Participating in a provider network and accepting reimbursement from an insurance carrier can help drive patients to your clinic, but as all out patient clinic managers know, this payment source comes with its own stressors. For example, the reimbursement process can be complex and may require a member of your billing department to dedicate ample time on the phone with the insurance company getting claims squared away. Plus, lengthy reimbursement wait times interfere with your profits and cash flow.

Why not just avoid all these headaches and start a cash based practice? If you’re like most practice managers, the idea has crossed your mind more than once. However, cash based private practices come with their own stressors. And nailing down all of the pros and cons can be tricky. We’d like to share with you some resources that can help you sort out whether or not a Cash-Based Therapy Payment Model is the right choice for your clinic.

How Does a Cash-Pay Business Work?

A cash-pay model is fairly simple: When patients receive services at your clinic, they pay upfront, at the time of service. There’s no need to submit a claim to the insurance company on their behalf or work with the insurance company for processing and payment.

The Pros:  It’s a straightforward and hassle-free way to keep finances flowing freely at your private PT practice. Plus, you can spend as much time as you need with your patients, and set treatment schedules as you see fit.

The Cons: The trickiest part of designing a cash based therapy practice is dealing (or not dealing) with Medicare and marketing your services to patients who are able to pay for your services.

The following resources can guide you through these two issues:

  • Medbridge Education. You can view a webinar series dedicated solely to educating PTs about starting a cash-pay PT practice.
  • Jarod Carter. This Private Practice PT, who is also featured in the Medbridge series, specializes in educating fellow physical therapists on the in’s and out’s of running a cash based practice. He has dedicated a website to helping fellow PTs learn more about starting a cash-based practice.

Setting Up a Cash-Pay System: What to Consider

The American Physical Therapy Association (APTA) also offers resources for everything you’ll want to consider before shifting to a cash-pay system. Steps include:

  • Identifying your target market. Many patients are familiar — and comfortable — with an insurance-based payment system. They want to attend a PT appointment and pay a co-pay, or wait for their Explanation of Benefits to arrive in the mail. They may not be comfortable with paying for a service upfront. You’ll want to analyze your patient population to determine which segment — if any — would be comfortable with this payment method.
  • Setting your fees. Just like any business, you’ll need to determine what you charge for your services. This will be based on recouping overhead costs, your desired profit margin and what your target market will be willing to pay. The APTA provides a resource for determining fees. You may also wish to work with a business consultant.
  • Establishing your payment policies. To collect payments, you’ll need to draft a policy and procedure guide for billing and collection. For example, are customers required to pay the amount in full upfront, or do you bill afterwards? Will you allow partial payments? This and more are factors you’ll want to build into your plan.
  • Managing your marketing efforts. Insurance companies help drive patients to in-network providers, and may sway members from visiting out-of-network providers due to the perception of higher fees for service. Your clinic will need to find its own patients without reliance on referrals, but this will give you a chance to build relationships with healthcare providers, as well
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Working as a Local Contractor to Supplement Your Cash-Based Practice

Beyond payment methods, you might also want to consider working as a local contractor to supplement your private practice, and myPTsolutions can help. We’re a therapy staffing agency run by Physical Therapists and we have extensive experience in the placement of best-matched PT staff with opportunities across the country. To learn more, listen in to this interview with a physical therapist who worked for myPTsolutions as a part-time, local contractor, while he developed his cash-based Equestrian physical therapy practice.

Did we miss anything? If you know of other resources for offering Cash Based Physical Therapy Services, please share them in the comments section below. Thanks!

Pros and Cons of Physical Therapy Private Pay and Cash Payments was last modified: by



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