Money woes solved with cash-only practice

A Mississippi internist explains how his situation changed for the better once he stopped accepting insurance.

By Mike Norbut, amednews staff. Feb. 10, 2003.

The days of waiting for insurance reimbursements and adding up accounts receivable are over for Todd Coulter, MD, an internist from Ocean Springs, Miss. About seven months ago, Dr. Coulter's practice, Midway Family Care, stopped accepting insurance, and he started seeing patients on a cash-only basis.

Dr. Coulter, who is the vice speaker of the Mississippi State Medical Assn. House of Delegates and the immediate past chair of the AMA Young Physicians Section, operates his clinic from 8 a.m. to 7 p.m. Monday through Friday. Office visits are $40, paid in cash, and patients can receive other tests, such as $40 x-rays and $20 ECGs, without going elsewhere. Patients who have insurance are instructed how to file their claims with their respective insurance company.

See related content
Region: South

Dr. Coulter is happy with his practice and says he is often complimented by other doctors "for doing what others are afraid to do." In a Q&A with American Medical News, he talks about how he managed the transition and how his practice has changed.

Question Why did you decide to switch to an all-cash practice?

Answer Basically, to maintain the solvency of the clinic. Patients would come in for an appointment and pay their $15 co-pay, and we'd file the claim, and then we'd wait three and a half, four, sometimes even five weeks to get the balance of our payment. It just took us too long. It was a cash-flow problem.

Along with that, we were seeing patients without insurance, who would just pay in cash. They were paying $68. I looked up one day and said, "We could do this all the time."

I believe this is a new model. This is what people want now. They want easy access, availability and affordability. This is why we're successful. We meet the access and availability needs, and we're affordable.

Question Has it been difficult to train your patients about the new method of payment? Do you still see a lot of patient who have insurance?

Answer Most of our patients do have insurance. What's important is they do not recognize (the higher charge) as a problem. For a lot of them, it's only $10 or $15 more than their co-pay.

The initial couple months, we had some people rather angry that we did not accept their insurance and rather upset that we charged $40, but most people have understood.

On average, we're seeing 25 to 30 patients a day, and eight to 11 of them are new patients. Those are people willing to pay the $40.

Question How did you settle on $40? Is there a difference for Medicare and Medicaid patients?

Answer We are a Medicare participant, but because we're walk-in, we don't see a large Medicare population. That's the nature of an urgent care or walk-in clinic.

The way I decided on $40 is this: I drive a 1995 Chevy van. When I fill up the tank, regular unleaded, it costs me $44. I wanted something that was common to everyone.

It was confirmed by this: when we bill a (billing code) 99213, we get $47. So basically, I was getting $47, and I got $15 up front. I said, "I'll tell you what, you keep the $7, and I'll take the $40 up front."

The other night, I took my family -- my wife and four kids -- to Chuck E. Cheese's, and we spent $52. I came up with a value that the average person can afford. $40 is not a lot to pay. When you go to fill up gas, it doesn't matter who you are, you have to pay the same price.

Question Your flyer also offers x-rays for $40 and ECGs for $20. With rates this low, do you struggle to cover costs?

Answer I own the x-ray machine, and I own the ECG machine. And even as a practicing internist, I don't need to do an ECG on every patient. The tests don't cost that much. The real question is, why is a hospital charging you $100 for an ECG? If I charge $40 for a chest x-ray, and the hospital charges $120, my gosh, the hospital is making a lot of money, isn't it?

Question How is your practice performing financially now compared with when it accepted insurance? How much have you saved in overhead?

Answer Our overall revenues are lower, there's no doubt about it. Two years ago, we collected $564,000, and this year, we collected $379,000. But we're growing by eight to 10 patients a day, so our name is getting out there. We're also not spending a lot on insurance billing, software support and things like that.

Plus, with the way this changed my practice, my overhead dropped by $2,800 a month, so we're seeing more patients, we're getting our money sooner, and with less hassle and with less overhead.

One of the things you have to worry about is claims being downcoded, delayed, denied or in any other way devalued. I don't have to worry about that anymore. I also don't have to create an electronic medical record for the insurance company. I only have to create a medical record that substantiates the patient experience.

We are seeing 25 to 30 patients a day now. We're shooting for, in five years, having 40 to 42 patients a day on average, which would make us a $500,000-a-year cash practice.