Most practices view yield optimization as a secondary concern, though what a practice should expect to earn in 2026 (opens in a new tab) suggests otherwise. The financial impact is significant:
- $1M at 0.05%: $500/year
- $1M at up to 1.75%: $17,500/year
- $1M at 4.5%: $45,000/year
The difference between a sleepy operating account and a tuned one is 3–4× the cost of a part-time controller.
Three buckets to think in
The recommended approach divides cash into three categories:
- Operating: Covers 30–60 days of expenses. Requires full liquidity.
- Reserve: Covers months 2–6. Allows 1–2 day settlement.
- Strategic: Capital reserve and acquisition funds. Can lock for 30–90 days if yield justifies it.
The common error is concentrating all funds in the operating bucket.
Bucket 1: Operating cash
Goal: Full liquidity, predictability, FDIC protection worth calculating precisely (opens in a new tab)
Target yield: 1.5–2% APY
Options include:
- High-yield business checking or savings at banks built for multi-entity practices (opens in a new tab)
- Lemma's operating account: up to 1.75% APY, no minimums, full ACH and wire functionality
- Avoid traditional big-bank checking, which often offers minimal rates
Bucket 2: Reserve cash
Goal: Short-duration security, enhanced returns, week-long liquidity
Target yield: 4–4.75%
Options include:
- Treasury bills (4-week or 13-week)
- Treasury-backed money market funds
- Short-term CDs from sweep-laddered banks
Treasury bills lack FDIC insurance but carry US Treasury backing, which suits most practices.
Bucket 3: Strategic reserves
Goal: Maximize returns on funds not needed this quarter
Target yield: 4.5–5.5%
Options include:
- Brokered CDs (3–12 month terms)
- T-bills (26-week or 52-week)
- IntraFi CDARS for FDIC-insured laddered CDs
Liquidity: 30–90 days, suitable for capital reserves, deal proceeds, or planned expansions.
When to rebalance
Avoid setting bucket allocations permanently. Review and adjust when:
- A new clinic launches (operating bucket increases)
- Capital calls complete (strategic bucket surges then decreases)
- Payer contract terms shift (revenue patterns change)
- Interest rates move 50 basis points or more
- During annual planning cycles
Quarterly assessments typically identify necessary adjustments, requiring roughly 30 minutes with proper dashboard visibility.
A simple split for $1M+
A baseline allocation for a $1M operating balance:
| Bucket | Allocation | Rate | Annual Yield |
|---|---|---|---|
| Operating | $300K (30%) | Up to 1.75% | $5,250 |
| Reserve | $500K (50%) | 4.5% | $22,500 |
| Strategic | $200K (20%) | 5.0% | $10,000 |
| Total | $1M | $37,750 |
Versus $500/year in idle accounts — with equivalent liquidity.
What to avoid
Three common pitfalls:
- All-Treasury approach: Sacrifices operating liquidity; unexpected expenses become problematic.
- Crypto or stablecoins: Represents a different risk category; lacks FDIC protection.
- Timing the market: Interest rates have remained above 4% for two years; delays create opportunity costs.
$45K in idle yield isn't a luxury. It's two new staff or a year of better software.