Cash-Only Business Model in Radiology?

A friend of mine was hosting a dinner party. A few hours before the event, he discovered that one of the extension leaves for his table was missing. Without it, the table would not be able to seat all of his guests.

Near his home were a couple of lumber and carpentry businesses. He took some measurements of the missing leaf’s dimensions, and off he went to get a substitute leaf made. No need for sculpted edges or a glossy finish; the table would be covered by a cloth, and esthetics were unnecessary.

He went to the first business and stated his need. They reacted unpleasantly, perhaps not wanting to take on such a small rush job, and named a figure that seemed high to him. On he went to the second business, where they were welcoming and eager for his patronage. Not only did they name a lower price, but they put in some extra effort, such as sanding down the edges. He headed home with the product he needed, in ample time to have everything ready for his guests’ arrival.

No preauthorization was necessary.

The customer was free to go to any vendor he liked, without checking to see who was in his network or first going to a “general craftsman” to get a referral. No outsiders (such as insurance companies or government) dictated prices, and no additional costs were baked in to the price of the transaction in order to fund such interlopers. The lowest bidder and/or the best provider of services earned not just this episode of business but likely future visits from the same customer and others hearing of the customer’s good experience.

Wouldn’t it be nice to work that way?

A growing proportion of our clinical colleagues thinks so, and has opted out of participation with third-party payers, including those of the government (Medicare and Medicaid). Once upon a time, such docs were a small minority, and their practices were referred to as “concierge” medicine.

However, as the burden of outside influences (that is, external to the physicians and their patients) grew and the benefits provided by those outsiders dwindled, these docs decided that enough was enough. They went cash-only, directly billing their patients for rendered services.

Some of their patients still carry insurance, and then submit their bills to their insurers for reimbursement - but such transactions are entirely between the patients and their carriers. The insurers no longer have a direct link to the physicians, who are thus able to run the business of their medical practices as they see fit. Most, having made the transition, are deliriously happy, for they are once again in control of their professional lives.

Conventional wisdom has held it that this approach, while doable for primary-care types, is no real option for specialists who rely more heavily on expensive equipment or hospital affiliations.

One might fear having an insufficient number of referrals to make such an arrangement fly, and/or that patients would prefer to stay with their insurers, hassles and all, rather than pay the per-case rates that many radiologists would need to operate in the black. It is easy to see how such fears could keep specialists such as ourselves captive to the predations of third parties. Better to have the sure thing of ever-diminishing returns in exchange for ever-increasing demands, we might think, than to declare our independence and try operating without the third-party safety net.

As our profession is squeezed ever more tightly, however, we will increasingly be questioning just how much safety that net offers. Many of our colleagues already feel that they are at their breaking-point, which is what it took for most of our cash-only clinical brethren to finally jettison the deadweight of the third parties.

Necessity is the mother of invention, after all. It would only take one or two radiological entrepreneurs to figure out a successful business model for opting out of participation with third parties; others, seeing that it could be done, would likely follow suit. In a way, being pushed to our limit could force us to reclaim control of our profession.

Now that would be nice.