Why You Should Consider Going Cash Based

Hi, welcome to the Pelvibiz Podcast. Are you a pelvic health PT or ot? Struggling to start your own practice? This podcast helps pelvic health PTs and OTs get out of debt, gain the income they desire, be able to treat patients without insurance restraints and learn how to create time freedom for yourself and your family. I'm your host, Dr. Kelly Alhui, founder of Ortho Pelvic Physical Therapy, Pelvic health Business grower and Pelvi Biz. Over the last two years I went from a solo entrepreneur to a seven person team in counting. I'm here to help provide a clear path to grow your pelvic health business.

As fast as possible so that you.

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Before we get started today, make sure you click the link in our bio to grab your ticket for Pelvi Biz. Now let's get into today's episode. Welcome guys to Pelli Biz Podcast.

I'm your host Kelli Elihui. Today we are talking about why if you were starting a physical therapy practice, why you should be cash based versus insurance based. I get this question a lot and I love to dive right into this. So being a cash based model, I do believe there are more benefits than there are negatives compared to insurance. Let's start with what's happening recently. We just got news that there is going to be in 2023 a 4.5% cut in reimbursement. Last year I think there was a 10 to 12% cut in reimbursement. They're never going to say oh we're raising reimbursement like it's just not going to happen. There's going to be cuts and cuts and cuts. Pretty much happens every year. We can take guess that it happens every year. Not trying to be negative here, but that's just, this is just the reality of it, right? So because there's those cuts happening, well then how am I supposed to hire people when I'm thinking potentially hey, I'm going to be bringing in this amount of money but oh wait, now I can't afford my employees because I'm getting, there's more and more cuts being had and now you can't afford to pay the employees, you can't afford to pay for your space, whatever it may be for expenses because you allotted for this and now they are cutting, they keep cutting. On top of that, when you are an insurance based clinic you can submit claims but you truly don't know how much you're actually going to be getting reimbursed and whether or not the billing person that you bring on is going to be kind of on your team or not, or whether or not they're filing things correctly or whether or not the insurance company decides that all of a sudden you have to have this random check mark here or this modifier here and that they are not going to do reimbursement. So there's a lot of, there's knowns but also unknowns. And that's the problem with the insurance model also. On top of that, I think patients get very, very confused on what is a deductible, what is in network mean, what is out of network mean, what does have they met their deductible before? What is it going to cost them before they meet their deductible? I just don't think it's clear at all with patients. And then they end up getting mad at the facility because well, you said you're going to cover this and now it's not covered. And now they have this bill for thousands of dollars just like they would in at a network clinic and you know, they don't want to pay it. And then you got to chase them around, potentially send them to collections. Well, that's going to cost you time and money anyways. So there's just a lot on the back end that's like that you try to have to like chase and run around and try to get your money and it just seems very, very tiring. So you know that's, that's kind of the negative to insurance. A couple more things about that is when you're in an insurance based model, as most of you may know, you're also, your outcomes are limited because you're maybe seeing your patient for 20 minutes, 30 minutes, whatever it may be, and then you're sending them off to the aid for them to do exercise or whatever else. When I worked at an outpatient orthopedic place, I was the only pelvic health therapist out of 100 plus pts. And when I sent them off to my aides, my aides had no clue what to do with them. So instead of them like doing stretching and stuff that we do to lengthen the pelvic floor, they were doing like athlete level grade stuff, which we do athlete level grade stuff with our pelvic floor patients too. But this is like chronic pelvic pain patients and it was just, it was a nightmare. It literally was a nightmare. So you know, that's another thing the outcomes can be limited because there's only so much time you have with them. There's only so much training that some of the aides have as well. I think the other thing is that the profit will also be lower in an insurance based model. You have to have between 500 to like 700 patients a month in an insurance based model for it to be to where you know you're surviving and being like, okay, I can potentially hire this person or I can pay my rent, just know that it can work. But the profit margin is a lot slimmer. So sometimes that brings on more stress, anxiety and whatever else. So here's the positive, okay, I know I started out with all the negative, but here's the positive, okay? The positive is if you are an insurance based model, what you can do to counter that is you're going to then have to have different services that are cash based that your clients are then going to opt into. So think about this. When you go to a hair salon and you get your hair done, okay, they charge you what, $200, $300, whatever it may be. And then what do they do when you're checking out? They sell you on your anti frizz hair. They sell you on a, a new shampoo for your hair. They sell you on this thing that's going to make your hair shinier, right? They're selling me on like three different things. And guys, I only go to hair salon once a year, okay, so maybe you guys had a different experience, but this is might been my experience this try to sell you on three different things. And luckily I have the willpower saying no, but some people don't and they're just like, yeah, okay, I'll do it. 300, $200 later, you now have products that are that much. So you're paying $200 or $300 for the haircut and and then additionally you're paying maybe $200 or $300 for these products, okay? But they'll last you like a year, they'll say, or whatever else, okay? So really to them as a customer, I'm worth about $600 going in there that day instead of me being worth $300, okay? So I'm looking at it from a business perspective, okay? So now let's bring that same scenario. Let's bring it back into the PT world or OT world, okay? So with that being said, when a customer comes in and they are paying an insurance based model, okay, we then can say, okay, these, the patients that are coming in the door Are anywhere between, they're going to stick with us. Maybe between, I don't know, $800 to $1,000 are probably going to spend with their insurance. Okay, that being said, if you know you need to get to $1,000 for each patient and they stop at 8, well then how else are we going to get them to a thousand? So what we can do is have products to sell, just like the hair salon. Can't we sell