Author Topic: Pricing Strategy  (Read 6452 times)

SnyderKristine

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Pricing Strategy
« on: March 03, 2014, 12:50:18 PM »
Hi All,

I just had a meeting with a potential client and he came up with lot of questions for me. HOMEWORK...

1. He would be willing to use our software instead of his own?
>> How much would it cost me for a provider, the initial fees and the monthly charges??

2. For a provider collecting $1.5 Million per year, how many people I would need to handle his end-to-end billing? And what would be the best % to bill?

Please help. I need to mail him the pricing model..

PMRNC

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Re: Pricing Strategy
« Reply #1 on: March 03, 2014, 01:57:52 PM »
I just had a meeting with a potential client and he came up with lot of questions for me. HOMEWORK...

1. He would be willing to use our software instead of his own?
>> How much would it cost me for a provider, the initial fees and the monthly charges??

That depends on what software or subscription service you use, no way to answer this. If he has a PM solution setup I would have to ask why change? This is one of the things I think today's medical billing company needs to be able to handle to stay competitive.. why make the client switch when you can go in and use their PM solution which allows you to still make money and they save money? Example:  let's say they have Medisoft in their office and they have been using it... then suppose YOUR solution is an online system where it's $199 a month per provider. Right there you need to UP your fees $199 or have the provider pay that fee in order for you to break even. Now if you are experienced and you can work in other systems, it would be in YOUR best interest and their's to continue their PM system, log in and do your thing for now.. later on you can do a cost analysis based on your data and theirs to see if a switch would be in their best interest. JMHO. I've seen so many billing companies starting out turn clients away because they wanted the client to use their software and couldn't be diversified to use the existing PM system in place. Sure it's not ideal in most cases but you have a chance to save them a few bucks, get paid for your time and prove yourself, later you can decide if a switch is in everyone's best interest.

Quote
2. For a provider collecting $1.5 Million per year, how many people I would need to handle his end-to-end billing? And what would be the best % to bill?

Again, no way to answer this either because no one knows your experience level, how much yourself and any staff can handle, volume, specialty, etc. I always do a full practice analysis before I quote a price. You need to know exactly what a practice is doing first before you can tell them how you can do it.

 
Linda Walker
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www.billerswebsite.com

Michele

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Re: Pricing Strategy
« Reply #2 on: March 04, 2014, 08:43:00 AM »

2. For a provider collecting $1.5 Million per year, how many people I would need to handle his end-to-end billing? And what would be the best % to bill?


Like Linda said, this is hard to answer without more information.  It does depend on the experience level of the worker, the type of billing, specialty of provider etc.  To give you a very big ballpark figure, since we don't have all of that information, I would think it would take two fairly experienced workers to handle an account that size.  This is a very rough guess.
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SnyderKristine

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Re: Pricing Strategy
« Reply #3 on: March 04, 2014, 11:24:19 AM »
Amm. I am so sorry I missed the details..

Well this is a Internal Medicine Physician..again as stated $1.5 Million annual collections, bills all types of insurances, and wants a complete Medical Billing solutions..

I can handle the Insurance ageing all alone, can also do appointment reminders if required, and can fairly take care of insurance verification myself..

Does that give any idea. I could not ask anything from him, he was asking all the questions ??

SnyderKristine

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Re: Pricing Strategy
« Reply #4 on: March 04, 2014, 11:29:58 AM »
Actually plain and blunt I offered him 7% of his revenue for all the services right from Appointment reminder to Patient Collections. Is that feasible?

I have worked only as an employee, so I really don't know how everything worked behind the curtains :(

PMRNC

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Re: Pricing Strategy
« Reply #5 on: March 04, 2014, 11:55:27 AM »
Quote
Actually plain and blunt I offered him 7% of his revenue for all the services right from Appointment reminder to Patient Collections. Is that feasible?

I don't like % based billing for many reasons, someone else might be able to weigh in here but I don't there really is a way for anyone to tell you it's a good price model for THIS client. When I am meeting with a potential client I do a full practice analysis so that I can come up with the best pricing model for him. I don't use % based, my fees are based on a flat monthly rate and calculated by my TIME so that I get paid for everything. If you get ONE client with heavy WC or PI, you could really take a hit financially. Likewise a problem client that required a lot of time could cost you money. I go in and analyze everything so that I can give them a pricing structure BEST for them and me.
Linda Walker
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SnyderKristine

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Re: Pricing Strategy
« Reply #6 on: March 04, 2014, 12:00:45 PM »
I personally don't prefer the % based pricing for many reasons. But the client himself went ahead and asked me how many% I will charge him, so I gave him that 7%.

Now considering this same example.
If I and one other resource would work on this account, and I guess would have to spend 4-5 hours everyday to keep things in pace,
What hourly rates should we charge and What should be the monthly flat fee?

I am just trying to get a approx. figure, I will add my own expenses and conditions to that?

But what I am trying to get is a minimum or maximum amount. So that I don't charge him less which would create a problem for me, and at the same time I don't want to loose the client by quoting some extra terrestrial amount..

Will these details help??

