June 21, 2024
By: Katie McGonigal, JD
Associate Management Consultant , DoctorsManagement, LLC
In an increasingly online world where credit cards and digital wallets are quickly becoming the norm, the concept of a cash-pay medical practice may seem foreign to some. This week’s tip
explores the pros and cons of accepting cash versus credit cards.
Accepting Cash Only
Pros
- Perhaps the most obvious benefit to solely accepting cash within a medical practice is that the practice does not have to pay the transaction fees to credit card companies and banks when a patient would otherwise normally pay with a credit card.
- Additionally, when patients pay with cash, a medical practice has access to that money immediately, instead of having to wait for a period of time before receiving funds from a purchase that was paid for using a credit card.
- While credit cards are an increasingly popular choice for payment (in a recent survey, the Federal Reserve Estimated that 82% of adults in the United States had a credit card), not everyone chooses to or is able to access a credit card. Accepting cash means that this population is also able to receive medical services. This is good news for the practice too, as it may attract patients that cashless practices can’t accommodate.
- A practice that only accepts cash does not have to deal with the possibility of having to navigate chargebacks for services or products provided by the practice.
Cons
- If a practice accepts only payments in cash, then this could pose a risk for theft by outside actors, both within the practice and while transporting the cash to the bank for deposit.
- Outside actors aren’t the only risk to a cash-only practice. Healthcare is consistently one of the top industries where embezzlement occurs – accepting cash as the sole payment method could make it easier for an employee (or owner) to get away with this version of theft. Practices must have very thorough record-keeping and best practices to continuously account for the amount of cash on hand and the amounts being deposited to the bank.
- As we’ve discussed above, most American adults use credit cards. Patients that don’t normally carry cash with them may be annoyed at the inconvenience of having to head to their bank or an ATM to pay for their medical appointment.
- Having customers that pay only in cash means that the practice must have enough of their own money on hand to be able to make change for customers, which will require monitoring and a timely process to access more cash if needed so that patients are not left in the lurch.
Accepting Only Credit Cards
Pros
- Accepting only credit cards makes the process of checking-out and paying a copay much easier – just an insert, swipe, or tap and the patient is out the door. This helps the practice to operate more efficiently, which in turn allows the patient to have a quicker, more streamlined visit.
- When a patient uses a credit card to pay for their appointment, it creates an automatic record of the transaction. This is unlike cash, where a manual record must be kept up-to-date every time payment is made. This helps a practice keep track of all the payments made in one place, which in turn makes the accounting process easier.
- An automatic record being created also helps to lower the risk of embezzlement from the practice, as opposed to maintaining a manual log that can be altered. In addition, not having to carry cash to a bank further lowers the risk of theft.
- Most businesses, including medical practices, accept credit cards these days. Not accepting credit cards may influence some patients to seek care at a competitor that will allow them the ease of paying with plastic during their visit.
Cons
- Accepting solely plastic means that efforts must be taken to protect patient’s data recorded after using their credit card. If the potential for a data breach stemming from the use of the credit card wasn’t enough to protect against, there could also be HIPAA violations from a leak of information related to the credit card transaction.
- While most people do use credit cards (see the cash-only discussion above), there may be populations that prefer not to use credit cards or do not have access to credit cards and will not be able to become or remain a patient at a plastic only practice.
- Additionally, there may be a delay in being able to access the funds from a credit card transaction, ranging from a few hours to several days.
- In some cities and states, accepting only credit cards isn’t allowed, as there are bans that don’t allow a business to go cashless.
However, medical practices are not limited to just choosing one of these options. For practices that decide that they want to accept both cash and plastic, there are both positives and negatives. For example, allowing patients to pay with both cash and card means that no population is excluded from being a patient at the practice. However, the practice will have to take steps to secure both the digital information associated with the use of credit cards and the physical cash and coins from patients choosing to pay that way, which may add additional costs and be less efficient. Generally, accepting both means that practices will benefit from the advantages for both methods, but will also have to deal with the cons of each.
Practices should evaluate their needs and the needs of their patient base to determine which scenario is the right fit for them.
