Cash-Only Therapist Practice: Pros & Cons

Two persons in therapy, the therapist explaining to the client that the practice is cash-only.

A cash-only therapist practice doesn’t accept insurance, and will only work with private pay. Running a cash-only therapist practice can be financially beneficial, as you have the freedom to create your own payment plan.

You also have better control over your schedule and client list, and can avoid the headache of dealing with insurance.

However, increased marketing pressures and a reduced client pool means cash-only won’t work for everyone. Discover more about starting a cash-only therapist practice here.

Advantages Of A Cash-Only Therapist Practice

Let’s start with the obvious advantage of switching to a cash-only therapy practice: you won’t have to deal with insurance panels anymore.

For all the benefits of accepting insurance, communicating with the insurance agency can be a headache.

You’re at the mercy of the insurance provider when you want to be paid, and which means the entire process can move very slowly.

When you accept cash-only, you can cut out all dealings with insurance providers. That means less time spent on paperwork, and less time stuck on hold. You also won’t run the risk of claims being denied.

Starting sessions with a client, only to find out insurance has denied their claims, can be stressful for everyone involved, and often result in lost clients and severely delayed payment.

Another major advantage of a cash-only therapist practice is the level of control it gives you. You have full freedom to select clients as you choose, and to create your own schedule.

Working cash-only can sometimes allow you to increase your client capacity, as you can better balance your mental energy. This is particularly advantageous to those looking to establish themselves as a specialist. You can really focus on your niche, as you build a practice that works for you.

And, finally, going cash-only means you can potentially earn more doing less work. Cash-only won’t always be a financial game-changer, but many therapists find they can earn around 4 times as much for one hour with a private pay client, compared to the same hour paid by insurance.

Disadvantages Of A Cash-Only Therapist Practice

The main disadvantage of running a cash-only therapist practice is that you are responsible for finding your own clients. You won’t be listed on insurance websites, so you have to put the effort into getting yourself noticed.

Attracting your own clients takes both time and money. You’ll need time to devise and implement your own marketing plan, as well as time dedicated to networking. If you’ve previously received most of your clients through insurance, then it might feel like you’re starting from scratch.

Alternatively, you could consider hiring someone to assist and guide your marketing efforts. While this might save you time, it will end up costing you more money. Either way, it lacks the ease of client referrals from an insurance provider.

You will also be limiting the range of clients you have access to. There are many potential clients who only pursue therapy if it’s offered by their insurance provider.

Once you stop taking insurance, you’ll no longer have access to these clients. For some therapists, this decrease in accessibility feels like a moral disadvantage, as well as a financial disadvantage.

If you were planning cash-only for financial reasons, you might potentially be limiting your earnings. In some areas, switching to cash-only might not be viable, as the majority of your clients will pay with insurance.

But in other areas, there will be more than enough cash-only clients to offset the change. If you’re already running a successful private practice, then you probably have an idea of the type of clients you have access to.

If not, put your networking skills to use, and find out what’s going on.

Removing Yourself From An Insurance Panel

If you have previously accepted insurance, you might find one of the surprising difficulties of switching to cash-only is removing yourself from the insurance panels.

Insurance panels are both hard to get on to, and hard to get off of. But it isn’t impossible to leave, and once the panel knows you’re looking to move on, they’ll be happy to let you go.

The system for removing yourself from an insurance panel will vary from insurance provider to insurance provider. However, in most cases, the best thing to do is simply contact the company directly.

How To Transition Successfully To Cash-Only

Before you try to transition to cash-only, it’s important to understand that this won’t be the right choice for everyone. Cash-only can greatly limit the number of clients you have access to, and in some areas, it simply won’t be viable.

Think carefully about the pros and cons of both options, and consider how your own talents play a part. For example, if you’re skilled at admin but struggle with marketing, it might be better to accept insurance.

When you start the transition to cash-only, prepare for slow growth. You’ll need to take control of your marketing efforts, and you won’t get the easy referrals from the insurance agency.

Start your marketing efforts in advance of the change. This really needs to be a key concern, as proper marketing can make or break a practice. You must develop yourself and your practice as a brand, and market your service as desirable.

Consider your financial situation, and create an income plan. Many struggle to transition to cash-only because they feel guilty about charging more for their services.

You need to shake off that attitude, as it will just lead you to losing money, which results in a poorer service for your clients. Be clear about your worth.

To make cash-only financially viable, you may need to diversify your practice. Consider teletherapy, workshops, and teaching routes (see also ‘How To Start A Teletherapy Practice‘). This doesn’t need to be a full-time commitment, but it can be an opportunity to ease the transition, and start supporting yourself financially.

Final Thoughts

A cash-only therapist practice can have financial benefits, as well as offering you a greater level of control.

However, without the easy marketing and expansive client list of an insurance-based practice, you might find cash-only is tricky to maintain.

Consider all the pros and cons when making your choice. Building a successful cash-only therapist practice can be hard work, but for many, it’s worth the effort.

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