Submitted by Antonio Arias, MBA, CHBME on Tue, 12/8/2015 - 8:00

Fee-for-Service vs. Private-Pay: Physicians Grapple With Changing Models

Fee-for-Service / Private-Pay: Physicians Grapple With Changing Models

From low reimbursements to high deductibles to non-paying patients, doctors and medical practice managers have plenty to be frustrated about when it comes to the business of healthcare. Yet interestingly, their chief complaint has little do with earning less money than they deserve – it has to do with the trouble they go to in order to get it.

For the last three years in a row, the Physicians Practice Great American Physician Survey has shown that healthcare practitioners’ top frustration is “too much third party interference.” (Notably, the percentage who select that response has also grown year-over-year since 2013 to almost 40 percent.)

Third parties play a huge role in the healthcare system, of course, and they’re not all bad; a referral-friendly doctor or a trusted medical billing company, for example, can make for an invaluable third-party asset to your revenue cycle management. But the key word in the surveyed doctors’ top ‘dislike’ about doctoring is the last one: interference. In the fee-for-service model, payers unfortunately seem more like adversaries than assets to the physicians they reimburse.

Are private payment models like direct care and concierge medicine the solution, or just a passing trend? Doctors seem to be grappling with the same question.

Of the 860 doctors surveyed by Physicians Practice this year, nearly 25% were already using direct pay, concierge, or some type of membership program in their practice. Plus, over 45% said they were somewhat likely or highly likely to make a change to one of these models in the next three years.

Those numbers may seem oddly high, but less so when you consider how many physicians are embracing hybrid payer/private payment models. The providers surveyed may be using any form of a private model or count only a small segment of their patient base as “members” in a concierge approach.

Which is perhaps, the new rule: A more open payment system, in which practitioners define their practice-specific payment preferences and adapt them as they see fit. Why? Because there’s no one-size-fits-all private-pay solution. To again consider the Physicians Practice survey results:

  • Current private pay physicians were almost equally split between cash practice, concierge, and direct primary care when asked how they define their practices
  • About 30% of private pay docs said their billing model was based on visit time, while 70% said fixed fee based on service type.
  • More than half of private pay physicians said they still took insurance as out of network providers

If your practice is fed up with fee-for-service, incorporating a private payment alternative may be a smart way to boost revenue. But before diving in, consider whether bolstering your billing effectiveness by contracting with a medical billing service may be a more economical solution. Click here to get started.

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Topics: Medical Billing, Revenue Cycle Management, Practice Management

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