General Category > General Questions

Can you make a profit by charging 4%?

(1/15) > >>

tallmanusa:
Can you make a profit by charging 4% of the net revenue?

This business is very price sensitive and doctors are always looking to cut costs. The going rate is around 6%; at 4% there would be no shortage of clients. I see some companies doing the same on Google ads. I will get nationwide clients through the same. I would charge $800 minimum.
I plan to do primarily e- claims through Kareo software, sub contract the billing/ coding to be done remotely.

Many people here are very experienced and know a lot more than me.

Thanks

PMRNC:
I truly don't have a professional answer to this one and I'm not sure I am comfortable giving you my personal opinion on the subj.    There was this pretty big billing company going around advertising their 4% cheap rates and cheap is how they were perceived, I don't even want to continue the story except to emphasize the word "cheap".   I also have to disagree about doctors looking to cut costs. I haven't seen a doctor try and screw me down in YEARS. I don't have not done % based billing in years. Some are shocked even when I tell them it's illegal for them to get into a % based contract in my state (NY) and once they learn that, they are fine. The other ones I simply ask them if they pay a % to their electric company , phone company, etc.    I get paid for the work I do. Simple. If I were to get a client that tells me.. Well Joe the biller down the street will do it all for 2%.. Great, call me in 6 months but expect my rate to be higher.

tallmanusa:
Linda, thanks for the reply.
You have been in business a long time, you have a client base, this is luxury a lot of us don't have.
A new company has to offer something different. If we offer the same as everybody else, we are certain to fail. If we offer the same things at the same price we have nothing to offer, except our good looks, and you know how far that gets you.

One does not have to sell on a percentage basis; one can sell for $2.99 per claim or $3.99 per claim while the going rate is $5 to $8 per claim. The percentage is the most common, and what the doctor would be already paying.

I beg to differ with you that doctors are not price sensitive; I have spent my lifetime dealing with physicians, they are the cheapest people, and now more than ever. As you know medicare is cutting their pay by 27% starting January 1, under Obamacare. Other insurances usually follow medicare, the doctors would be scrambling to save a nickel anywhere they can.

My question remains the same, can you make money by discounting the services whether by percentage or per claim basis? If I cannot I would not enter the field, I have nothing to offer; and so goes for every newcomer.

supertaz93:
In business, you can price yourself out of business in either direction.  My sister-in-law was selling golden retrievers for $100 because she thought that was a fair amount.  She was getting no takers.  Come to find out, because her price was so low, people assumed something was wrong with the puppies.  She tripled her price and sold the puppies immediately. 

PMRNC:


--- Quote ---In business, you can price yourself out of business in either direction.  My sister-in-law was selling golden retrievers for $100 because she thought that was a fair amount.  She was getting no takers.  Come to find out, because her price was so low, people assumed something was wrong with the puppies.  She tripled her price and sold the puppies immediately.
--- End quote ---

Excellent analogy.. When I founded PMRNC with my then partner we actually offered free memberships almost for a year.. we did ok but not great. We then began to charge a very minimal fee ( I believe we started at $19.99 for the year) and we actually got LESS business. It wasn't until later on when we raised our price and upped our services that we began seeing a real profit.   After then taking some courses on marketing and advertising I learned that was what was called "PERCEIVED VALUE".   


--- Quote ---You have been in business a long time, you have a client base, this is luxury a lot of us don't have.
A new company has to offer something different. If we offer the same as everybody else, we are certain to fail. If we offer the same things at the same price we have nothing to offer, except our good looks, and you know how far that gets you.
--- End quote ---

No matter what you charge, if you are indeed offering what everyone else is offering that's right, you are going to have a harder time. If you have less experience, less knowledge and less to offer, that is how it goes. If I opened up a Pizza shop and have never made pizza before, whether I charge .25 cents a slice or $2.25 a slice, the pizza shop on the other side of town is going to get more business than me.  That's just a fact. People (especially doctors and other professionals) do place perceived value on something.   If I went to my lawyer and asked him to just charge me 4% he'd laugh at me and he should laugh at me.    I was new in business too. I started out with ZERO clients and never resorted to cheapening myself.  I did have one major advantage that goes to prove my theory, I was on the other side of the fence. When I was up against the 4% group physicians did indeed choose me over them when I was 3% higher just starting out.   I dont want my clients telling other physicians.. "Go use HRS, they are cheap, they only charge 2.99 a claim" I'm sorry, if that was how I had to get clients I'd find another business.  We already have an uphill battle with the offshore companies advertising .50 cents a claim!! Add this and it sours an industry.


