Switching to a Cash-Based Functional Medicine Practice
May 02, 2023
Moving towards a cash-based functional medicine practice can feel a little daunting. After all, pivoting away from the more traditional insurance-based model requires unique business logistics and establishing the right processes for billing, collecting payments, and maintaining a healthy cash flow.
Luckily, functional medicine practitioners are in a strong position to make the switch to a cash-based practice. Research by global consulting firm McKinsey found that consumers are placing a higher priority on their wellness while continuing to express frustration with the current healthcare system. Consumers are also willing to pay out of pocket for complementary health approaches. With traditional academic medical centers like The Cleveland Clinic publishing headlines linking functional medicine to measurable improvements in quality of life, this trend is likely to continue.
No wonder more and more functional medicine practitioners are transitioning to cash-based businesses. If you’re wondering how to start your own private practice that moves away from traditional insurance-based billing, keep reading to understand the key benefits of cash-based billing and get ideas for how to make a smooth switch.
Moving to a cash-based functional medicine practice offers opportunities to be paid more (and faster) for the great work you’re doing. It also relieves a big administrative burden giving you back time to spend helping more clients thrive.
Switching to a cash-based model means you no longer need to interact with insurance companies. This frees you from wading through CPT (Current Procedural Terminology) and ICD-10 (International Classification of Diseases 10th Revision) codes, navigating complex billing procedures, and spending hours on documentation and follow-ups.
Clients who pay you directly may still want to try and submit to their insurance providers for reimbursement. If that’s the case, they will likely ask you to provide them with a Superbill to support their claim.
Even though insurance companies are required by law to pay claims promptly and efficiently, delays still happen. Whether it’s due to incomplete or inaccurate documentation, disputes over coverage, or uncertainty around reimbursement rates, unexpected issues can leave you waiting several weeks, or even months, for payment.
When you switch to cash-based, clients pay for services as they happen. If you want to ease payment friction by keeping a credit card on file for each client, you’ll need to get consent to store their credit card information.
We’ll explore how to ensure you’re meeting regulations for storing credit card information later in this article.
When you consider how to start your own private practice, there’s a lot to think through. Between keeping your calendar bookings manageable, mitigating burnout, and exploring ideas to future-proof your practice, you have plenty of stressors on your mind. Wondering when and how much you’re going to get paid for your services doesn’t need to be one of them.
Some insurance companies may not recognize functional medicine as a reimbursable service. Others may only provide limited coverage for a functional medicine practice, which can cause practitioners to avoid offering certain services for fear they won’t be reimbursed. These worries disappear when you’re operating in a cash-based model.
Imagine a team of nutritionists and dietitians in an integrative and functional medicine practice group. If this group practice decided to accept insurance, the majority of insurance plans would cover services from their registered dietitians (RD), but some won’t cover the services offered by nutritionists. This would undoubtedly affect which services the group practice offers and which practitioners they invite into their group.
If this same group switched to a cash-based business model, they could take reimbursement out of the equation and offer a full range of services from a diverse set of practitioners to best serve their clients.
When you move to a cash-based practice you’re freed from accepting the reimbursement rates insurance companies set for functional medicine treatments. This opens up the opportunity to more appropriately value your services and boost your income without increasing your workload.
There are a few factors that go into deciding what to charge clients. For example, a practitioner who offers functional medicine health coaching would want to consider the following:
One final note: Don’t forget to evaluate your money mindset when you’re setting pricing to make sure deeply embedded beliefs and past experiences aren’t subconsciously sabotaging your true earning potential.
According to the Council for Affordable Quality Healthcare (CAQH), providers spend an average of 8 minutes per transaction on manual insurance claims submission and 3 minutes on electronic submissions. Those numbers can go as high as 20 and 22 minutes, respectively. This doesn’t take into account time spent checking in on claims status or working through claim issues.
Practitioners already have plenty of administrative tasks jockeying for their time. Moving to a cash-based practice removes one big administrative time-suck from your list. Of course, you will still need to invoice your clients, but a tool like Practice Better offers plenty of automations and shortcuts to keep payments flowing and flexible.
Through many conversations with our functional medicine practice customers over the years, we’ve uncovered some common themes around what to plan for when shifting to a cash-based practice.
Whether you’re just launching your practice, or you just want a refresh, it’s critical to ensure you’re meeting all relevant legal requirements and getting express written consent from clients where needed. There are the four main legal forms that functional medicine practitioners should be aware of, according to Attorney and Legal Coach, Lisa Fraley:
Keep in mind that legal requirements may vary depending on your location and credentials. Consulting with a licensed attorney will ensure you’ve covered all bases and are taking the right steps to provide peace of mind and confidence in caring for your clients, while protecting your business for the long term.
As stated earlier, if you’re transitioning from an insurance-to cash-based business model, keeping a credit card on file for each client simplifies payments. However, there are strict rules and regulations in place when it comes to storing this sensitive information.
Regulations related to storing credit card information can vary depending on the location where your business operates. Different countries or regions may have different laws and regulations related to data protection, privacy, and consumer rights that can impact how you store and handle credit card information. For example, in the European Union the General Data Protection Regulation (GDPR) sets strict requirements for the collection, storage, and processing of personal data, including credit card information. In Canada, the Personal Information Protection and Electronic Documents Act (PIPEDA) is in play.
Make sure you familiarize yourself with the laws around keeping a credit card on file in your jurisdiction to avoid fines, lawsuits, and losing your ability to accept credit card payments from clients.
When clients are paying out of pocket for services in your cash-based practice, many will undoubtedly appreciate flexibility around how and when they pay. A functional medicine coach offering flexible payment options can also potentially attract more clients while ensuring they still get paid in a timely manner. Get ideas on different ways you can structure payments over here.
In the world of functional medicine, transitioning to a cash-based private practice opens up a world of benefits and exciting opportunities. By breaking free from the constraints of traditional insurance-based models, practitioners can experience greater financial stability, increased income, and regain control over their payment processes.
Practice Better is the complete practice management platform for nutritionists, dietitians, and wellness professionals. Streamline your practice and begin your 14-day free trial today.