The Great Practice Makeover: Branding the Cash-only Practice

Mark Wehr* wanted nothing more than to focus directly on his patient’s needs. But insurance company rigmarole was really bogging him down, which, of course, greatly hampered this desire. His solution? Dump the payers.

All of them.

Wehr took a huge leap, revamping his practice into a cash-only model. He would cut third-party payers out of the equation and get all of his revenue directly from patients. “My mission was to try to practice medicine in ways that we didn’t have to file insurance,” says the family practice physician.

The cash-only model is appealing to physicians tired of corporate intrusions into their relationship with patients, but so far only a handful of pioneers have actually attempted the switch. It’s risky:

Wehr knew that his biggest challenge would be finding enough patients to make the practice viable. He took all comers. He gave out his cell phone number. He was willing to crank up his Prius and make house calls way past the witching hour, if needed. He was also willing to receive them, literally: He moved himself and his family into a residence above his own medical offices, in order to maximize accessibility.

Now that’s a patient-focused doctor, eh? Problem was, Wehr didn’t get the patient mix he thought he’d get - those wanting and meriting such one-on-one attention. His practice is located in the heart of a midsized Southeastern city. “What I got were knocks on doors for lacerations from bar fights,” he explains. He also got a disturbing number of suspected doctor shoppers, insisting they just had to have an Oxy script for their “aching” heads or spines.

Why isn’t it working?

Falling short of a goal is usually due to multiple factors, the impact of which can range in magnitude from slight to derailing. For example, it’s possible that Wehr’s less-than-ideal location is contributing to his difficulties. Or perhaps his bookkeeping skills, though streamlined, are too loosey-goosy. Whatever. Doesn’t really matter, because there’s one firm rule being violated here: He doesn’t know his own practice.

No matter how skilled the doctor, how accommodating the services, how flexible the hours, or how easy the payment structure, if you don’t define your practice’s purpose and develop a strong brand - and make every single decision based on that - you won’t succeed the way you want to.

Wehr wants to offer it all - all the time. That’s fine, and it can be done, but not before he defines exactly what “it” is, and exactly to whom he wants to direct “it.”

Narrow your focus

For a practice with half-baked success in going cash-only, the malfunction is frequently a simple case of “too much too fast, without enough thought given to the wisdom of such fast and broad expansion,” says David Albenberg, a family physician who is a nationally recognized expert on cash-only practices. And he should know, having also been guilty of said unfocused branding when he reformulated his own cash-only practice, Access Healthcare, in Charleston, S.C.

The key to developing “your” brand is properly vetting each new idea against your mission and standards. What do you want to offer? To whom? What kind of staff do you want? What goals do you want to hit for annual revenue, ideal patient load, number of hours you work in a week?

These are important questions to which you must have answers before you just drop your payers and send a letter to your patients announcing the change to cash-only. Also, you certainly don’t want to waste your hard-earned money and very limited time on go-nowhere marketing schemes. Consider this list of ways to streamline your efforts:

• Forget the phonebook. In today’s Internet-connected world, the phonebook is just not very effective anymore - except, it seems, with drug-seekers, who still look there first when shopping for a compliant physician.

• Develop some marketing collateral. Instead of buying a phonebook ad, spend a little money developing some marketing collateral. Desktop publishing software is extremely intuitive and accessible these days. Still feel intimidated? Pay a high-school or college kid to help; they’re proficient with software programs and will work cheap. Tell him you want your marketing collateral to look like an invitation. Make sure it includes a detailed explanation of how you’re changing your practice, including the fact that you’ll be über-accessible, and how you plan to achieve this.

• Closely target the patients you want. Cash-only practices have smaller patient panels than ordinary practices, but their overhead is much lower. So think about who is currently in your patient base. Which slice would you like to keep in your restyled practice? Build a “guest list” of sorts that includes only this slice, and send the invitation to them. Clearly explain that you’re looking to build a practice that’s streamlined for ultra-focused patient care, that you want patients who understand this concept.

Directing your marketing to a selected subset of current patients does not make you a snob doctor who only wants the cushy cases. Rather, the aim is to establish a foundation of patients - “those who ‘get it,’” says Albenberg - so you can provide the kind of care you want to provide. There will be a few that you’ll regret losing when you go insurance-free, but by and large, your patient population will self-stratify, with the ones you don’t want divesting themselves from you anyway.

• Set and then aim for your target numbers. How many patients do you need to keep your practice viable and you satisfied with your work-life balance? Don’t be afraid to ask for some help here to dope out all the numbers. There’s a lot at stake when running a practice, from covering your insurance premiums to having the proper supplies to putting food on your own table.

Cash-only vs. retainer-based

Speaking of numbers and patients and payment styles, there’s one last issue that needs inspection. Consider that when Wehr first went cash-only, about 150 of his patients went with him. Of that portion, about 60 were fee-for-service, while the rest paid an annual retainer. However, Wehr has found that the cash-paying subset is much more likely to display drug-seeking behavior, which, of course, completely flies in the face of his desire to treat the whole patient.

Wehr would do well to shift his cash-based practice to a pure retainer model, as this will drive off the ne’er-do-wells while keeping the patients who truly want a well-qualified, attentive doctor heading up their care.

Granted, this is a scary prospect on top of the initial scary prospect of going cash-only. First, dump the payers; now, dump the patients - yikes. “When you rebrand, it’s not without pain,” agrees Albenberg.

Many of those fee-for-service patients are decent people who value the alternative model of care you’re espousing, and yet you’ll lose a certain fraction of them if you go retainer-only because they simply don’t have the initial funds to participate, or because they just don’t see the value. What a bummer, in those cases, to send out your “I’m changing” letter.

But if Wehr truly wants to transform his practice to a model that aligns with his values and serves his patients well, then change he must.

Unfortunately, change comes with some pain, and it delays gratification. With 60 percent of his patients paying on a fee-for-service basis, Wehr can expect his patient load to drop off drastically if he goes retainer-only. It takes time to rebuild.

But the alternative to not embracing and enacting the whole package means that Wehr can expect to eventually find himself back where he started - practicing within a traditional, volume-based model, seeing 20 to 30 patients a day, taking a few days to return a phone call, keeping people waiting - with the added “bonus” of a defeated sense of déjà vu. Anything’s better than that.

Shirley Grace is an associate editor on staff at Physicians Practice. She can be reached at shirley.grace@cmpmedica.com.

This article originally appeared in the November 2008 issue of Physicians Practice.

*The Great Practice Makeover is getting a mini-makeover of its own. From now on, the individual practice we’re profiling won’t be identified, and we’ll be focusing our advice on a single issue to give the feature even more practical applicability. So, got some dirt to dish? Worried about an especially sensitive situation? E-mail lchrobertson@physicianspractice.com for a chance to have your own practice “made over” - anonymously.