In 2019, I was desperate for help with my private practice. I had left a comfortable employed position seeking more control in my schedule but job options were meek where I lived. I didn’t want to move out of the city with a newborn so I had decided to open my own practice instead. I was naive enough to believe I could do it. After seeing what other business owners were doing I saw an opportunity to modernize the medical experience for patients. I had tried to introduce new ideas into the practice I was employed at, but it became obvious that I was only hired to work on their dreams, not mine.
After creating a business plan and predictions of a traditional insurance-based model, I took out another 6 figure loan (on top of education loans) to build my dream private practice. With only a year in I watched my bank account take a nose dive into a negative balance. I thought to myself, how could this be possible? My schedule is full. I have full time staff. I am busy seeing patients back to back, often missing bathroom breaks or lunch to catch up with billing and charting.
I thought I had made it, building my business from the ground up with little to no business background. I attended a few practice management seminars, consulted with agencies and coaches. I was doing all the right things. I had spent a lot of money to learn things we were never taught in our medical training.
I had no idea how I was going to pull through and I was resistant to letting go of my loyal staff. They worked so hard for me and I really wanted to give them my loyalty as well but I didn’t know how to make payroll. I watched my credit card debt get out of control.
I was busy in the least productive way, seeing a ton of patients but getting paid so poorly I was essentially paying them to see me. Was this what I really wanted? Is that why so many people say private practice is dead?
The truth is, staying in an insurance based model will continue to kill very well meaning physicians who are capable of caring for their community but it doesn’t make financial sense to contract with insurance that only pays a percentage of our fees. One logical way to make up for the financial difference was to see more patients. With that, however, is more paperwork, more expenses, more stress and liability. It’s a cycle that seems nearly impossible to get out of.
The truth is, staying in an insurance based model will continue to kill very well meaning physicians who are capable of caring for their community but it doesn’t make financial sense to contract with insurance that only pays a percentage… Click To Tweet
I learned about opting out of insurance and was immediately intrigued. I had the same fears everyone else continues to have. For example:
- Fear of losing income. At this point, what more could I lose? I was already at a negative balance and with the pandemic temporarily shutting down the practice I nearly lost my mind. My overhead was exorbitant and not sustainable. The majority of my revenue came from Medicare and Medi-caid but I could not keep my doors open at this rate so I had to do something different.
- Fear of losing patients. I had taken care of people who had no means to pay for medical services. I knew their families, who often showered me with whatever they had, crates of strawberries, homemade food, fresh eggs. I knew that if I opted out, they would not see me again. I also had patients who drove nicer cars than I did, who wore their money with high end brands but it was not my place to judge how they chose to spend their money. I personally know quite a few people who are financially well off but managed to be on state funded insurance nonetheless. If they could source ways to pay for what they value, then spending on their medical care isn’t all that different.
- Fear of the unknown. Could I really do it, take on a path that only few have? How long will it be until I break even? What other skills do I need to learn to make this work? Who can actually help me?
An advisor told me in order to be profitable, I had to let go of the lowest paying insurance to make room for people who are willing to pay. During this phase of my practice, I had a hard time believing there would be enough people willing to pay out of pocket for my services. Why would they if they had insurance and in-network options? Looking at my short lived stint in the insurance model (less than 2 years), I knew I had to do something drastically different because the conventional way was not working.
In the first round of courage at the start of the pandemic in 2020, I learned a unique skill that made me stand out from in-network options (marketing). I slowly started to opt out starting with the lowest payor and held my breath. It was a leap of faith. My staff was very concerned. I had one person email me saying they were disgusted with my choice to abandon them and many unpleasant calls then followed.
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The thing is, I never abandoned them. I was alway present and available and it was their choice on how they went about getting their medical care. There were many other resources in the community to get care from, and those who have an abundance of resources are actually a better fit for this. As a solo private practice owner, however, there are no tax breaks and no leveraging power to negotiate for better rates.
