view from the top
Too Many Private-Pay Patients?
How you can create this "problem" in
your own practice.
the title again it's not a misprint. There are more private-pay patients
out there than you'd ever think possible and because of this, it's easy to be more
profitable. All you have to do is follow conventional wisdom that says the more
you charge, the more you make. When you raise your fees but not your expenses, the
extra fees fall straight to your bottom line.
However, many doctors find this conventional
wisdom quite unconventional. That's because in today's world of third party payers,
a fee increase is a virtual one. You can charge patients $50,000 for their eye examination
but if the contract you signed with their insurance provider reimburses you $11,
that's all you'll collect. So in this case, a fee increase is meaningless and so
is conventional wisdom.
only way that wisdom applies is if you stop working with that particular insurance
plan. In that case your bottom line rises significantly if you keep the patient.
Because, as we explained above, the fee increase drops straight to your bottom line.
Break with convention
With this idea as a backdrop, let's examine a
strategy to attract more private-pay patients. To do this I will ask you to buck
the traditional concept that "private-pay" refers to a patient with no insurance.
Rather, consider that all patients who are not yet associated with your practice,
regardless of their insurance coverage or lack thereof, are private-pay. This is
true because if a patient with insurance comes to your practice and you don't accept
his or her insurance that patient becomes private-pay. And this patient will
pay your actual private-pay fees. So, if you accept no insurance, all patients are
private pay at least in your office!
What are the odds?
But alas, there is a sentiment among many doctors
that, "If I'm not on the plan, I don't get the patient." While this may be true
in most cases, it isn't true in all cases. There are a significant number of patients
with insurance benefits who choose not to use them in favor of staying with a "non-insurance"
doctor, or more commonly, have benefits and are unhappy with their current doctor,
but don't know where else to go!
A sound marketing strategy would be
to reach out to these patients and espouse the benefits you can provide them. Usually
these are things like less wait time for an appointment, more one-on-one time, no
drug formulary restrictions, etc. While many patients may not be swayed by these
benefits, keep in mind our premise above that those patients who do visit you will
now pay your full, non-discounted fee.
Your new "problem"
Many of our clients report financial success by
using this model and mindset. In fact, by carefully analyzing the profitability
of each plan he was on and slowly paring down the less profitable ones, one client
is now 80% private pay in a market that is 80% insurance. His new "problem" is what
to do with all these private-pay patients.
This column isn't intended to offer
guidance about which plans you should join or drop. Rather, we recommend you evaluate
each plan on its own merits and pitfalls and decide on a case-by-case basis which
plans to work with. Keep in mind every time you drop another poorly paying plan,
you open up the doors to more private-pay patients.
DR. GERBER IS THE
PRESIDENT OF THE POWER PRACTICE, A COMPANY SPECIALIZING
IN MAKING OPTOMETRISTS MORE PROFITABLE. LEARN
MORE AT WWW.POWERPRACTICE.COM
OR CALL DR. GERBER
AT (800) 867-9303.
Optometric Management, Issue: March 2006