Starting a Medical Billing Business > Starting Your Own Medical Billing Business

First Client - Provider Just Starting His Practice - Pricing Question


I have my first client. Hooray! He will be a mental health provider working two days a week. I have purchased and read the pricing book offered through this site (great by the way!) but I'm still concerned on how to set my pricing. I have no past revenue or collection information to go off of because he is just starting out. I live in Oregon where fee splitting is acceptable but love the idea of a flat rate. Where do I begin with no information to go off of? Should I run estimates on those two days? Should I do a percent with a minimum flat rate?

Not my area of expertise, as I work for billing companies and don't own one, but if I did, and was in your situation with a first client, who was new to practice, here are some things I would look at when arriving at my fee:
1. My overhead. I would estimate high, and then add even more on just to be safe. There will always be something you have forgotten about, or that comes in higher than you expected.
2. What codes will the provider be billing, how many patients will they be seeing on a daily/weekly average, and what is the payer mix? From there, you can estimate what sort of average ticket price/revenue stream will be generated, based on insurance fee schedules.
3. What will you be doing as the biller? Just demo entry, claim generation, and claim follow-up/AR? Or will there be more, such as obtaining authorizations, benefit verification, etc?

I wouldn't run estimates based off of two day worth of work for the provider, because who knows if that will change? I would not do any sort of percentage, personally. It never works out in your favor.

Thank you Kristin for you response! Great information to think about as I proceed forwarding with an amount. I will be handling all billing related responsibilities including verification and authorizations as needed. I think I'll head in the direction of a flat rate after I run some numbers. Thank you again!!

Congrats on the new client!!!

First, i agree, don't go on a %.. especially since they are new and only working two days a week.

This client sounds a LOT like a psychologist I setup years ago. He was also brand new practice and not data to go on. I made the mistake of giving him 100 claims free if he signed contract within a certain time. Mind you this was many years ago and I was marketing for new clients and new to the business myself. I didn't have the good fortune of knowing he was only going to work two days a week 5 hours a day, so let's say I lost money for about six months on that account.

Here are some suggestions based on the lessons I learned with that client which is very similar to your situation:

1) ask if he's practiced anywhere else and if he has a list of patients he will be bringing over to his new practice
2) WHAT services does he expect from you? This is important, since he is new, does he want you to do credentialing, does he have compliance plan, HIPAA security, Policies/procedures, patient office policy, patient privacy notices, collection practices,  etc. EVEN if he doesn't want you to do those, find OUT whether these things are going to be done or have been done FIRST (COVER YOUR --S)   YOU cannot do your job effectively w/out those assurances in place!  ASK FOR ALL Of those since he's a new practice. YOU don't want to be caught off-guard without those essential things in place before you even send your first claim.

3) If he wants you to do any of the above mentioned in #2.. create a separate consulting contract. This is not billing and the services should be done under a consulting contract.

4) Find out if he will be investing in a PM system. If you will be supplying the PM system, make sure all costs associated with his account are included in your fees along with other costs.

5) I agree a % is not a good idea, so while he's starting out I would go on an HOURLY basis. When you do your contract with him, be sure the hourly rate is there and if you want, put a clause that you can re-negotiate in six months or one year. That gives you some time to establish how much time is needed and him a chance to grow the practice and obtain enough data for you to re-negotiate a flat fee later. It also ensures that you are paid for all the work you will be doing. Setting up a NEW practice is a lot of work and you will find yourself doing a lot of tasks you really didn't expect. MAKE sure to review your contract or have an attorney review it so that you cover everything in it. With a new practice assumptions could be made by the new client on what you will be doing and you don't want to be caught off-guard with services you never discussed. Trust me I've learned that lesson too.

I hope this helps. I don't know about your experience, however if you have a good amount of experience or training this is a great time to offer up additional services to him, since he is establishing a new practice, and a chance for you to earn additional revenue. IF you are NOT experienced enough to offer those services BUT he needs them, offer to outsource them and maybe network with additional professionals to help you out.

Best of luck!!! I love setting up new practices.. I've done many and each time I setup a new one, there is always something new to learn :)


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