Utah ASC director on how cash-pay pricing can grow profit margins — 4 takeaways

Angie Stewart - Print  |

Cash-pay surgery is a growing trend in the U.S., according to Maria Todd, PhD, director of business development at St. George (Utah) Surgical Center.

Four takeaways:

1. Under insurance-based pricing, ASCs are expected to negotiate contracts with a variety of payer types according to the payers' terms and conditions.

2. Insurance-based pricing causes providers to absorb various transactional expenses, such as revenue management costs, costs associated with payment delays and compliance-related expenses.

"The requirements and duties beyond direct patient care erode margins or advantages associated with the maximum negotiated fees. In some cases, the performance requirements to get the money you've earned taking care of patients can turn the value of the contract upside down," Dr. Todd said.

3. Cash-pay pricing is (and should be) a different rate than the insurance-based price, Dr. Todd said. The latter includes costs of labor intensity, payment delays and other administrative variables, while cash-pay prices only need to encompass the expenditure associated with collecting the cash and depositing it in the bank.

4. Cash-pay pricing gives providers greater control over how their services are sold and excludes factors that influence price calculations, ultimately increasing the providers' profit margin, according to Dr. Todd.

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