Running a cash-only practice is a foundational a foundational facet of The Nurse Practitioner Model. Insurance-based practices can be far more complex and less lucrative than a cash practice. Many nurse practitioners have been negatively affected by the bureaucracy associated with most insurance carriers, including strict criteria related to HPIs, ROS, physical exams, and arbitrary guidelines that limit the scope of a provider’s care.

Accepting insurance means playing the medical billing “game”. You are likely to get bogged down by excessive charting, coverage verification, interactions with insurance agents, and even the possibility of spending money to outsource insurance busy work. If you are serious about improving your NP business, you need to make an important decision: are you going to be an insurance-accepting or cash-only practice? There are pros and cons to both, and we discuss them here.

Benefits of accepting insurance

There are a number of reasons an NP may be motivated to accept insurance, including:

• Accessing more patients: A vast majority of individuals have some form of insurance, with many insured under Medicaid and Medicare. You may attract more patients by accepting a wide variety of carriers. However it’s not guaranteed that these potential clients would be interested in your practice, especially if you are mostly offering services not covered by insurance, like aesthetic treatments.
• Reliable payments: For the most part, insurance is a reliable source of income. You bill a patient, this goes into a payment queue, then you receive payment within a few weeks. It’s very simple and predictable. In comparison, a cash-only practice may lead to wide lapses in payment since the patient is personally responsible for compensating you.
• Increasing revenue per encounter: This means that for each visit, you can increase the revenue generated by each appointment. For example, giving injections, doing a small procedure, offering additional education like tobacco cessation, etc. You can turn that basic 30 minute 44204 charge into multiple charges to put more money into your pocket.

Downside of insurance acceptance

There are also many reasons why an NP may shy away from insurance carriers at their clinic. These are some common problems associated with this type of practice:

• What insurance says goes: When you accept insurance, your practice is now dictated by their terms: your business strategy is restricted by a carrier’s payment protocols, treatment guidelines, pre-authorizations, etc. It can be difficult to run a business efficiently when there are outside factors are at play.
• Audits: Insurance companies can audit any of your charts at any time. If they don’t feel like your service was covered or that your charting justified a billing, they can simply take their money back. That means you had a patient encounter and provided a service that you now did not get paid for. This is a waste of your time and could be financially disrupting to your business.
• Charting: You must chart based off Medicare, Medicaid and insurance guidelines. These guidelines were created by government bureaucrats who don’t practice medicine in the real world. While charting is valuable for record-keeping and protection against lawsuits, excess charting is an unnecessary time suck.
• Pre-authorizations: Let’s say your patient has a number of complaints that require medical intervention. It’s crucial for this individual to receive care in a timely fashion. With insurance, this is often impossible. Care can be significantly delayed by the pre-authorization process, which requires a load of time and effort from both the provider and their patient.
• Administrative processes: The logistical side of insurance can be time consuming and expensive. Hiring an in-house biller or utilizing a third party company can be very costly. An in-house biller will need to be paid a salary or hourly rate, and a billing company will want a large percentage of your collections in exchange for their services.

Insurance is a part of the real world if you practice in the United States. It’s a fact of life and if you decide to use it, be prepared for many hours of your time and energy wasted that can be better spent caring for patients. Think to yourself, if that time is truly worth it to your business? The predominant goal of business is to make money. Being on the phone for hours on end will not make you money.

Pros of cash practices

. Cash practices can generate enormous amounts of profit with low overhead.

• Low overhead: You can operate a cash practice with two people: a provider and a medical assistant. You do not need to hire receptionists, medical billers, or office managers. A cash practice is very simple. All you need is a basic EMR or even paper charts, affordable scheduling software, and basic book keeping software. You can do this on less than $50 a month.
• Basic charting: In a cash practice, your charting guidelines are completely up to you. You don’t have to worry about audits, and you are charting in a way that best suits your work style. However, be sure to chart sufficiently in case you are sued for malpractice further down the road.
• No third parties: A cash practice is you and you alone. No outside entities. No dealing with insurance companies or medical billing companies. No more headaches from Medicare and Medicaid. A cash practice is the patient and you. They pay you for a service, you provide it, and they leave. Compare your clinic to any other non-medical business. Other professionals, such as barbers or accountants do not go through a third party to get paid. Why should NPs be any different?
• Larger profits: Low overhead and more time is the result of a cash practice. Eliminating insurance logistics awards extra time to build your business. Spend this time marketing, seeing more patients, and networking. These activities build your business and increase your revenue dramatically. This turns into large profits because your overhead is low, and revenue is high.

Cons of cash practices

While a cash practice may look pretty appealing, there are some negative factors to consider.

• Smaller patient populations: A cash practice will attract fewer patients than an insurance practice. Because most people in the US use some form of insurance to cover their medical costs, many people will not utilize your services because you do not accept it, even though it is often times cheaper when you account for co-pays and deductibles. On the other hand, there are many people out there with disposable incomes who are more than happy to give you their money for quality service.
• Niches: Operating a cash practice requires a niche. Providing general medical services like primary care or urgent care is not going to be profitable. There simply are not enough patients willing to pay cash for these services. You must find your niche practice if you are going into cash business. Niches can be opioid addiction, weight loss, aesthetics, hormone replacement, etc. Take one of Elite NP’s focused courses to explore the benefits of a variety of niche practices!