Cash-Based PT Practices (part 3)

In my last post, a fellow PT asked me about how I priced my services and how that may convert to his geographical area. A specific answer to pricing conversions between cities would be difficult without a lot of details that go beyond the scope of this forum. However, I do have a section of my eBook dedicated to guiding PTs through the process of pricing Cash services, so I decided to share part of it with you now.

How much are my services worth?

You want to price your services appropriately based on a number of factors …

-          geographical area of your practice.

-          income levels of your target and geographical market.

-          competitor/related-service pricing – keeping in mind how you differ from them.

-          What do other well-run cash practices in the area charge?

-          What about insurance-based practices that have some cash-services?

-          Can you offer something better than the above-mentioned cash-based practices?

-          Are your results superior? … yes? Great! … charge more. No? … charge the same or slightly less (but you’d better change your services so that they are, in fact, superior. And if your results aren’t much better/faster than the average Insurance-based PT, a cash-based practice may not be a viable choice for you).

-          Are you the only cash practice around? Yes?… Great! What do the insurance-based practices bill and receive for an hour of their treatments? This may be a guide as to what you should expect to make. If you can make as much or more than the average reimbursement per hour, but without all the headache and overhead of dealing with insurance, you’ll be coming out way ahead.

-          Ask a number of people what they might be willing to pay out of pocket for the services and results you offer. Don’t simply ask friends and loved ones … ask people who don’t know you very well and answers will be less biased. If you already have an insurance-based practice, ask your current patients what they’d be willing to pay out of pocket for more one-on-0ne treatment with you. However, keep in mind here that your current patients may not be the type that would ever consider paying out of pocket. They may be hardcore about always using insurance and answer with ridiculously low numbers, so take these responses with that in mind. See my last post for more details on this.

-          Look at what people in the area are willing to pay for other services. If women have no problem dropping $225 on a haircut and color, and your services will help them get back on the treadmill painfree, $100/hr sounds too cheap to me. If people are paying $110/hr for a massage at the local spa, charging the same or less would be an insult to our profession… your skills and services go way beyond massage, and should compensated appropriately.

On the other end of the spectrum, I’ve heard of Cash Practices where the price per hour of treatment (and especially the eval) is too much in my opinion. There are some in which the first hour (eval and treatment) is nearly twice as expensive as subsequent hour-sessions, even though much more actual treatment and results generally occur in the sessions after the eval. Deciding to pay that much more for the first visit is quite a mental hurdle for prospective patients to jump … even wealthy ones. Of course, there is a good argument that our ability to evaluate and diagnose separates us from other similar practitioners and should therefore cost more. I agree to a point, but we must always consider economics and financial logic as well. To make the first hour substantially higher than the rest creates a barrier to entry that may keep a number of patients from coming in at all. Even if you get phenomenal results, you’re usually going to see most patients at least 2-4 times. For this reason, I charge the same amount for all visits. I feel that more people are willing to give my services a try when the first visit is not substantially more expensive, and I’ll end up making more total money in the long run. Mind you, I don’t spend more time with patients on their first visit. All sessions are one hour. If you spend more time on the first visit, it should of course cost more.

On that same note, I’ve seen a number of health care and wellness services offer free or reduced initial visit fees. If you’re having a hard time getting people in the clinic, you may consider this, but I wouldn’t really advise it. People who are strongly enticed by big deals rather than the reputation and promise of a high quality service are often not well suited for Cash-based PT clinics. People generally expect to get what they pay for, and I personally don’t want them expecting a low-cost service from me. Don’t be afraid to put a solid price tag on what you do … within reason of course. It will attract patients who prefer quality over quantity, and are more motivated to get better.

You obviously may go about pricing in a number of ways, so be flexible and willing to try different approaches if one isn’t working. Experiment with different pricing models. That does Not mean you should be overly willing to drop your price. Don’t sell yourself short, but be creative if you see that something isn’t working related to your price. Maybe in your area, people aren’t willing to pay $150 for an hour of one-on-one time with you, but they are willing to pay $75 for half an hour with you? If you add wellness/gym packages to your business, there are endless possibilities to how you can change variables to entice more sales. One of the most exciting things about running your own business (in my opinion) is creatively finding what works best both for your customers and for your clinic.

www.DrJarodCarter.com