Insurance VS. Self Pay Only Practice?

Posted: May 6, 2021

This is a question that comes into my private practice coaching sessions often with new practice owners trying to figure out which funding source is best for them. Every therapist and practice is different and gifted with a unique set of skills that make answering this questions easy. To answer this question, I suggest you do some self-reflective work and determine where your pain tolerance lye when it comes to certain aspects of running your business.

Let’s look at the pros and cons of both in detail.

Insurance Panels

Pro’s

No marketing necessary
Full case load
Larger pool of clients to choose from 91.5% of American have health coverage.
Steady source of referrals and can grow caseload fast.
Accurate billing =steady stream of payment
Can offer services to a broader range of individuals.
Can be selective over the client you want to serve

Con’s

Rate is usually lower than Private Pay rate.
Restrictions on how care is performed
Claim errors can slow reimbursement down
Long wait time for denied or rejected claims
Credentialing process can take awhile initially.
Must take training on billing process and coding to bill like a boss!!

Private Pay

Pros

Freedom to practice the way you envision your practice.
Payment received at the time of visit.
Less follow up and delays on payments.
Can charge more and see less clients
Can be selective over the clients you want to serve.
Less paperwork

Con’s

Growth may be slow at first while you find the marketing strategy that works for you.
You will be required to actively engage in marketing and would need additional training to become an effective marketer.
Growth may be slower and take time to ramp up.
Accessing a smaller pool of clients so marketing messaging is important.
Following up on past due invoices impacts bottom line.

There have been plenty of therapists who are successful in running both types of practices. It comes down to knowing your strengths as a leader. Both structures require business savviness to be able to establish processes for oversight and outcomes. If you accept insurances having a process for billing, claim processing, and auditing is necessary. If you are private pay understanding marketing conversions and tracking your ad dollars spent and return on investment is going to be crucial.

Some practice owners diversify their practices by doing a hybrid of both.

Hope this helps. If you need further help, set up a strategy session with us for free by clicking the link on our website at www.privatepractease.com