PMRNC

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Re: Pricing Strategy
« Reply #7 on: March 04, 2014, 12:16:11 PM »
If you do a search here within the forum you will come across a few formula's. I can't tell you about what you should charge as hourly rate because I don't have the proper demographics to do so. I have a formula somewhere on this forum that shows you how to do a monthly flat fee with sliding scale and at same time have provider not even know what your rate is based on in regards to hourly rate. Even if you charged $40 an hour, you can still save the provider a lot of money, but the question is what is your time / experience worth in regards to hourly rate? How long does it take you to do the everyday functions necessary? Volume ? etc.    Unfortunately pricing your services really is a matter of personal preference to you and your business and will vary greatly depending on your experience.
Linda Walker
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One Stop Resources, Education and Networking for Medical Billers
www.billerswebsite.com

maxamillion125

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Re: Pricing Strategy
« Reply #8 on: March 04, 2014, 10:52:19 PM »
We do the billing for a 1.5 Million dollar provider and charge 7%.  We do anywhere from 30-50 claims each day.  You have to figure in all the time spent calculating and depositing every Insurance and patient payment, denied claims management, patient calls, statements, entering patient demographics and refunds on top of all the obvious services you'll be doing.  Our practice management software costs us $250 per provider so thats another $750 per month on this particular account.  1.5-2 full-time employees for an account this size is about right. 

Michele

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Re: Pricing Strategy
« Reply #9 on: March 05, 2014, 09:58:33 AM »
We have billed for an account similar to this, internal medicine, we did all but verify benefits and appt reminders.  And NO CODING.  It took 1 employee full time and another employee that could handle some other stuff as well.  I agree with Linda, no percentage billing.  I prefer a flat monthly fee.  I do not like quoting a provider an hourly fee.  They do not take all of our expenses into consideration.  When you quote a doctor an hourly rate they think they are paying an employee that amount per hour, not a business.
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shanbull

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Re: Pricing Strategy
« Reply #10 on: March 05, 2014, 01:19:04 PM »
Definitely no percentage billing for claims as old as 2011, there's too much chance you'll spend time on claims that will never get paid. If they want you to work with the old claims anyway, flat fee is crucial. You could even do a flat fee for claims over a year old and percentage for claims under a year old. I just would be wary of getting stuck with a pile of claims that are deadweight with nothing to show for it in the end.

Look at what you need to be making to provide for yourself, at minimum, per year. Include your business and advertising expenses. Break it down into a monthly wage. Add foreseeable monthly expenses for this client. Add a small cushion for emergency expenses. That's your minimum monthly flat fee, if you're expected to work full time on this alone (if not, adjust what portion of your monthly wage would need to be paid by this client/factor in wages for any additional employees you would need to hire for this). Once you are more experienced, give yourself a raise in the first category and recalculate.
« Last Edit: March 05, 2014, 01:21:05 PM by shanbull »

SnyderKristine

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Re: Pricing Strategy
« Reply #11 on: March 05, 2014, 04:11:28 PM »
We do the billing for a 1.5 Million dollar provider and charge 7%.  We do anywhere from 30-50 claims each day.  You have to figure in all the time spent calculating and depositing every Insurance and patient payment, denied claims management, patient calls, statements, entering patient demographics and refunds on top of all the obvious services you'll be doing.  Our practice management software costs us $250 per provider so thats another $750 per month on this particular account.  1.5-2 full-time employees for an account this size is about right.

Thanks for providing all this info. It gives me a better picture of what we will have to do... Just one more question about this scenario:

"How do you calculate the amount collected for every month, so that you bill 7% of that? Where do you get that data from?"

Newbie...Plz don't mind  ::) ::) ::) ::)

SnyderKristine

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Re: Pricing Strategy
« Reply #12 on: March 05, 2014, 04:14:31 PM »
We have billed for an account similar to this, internal medicine, we did all but verify benefits and appt reminders.  And NO CODING.  It took 1 employee full time and another employee that could handle some other stuff as well.  I agree with Linda, no percentage billing.  I prefer a flat monthly fee.  I do not like quoting a provider an hourly fee.  They do not take all of our expenses into consideration.  When you quote a doctor an hourly rate they think they are paying an employee that amount per hour, not a business.

That's what I am planning to do. I will work on this account myself for full time and Will hire a part time employee. Plz don't mind me asking this, but how much flat fee did you charge this particular provider. It will make things more clear for me. A straight forward example..

Thanks in Advance Michelle

SnyderKristine

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Re: Pricing Strategy
« Reply #13 on: March 05, 2014, 04:20:04 PM »
Definitely no percentage billing for claims as old as 2011, there's too much chance you'll spend time on claims that will never get paid. If they want you to work with the old claims anyway, flat fee is crucial. You could even do a flat fee for claims over a year old and percentage for claims under a year old. I just would be wary of getting stuck with a pile of claims that are deadweight with nothing to show for it in the end.

Yeah you are right. Percentage model for old pending claims would only put me in problem.. Waste of time and energy...

Look at what you need to be making to provide for yourself, at minimum, per year. Include your business and advertising expenses. Break it down into a monthly wage. Add foreseeable monthly expenses for this client. Add a small cushion for emergency expenses. That's your minimum monthly flat fee, if you're expected to work full time on this alone (if not, adjust what portion of your monthly wage would need to be paid by this client/factor in wages for any additional employees you would need to hire for this). Once you are more experienced, give yourself a raise in the first category and recalculate.


Marketing expenses +
Practice management charge for the client+
Patient statements charge+
Online payment by patient (credit card /debit card) +
Wages of employees working on this account +
Stationary charges +
Phone bill +
Misc (Profit)

Would this formula work ???

RichardP

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Re: Pricing Strategy
« Reply #14 on: March 06, 2014, 01:18:47 AM »
"How do you calculate the amount collected for every month, so that you bill 7% of that? Where do you get that data from?"

When payors are billed (Insurance and patients), they will eventually pay ... something.  So - ask yourself this question "from Day First of the month to Day Last of the month, how much money did the doctor receive?"  Add up all this money and multiply by .07.  That is your fee.  You can calculate this figure from the doctor's deposit slips with dates that fall within the target month.  But the more usual way is to print a report from your billing software that totals all payments posted to the software during the target month.