The Advantages and Disadvantages of a Private Pay Division

Heather SinclairBusiness Insurance, Risk Management

Every day, countless patients are cared for by private nursing divisions of healthcare organizations. The National Association for Home Care estimates this is a $40 billion market.

These healthcare providers handle anything a patient needs. They assist with feeding and hygiene, transporting patients to appointments, wounds and injury care, medication organization and distribution, equipment maintenance, and countless other tasks.

These divisions employ licensed, qualified medical personnel who help patients manage complex medical tasks in their own home. They’re often available at all hours of the day.

But is a private pay division right for your business?

The advantages

Private duty nurses typically perform tasks that patients would otherwise handle themselves or get help from a friend or relative. Providing these solutions for your clients creates an additional revenue stream that doesn’t compete with your other services.

The services you provide can range widely, which puts your business in a flexible position. Not every home-based task requires an RN or LPN. Some patients need basic help at home (like preparing meals and bringing them to their doctor) while others need complex education and monitoring. Plus, you don’t have to expand into all home services at once, which may allow you to use existing resources to meet patients’ needs.

Furthermore, serving clients in their home opens new groups of clientele: patients who are well enough to stay home and patients who are unwilling to stay in a healthcare facility. In many cases, hospitalized patients are desperate to return home, but they still need care. Again, this is an entirely new revenue stream that your business shouldn’t ignore.

The disadvantages

Unfortunately, no business expansion is without risks.

First, there is always risk when an employee is sent into a client’s home. Employees are exposed to pathogens, blood borne illnesses, transportation accidents, pets, unsanitary conditions, and physical injuries due to unsafe environments and poor patient handling. These risks may create a liability.

Second, in most areas, your clientele is limited. Private care services are not cheap. Since private pay divisions don’t instigate insurance or Medicare claims, patients are billed the entire invoice. While there may be a serviceable short-term market, there aren’t many people willing to invest in long-term private care.

This means any healthcare organization with a private division is forced to engage in marketing to drum up business, which, naturally, affects the bottom line. You must grow your hiring, marketing, and clientele equally or risk inefficiency. 

Finally, you absolutely must conduct exceptional customer service. There’s no middle ground here. Unwell patients who invite strangers into their homes are in an extremely vulnerable position. The care provider must not only be supremely qualified, but he or she must have a pristine bed-side manner. If a patient is made to feel uncomfortable or disrespected, they will discontinue services.

Only you can decide if developing a private pay division for your healthcare organization is the right path. It’s a tricky business, but if you already offer numerous healthcare solutions and products, you’re likely to find success.

Heather Sinclair

Risk Management Consultant

The Advantages and Disadvantages of a Private Pay Division