Practically speaking, by opting out of insurance, I was able to be more accessible since there was no waiting on referrals or prior authorizations to be seen. A simple knock on the door or phone call was all that’s needed and patients could be seen within 24 hours. This was a huge benefit for patients wanting to avoid the Emergency Department for an outpatient issue like an infection, puncture wound or minor trauma. Treatments are quickly rendered and patients heal faster.
“By opting out of insurance, I was able to be more accessible since there was no waiting on referrals or prior authorizations to be seen.”
And my advisor was right. Once I made room for people willing to pay, my profits increased and my stress slowly came down. I was eventually able to pay off my credit card debt. This happened throughout the global epidemic.
It took about another two years for me to be 100% free from insurance contracts and be a Direct Specialty Care podiatry practice. This is a business model with a social purpose, to simplify access to medicine and restore the patient-physician relationship by removing third party payors, while offering physicians less stress, more profit and more rewarding work-life balance. This is a model that makes it easy for patients to access their doctor, get high quality care and for doctors to sustain their private practice, keep their doors open to serve more people, and love medicine again.
Direct Care cuts overhead costs by 40-50% because you don’t need:
- A biller
- A billing software
- Additional staff support to field insurance related questions
- Contracts to review
- Prior authorizations
- To understand how to collect co-pays, deductibles, apply co-insurance etc
- To deal with complaints such as “you didn’t bill the correct code” or “well my other doctor said this would be covered”
- Collection agency to collect past due payments
- To double or triple book
- Large medical space to overbook
- To worry about audits
- To worry about refunding overpayment
- To worry about “we overpaid you so now you owe us back”
- To do an enormous amount of unpaid work after hours
- To keep telling your family who’s waiting for you to spend quality time with them when you’re buried under charting & billing issues, “I’m still working…”
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The time normally wasted on the usual business of insurance is restored and I’ve used this time to reflect and heal. Although I’ve had some losses from opting out, I’ve had tremendous gains such as a lifestyle that offers:
- More time. When you can charge the full amount, you can see fewer patients. The stress of a volume base practice diminishes. What would you do with more time & energy? Solve more problems, do more fun things, there’s no limit.
- Deeply satisfying relationships with their patients. Since we are spending more time with patients, piecing the puzzle together as to why they have pain or are at risk of complications, we get to know them on a deeper level. Patients are craving that, physicians are craving that. Technology can only do so much for patients but people need to feel heard by their physicians for their most vulnerable problems.
- Less stress. When you are contracted with insurance, you’re basically working for them. Since they control whether or not you will get paid, you have to be compliant with what they ask for and there’s no debate about it. Their resources are abundant, now whether you think what they’re doing is right or wrong isn’t the point. They are not a business built on ethics, it is built on profit and they capitalize on us who do function on ethics and our natural desire to do things the right way to help others.
I made a ton of rookie mistakes with my practice early on so that you don’t have to. Here’s what I propose you should consider before opting out and moving into Direct Care:
- Decide this is what you’re going to do and plan for it, mentally and financially.
- Have a nest egg of about 6-12 months before choosing to opt out. That may look like employment, remaining in-network, having a supportive partner and living lean until you’re ready. Be careful about purchasing new equipment or long contracts as this may add financial strain that is hard to get out of.
- Get your board certification(s) first, then think about Direct Care. This process has a different layer of stress and will vary among different specialties.
- Absorb the knowledge from other direct care doctors. Look beyond doctors, including alternative healers, for business advice. They paved the road, so take advantage of that. We want others to succeed in this model and we have to. This is our way of saying we’re not ok with what the system is doing to us, so we’re choosing to play a different game.
- Connect with others who get it. You’re going to deal with the doubts in your mind as it is, you don’t need other people’s insecurities to add to it. Protect your light and move quietly. Work your job, collect your cases for boards, save up, then pivot.
The decision to opt out is difficult and personal. It’s akin to telling a carnivore to go vegan because of its health benefits and moral alignment. Some will get it, some won’t, some just need more time and more information.
I’ve chosen to opt out for the better, it was better for me and the people I serve. Afterall, medicine is centered on the patient-physician relationship and Direct Care is exactly that.