Surviving Low Reimbursement in Private Practice

Like many of you, I spent years watching a disheartening pattern in my practice: our overhead climbed, but reimbursement from insurance providers remained perpetually stagnant.

When I looked at my bottom line, I realized that survival meant getting strategic about contracts, patient flow and income diversity.

AUDIT YOUR PAYERS

In the early days, many of us cast a wide net, accepting as many insurance plans as possible just to get patients in the door. But these one-sided contracts too often work in the insurer’s favor, not yours. Take the time to analyze which panels are worth your effort. If payments haven’t increased in years and paperwork continues to pile up, the best business move might simply be walking away.

If you want to exit a contract, make sure you do it right—give written notice and keep communication formal to the insurance company. Post accepted insurances on your website and always ask about coverage when scheduling new patients.

THE REALITY OF CASH-ONLY

Some practice owners dream of ditching insurance entirely and going cash-only. But in reality, the success of the cash-only model depends on your practice’s niche, your community and your tolerance for risk.

You might consider not accepting credit cards to avoid fees, though this can deter some patients. And keep in mind that billing and collection requires more effort from you and your staff once you cut out the middleman. Many patients do not realize that both you and they pay a fee to the credit card company, so offering patients a lower cash fee for services may make sense.

SEE MORE, NOT JUST NEW

One way I offset low reimbursements is by increasing patient return rates and follow-ups and maximizing the number of patients seen per day. This usually requires tighter staff scheduling and utilization—using scribes or delegating everything allowed by law to your team. When each appointment and every staff member’s minute counts, time management becomes your lifeline.

FIND YOUR NICHE AND MARKET IT

Specialty services like low vision, contact lenses, children’s vision or geriatric care can help you attract cash-paying patients. If you’re in an economically healthy area, social media marketing can amplify your reach, but this only works if you or a staff member is skilled, active and consistent online.

Also, be choosy about which frames and products you carry—and market them too. Some insurance panels dictate what you must stock and where you must send lab work; greater freedom to make decisions about your optical inventory and lab work may bring costs but also more control and potential for add-on sales. Reclaiming the freedom to choose your own inventory and partners may require more upfront effort, but the payoff is total control over your optical’s profitability and patient’s experience.

UNDERSTAND YOUR CONTRACTS

Insurance companies are contractors, and most contracts are “take it or leave it.” Be sure you know the specifics about prohibited up-charges, reimbursement on lens options and requirements for both vision and medical services. Often, you can’t “give away” services or products to make patients happy because contracts forbid it.

It’s also important to remember that contracts often change—sometimes with minimal notice—so always read updates and know your opt-out process.

DON’T PUT ALL YOUR EGGS IN ONE BASKET

Relying on a single big payer? You’re at their mercy. Diversification is a must. Some ODs negotiate directly with local employers or school districts. For others, offering more medical eye care—often reimbursed at higher rates—can supplement low-paying vision plans.

STAY LEGAL

Thinking about expanding into new services? Know what’s legal in your state before investing in technology or marketing. Telemedicine, for example, is regulated closely by optometry boards—which may differ from medical boards.

WATCH YOUR COSTS LIKE A HAWK

Low reimbursements squeeze margins, so chair cost analysis is more important than ever. If you own your building, assess whether it’s a financial asset or a drag on your profitability. Small changes add up and every dollar matters.

TREAT YOUR PRACTICE LIKE THE BUSINESS IT IS

At the end of the day, owning a practice means making business decisions—sometimes tough ones. Know your worth, run the numbers before making changes and never accept less than your practice deserves out of habit or fear. The love of your profession should not come at the cost of your financial health.

Read more on managed care here.