As collecting money from payers gets more and more difficult and physicians must see an increasing number of patients to earn the same income each year, many physicians are considering changing to an all-cash practice. As the number of possible patients increases and the number of practicing physicians decreases, this trend will become even more prevalent. According to the 2012 Survey of America's Physicians conducted by the Physicians Foundation, approximately 7% of physicians have a cash-only medical practice. This is up from the American Academy of Family Physicians 2010 Practice Profile, when only 3% of active members had a cash-only practice. These are not staggering numbers, but more than 14% of this same group is considering a move to a cash-only practice in the next 5 years.

At the same time, the enrollment in high-deductible health insurance plans by patients increased from 13% in 2006 to 25% in 2014, resulting in more and more patients who will consider paying out of pocket for their routine medical costs. These plans are usually combined with health savings accounts. This results in the patient having up to $3000-$5000 each in funds to pay for their medical care directly before health insurance plans become responsible.

The benefits of this type of practice for physicians are clear: The payment is immediate, it costs less to collect, and it is predictable. There are also significant benefits to the patient in this type of practice. When a practice does not participate in any insurance plans, the physician is usually able to give more individualized service and the fees are often at a reasonable level. In practices where insurance pays at a discount of billed charges up to an unidentified maximum and the costs to collect these fees are significant, a physician must price his or her fees at a level high enough to cover all their costs to collect. In a cash-only practice, often the gross charges for each service are significantly less and usually approach the fees set by the insurance plans.

For example, a routine office visit may be paid by an insurance company at $98, but the physician must spend at least 15% for billing, postage, staff to determine in-network rules, and coding expenses. Therefore, the actual amount received by the practice may be $83 and take weeks to collect. If the practice is a cash-only practice, the physician could receive $110 for the same visit; this is only 12% higher than the "approved rate," but the physician would receive 32% more in actual income. This increased income would decrease the number of patients per day the physician would need to see to cover costs and result in a better encounter for the patient.

However, if a physician or group of physicians decides to open a cash-only practice, they must understand the basics of retail sales. The customer (patient) is king. The entire office encounter must be changed to be a patient-centered approach that incorporates wellness and preventive care.

Another important factor to consider: With contracting and the percentage the company extracts for doing business, how much ahead do you end up financially?

Some physicians favor a hybrid practice, which is a combination of insurance-based patients and concierge patients. In a hybrid practice, most patients continue seeing the doctor for 15-minute visits and paying copays while a relatively small number of patients pay an annual fee to receive greater access and visits that last however long is necessary.