Cash-Only Practices: Doctors Are Rethinking Their Objections

Neil Chesanow


February 10, 2012

In This Article


Cash-only (also called "direct-pay") medical practices, in which doctors shun managed care contracts and are paid in cash by patients, are gaining adherents -- admittedly slowly, but surely. And while there have been philosophical and logistic criticisms of the model, some of those are steadily breaking down.

One reason is that low insurance reimbursements, particularly from Medicare, are making it harder to meet practice overhead expenses. Another is that increasingly more doctors, particularly primary care physicians, seek greater control over their patient visits and patient relations.

"How do you create a practice model where your patients are your payers, where you get doctor and patient back into a real relationship, and where patients can trust in the way doctors work and how they do business?" asks Alan Dappen, MD, who has a cash-only solo practice in Vienna, Virginia.

Cash-Only: Making a Real Impact?

How many doctors are going the cash-only route? It depends on whom you ask.

"The cash-only movement is growing exponentially," asserts Brian Ray Forrest, MD, an adjunct professor at the University of Carolina School of Medicine at Chapel Hill; President of the North Carolina Academy of Family Physicians; and founder of Access Healthcare, a direct-pay practice in Apex, North Carolina. "In the next 5 years," he predicts, "25% of doctors will convert to a cash-only model."

Formal surveys of doctors who have no managed care contracts tell a different story, however. "According to our 2010 Practice Profile Survey, taken from our active members, only 3% of respondents were practicing in a cash-only, direct-care, concierge, boutique, or retainer medical practice," says Glen Stream, MD, president of the American Academy of Family Physicians (AAFP). That comes to fewer than 3000 doctors out of the AAFP's 97,000-plus membership.

As the AAFP's president, Stream has the opportunity to interact with a great many family physicians. Even though only 3% of AAFP members have opted out of managed care, are a far greater number considering it? "Absolutely," he says.

The Center for Studying Health System Change in Washington, DC, has been tracking the number of doctors without managed care contracts since the mid-1990s. Ann S. O'Malley, MD, MPH, a senior researcher there, says that on the basis of periodic surveys the center conducts, the number of cash-only practices grew from 9.2% in 2001 to 11.5% in 2005, an increase of only 2.3%.

"Despite anecdotal reports that many physicians have dropped out of insurance networks, the vast majority of physicians -- 87.6% -- had managed care contracts in 2008, the year our most recent survey was published," O'Malley observes.

Still, that would mean 12.4% of physicians are in some form of direct-pay practice. The Association of American Medical Colleges estimates that the number of US doctors now totals about 954,000. Could it be that 118,000 physicians currently accept only cash?

Kathryn Moghadas, RN, CHBC, principal of Associated Healthcare Advisors in Winter Springs, Florida, doesn't believe it. "This has been touted as being highly successful," she says. "Most of what I see is doctors failing at it."


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