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 (opens in a new tab) suggests otherwise. The financial impact is significant:

• $1M at 0.05%: $500/year
• $1M at 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: 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:

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.