As a physical therapy (PT) private practice owner, you’re faced with an important decision: become an in-network clinic, go out-of-network, or go cash-based.
Sure, going in-network opens the door for patient referrals and serving Medicare clients--but going cash-based means faster payment times, less red tape, and often improved patient outcomes.
But PTs realized they didn’t have to exclusively operate under the in-network or cash-based private practice model. In fact, more and more PTs are opting for a hybrid clinic model in order to capitalize on the benefits of both in-network and cash-based clinic models--and you can, too.
In this guide, we’ll cover:
- Four models for your PT clinic
- The benefits of the hybrid model
- How to set up a hybrid clinic
- Next steps for clinics under the hybrid model
Let’s jump right in!
What is a Hybrid Physical Therapy Clinic?
Hybrid clinics let patients choose their payment method based on their insurance coverage, personal preferences, and desired services. Patients have the option to pay through traditional insurance plans, out-of-pocket payments, or through a membership-based model.
This flexibility allows individuals to choose the payment method that best suits their needs and financial situation. This ensures that they can access the healthcare services they require without unnecessary barriers.
Four Business Models for Physical Therapy Clinics
Let’s start by understanding what the different payment models for physical therapy are, their strengths, and who they’re best suited for.
Then, we’ll take a step back and understand how you can capitalize on the present-day PT market, understand your clinic’s strengths, and best direct the future of your hybrid physical therapy private practice.
Option 1: The In-Network Insurance Clinic
The “In-Network” insurance model is most popular with physical therapists and allows patients with participating insurance providers to access your services at a pre-approved amount. Patient payment will vary from provider to provider and provides PT services at a lower cost to your patient’s insurance company.
Participating in a provider network and accepting reimbursement from carriers can drive patients to your clinic, but PTs may not receive cash for providing PT services covered by Medicare. If you participate in Medicare, you can’t be paid in cash for hybrid physical therapy programs and interventions which can cause your clinic to miss out on patients.
Pros and cons of the in-network insurance model
If your private PT clinic is in-network, there are a few benefits including:
- More patient referrals from insurance providers, since insurers often refer patients in-network
- Less marketing and sales training and pressure on your clinic’s administrative staff to constantly capture and retain the patient
However, there are a few downsides to the in-network insurance model. These may include:
- Declining reimbursement rates that may approach non-viability for your clinic
- Increasing patient care restrictions around Plan Of Care (POC) and authorization
- Closed panels that make it more difficult to become in-network
- Pressure on clinical credentialing and re-credentialing due to insurance requirements
Option 2: The Out-of-Network Insurance Clinic
Operating under the out-of-network insurance model, your PT clinic is not bound by the insurance provider’s rules and regulations. PT clinics with the out-of-network insurance model are often faced with one of two scenarios:
- They have an “in-network” reimbursement so low that it doesn’t make sense financially to participate, or
- The insurance provider panels are closed, which blocks new private practices from becoming “in-network” providers.
As an out-of-network provider, you can either collect payment directly from patients at the time of service and offer an itemized bill to submit to their health insurer, collect from patients at the time of service and offer to send bills to the insurer on their behalf, or accept assignment, bill the insurer, and bill the patient for the balance after their insurance provider paid.
Pros and cons of the out-of-network insurance model
With an out-of-network insurance model, PTs can see benefits such as:
- Improved patient outcomes by prioritizing care over appointment volume
- Higher profit margins and the ability to reinvest in the practice
The downsides of the out-of-network insurance model include:
- Increased training and marketing expenses to educate the public on this option.
- More time and effort are spent convincing Doctors to refer out-of-network.
Option 3: The Cash-Based Clinic
A cash-based clinic can include a wide range of clinic models--from limited insurance contracts to no insurance contracts, to collection at the time of service, to noncovered services. However, all services are rendered on a cash basis, and each patient is financially responsible for the cost of their appointments.
No matter what you choose to offer and how you want to operate, all cash-based clinics have one underlying theme: they allow PTs to avoid restrictions placed on services by insurance providers.
Note: Being cash-based is NOT the same thing as being an out-of-network provider that’s submitting claims to the insurance carrier for out-of-network payments.
