Attracting the self-pay patient to your practice

Are you neglecting this lucrative market?

Even in the most penetrated market, there are non-managed care patients. If you find that statement suspect, talk to Tim Smith, MD, a solo practitioner in Berkeley, CA, who only accepts self-pay patients.

Smith has spent the last 18 months building up a primary care practice that concentrates on preventive medicine and patients who pay out of their own pockets instead of relying on insurance companies. He has lowered his fees but still managed to grow his practice and improve its financial performance. "It really is a dream come true," he says.

Smith found that his natural approach and willingness to use or suggest alternative treatments was unappreciated by HMOs and other payers. "I had several years of financial uncertainty," he recalls. "Patients kept asking me why I wasn’t on their HMO list."

It was a conversation with a consultant that made Smith think about building a practice on indemnity clients alone. "I knew it meant developing a billing system and other administrative functions that would take away from my practice of medicine," he says. "But I knew that I didn’t want to market to managed care."

Over the next few months, he lowered his fees from $200 for an initial 90-minute consultation and $100 for additional visits to $89 per visit. He gives a discount of $10 for patients who pay at the time of the visit.

Surprisingly, his income didn’t fall. "I went from spending a lot of time on collections every month to having virtually no outstanding accounts receivable," he says.

Others make it work, too

While Smith’s decision is extreme, other physicians have made a concerted effort to attract self-pay patients. Bill Grisaitis, MD, is a dermatologist in Winter Park, FL. Although about 80% of his procedures are covered by insurance, the rest is up for grabs, he says. "Patients understand in this specialty that there is an element of the splurge in dermatology. It doesn’t always save their lives, but it can help them live better."

Grisaitis says much of his success with indemnity patients comes through creating a strong presence in the community. "We try to create recognition and word-of-mouth referrals."

He starts with a practice evaluation form (see copy of form, p. 94) which each person is given when they first come into the practice. "We kept it short so that it would not be too cumbersome," he says. Most patients fill it out before leaving Grisaitis’ office.

One of the questions asks whether the patient would be comfortable referring the practice to a friend. "We did that so it puts the idea in their mind," he says.

Smith, too, concentrates on promoting positive feeling from his patients and word-of-mouth referrals to grow the practice. "People talk about managed care and how it doesn’t meet their needs," Smith notes. "I remind them of that; I capitalize on what is going wrong with the health care system and let them be my advertisers."

Grisaitis also emphasizes building long-term relationships with patients. In his specialty, there is a greater likelihood of multiple visits. "The patients we really want to attract, we see periodically," he notes.

While neither Smith nor Grisaitis count on referrals from other physicians, both get them. Grisaitis believes his are the result of lectures he gives in the community to the public and to providers, and from letters he sends to primary care practitioners when he gets a referral from one.

"If they are new to me, I also make a phone call and introduce myself and my practice." Smith will often get patients from other physicians who are not involved in alternative treatments, such as acupuncture, but who know about his 20-plus years practicing in Berkeley.

Smith doesn’t advertise his practice, but Grisaitis has found a small gold mine in advertising in his church bulletin. "I was surprised at the cost, but it has been a really great source of patients." The fact that he is a parishioner plays well with potential patients, he says. "You have to let people in your social circle know what you do," he advises. He often gives talks at his golf club or church on dermatological issues. That gets his name out in the community.

Grisaitis also advertises in local magazines which cater to his preferred market: people in their mid-40s to 50s who lead an active lifestyle. About $20,000 per year goes to advertising, says Grisaitis. His revenues are about $1 million per year.

Another form of advertising: He gives patients T-shirts with his logo and name on it. "I think I have one of the most recognized logos in the area," Grisaitis says.

Lastly, Grisaitis touts elective procedures in brochures which are kept in his waiting room. He says this encourages patients to think of him when they consider such treatments.

Grisaitis works hard to attract and keep the indemnity patient and would love to grow this part of his practice. He says the best way to do that is to treat patients with respect and honesty that he would want from a provider. For example, if a self-referred patient comes to his practice with a problem that would be covered by a plan, Grisaitis tells the patient to go back to the primary care provider and get a referral to physicians who are on their health plan. "I lose the income, but they appreciate the honesty," he says. "They are more likely to come back for a cosmetic reason or to refer a friend."

Virtually any physician can build this part of a practice, he says. "If you have an aspect of your practice that is not covered by managed care — for us it is chemical peels and laser procedures — then educate the community that this is available," he says. "When they come to you, treat them well and with the compassion you expect for yourself and your family. People talk about that. Make your waiting area inviting and informative about your practice and what it can offer to patients."

Smith agrees that the most important thing he does is show he cares about his patients. "I don’t just run my patients through some mill. I get to know them and provide the best possible care. People don’t mind paying for that."

For Smith, the 18-month experiment has paid off. "I have a constant influx of new patients. I have a more predictable income and where I had two months outstanding accounts receivable before, now I have virtually none."

Tim Smith, MD, Solo Practitioner, Berkeley, CA. Telephone: (510) 548-8022.

Bill Grisaitis, MD, Solo Practitioner, Winter Park, FL. Telephone: (407) 644-9030.