> [llms.txt](https://getlemma.com/llms.txt)

# How to earn more on $1M+ in practice cash

Most practices view yield optimization as a secondary concern, though [what a practice should expect to earn in 2026](/provider-guides/medical-practice-apy-expectations-2026) 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](/provider-guides/fdic-insurance-medical-practice)

**Target yield:** 1.5–2% APY

Options include:

- High-yield business checking or savings at [banks built for multi-entity practices](/mso-banking)
- 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.

## Your bank doesn't know healthcare. Lemma does.

Lemma is business banking for healthcare practices, MSOs, DSOs, and multi-entity groups: free ACH, up to 1.75% APY, $10M FDIC protection, entity management, cash sweeps, and an AI-powered lockbox that digitizes checks and EOBs on arrival.

Free for a single entity, $50/month per entity for groups. Open in 5 minutes. It's the last bank switch you'll make.

[Sign up](https://app.getlemma.com/sign-up)
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