When designing your cash-based medical practice you’ll have to decide how much you’ll charge for your services. In this article I want to help you think through how to set your cash-based clinic prices.
If you don’t know me, I’m Dr. Mo, a family medicine doctor who has been a digital nomad for a while. I have a virtual health coaching practice at drashori.com and I’m starting a physical cash-based walk-in clinic in Long Beach, CA.
How Much Can Patients Afford?
There is a lot of disposable income in our lovely nation but the value is in the eye of the beholder. You’d be a fool to try to sell a $100 office appointment to someone who shops for groceries at their local 7-11.
Instead of what’s affordable, think of what’s sustainable. Think of how much work you’re willing to put in, the income you need, and then go find the right people to who this clinic is a good fit and advertise and market to them.
Doing Market Research
Ask a person how much they’re willing to pay for a doctor’s appointment when they have an ear ache – “Oh, I dunno, whatever my copay is, I guess.”
Now, ask that person when they’ve actually missed a night of sleep because of that ear pain and let’s gauge their interest – “Fuck me! Whatever it costs! Just want to get rid of this pain.”
So, you can fake acuity or need when doing market research. It works great for selling designer jeans but falls on it’s ugly face for medical services.
The Non-Insurance Based Model
The elephant in the room is the fact that you’re building a cash-based practice that doesn’t take insurance. Do your customers understand that? How do you get it across to them?
One option is to throw it in their face, “No Insurance Accepted here!” or “This is a Cash-Based Practice.” or “We are out of network with all insurance services.”
I don’t think there is anything wrong with doing it boldly and strong like that, as long as it’s professional. But people are learning more and more about non-insurance network clinics so you may not have to be too heavy handed with it.
“This is a cash-based medical practice. We don’t work with any insurance providers. We accept cash and cards for your office visit.”
“Each visit costs $100, with or without insurance.”
Alternatively, you could explain things to each person who comes in the door but be prepared for a lot of follow-up questions. In my opinion, it’s better to just market to those who get the cash-based system. These individuals are already paying a premium for things that they could otherwise get free or at discounted prices.
How Much Income Do You Need?
Okay, you have a cash-based clinic and you want $180K of net income. This is the money left over after you pay for your overhead, but you still have to pay taxes on this income. Clear?
An insurance based practice has a lot of overhead such as billing and staff and equipment. A cash-based practice can run quite lean. How lean? That depends on your profit needs, patient base, and services you want to offer.
You could charge a lot more per visit and offer a concierge model clinic but you have to make sure you have enough affluent people who want to come to your clinic.
Or, you can lower your cost and strike a balance between the affluent and those who appreciate better value, convenience, and transparency.
Planning for $180K of Annual Income
1. Set Your Desired Income
To earn $15K a month ($180K/yr), you need to earn $3,750 per week. That’s your goal. Some weeks will be better or worse than others.
Don’t shy away from setting your income needs at $500K but remember it’s always a trade-off. If you want to earn more money you’ll have to do more or sacrifice more.
2. Overestimate Your Overhead
Your overhead depends on the size of your clinic and staff which also dictates how many patients you can see, up until your time becomes the limiting factor. For your monthly overhead consider:
| Rent | $1,625 |
| Medical Supplies | $600 |
| Utilities | $200 |
| Insurance | $800 |
| Employees | $4,000 |
| Tech Stack | $300 |
| Marketing | $500 |
| Total | $8,000/mo. |
3. Calculate Your PPC (Per Patient Cost)
The total revenue you need is $22,700/mo.
Option A: ~20 patients/day = $60/patient
Option B: ~15 patients/day = $75/patient
Option C: ~10 patients/day = $120/patient
Of course, now you need to decide at what pace you want to work, how many day you want to be in the clinic, and your work hours.
4. Figure Out Your Ideal Work Schedule
“Ideal” means striking a balance between how much you want to work and how much you have to work. When you’re employed it’s 20% what you want and 80% what the employer wants. When you’re building your own medical practice, it’s revered.
- I want 30 minutes per patient
- I don’t want to do paperwork
- No prior authorizations
- No requesting old records
- No fucking around with complex EHRs
- I want to see patients for 6 hours a day
- No weekends
- I don’t mind texting patients
- No inbasket
Given these factors, I can design a 6-hour work schedule, 5 days a week.
5. Figure Out Your Services
The services you offer could either speed up your clinic or majorly slow it down. Don’t worry, slowing down your clinic isn’t always a bad thing.
Sample services to consider:
- skin biopsy
- lacerations
- abscesses
- joint injections
- trigger point injections
- Toradol injection
- throat swabs
- placing IUDs
- cryotherapy
- IV fluids
- …
The next questions to ask is whether you want to charge for each service you offer or have an all-inclusive price.
