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How Does A Cash Pay Physical Therapy Practice Work?

by Kevin Prue

Cash pay physical therapy is an alternative business model to the traditional insurance based physical therapy business model.

Cash pay PT is gaining a lot of interest from both clinicians and patients. The main reason this model is so appealing is because it emphasizes quality patient care over quantity patient care, while removing the headaches and restrictions associated with insurance based care.

My cash pay physical therapy clinic

My cash clinic follows a similar model that other cash pay clinic owners have made successful.

  • We provide one-on-one care, usually in one hour time blocks per patient.
  • Patients pay for these services the same day they receive care, and we provide a "super bill" with all the coding and information necessary for the patient to file the claim with their insurance company.
  • Depending on the patient’s insurance policy, patients will either receive a check from the insurance company as reimbursement for covered services provided by the therapist, or the cost of the appointment will be applied to the patient’s deductible.
  • Most cash pay PT clinics only see patients once per week or sometimes every other week, opposed to the typical 2-3 times per week for “x” number of weeks. So a patient attending a cash pay PT clinic may actually only need 4 or 5 visits, opposed to the typical 12-15 visits at an insurance based clinic.

Justifying the costs of cash pay PT to the patient

First, patients are willing to pay for services they value, and perceive as valuable.

Not every patient at my clinic is wealthy; some struggle to make ends meet, like millions of other Americans, but they view exercise and movement as an important part of their daily life. Patients don’t think twice about paying cash for a personal trainer, attorney, massage therapist, or other services, so why does physical therapy have to rely on insurance reimbursement?

Some patients are already paying for things like a gym membership or to participate on a sports team, so if they are injured and unable to participate in these activities, they feel like they are wasting money. If I can get them better faster than the alternative clinics, these individuals are going to be happy to pay for my services.

Traditional Physical Therapy

  • Co-Pay $40
  • Number of Visits 12
  • Total Cost$480
  • Time Spent with the PT (15 per 30 minute visit) 180
  • Cost per minute $2.67

Cash pay Physical Therapy

  • Cost Per Visit $125
  • Number of Visits 4
  • Total Costs $500
  • Time Spent with the PT 240 Minutes
  • Cost per minute $2.08

While these numbers are averages, and things can change based on a patient's individual insurance policy, I think it gives you a good idea of how a cash pay PT practice compares to an insurance based practice.

As far as cash pay PT goes, if the insurance company reimburses the patient for 50% of the services provided, the out of pocket cost decreases to $250 for patient. That’s nearly half the cost of attending an insurance based clinic. Don’t forget to factor in time missed from school or work a patient encounters while attending the insurance based PT clinic 12 times vs just 4 times at cash pay PT practice.

Making a profit

Running a cash pay PT practice can be a lucrative option, if done appropriately.

By eliminating the time and costs associated with dealing with insurance companies, clinic owners can keep their overhead low. They don’t have to hire a full time staff member to handle insurance claims and denials, nor do they have to pay a company a percentage of all revenue generated to outsource this work.

Keeping overhead low is one of the many keys to a successful cash pay PT practice. In my clinic, we have kept the cost of equipment low because I spend the majority of my time performing manual therapy. I don’t have any of the traditional modalities like E-stim, ultrasound, and traction machines because I don’t think these modalities yield the best results for patients, and the cost-benefit analysis didn’t add up for me.

So by keeping the overhead of my clinic down, I can eliminate most of the costs associate with running a traditional physical therapy practice, which means more of my revenue is going into profit opposed to expenses.

Wrap up

So there you have it, a quick glimpse into the inner workings of a cash pay PT practice vs a traditional insurance-based PT practice. I hope you found it interesting and hopefully you learned something new. As always feel free to connect with me on the forums here, or follow my practice on Facebook or Twitter.

Wondering how to get physician referrals to for your physical therapy clinic? Check out Kevin's next article, New Grad's Guide to Physician Referrals!


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