing fight kind of thing. And it’s also a win-win for patients with high-deductible plans, especially those patients who are coming in asking to pay cash.

In the conversation today, Marshall Allen, my guest, explains how to, in a simple enough way, operationalize the ability of a practice to take cash. There’s a form that you’ll need for insured patients. You’ll actually need a cash price. It’s also a marketing opportunity. For example, you can get listed with entities that connect consumers to practices that take cash, like UB