--- Quote ---I beg to differ with you that doctors are not price sensitive; I have spent my lifetime dealing with physicians, they are the cheapest people, and now more than ever.
--- End quote ---

Your opinion in what experiences you have had may differ, but I'm sorry I have NOT dealt with cheap physicians.  I've certainly had some tell me that other companies are offering a lower cost.. but again, their response is going to depend on  my response.   We teach people how to treat and respect us. That's a fact. Sociology 101 LOL.    I have been doing this a long time and I've seen and talked with billing companies who think like this and don't make it a year.


--- Quote ---As you know medicare is cutting their pay by 27% starting January 1, under Obamacare. Other insurances usually follow medicare, the doctors would be scrambling to save a nickel anywhere they can.
--- End quote ---


I have no idea what your experience is in the business, however the consulting portion of my business BECAUSE of Obamacare has doubled. I have taken out 79 physicians from Medicare and/or Medicaid   De credentialing became just as much of a demand for me than credentialing :)  Carriers will not be able to "mimic" Medicare where that is concerned, that's a myth, premiums WILL rise but there will NOT be this competition among carriers that people think. I'm not happy at all About Obamacare, as a patient and as the daughter of parents on Medicare I'm so not happy with it and I'm scared for my folks because of it and my own family because I know my own Cadillac policy through my husband's days are numbered. But IF it goes through, my business will go on I will just once again diversify. Like I said.. I'm getting calls left and right about opting out of Medicare. I'm not worried about Obamacare in the least from a business stand point.


--- Quote ---One does not have to sell on a percentage basis; one can sell for $2.99 per claim or $3.99 per claim while the going rate is $5 to $8 per claim. The percentage is the most common, and what the doctor would be already paying
--- End quote ---
.

What is "common" is not always what is right or what is successful.  It's also common that people get paid to work. Physicians are human too and they are out to make a living. Like I said.. once I ask them if any of their other service providers charge them based on a percentage of their revenue.. conversation over. They pretty much all say "I guess I didn't think of it that way".  Would a physician hire an office manager in house and pay her based on a percentage of his revenue? I think not.   And also there is the legality of such fee-splitting arrangements now in many states.  I'm in NY where it's illegal.. I could get more business than I know what to do with by letting physicians know if they are paying their billing company a %, they are risking their practices and medical license.  I think the average physician would be highly insulted to be called "cheap"    It's very simple ... I work XX hours, I get paid for those hours. They get that.  That old line "We don't get paid till you get paid" is so tired and they know it too.   

Keep ONE more thing in mind and I might not be your favorite person after this.. but I'm honest.   NETWORKING is absolutely KEY in this business.. your networking skills will not be worth anything if you outbid and undercut the "competition"   The KEY is your services, thinking outside the box and being diversified. IF you don't have the experience or knowledge you have a broader disadvantage, maybe that's negative of me to say, but again, it's honest. I didn't say IMPOSSIBLE. But look at how you would be entering into this business, best to keep your fellow billing companies as "friends" or you won't last a year.


--- Quote ---My question remains the same, can you make money by discounting the services whether by percentage or per claim basis? If I cannot I would not enter the field, I have nothing to offer; and so goes for every newcomer.
--- End quote ---
 

I'll answer this practically, opinion aside.    YES you can make a profit that way. After you have worked 4 X as hard, have 2X as many clients and worked 3 X as many hours as the other.   

The two main ingredients in this business is NETWORKING and DIVERSITY, today's new billing company must have those two things or they will not make it.

Navigation

[0] Message Index

[#] Next page