Article Date: 3/1/2006

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Too Many Private-Pay Patients?
How you can create this "problem" in your own practice.

 Read 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.

The 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.


Optometric Management, Issue: March 2006