When the topic of having a cash-based practice comes up it seems that doctors automatically make the assumption that they have to learn how to “sell prepays”. Well that couldn't be further from the truth. Having a cash-based practice is not about having everyone prepay for their care. A practice full of prepay patients is a practice out of balance. It is a practice dependent on new patients. It is a practice with the same stress as a non-cash-based practice - where are my new patients? No new patient means no new income.
If running a cash-based practice is not about prepay then what is it about? The real philosophy of having a cash practice is being in control of one's own destiny. Not being dependent on some third party to support your life. This is freedom. This is stress-free! The key to having the STRESS FREE cash-based practice is creating CASH FLOW. It is not about having a great month of collections. I love those practice management ads with all the testimonials about how doctor so and so collected $xyz that month. Big deal! It's not about a big month's collections. Anybody can have a big month. It's about creating a consistent flow of income that supports the practice and your lifestyle. Prepays, although nice to have, do not support a "consistent" cash flow.
I'll repeat. The key is to have enough CONSISTENT monthly income from your cash patients to support your practice and lifestyle. Lots and Lots and Lots of practice members on monthly payment plans accomplish this. If you had 200 practice members each paying you $200 a month on average, you would have a consistent cash flow of $40,000 per month. In case you we’re wondering, it’s not about making more money. It’s about serving mankind with outstanding care, creating a fun, stress-free life with a business model that makes it easy for your practice members to not only start care, but stay-on for wellness care. Prepay plans just don’t work very well at transitioning people from patient to wellness practice members. So then, why do I accept prepays? It has to do with the fact that although the vast majority of people choose to pay for services and products with monthly payments, there is a small percent of the population who prefers to prepay. Since we let the patient choose which option works best for them, some want to prepay.
However, we find that most of patients prefer monthly payment plans. Look at how people buy cars, homes, tv’s, appliances, etc. Almost everyone finances the purchase and pays monthly. My personal favorite option is where a patient makes a down-payment and the balance is paid monthly. The down payment creates commitment from patient, whereas the monthly payment creates the consistent cash flow.
And quite frankly, patients who pay monthly stay longer whereas prepay patients have to "renew" at the end of their term and any time a patient has to make a "choice" regarding renewing, you will lose some of them. However, if a patient is already used to paying a monthly fee, when the renewal comes up, the monthly fee should be lower (since they are coming in less often). They're happy to continue, especially when the fee has gone down. “Hey Mary, your monthly fee is going down from $285 to $155 per month. Isn’t that great!”
After a long enough period of time, you will have built up a clientele of patients who consistently, month-after-month, pay you to care for them. You can literally go months WITHOUT a new patient walking in the door. Do you know how good it feels to be able to just take care of people and not be concerned about new patients? It is truly the definition of a fun, stress-free practice!
Dr. Miles Bodzin is Founder & CEO of Cash Practice®, a provider of online systems for Creating Life-Time Clients in the Click of a Button™, visit www.CashPractice.com to learn about the Cash Practice® Systems.
Or call 877-FIFTY-50.