Is it time to review your patient fees? Do you have a plan to get it done and keep it objective?
For lots of clinicians, November is an ideal time of year to do a review, particularly to allow time to notify patients and implement changes in the New Year. But a review can be done at any time and should be done at least annually – even if you decide to keep your prices the same!
As a business owner, you’re probably well aware of increasing costs. We find, though, that many of our clients aren’t sure how to review their pricing to ensure they’re meeting these increases, including how to keep things fair and the process objective.
Money is an emotive topic, and pricing can be a sensitive area! So, this article aims to make your next pricing review a straightforward and objective process.
Where do you start?
It’s good to give a moment’s thought to what your patient fees/pricing represents. It comes down to you receiving something in exchange for the valuable services you’re providing. If these are of value to them, the people receiving them should be paying for everything involved in providing them. This includes things like your knowledge, expertise, experience, time and the interest and care you provide, plus the standard of support and service the practice offers and everything that goes into making this available.
Plus, it’s also time to push through any misconceptions or pushback that those providing healthcare services shouldn’t raise their prices!! For more about this topic and ways to shift your thinking if you or others in your practice are hesitant, check out our “Money – A Dirty Word in Healthcare?” article.
Finally, as you’re going through this process, we suggest you think with these definitions:
Market price floor – the minimum amount that could be charged to cover your total costs/expenses to provide the service.
Market price ceiling – the maximum amount that the market will bear. If, for example, you were to compare your pricing with other similar practices/services, you would generally set the market price ceiling as that of the most expensive price in the market.
Objective inputs to fee setting
If you’re the practice owner and have contractors/associates, you might like to pass this article on to them to help them review and set their pricing.
The factors to consider vary by area and specialty within the healthcare industry. We suggest you review the following as applicable to you:
Patient loyalty – impacted particularly by competition and scarcity.
Rebates available from Medicare or private health insurance.
Costs you incur as a clinician to provide the services, including things like special equipment, conferences and other professional development.
The service fees you pay to the practice.
Competitor pricing – there may or may not be a market price ceiling.
Balancing your loyalty to your patients and what’s right for you and will support you to continue practising and providing them with care.
Supply and demand or ‘what the market will bear’.
This point deserves a bit more information. Your current and future booking levels are indicators of what your market will bear. Consider whether you’re currently receiving adequate exchange for what you provide. If you’re booked well in advance, that’s a pretty good indicator of the perceived value of your services and your reputation and the appetite for fee increases.
Other factors to be thinking with…
Will you use CPI as a factor?
The AMA publishes the List of Medical Services and Fees (Fees List) annually. You need to be a member to access this, but it might be a beneficial investment.
Is establishing a policy of increasing by a set percentage each year rather than doing a full review of all the different inputs each time worthwhile?
Timing your increases, considering the need to communicate these to your patients – new and existing (including those who might already have a review booked).
The ACCC regulations around practitioners agreeing on fees to be charged – review these here.
Transparency and informed financial consent.
When you’ve decided to increase your fees, factor in how you’re going to ensure transparency and informed financial consent, including:
Communicating the pricing changes externally - website, flyers, patient registration form, signage in your practice, etc.
Communicating the pricing changes internally to your admin team so they follow through with patients. Maybe your appointment confirmations can include pricing information?
Awareness that when your patients leave the practice and pay their account, this is the final part of the service and their interaction with you as their clinician. Ensuring they’re fully informed ahead of time about fees not only ensures financial consent but also removes the potential of them taking away a negative experience.
If you’ve completed your review and are ready to implement your new fee structure, this article might be helpful - Implementing Your Fee Change.
If you’d like to talk through your approach to setting fees, the team at Augmentum would be happy to help, drawing on our extensive experience with clients in the healthcare field.
The Augmentum team provides a broad range of consultancy and management services, supporting healthcare business owners and decision-makers in key areas such as strategy development and action planning, building effective foundations and teams, keeping your finger on the pulse, and driving growth and success.
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