For the past few years, I’ve been selecting healthcare providers based on the quality of care I believe I’ll receive—whether or not they accept my insurance. And more often than not, the providers I choose are out-of-network or cash-based providers, which means I happily hand over my credit card to pay the full cost of my care at the point-of-service. Now, in some cases, the provider has handed me a superbill to submit to my insurance carrier in order to request a partial reimbursement. In others, the provider has submitted a claim on my behalf. Some providers, on the other hand, offer services that are not covered by my insurance at all—meaning there’s no claim whatsoever.

So why, you might ask, am I willing to pay cash for medical care that I may otherwise be able to get for less if I were to select an in-network provider? I’m glad you asked, because I represent one of the cash-pay patient personas that I will cover in this post. Read on to learn more about the psychology of the cash-pay patient.

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The Quality-Conscious Patient

This might be a controversial statement, but in my experience, I’ve received noticeably better, more personalized care from providers who have opted out of the insurance game. And that makes sense to me; cash-pay providers don’t have to stress about dwindling reimbursements or structure their sessions to maximize their billings—instead, they can charge a price that covers their costs and ensures they turn a profit. That way, they can put their full attention on me. The provider’s needs are met, and so are mine—and as far as I’m concerned, that is the best way to successfully do business. And health care—just like any other industry—is a business.

An Example

Here’s an example of the quality of care I’ve received from this type of arrangement: I had a bit of an emergency situation arise earlier this summer, and—in addition to helping me get the care I needed on that day—one of my out-of-network healthcare providers called to check on me a few days later. She spent almost an hour on the phone with me, offering comfort, answering my questions, and sharing her singular expertise. Not only did I feel fully supported, but I also didn’t receive a bill for her time—although she certainly could have charged for such a service. Instead, this was a value-add that she was able to provide because her financial needs were already met. And as a result, I am a forever-loyal patient who sings her praises to everyone I know, and who will readily seek out—and pay more for—her care again. We’ve built a relationship in which we are both receiving commensurate value—and there is no middle man. In other words, we have a partnership—not a commodity exchange—and that’s exactly what I’m looking for with a healthcare provider.

Connecting with the Quality-Conscious Patient

As Ann Wendel explained in the comment section of this post—and I summarized here—it’s totally doable for out-of-network and cash-pay providers to convey to their patients the unique value that comes from opting out of insurance: “Many patients have a $30–$50 copay per in-network visit,” she said. “And most in-network PT clinics want to see patients two to three times per week.” So, Wendel explains to those patients that they could pay $90-plus per week in copays to see an in-network provider, or they could see her once a week for—and this is the most important part—“highly personalized treatment” for only a slightly higher price tag. “For some patients,” Wendel said. “It’s just a matter of educating them so they understand the cost. And then it’s all about value—either a patient values the care you offer or they don’t. The ones that don’t aren’t your target audience anyway.”

The Cost-Conscious Patient

In some situations, it’s less expensive for patients to pay cash for medical care than it is to go through their insurance. Counterintuitive, I know. According to this Wall Street Journal article, “Not long ago, hospitals routinely charged uninsured patients their highest rates, far more than insured patients paid for the same services. Now, in the Alice-in-Wonderland world of health-care prices, the opposite is often true: Patients who pay up front in cash often get better deals than their insurance plans have negotiated for them.”

An Example

That article uses Nancy Surdoval as an example. When she needed knee surgery in 2015, Boulder Community Hospital in Colorado told her “it would cost her $600, out of pocket, using her high-deductible insurance, or just $70 if she paid cash upfront.” It’s no surprise that she opted to pay cash. It’s also no surprise that she was furious with her health insurance carrier. And this is hardly the only example of this type of situation: according to this article, a hospital charged a woman’s insurance company about $80 each for several routine blood tests, leaving her footing a bill of almost $300. Odd, considering that each test “carried a cash price of closer to $15 apiece.” Glenn Melnick, a health economist at USC, says, “This just shows how screwed up the whole pricing system is. It absolutely makes sense to shop around for healthcare like you shop for everything else.” Some patients are even foregoing insurance altogether, deeming it more cost-effective to completely self-pay for their health care—even with an Affordable Care Act (ACA) penalty on the line.

Connecting with the Cost-Conscious Patient

With the rise of high-deductible healthcare plans, more and more patients are having to foot extremely high medical bills—and it would appear that some healthcare organizations would rather receive an extremely discounted upfront payment from a patient rather than deal with the insurance carrier at all. Plus, according to Melnick, “Insurers aren’t getting the best prices anymore.” While accepting cash from patients can get tricky for in-network providers—many insurance carriers require providers to submit all claims to them—out-of-network and cash-based providers have significantly more wiggle room to negotiate cash prices that work for them and their patients.

To connect with a cost-conscious patient, consider being transparent about the costs of your services, so you can have an honest discussion about the price—and the value. (Hint: the best way to assess and share your value is by collecting outcomes data. Just ask this PT who can’t live without it.) As Jannenga noted in this FAQ doc, however, out-of-network providers should still be familiar with the parameters set by insurance carriers. In other words, before accepting cash from patients—or offering cash-discounts—be sure to review your insurance contracts and state practice act; you may even want to consult a healthcare attorney.

The You-Get-What-You-Pay-For Paradigm

When considering the psychology of the cash-pay patient, it’s also important to factor in the “you-get-what-you-pay-for” paradigm. One of my college professors told an interesting anecdote about a woman who owned a jewelry shop. She had several pieces that she simply could not sell. So, finally, she decided to mark them down in price. Before she left the shop one evening, she made a note for her assistant to reduce their price by a substantial percentage. But the shop owner had notoriously terrible handwriting, so when her assistant arrived the next morning, she mistakenly thought her boss had asked her to increase the price of the items, which she did immediately. By the time the shop owner returned, the entire set had been purchased. Apparently, increasing the price increased the perceived value of those items, and thus made them more appealing to her customers. Interesting, right?

Applying this Paradigm to Rehab Therapy

When it comes to rehab therapy, increasing the perceived value of your services could actually lead to better outcomes and higher patient satisfaction levels. After all, the more your patients value your services, the more engaged they may be in their care—and thus, the more they may get out it. Now, you don’t necessarily need to raise your prices in order to take advantage of this paradigm—although, if you’re undervaluing your services, then by all means, please do. You simply must provide more value and/or better communicate your value to your patients. To learn how to do just that, check out this free webinar hosted by WebPT’s Heidi Jannenga and Nancy Ham.


What have you noticed about cash-pay patients in your practice? When you seek medical care, are you a cash-pay patient, or do you prefer to stay in-network? Why? Share your insights in the comment section below.

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