Have you addressed the financial impact of the pandemic on your practice?
While many of our colleagues saw increases in patient volume in the wake of the pandemic, many saw reductions. One thing that has become consistent is that the cost of doing business has increased. If you have been putting off evaluating your fees or haven’t addressed them in years, it is time to stop procrastinating. Regardless of your patient volume, if your fees don’t reflect the impact of increased costs to your practice, it is going to have a negative effect on your practice revenue.
All practice owners need to know the cost of doing business. According to a national survey a few years back, overhead in a typical chiropractic practice can average 50%. I would be surprised if that average hasn’t increased, considering the increased cost of addressing a pandemic, compliance mandates, rising overhead, and lower reimbursement models. To calculate your average cost of providing an office visit and the percentage of overhead, use this simple calculator. This number is key to knowing your bottom dollar for maintaining profitability in your practice. While this is not as exact as a formal Profit and Loss Statement, it will give you an excellent ballpark idea of your costs.
Next, you need to determine the average charges for services offered in your area. Unfortunately, the Sherman Anti-Trust act prevents you from reaching out to colleagues in your community and asking what they charge, as this can be seen as price-fixing. There are multiple ways you can gather general information about health care fees in your area, however. You can hire a consultant to collect this information for you or utilize websites such as ChiroCode.com or fairhealthconsumer.org, which calculate fees in your zip code.
Finally, start a spreadsheet and list every code that you use in your practice. Then list the reimbursement rates for each code from Medicare, in-network, and out-of-network insurance companies. Next, add the information you gathered on average fees based on your zip code. Start by comparing the averages in your area to the current fees in your practice. Are you above or below the average? Then, using your actual fees, determine what you are currently charging per visit, on average. Are you falling above or below your cost per visit? Finally, you will want to compare your cost per visit to your reimbursement rates with provider agreements. Do you have any contracts that pay you less than your cost per visit?
Now that you have this information in front of you, what’s next? Now is a great time to determine if you need to make any adjustments to your current fees. Even a slight change of $5 per visit for the average practice can have a significant financial impact on your bottom line. Just $5 more per visit is the equivalent of getting paid for 13 months while only working 12. If you have any provider contracts that are not meeting your desired cost per visit, try reaching out to negotiate your agreement. Your evaluation of cost versus reimbursement will empower you to consider whether participation in a particular network is or is not advantageous for you.
If raising your fees gives you heartburn, and you have concerns that doing so will run off your patients with limited benefits, high deductibles, or no insurance at all, then consider using a Discount Medical Plan Organization. Providers who offer these types of memberships to their patients often can give their patients the same kinds of discounts that insurance carriers have negotiated for those same services. As a result, the discounts to patients are often the same or lower than the co-pays they are accustomed to paying for their treatment with robust insurance plans. In addition, having a contractual network agreement with a DMPO makes the discounts you offer legal and compliant.
This fee analysis may take a little time, but I challenge you to sit down and evaluate your fees. It will allow you to see where you could be losing money and correct those areas of concern to become more profitable in 2021 and beyond.