If you don’t see compelling reasons to remain in-network with insurance providers in your area, the cash-based model may be your best bet for profit & patient outcomes alike.
Pros and cons of the cash-based clinic model
Being a cash-based PT clinic has many benefits, including:
- Accessibility to those with high insurance deductibles
- Access to new patients in your clinic’s areas
- Flexibility to determine and adjust your own rates
- More effective patient treatment plans with less pressure and regulation around authorization
- Increased average number of visits per episode of care
- Lower overhead costs due to less time spent on billing insurance
- Increased revenue without insurance-based reimbursement rates
- Faster time to payment without insurance payment times
However, there are challenges facing cash-based insurance models. These might include:
- Determining rates for junior and senior PTs
- Additional marketing and sales training in order to attract & retain patients willing to pay out of pocket
- Difficulty generating income when PTs are not in the office treating patients
Option 4: The Hybrid PT Model
The hybrid clinic model gives you the best of both worlds: the strengths of both cash-based and in-network billing, all while balancing their challenges. Under the hybrid private practice model, you can serve all in-network patients while also capturing out-of-network and cash-based patients.
The hybrid clinic model allows you to increase revenue, drive better patient outcomes, and support a wider range of patients by partnering with insurance, while also gaining the operational and financial benefits of a cash-based model.
The Benefits of a Hybrid PT Clinic Model
Now that we’ve covered the strengths and downsides of in-network, out-of-network, and cash-based PT clinics, let’s bring it all together.
Hybrid clinics are a fantastic option for entrepreneurial PTs because you get the best parts of both insurance and cash models. These benefits might look like:
- Increased revenue with a greater market share and a wider range of patients in your region than other clinics working under a single-model system, plus mitigating insurance billing for your cash-based clinic patients.
- Better profit margins than a solely in-network clinic, while increasing the patient and appointment volume of out-of-network and cash-based models
- Supporting more patients within your community by providing more ways to access and pay for services
- No sacrificing patient care or plans for insurance-based POC and authorization
- In-network referrals from participating insurance providers
- Faster time to payment by avoiding the insurance payment periods.
The downsides? A hybrid clinic model can make things more complicated at times.
- You’ll technically be operating two separate businesses with different Tax IDs, business models, and clientele
However, PT clinics have found that going hybrid is well worth the additional lift, and can bring opportunities for growth and profit. If you think this split insurance and cash model is right for you, here’s how to get started with your hybrid treatment center.
Setting Up a Hybrid Model at Your PT Private Practice
To get started, simply set up two companies with two separate tax ID numbers.
By enrolling one physical therapy clinic as a participating Medicare provider, and one as a non-participating provider, you can take in-network patients and out-of-network patients. While legally separate clinics, you can (and should) function as if they’re one unified practice.
While legally separate entities, you can consolidate and simplify your efforts outside of insurance billing. To make managing both clinics as simple as possible, we recommend that you:
- Adopt a practice management solution that can accommodate insurance billing AND cash-based payments for a unified, streamlined management experience.
- Direct your marketing and patient acquisition towards one of the practices, with overflow to the other practice.
- Get an office with two adjoining suites to simplify and consolidate both corporate functions.
- Keep your administrative functions aligned across marketing and billing to improve brand strength, consistency, and ROI
What’s Right for Your PT Clinic?
Whether you go completely cash-based, in-network, or take a hybrid approach, managing your patient billing requires a robust practice management solution that offers unified insurance claims processing, payments, HEP, and patient communications.
Make managing your hybrid clinic easier with a comprehensive practice management solution like PtEverywhere. With built-in claims processing and billing tools, you can easily manage both cash, in-network, and out-of-network patients from one spot.
About PtEverywhere
PtEverywhere takes a different approach to practice management. By focusing on the hybrid clinic provider and the patient first, you can access the features, functionality, and niche focus to elevate your care.
With PtEverywhere’s recent addition of revenue cycle management (RCM) tools to check eligibility, create and scrub e-claims, and reconcile ERAs/EOBS, you can access all of the tools you need to run your clinic at your fingertips--regardless of who is paying for your services.
To learn more about using PtEverywhere for your physical therapy private practice, book a demo.