Unlocking the “Cash” in Cash Pay Medicine--How to Get Paid the Right Way
“Money is like manure. It should be spread around.”
-Thornton Wilder
Your team gave the patient a quote. The visit’s done. But sending a bill to insurance vs getting paid by patients themselves changes the situation. Just because there’s a credit card reader and statement template doesn’t mean a practice can handle a private pay setup. Most insurance-based clinics have a cash or uninsured patient fee policy. Copying and pasting those rules from a health plan-focused setup won’t be effective in a 100% cash pay clinic. How should you best collect fees now? Again, you’re not billing a corporation (i.e. health plans) anymore. You’re looking patients in the eye while they hand their card to you or agree to a contract. The best payment practices won’t matter if you don’t earn the patient’s trust, let alone their savings.
Today’s TLDR—a collection policy checklist
[ ] Set your ideal collection time based on the business model (paygo, concierge, retainer, or something else)
[ ] State a transparent fee structure on your website or profiles
[ ] Can your practice accept all relevant payment methods?
[ ] Credit card/debit card
[ ] Cash
[ ] Check
[ ] Contactless payment
[ ] Bank transfer/EFT/ACH
[ ] Peer to peer transfer (e.g. Venmo, Zelle)
[ ] Crypto? (I’m kidding… or am I?)
How we handle payment
Design a collection policy well, and you should rarely hear disagreement from patients. Transparency matters as well (at least to us). For reference, our clinic operates a paygo model (i.e. fee-for-service with cash). For paygo, specific fees should be posted on your website or business profiles.
Distinct services carry their own prices and time guidelines. We clearly state that the office is a paygo model. If nothing else, take note of the underlined section in the screencap above. Accept payment at time of service.
The best accounts receivable… is $0 accounts receivable
Billing right after the patient has a wonderful appointment is the best time to get paid. Be flexible with method of payment, even if credit card processing fees between 2%-4% can be troublesome. To be safe, have a separate clause noting that fees are subject to change at anytime. Either way: be clear upfront with patients on the phone or your booking platform. If patients know what to expect and, crucially, those expectations are met or exceeded, they’ll be pleased to pay. You’ll prevent awkward conversation starter of “so, I have this bill for you…” Instead you’ll say “I have your statement for you, consistent with what we discussed on the phone (or online).” Several of these principles align with different reimbursement models as well (more info on that below). Keep the transactions smooth. Have a user-friendly payment processor (we use Square) for your staff to accept various cards (including HSAs/FSAs) as well as handle payment disputes if needed. However, we live in 2024. Not everyone physically holds cash or cards anymore—allow contactless payments if possible. Refund scenarios rarely come up when the job is done correctly, but when they do, be like Amazon: just give the refund unless there’s an ironclad reason not to.
Naturally, there are exceptions when it comes to same-day payment. Some patients prefer to just write a check later or pay things online. Others may want a payment plan instead. Prep your contingencies.
Offer personalized service either way. As long as your manager reconciles incoming deposits at frequent internals (daily or weekly), there should be few surprises. This applies to other private pay business models as well.
What if my clinic runs as concierge, retainer, or something else?
Some medical disciplines fare better with a recurring revenue setup. Direct pay primary care may come to mind. Installment payments offer predictability at the cost of time value of money (i.e. money is worth more now than in the future). Depending on your bookkeeping setup, cash flow needs, and exclusivity of the practice, it might be simpler to implement a recurring bank transfer instead of using credit/debt cards. In practice, most patients aim to use their credit card. They’re spending their hard-earned funds on you, so they may as well farm some Chase rewards points along the way. A recurring revenue model may also help patients better understand pricing expectations. You’re charging, essentially, one fee (easy to track) over multiple periods and patients can better view how that charge increases over time. Just like their Netflix subscription. Those running a fee-for-service model otherwise have to justify more sets of prices. If your clinic follows direct-to-employer arrangements, (i.e. you oversee a firm’s workforce medical needs), consulting a lawyer is critical to formalize the arrangement.
Cash is King!
Regardless of the model, a few elements remain in force:
Your contract with the patient clearly spells out recurring fees, responsibilities, term length, etc.
Remain transparent with pricing (both for recurring and one-time fees).
Bill on time and on target:
Fee-for-service/paygo—accept payment same-day (keep receivables as close to $0 as possible).
Concierge and retainer—automate payment once pricing expectations are clear.
Direct to employer—form an agreement around the client’s needs, but avoid taking payment too late in the patient care lifecycle (e.g. more than a month or quarter after care is rendered) if possible.
Take your time in setting the ideal collection policy—get it right the first time. It’s difficult to reshape patient expectations around fast-changing rules. Train ALL your staff on said policies. Only then will your whole clinic maintain a robust system. After all, these are patients’ well-being and livelihood we’re talking about. Care to Cash can help demonstrate how to handle payments with the same excellent care given in the exam room. Reach me at x.com to talk shop about your healthcare journey. Subscribe to caretocash.substack.com for more critical cash pay tips.