Top 10 Things to Consider Going to a Direct Payment Model
Date: 04/07/2024
- Have an adequate cash reserve while practice is growing. Ideally, have enough to cover overhead expenses for a full 6 months.
- Have an alternative income stream as this practice will take longer to grow than traditional medical practices. Many potential patients will decide not to make an appointment when they learn that their insurance is not accepted.
- Keep overhead low since practice will grow slowly. Consider a sublease arrangement or sharing an office to keep monthly lease manageable. Consider opening with part-time hours only and hiring part-time staff early on.
- Be prepared to explain “why” you have chosen to go to a direct payment model to both patients and referring colleagues.
- If opting out of Medicare, have all Medicare patients sign a private contract every 2 years. Medicare patients need to be informed that they cannot bill Medicare for services rendered. Click here for an example contract.
- Be prepared to deal with medical insurance issues your patients may encounter. For example, insurance companies may send your office a check for services rendered even though the patient already paid in full. Your office then needs to return the check to the payer and request the check is re-issued to the patient. It is better for the patient to bill their own insurance. This can be disappointing to some patients who prefer courtesy billing by your office.
- Spend money and time in creating an appealing and informative website for your practice. On the website, the reason for the direct payment model can be explained and the positive attributes of spending more time with patients, etc. can be emphasized.
- Expect to spend time marketing yourself and your practice. Friendly, extroverted providers are more likely to succeed.
- Understand accounting and the need to monitor Profit and Loss Statements on a monthly basis. Work closely with the office and/or business manager to stay on top of practice costs and issues.
- Be PATIENT as this type of practice takes money to set up and can take 1-2 years to be profitable.
About the Author
Susan L. Hutchinson, MD, is the Founder of the Orange County Migraine and Headache Center in Irvine, California. She is board-certified in Family Medicine and UCNS-certified in Headache Medicine. She served as Section Chair of the Women's Health Special Interest Section and is the immediate Past-President of The Headache Cooperative of the Pacific (HCOP).
