November 19, 2018 | 5 Min Read
5 Ways To Calculate Prices For Your Clinics' Services
So you’ve graduated with extensive training. You know the ins and outs of body mechanics, clinical reasoning, patient outcomes, and other critical skills that have helped you to become a great practitioner. But one thing that your education failed to teach you about is business – business management, Human Resources, balancing the general ledger, taking out a bank loan, and how to set the prices of your clinics’ services.
Service-based pricing can become complex as insurance providers, and governing bodies such as the provincial government and regulatory colleges can all have a hand in the prices you set. And don’t forget about the fee schedules containing individual charges for billing codes.
Setting rates for your services can be a daunting task. If you price your services too high, patients might look elsewhere for similar services, or value your services as underwhelming for the price point. If you price your services too low, your clinic might find it hard to keep the lights on and pay staff members. At the same time, you might have an overflow of patients and not be able to provide an adequate level of patient services. Patients may also feel as though your services are not at the level of professionalism they need.
5 tips to help you set prices
Price your services not too high and not too low. So how does your clinic find the right price for your services? How do you set rates that are in line with the value that is provided?
1. Look at your local market
Whether if it’s in your city or province, there’s bound to be other clinics like yours. The key to assessing your internal pricing for services is to look outward to your competitors. If you find that your prices are drastically lower or higher than your local competition, it might be time to think about changing your prices.
Have you worked at another clinic before? What were some of the rates that they used? Information is all around you, sometimes you just have to hunt for the answers. Based on the local market, know the value and services that you provide compared to your competition. Are there specific areas of treatment that your competition does not provide?
Be sure not to scrape the bottom of the barrel for pricing or your local patients might think that you provide sub-par services, and over the top pricing might not bring in the number of patients that your clinic needs. Look to local associations or provincial associations to see what their recommended fee schedule is for services. The worst they could say is “no,” and getting over the word “no” is one of your biggest hurdles to running a successful practice.
2. Look at creating a fee schedule
A fee schedule is a table showing fixed fees for goods and services. Setting a fee schedule comparable to third-party fee schedules means that you might not always maximize the amount on the reimbursement. Creating different fee schedules for third-party coverage providers might mean that you can receive the highest payment possible, but it also takes quite a bit of time and creates numerous products and services that might confuse admin staff, billing staff, and practitioners.
Look to create a single product or service for the fee schedule instead of creating multiple based on the coverage company. Reverse calculate to find where discounts could be applied to certain third-parties as well as cash-based patients. Be sure to view the regulations on discounts for the jurisdictions that regulate your practitioners and clinic.
3. Type of clientele
Do you offer high-end services with in-depth patient care? Maybe you tailor your services to professional athletes and amateur teams only. Within that maybe you specialize further in a sport such as hockey, football, or dance. Knowing your skills, your practitioners’ skills, their backgrounds, and your network, you can further connect your clinic to a certain spectrum of clients.
Having hands-on clients that require more customer service and in-depth treatment means that you can charge a higher rate for your products and services.
4. Clinic model payments
This may be affected by the number of cash-paying patients you have. The more cash-based payments you receive without third-parties, the more room to set your service rates. Relying on third-parties such as insurance providers will restrict the model of payments.
If your patients rely on insurance coverage to pay for appointments and treatments, it means that you have to adhere to the coverage put forth by the third-party. This means that your clinic should take into consideration the types of third-party and insurance coverage that your patients have, along with the rates the third-parties payout, and the length of time to pay out by the provider.
5. Clinic age
You’ve taken a leap and you have just started a clinic on your own or with a partner. You know in order to pay the bills you need customers that are willing to pay for your services at the right price point. By the law of demand states that “conditional on all else being equal, as the price of a good increases (↑), quantity demanded decreases (↓); conversely, as the price of a good decreases (↓), quantity demanded increases (↑).” That being said, it might be best to set your prices slightly lower to increase the number of patients that choose your clinic.
Focus on getting to know your customers, likewise, get them to know your staff and services. Having repeat customers that use your services over and over to the point where the cost of switching to a different clinic are higher than staying. There are no better patients than a loyal patient.
Over time with a full patient load slightly increase the price of services. This might be seen on a yearly basis to the point where your fee schedule will match the value of your services. This will ensure that patients stay with your clinic and the value of your services match the set pricing.
Charging the right price for your services and products is an art form mixed with science. Keep up to date with market trends and rates to understand where your service pricing should be set at to grow your clinic. Setting your service pricing is always something that you can change over time.
Contact a Juvonno customer service representative to learn how to use the reporting features in Juvonno to analyze your services and product fees even further.
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