I love the simplicity of an all-inclusive cost. You come in, I’ll see you, and I’ll do whatever you need. Some patients will only need a med refill and so you’ll save money on them. Another person will need a biopsy and cryotherapy and you spent more time and money on that person.
In reality, abscesses and lacs take too much time. IVs are cumbersome and time consuming. IUDs aren’t worth the risk. But a joint injection or trigger point or Toradol injection is easy and high-yield.
6. Who Will Come To Your Clinic?
My clinic space right now is 500 sq ft, which makes churning 50 patients a day quite impossible. 20 would be pushing it. 10-15 is perfect.
The kind of people who will come to my walk-in clinic are those who want a medical doctor to take care of them. They want to have a frank conversation about their health concern.
The perfect avatar of my patient is someone who:
- <1 chronic disease
- generally active
- has older children or DINK
- has their own business or leadership role
- male
- caucasian
- in their mid 40s
- drives an electric/hybrid car
- likes calming music
- drinks socially
- travels regularly
- has outdoor hobbies
- has health insurance
- household income $200K
This is who I think will come to my clinic. Don’t confuse this with who you want to attract. Those who need your services most are often the least likely to be attracted.
7. Set Your Price Points
People like options but keep it simple. You can offer 2 different price points but I’m against nickel and diming the patient. That’s what the mainstream healthcare system already does.
- Feeling Financially Healthy? $100.
- Feel Underemployed? $75.
Alternatively, you can offer different price points based on the services used:
- Medical Consult Only – No Rx, No Procedure: $75
- All Other Appointment Types: $100
Play Around With The Numbers
Here is the creative part of your practice, playing around with the overhead and income needs until you have it dialed in.
It will also depend on who will actually come to see you. You might end up getting many more worried-well moms bringing in their kids. They are there for the convenience, not wanting to wait 3 hours at the urgent care or 8.5 hours in the ER. I charge a premium for that because there is a lot of explaining to do in these cases.
Conversely, you might have a bunch of business owners who just want to be reassured, presenting with straightforward concerns or complaints. That’s a major discount scenario in my book – I’ll lower my prices and focus on marketing to more of such individuals.
Operate On Razor Thin Margins
The nice thing about a cash-based clinic is that you can proudly boast that you’re not trying to add unnecessary fluff because the patients are the ones who have to pay for it.
“Yes, we’re spartan, but you get better care at half the cost!”
Employees
Do you need a person the whole day there with you? Forget the idiotic concept of needing a chaperone at all times. If that’s what you’re afraid of you’re running the wrong kind of medical practice.
Do they have to be there in-person? Vitals? Why? If someone comes in for their usually migraines requesting Toradol do you need their HR or RR? I don’t even want a BP.
You’re not an insurance clinic – don’t think the same old way. Your patients want good quality, attentive medical care. Do that.
Medical Supplies
$600 is what I put down for medical supplies for Toradol Solu-Medrol, Decadron, Lidocaine, syringes, swabs, gauze, and basic laceration & abscess kits.
Sterile gloves for sutures? Only on planet Mars, son. There is no reason to use sterile gloves to place 3 measly interrupted sutures, much less staples.
If you aren’t attracting more patients who demand these services then stop stocking these and focus your marketing on the simple visits that don’t need procedures.
Malpractice Insurance
I’ve talked about Arbitration Agreements in the past, making the need for medical malpractice insurance slightly obsolete in a low-acuity setting.
As always, don’t just have an AA in the documents your patient signs, lead with it, front and center.
“This clinic doesn’t carry malpractice insurance because we don’t believe it adds value to our clinical visits. We have an Arbitration Agreement in place in case there are any unexpected clinical outcomes. Ask us about it.”
Tech Stack
Technology is frustrating and often creates more problems than it solves. What do you really need for a walk-in cash-based medical practice? A word document and a way to transmit prescriptions to the clinic.
- Scheduling? Sure, if you are going to take appointments.
- Patient portal? Not really, they can text or email you.
- Patient communication? Not really. You can Spruce, text or email.
- Charting? I can do that in a word document.
- Billing & coding? Definitely not.
- Lab integration? Nope, I can access that directly.
- Consent forms? Google.
- Telemedicine? Google.
- Prescriptions? Dosespot.
I’m not saying you should use Google, but paying $300/mo for an all-in-one EHR should make your work 21x easier because that’s the price difference between Google Workspace and an EHR.
Marketing
This one is tough because you won’t know what your ad-spend will be until your clinic launches. Even if you’re on a very visible corner, you might not have a lot of interest.
The good news is that you can always tweak your marketing to attract the right people. Maybe it’s your message, your services, the appearance of your clinic, your website, or your ugly face, either way, there is a cure for all of these marketing maladies.