The Benefits of a Fee-based Practice

There’s no way around it: An insurance-based practice simply cannot compete with one that is cash based. “Your administrative and overhead costs at a cash-based office will probably be a third of the traditional office,” says Dr. Taylor. “We have one employee, rent, and minimum capital expenditure. The net income is greater, and you collect all the money. In the insurance-based office, what drives the system is volume, and you need to have a larger staff to serve that volume. We needed three to four employees just to deal with verifying and collecting insurance monies, so it’s quite costly, and then you get 50 percent of whatever your charge is. You’re paying several employees to get half of what you charged.”

Dr. Lezaic concurs that a cash-based practice is a very strong incentive: “There’s no tangling with approvals and a whole billing department. It’s really nice; you’re very happy, you’re not rushed. I could be seeing 40 primary care patients and not being fully happy with the reimbursement. Instead, I’m not on call, I don’t work weekends, and it’s at least as good as what I’d make as a primary care physician, and better.”

But is there a danger of being consumed by the pursuit of profit, and losing the focus on patient health? Dr. Lezaic says that some practitioners tend to shy away from the topic. “It’s tough for me to talk about money in a consultation; I have a whole department that does that, but people always ask, ‘How much is it?’ I know a lot of my male counterparts have a real problem discussing fees. I think in many ways, it’s easier for a woman; we’re more direct.” And, she notes, “In our practice we try to be reasonable in our prices; we tend to be more reasonable than plastic surgeons. But I don’t love that—I don’t think that’s a good reason to choose a physician.” Dr. Bell-Taylor is even more emphatic that the subject of money is nothing to shy away from. “Patients don’t value medical service. Many physicians are frustrated because they’re undervalued—they’re thought of as a $10 copay. If you’re going to do this you can’t be uncomfortable asking for money. A physician who feels good about him or herself provides better care. Insurance companies make so much money off of us—everybody makes money off of us, but we don’t feel like we should make any money! Insurance companies need us to stay in business. A sliding scale is not needed; people will find a way to pay for what they need and want. Physicians are losing money and closing their offices every day.”

“We charge less per half hour than does my lawyer,” adds her husband, Dr. Taylor. “My time is worth something. If you want to be covered by insurance, I will do what the insurance company pays for. We’re not denying care; we’re not being ruthless or uncaring. But if you want something different, if you want more than what the standard treatment is, you need to pay for it.” And there are some overhead costs not found in a traditional practice. “You have to spend about 20 percent of your revenues on advertising,” says Dr. Lezaic. “That’s high, but it’s very important. Advertising is a necessity, and you really need to pay for quality.” And most important, she notes, is that “you have to be in this because you love it. I love what I do. If you did it just for the revenue, you’d really be stressed out.”

Final Words

“It’s definitely rewarding,” says Dr. Jill Lezaic of her fee-based aesthetic practice. “It also empowers the patient,” says Dr. Eldred Taylor, of the freedom patients have to make their own decisions once out from under the veto power of insurance companies. But, he cautions, “I don’t want to give the impression that anybody can close their traditional practice and open a fee-based practice; it takes time and you need to be knowledgeable about the subject. You need to really look at the market. The reputation we gained from [offering additional services] in our regular office gave us the ability to open the second office. We advertised, wrote our book, put out newsletters, started a Web site, and spoke at hospitals and women’s health seminars. And we have been significantly profitable since the second month.” So why doesn’t everybody do it? “What usually stops the physician is fear,” says Dr. Taylor. “Insurance companies try to intimidate you; they take their cut off the top. It’s like having a pimp. They say, ‘How dare you set up a practice on your own!”