Setting Chiropractic Fees For Maximum Profitability (Part 1)

 

When most chiropractors candidly discuss their “process” for setting fees, they are forced to reluctantly admit that they truly have none.

In fact, after years of working with my private consulting clients and having numerous discussions with my seminar attendees on the subject of fees, I’ve come to conclude there are three main methods of chiropractic fee setting utilized by 80% of the profession:

Method #1: Dr FeelGood

Fortunately, categorizing chiropractors in the fee schedule method of “Dr FeelGood” is not a cheeky reference to the ability to overprescribe nor a Motley Crue reference – instead method #1 simply refers to DC’s who set their fees by whatever “feels good” to them.  Admittedly unscientific and prone to wild inaccuracy, this method nevertheless probably represents the most popular fee setting method.

Method #2: Neighbor Nate

While I’m admittedly not a fan of #1, the second route is significantly worse in my opinion.  The “Neighbor Nate” method actually is one of two methods, both giving the same results. If a DC has a friend in town, they discuss fees openly and then the doc looking to change his or her fees does it based on what their neighbor charges.

The other variation involves some simplistic spy-work done in the name of research whereby a staff member usually holds her nose tightly and calls a neighboring chiropractor in a disguised voice (as if the receptionist on the other end of the line has every chiropractic staff members voice in town memorized).  She proceeds to pose as a new patient and ask dozens of fee questions until she has a good idea what Neighbor Nate is charging.  Then the doc goes about the business of changing his or her fee schedule.

Method #3: Insurance Indicators

While this may have the most scientific appearance of the three main fee setting methods, the vast majority of chiropractors go about it all wrong. Typically, what happens is the chiropractor desires to raise fees.  They assign a staff member the task of doing “the research.” The dutiful CA compiles a brilliant looking spreadsheet of what the big insurance payers in their area are paying.

Here’s where things go horribly wrong for too many chiropractors. The office decides to then set their fees “in the ballpark” of the third party payers for whom they are contracted. The office also reasons that they don’t want their fees too high as to be “on the radar.”

Problems With Method #1

Even though it’s as common as constipation, the downsides with the Dr. Feelgood should be obvious and equally unwelcome.  What “feels good” is massively limited by your head space and your own value in what you do.  It also may have no bearing on third party reimbursements, nor what the market will bear.  In short, it’s completely random AND emotional and probably not good for your bottom line.

Problems With Method #2

Using the Neighbor Nate method brings on all the same problems as Dr. Feelgood  with a few unhelpful additions that increase the potential for trouble.  What if Neighbor Nate used method #1? What if Neighbor Nate is a nutcase? What if Neighbor Nate is a newbie and can’t adjust his way out of a paper bag?  What if Neighbor Nate’s business stinks?  What if Neighbor Nate sees 1 insurance patient per year and doesn’t really have a pulse on third party pay? What if Neighbor Nate is a walking compliance nightmare?

Oh the horror.  This method really is rotten and only reinforces the bigger problem that you believe you (or chiropractic) is a commodity.  You are not.  Do not compare apples to apples.  If you can’t get that in your head and through your patients, you’ll suffer endlessly and be at the mercy of anyone else’s fees in town.  In other words, who cares what the neighbors fees are?!  If you can’t justify why your services are different, you’ve got bigger problems. Sure, most insurance companies will pay you in the same ballpark – but not all.  And assuming you do not participate with every payer (pure madness in itself), you are volunteering to lower your fees even for payers for whom you are out of network (thus lowering the benefits of being out of network).  Save your sanity and don’t go here.

The Problems With Method #3

Though this is certainly the most logical of the three methods, it’s still tragically flawed for numerous reasons.  Here they are:

  1. Setting fees to match insurance allowables simply reinforces the third party payer’s low fees.
  2. Since all payers don’t utilize the same fee schedule, this also frequently results in your fees being too low for some payers.
  3. You’re on the radar anyway, regardless of your fees.  Setting them to low just puts you on a laughable list radar of docs who don’t really understand how insurance works.
  4. You run the risk of setting your fees to your lowest paying class of patients.
  5. This method bears no relationship to your profitability

Need we go on?

Strategies For Setting Fees Profitably

Now that we’ve hammered home how NOT to set your fees, stay tuned for Part 2 where we will strategies to do this profitably.  Til then, begin to list all the ways why you are worth WAY more than you are currently charging – because it’s true!

Need help setting your chiropractic fees? All of our chiropractic coaching clients receive a Fee Optimization as part of their overall strategy to help them increase profits and work smarter — and much, much more!  For more information on our coaching services, click the links above and to see how we’ve helped other clients like you improve their practice, be sure to check out our testimonials!

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