Private pay vs insurance in private practice

When getting started in private practice, one of the most common questions is whether to focus on health insurance such as Medicare or private pay.


It’s not always easy discussing finances, especially in healthcare, which is why we’re here to help! One of the most common questions that arises when getting started in private practices, is whether to go for health insurance such as Medicare, or private pay. It’s a decision many wrestle with, and each side has merits. Fortunately, we’re here to help you weigh up your options, and hopefully, help you reach a conclusion.

Opting for self-pay at your private practice

Many healthcare practitioners prefer to self-pay in their practice, which means they don’t rely on external financial support and operate on a private medical pay model. All service is provided by the practitioner’s own means, which can result in significantly less hassle in practice management and EHR systems

Pros of opting for private pay

There are various benefits to using private pay, including the following. 

Less paperwork

Healthcare is riddled with enough paperwork as it is, and implementing private pay can significantly reduce the amount you have to deal with. You don’t have to spend time filling out pedantic insurance claim forms, meaning you don’t have to file any either! Eliminate all tedious administrative processes and save time to do what you do best; attending to your patient’s needs.  

Lower restrictions

Going by self-pay means you can work on your own terms. You don’t need to adhere to the restrictions commonly set by insurance providers, and you can determine the services you pay for and for how long. You don’t have to work with confusing or changing guidelines and have more autonomy over your operations. 

Higher client record privacy

With insurance providers, you need to share client records, which often contain personal information such as their health condition, assessments, evaluations, interventions, medications, and treatment plans. Some clients may not appreciate third-party sharing, and with self-pay, you can cut this process out entirely. Keep all your records just between you and your clients. 

No delayed payments

If you’ve worked within the healthcare sector for a while, you’ve probably encountered the tiresome process of filing insurance claims, only to have them rejected, and thus, have payments processed late. It’s frustrating, and can take up to 45 days, which is incredibly slow! With self-pay, you don’t have to deal with delayed payments, and you can receive reimbursement at a much higher rate. 

Cons of choosing private pay

While there are some obvious benefits to private pay, it’s important to also acknowledge its downfalls. 

Lower number of clients

Many clients prefer to operate through insurance companies, and that’s totally acceptable! You’ll always find that this is a high-preference option, however, this does mean that you may have to turn a number of clients away. 

Hard work to build a referral network

Going with insurance companies means that you can become credentialed, and join a wide professional referral network. Insurance providers often provide clients with organizations, locations, and names under their coverage system. If you choose to go with self-pay, this does mean that you have to spend more effort in creating your own referral network from the ground up. 

Education of potential clients

Many clients may not be familiar with self-pay methods, meaning that you may have to spend more time informing and educating your clients on the ins and outs of your service. 

Limited access

Clients from low-income backgrounds may struggle to pay for your services with their own resources, which means a self-pay option can be unaffordable for some. This can depend, and so you should also take into consideration your location, as some areas may not experience this challenge as much as others.

Choosing insurance for your private practice

On the other side of the coin, you can choose to implement insurance payments within your private practice. This means using third-party providers to liaise between you and your clients, and cover medical procedures, assessments, and evaluations used. Both licensed and unlicensed therapists can benefit from insurance information, and learn more about their pros and cons.  

Pros of opting for insurance

There’s a range of pros to incorporating insurance within your practice, including the following.

Large number of referrals

A major benefit to insurance is that you’re likely to get a larger number of referrals. Insurance companies keep practitioner information on hand to forward to eligible clients, so you can increase the number of patients through your doors. You don’t have to put in any extra effort, and you can easily develop a solid portfolio of clients in no time. 

Better credibility

Impressions are everything, and if you have an affiliation with an insurance company, you’re far more likely to be considered by patients. Insurance is still the way to go for a majority of clients, so having this in place can boost your reputation and enhance your credibility by miles. 

Lower cost for patients

Additionally, having insurance means that patients are more likely to have medical exams and assessments covered by insurance, which results in lower costs. Patients will be more attracted to your services due to the lower price, and as a result, you can have a more steady source of clients. 

Cons of choosing insurance

There are, however, some major pitfalls to choosing insurance that you should be aware of. 

May get paid less for service

Because you’re going through a third-party provider, this does mean there are additional costs. At the end of the day, the insurance company is a business too, and needs to maintain a steady profit! This may mean sacrificing some of your profit in order to gain more clients. 

Tedious credential process

The horror stories of filling out insurance claim papers aren’t too far from reality. Many healthcare practitioners and clinicians find this process to be incredibly finicky to deal with, especially with the number of guidelines you have to adhere to, which are subject to change. It can take a significant amount of time to attend to patients through insurance - and time is money!

Delayed payments

There’s a likely chance that your insurance claims will be rejected at some point. Oftentimes, this is over missing information that can be easily fixed, but it does mean that you will receive delayed payments. This can be frustrating, especially when there are multiple delays at once!

Self-Pay or Insurance: Making a Decision

Hopefully, you now have a greater understanding when it comes to the advantages and disadvantages of both self-pay and insurance within private practices. Each presents its own drawbacks and benefits, and both are equally valid options. However, if you’re deciding to incorporate one type within your practice, you’re probably wondering which one is the right one to go with - and for that, we don’t have a straight answer. 

The best method is the one that works for your business needs, goals, and objectives, and can match the resources that you currently have. If you have a steady flow of clients and are aware many of them have no preference for private vs. insurance, perhaps consider going with private. Conversely, if you’re just starting out, insurance is a great way to quickly build a referral network, and grow your business from the ground up with solid support. 

Unfortunately, we can’t tell you what to do when it comes to self-pay or insurance decisions. However, we trust that with this information, you can make an informed choice about what’s right for you. 

We wish you the best of luck, and take confidence in your healthcare abilities!

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