Contract in?

Is cash (still) KING? Or should you contract in?

It’s been a year since COVID ushered in a new norm & it’s time to relook at your business’s finances & ask yourself what you can do to protect your cash flow &/or generate more income. For some, this comes down to whether to remain a cash practice or to contract in with medical aids.  Here are 5 things to consider when weighing up your options: 

1. Which medical schemes do most of your patients belong to?

You wouldn’t want to contract with every medical scheme, but just who to contract with comes down to which schemes your patients belong to. Scan your patient population for the top one or two schemes that your patients are members of. Contracting with these medical schemes is a good idea if you want more control over your cash collection processes. Once you know who you want to contract with, you might also want to enter into a preferred payment contract that could result in more revenue. See the example below: 

Graph 1 - contract in or out?

From the graph, you can see that over half this practice’s patients belong to just two medical schemes – Polmed (21%) and GEMS (30%). If the GP was contracted with these two schemes, they could benefit from entering into a preferred payment contract with them. From a revenue perspective, the average GEMs fee could increase by R36.10 and R41.10 for the Polmed fee. This equates to an additional R9 421.70 per month1.  

The GP could also set up the maximum acceptable rates per scheme in their PMA to ensure they are being paid directly from the scheme, instead of having to collect additional amounts from patients.


2. What type of medical cover do most of your patients have?

The type of cover your patients have can be a strong indicator of their ability or willingness to pay.  For example, patients on a hospital plan will generally pay their GP upfront in cash because they understand that payment is their responsibility. You probably can’t expect the same from other patients with more comprehensive medical aid cover. They may not understand why they have to pay cash over and above their medical aid premiums every month. Similarly, if your practice is in an area that has majority Keycare patients, their consults won’t be covered unless you are a Keycare enabled practice. The lesson here is to know your patient population and their ability/ willingness to pay in cash from their own pocket. 


3. Your speciality & relationship with your patients

Right or wrong, patients often expect more routine consultations such as GP visits, annual eye exams and dentist checks to be fully covered by their medical aid. Those patients may be deterred from visiting practices that are cash only. Gauging how your patients perceive the service you offer (general or speciality) can help you decide whether to contract or not. 

Your decision will come down to your personal preference guided by practice/patient data. But there is also a more intangible consideration that could influence your decision and that is the relationships you have with your patients. What would they appreciate the most? What does it mean for returning patients and word-of-mouth referrals? Is it more advantageous to contract out because you can charge a premium? How do you feel about collecting cash? Does contracting diversify your practice from other practices in the area and could that mean more feet through the door? It’s important to factor in your patients when making the decision to contract or not. 


4. Your technology setup and practice processes

Sending claims while the patient is at the practice is important for both cash practices and those contracted to medical aids. But the ability to collect from a patient directly after a consultation is essential if your practice relies on cash patients. The problem with collecting cash payments instead of claiming from medical aids is that practices don’t usually have the necessary processes in place to collect from patients straight after the consultation. This drops the likelihood of collecting payment from a patient by 16%2 once they’ve left the practice. Similarly, if you are going to rely on medical aid payments, you need to ensure that you have the right technology and support staff to ensure claims are sent in real-time with minimal errors.


5. The cost of cash vs medical aid billing

Consider the actual cost of contracting in or out for your practice. Typical costs to weigh up include: 

  • the monthly license fee for your medical billing software
  • claims switching fees
  • cash deposit fees
  • credit card transaction fees, and 
  • the cost of bad debt  

These costs can vary enormously depending on whether you are a contracted or cash practice. Do the calculations using your practice data to know what percentage of revenue you are spending on fees and bad debt. Once you have an actual figure, you can ascertain how your cash flow and practice growth is being affected. 



A private practice is essentially a private business. Therefore, your decision on whether to contract into medical schemes should be based on the current state of your practice and where you are headed growth-wise. Evaluate the potential benefits to your practice for both options, and that means taking your patients’ (customers) wants, needs, and spending power into account. The above considerations will help you make that decision and set your practice up for success. 


  1. Rand value is based on the increase in rate when moving from a Polmed/GEMs non-contracted (R375/R386) to a contracted rate (R416.10/R422.10) at current claim volume indicated in graph. 
  2. Ferkovic, T.J. (2016) Waiving copays puts you at risk for fraud. Available at: (Accessed: 26 October 2016).


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