wands? Can't we sell squatty potties? Can't we, you know, put together packages for them that they're going to actually use this stuff for their plan of care? You're just giving it to them right then and there. They can get started on it, they're going to have it, they can touch it, they can feel it, they can understand how to use it. Because you're giving it to them, you're going to give them something as well to help them like understand actually how to use the thing. Instead of them going to Amazon, just buying on it, waiting a couple days, then it comes in and then them not knowing what to do with it and it just sits there. So these are the things that you're gonna have to think about is what other added services can I do? Can I put a nutrition program together? Can I put a wellness program? Can I do a fitness program with this? Like what else can be my add ons to then bring cash flow into the clinic so that an insurance based model is profitable. This is truly the only way that I believe that insurance based clinics are going to survive. This is my prediction for real. Okay. So I truly believe that a cash based model is going to be the best way. Again, I'm not saying that you can't do insurance. You can try insurance. Some people do hybrid as well. Personally, with hybrid, I feel people get confused when patients come in and they're like, but wait, you only take Blue Crush, Blue Shield because we all know they reimbursed, you know, typically the most depending on what your state you're in. Guys, they can reimburse between anywhere between like $80 a patient to 150 depending on the state. But that being said, if a patient's like, well you guys said you take insurance, but wait, you don't take my insurance. And then they get all kind of huffy and puffy about it because again, it's just hard for them to understand. It's even more confusing when you're like, oh, we're hybrid, we do take some insurances, we don't take others. And then this is cash pay. Personally I would just be insurance or not or cash pay because otherwise it just leads to annoyed customers. I feel like, because people are again, they just, it's not clear because now there's too many options. Okay, so that's the hybrid model or you can go cash model. Personally, this is where I think a lot of people can do really, really well. So I look at the cash model as like the premium model. You're kind of like the Chanel, the Louis Vuitton. Now I'm not treating the Louis Vuitton people and only the Louis Vuitton people. No, I'm treating teachers, I'm treating, you know, anyone and everyone, students like I am treating anyone. Okay. But I think you have to know your audience to know the value that you're providing. And does those people want that value? And those are the clients that I actually want to treat. I don't want someone that just comes into the clinic and says, hey, my doctor referred me, I'm just here. Like to me those outcomes aren't going to be as good because they're not as involved into their treatment. I want someone that's like, look, I just paid you money, a fair amount of money and I want to get better. Like those are the people I want to work with because I know I'm going to have really good outcomes. We all know that the more we invest in something, the more that we're compliant in something. Okay, so compared to like the Walmart is would be more of like the insurance base because you have to have high volume, you have to have lots of people coming in the door for that clinic to really thrive. Compared to the cash base, you have to have lower volume. So that's the positive. That's one positive. So you have lower volume, typically you have better outcomes because typically the provider is the pt, the ot, the pta, they're doing pretty much all the work. There's not really too many aids in a cash model. You're not going to be burnt out, you're not going to go home with 20,000 no's to do at night. So overall that's gonna make for better self care for the PT or ot, which is great. Less burnout. You're going to be able to really connect with your patients and get to know all your patients and truly feel that you aren't having this like toggle between treating the patient and then like trying to get all your notes done. I mean I used to feel that so much when I was an insurance based model. That they were just on me to do my notes correctly because if I didn't, then they weren't getting reimbursed. I get it, it's not their fault. But that's all they wanted me to do is do my notes. And all I want to do is treat the patient and like make sure the patient was like good and there was like such this like battle. And in cash based, you, you don't have that, which is nice. So you literally get to treat the patient and you can treat their shoulder and their pelvic floor, you can treat their ankle and their pelvic floor. Like you can treat whatever it is. And that's like the coolest thing. So also in a cash model you're gonna have more profit because you know, you set the rate, you know that Every visit is 200 a visit. That's it. There's no hidden fees, they have to pay up front. You're not chasing anyone down. I'm not hiring a billing lady to have to chase them down. Remember that billing lady can be anywhere between, I don't know, 50k to 75k a year that you have to pay just to get your money and pay your employees and pay rent. This is just the reality of it. For real. This is literally just the reality of it. So no, we're not all trying to be millionaires here, but we do need to survive and a business has to survive with some kind of profit. So you know, you have to have some kind of profit happening otherwise you're not going to be in business and you can't pay the employees. What else is a positive about cash base? It's lower volume. So you're not then going to have to hire like 14 employees or something like that. You may have like 2, 3, up to maybe 8, 9, 10 employees. It's a lot easier to manage that way compared to having 14pts on staff and then a manager and then front desk and all that. There's just more, more things to manage. So that's personally why, you know, I just choose cash base because it's a better model for everyone. It's better model for patients, it's a better model for the provider. So PT, OT, PTAs. It's a better model for just like the whole system and everyone that's kind of involved in that system, admin everyone. There's just, it's less kind of load if I, if, if I can say that compared to insurance based. So hopefully that gives you guys, you know, a little bit of clarity versus insurance versus cash base versus hybrid. And yeah, I mean all of them can work. I just know after coaching many, many people that what I've seen is the cash based PT clinics are the ones that are actually, you know, doing well and able to survive and can pivot quickly. So it's not to say the insurance ones can't or the hybrids one are not going to survive, they are, but they just have to be very unique about their marketing and be more like a hair salon to actually keep their business up and running. So hopefully that gives you guys some insight today on the difference and you learn something and hopefully you guys have a great night.

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