When you create a niche side practice that is cash only, it is important you figure out how patients will be paying you. I am not talking about what point of sale system you will be using; I am talking about the payment model you will be utilizing. There are two payment models with a cash practice:
- Subscription based.
- Time of service.
The subscription model is where the patient will pay you a monthly fee for all the services you provide. This could be hormone replacement therapy, weight loss treatment, etc… This all-inclusive cost should cover the majority of the services/products you provide. It is a concierge type practice essentially.
The time of service model is where the patient pays you at the time of service. This could include the cost of the visit, the products/medications you sell, or the procedure you perform. They show up, you provide them with service, they pay, and they leave.
The type of model you chose ultimately comes down to what type of niche service you provide. If you are providing services that require routine follow up and refills such as testosterone replacement therapy or weight loss treatment, then a subscription based model might work better. If you have more of a treat and street type practice like medical cannabis or stem cell injections, then a time of service based model would be better.
A subscription model has its pros and cons.
The first pro is that it is predictable for you and the patient. The patient knows what to expect in terms of payment and what they receive for that. You know your costs and it keeps bookkeeping simple.
The second pro is that it can help patients who might be financially strapped on cash. If you charge patients the entire cost of various services and products such as the visit and a bottle of HCG, it could be too expensive for the patient to pay it all up front. When they pay a lower monthly fee though, it becomes affordable.
Another pro is that it can be set up on an automatic payment plan. When you take a patient’s credit card information and input it into an automatic payment plan, you know that payment will be received. It also makes for predictable and consistent revenue. Very rarely will a patient screw you over, and if they do, they are not welcome back… This is one of the cons.
The main con is that time consuming patients will eat up a lot of your time. You will not find value out of these patients when everyone else is compliant and straightforward. The needy patient will take full advantage of the unlimited visits/services within the monthly subscription they pay for. This is why it is VITAL you have limitations in place for your subscription plan. If you offer unlimited service within this subscription fee, a handful of patients will drive you nuts. Have a limit to the services being provided but still provide VALUE to the patient, that is the key.
I utilize a subscription based model for my men’s health practice. Men pay a monthly fee that includes visits and the treatment. I offer unlimited visits with my subscription because I want my patients to derive significant value out of my practice. Do some patients take advantage of this? Yes, but only a couple. I am okay with this as they are a little more complicated and I enjoy the challenge, but I would be lying if I said that it doesn’t drive me crazy sometimes. Overall though, it works well and my patients love the model. It really provides for a consistent revenue stream month to month.
A time of service based model also has its pros and cons.
The first pro is that once the patient pays you, the transaction is complete for the most part. The patient arrives, you provide the service, they pay you, and its done until follow up. This makes for a simple transaction for all parties and you have the money in your pocket.
Another pro is that you are paid at the time of service. Like I mentioned with the subscription model, sometimes patients will pull a fast one on you and not pay. This happens very rarely, but it can happen. When the patient pays at the time of service though, you have the money in hand and that is it.
The biggest con with this model is that it can complicate your books. If you offer multiple services and products it makes keeping track of everything more difficult. It also can be confusing for patients when they see dozens of different prices and items your practice has. They can become indecisive and develop cold feet.
The other con is that it requires the patient to have all the money up front. This can be too expensive for some patients which could result in no business from that particular person. Remember, some money is better than no money.
I utilize this model for my medical cannabis and stem cell practices. I just do not see how I could make those service lines a subscription based model because there is no continuing routine follow up compared to hormone replacement therapy or weight loss treatment.
So, when you are determining which model to choose with your practice, ask yourself this question:
“Is routine follow up necessary?”
If the answer is yes, then consider a subscription based model. Like I mentioned, it provides for consistent revenue and is more affordable for some patients.
If the answer is no, then consider a time of service based payment model. Typical treat and street type practices will want to opt this way.
You could always have both options in your clinic as well. My men’s health clinic is predominately a subscription based model, but I do offer the choice of paying for everything upfront instead of monthly. If a patient would just prefer to pay for everything up front, I offer them a discount. For example, if I charge $100 a month for visits and treatment but a patient does not want to pay monthly for whatever reason, I also sell 3, 6, and 12 month packages and offer discounts for that. Having all the money upfront is great because you just don’t know if the patient will ever return or not. So, consider a hybrid model as well.
When you first start a practice, sometimes it just takes some experimenting with different pricing structures to find what works best. I experimented with multiple different payment structures and pricing when I first started… You will figure it out as you go through the journey!