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

Business Pricing ?

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AllAboutU:
I have a business model for my pricing that incorporates my overhead and generally the time it will take me to complete everything. I have been using the formula's Michelle and Linda teaches. I have always had providers that are established.

Here's my dilemma: I have 2 brand new practices that are considering coming on board, brand new to where they have NO revenue for me to base my pricing off of. I was thinking of a sliding scale to include my overhead, but I am at a loss of what to charge. I have done the math and I refuse to bill anyone a percentage per claim, I would loose too much money. I also do not want to scare them away with my hourly fee once I have broken out the cost of my overhead and where I'd like my salary to be. In taking on these two companies, I will have to think about hiring at least one person as I already have 3 other providers. I'm struggling can anyone add any insight. I would not expect to have to work very many hours since they are a startup and they only need billing / posting.

I was thinking percentage of monthly revenue to be reassessed again at the $10k mark:
Company's revenue is $0-$5000 my charge would be 20% of that
Company's revenue is $5001-$10,000 my charge would be 35% of that

Thanks for any help. I really appreciate all of you!

Michele:
It is always difficult to calculate a fee when the practice is a new one.  What we try to do is to estimate how much business they expect to do, compare that to another similar client and calculate our fee that way.  With new providers we also set up a re-evaluation at 3 months.  That allows us to determine if we are on track.  Also it is good for the provider as well to ensure they are not overpaying. 

I am surprised by your figures below.  Most providers are used to paying a % on what is collected (even though it's not a good method) and 20% - 35% of revenue seems high. 

AllAboutU:
Thank you Michelle for your reply. I was thinking of total monthly revenue as a way to capture my expenses for this provider. I was thinking to charge this method for just a couple of months and then review with them where we stood in terms of pricing. My thought is that if I charge based on total revenue received it will cover expenses and the hours it takes as I would be doing more than just collections for them. I like your method, I will try that. I have a meeting with them tomorrow, we shall see. Thank you again for your help!!!!

Michele:
Good Luck!

PMRNC:
I look at my time same as Michele and my flat fee never discloses my hourly rate.. the sliding scale is for new patients so that would even out as the client gets busier. I agree with Michele those figures seem very high.

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