Practice Models Example

Assume a practice has 300 patients and sees 100 of these patients each month. For each quarter, the revenue from cash ($500 each visit), insurance-only (average payment $100 ins/$40 patient), and the insurance-plus FMEC hybrid ($100 per month) would look like this:

  1. Cash-only. 100 visits x 3 months x $500 per visit = $150,000 per quarter
  2. Insurance-only. 100 visits x 3 months x $140 per visit = $42,000 per quarter
  3. FMEC hybrid.
    • 100 visits x 3 months x $140 per visit = $42,000 
    • 300 patients x 3 months x $100 FM Program Fee = $90,000 
    • Total per quarter = $132,000 per quarter

The cost to each patient in the above models would be:

  • Cash-only. $500 for one visit each quarter.
  • Insurance-only. $40 copay/coinsurance/deductible for one visit each quarter.
  • FMEC hybrid. $40 copay for one visit + $300 FM Program = $340 each quarter.

The cash-only option generates the most revenue but has the highest cost to the patient ($500). As 75% of Americans have either Medicare, an employer-based plan, or an individual plan, a cash-only practice can struggle with demand and would most likely require marketing costs not required of an insurance-participating practice, which would reduce or offset the higher revenue.

The insurance-only option has no problem with demand, as many markets suffer from a shortage of healthcare providers. The insurance-only option does have a viability problem, though, as it generates less than a third of the revenue generated by the cash-only and FMEC hybrid models. Provider revenue is limited to $140 per patient per visit.   

The FMEC hybrid option builds on the benefit of insurance participation to find a middle ground between the revenue of the cash-only model and the insurance-only option. Demand is generated by insurance participation while the platform fees are a lower recurring monthly payment than most cash-only options. Provider revenue is $140 per patient per visit plus $100 per patient per month, but insurance payments of $100 would reduce the quarterly patient cost to $340 in this scenario.

In the above scenario, the FMEC hybrid model generates 88% of cash-only revenue, but at a savings to the patient of 32%.