Allied health business owners often have hesitations in reviewing and adjusting their fees. Many probably don’t know how to identify the increases needed and, ultimately, have a hard time justifying and explaining these changes to clients and even to themselves. This episode will help you make informed decisions on fee reviews and adjustments you need in your practice today.
Increasing your fees to get positive results in your business
I have also been through this predicament of fee increases when I had my private practice. It surely wasn’t an easy task but going through the process has made a tremendous positive difference in my overall business. I want you to experience the same benefits when I made these changes in my practice.
Armed with knowledge about reviewing and adjusting your fees the right way will empower and inspire you to work on implementing this process in your business. I will share my knowledge on some of the biggest bits I’ve experienced and have heard and understood from other allied business owners to help you get started on the right track.
Problems and challenges on increasing your fees
In my coaching sessions, there are 3 common problems and challenges I hear about when business owners increase their fees. Private practice owners are a little nervous to put their fees up because they need to justify and explain this to clients and their team and they are a bit uncertain whether clients will be able to afford it. In my opinion, these feelings are, most often than not, a result of over-thinking.
- Practitioners are putting up fees by $5
When I had my private practice, we put our fees up by 5% every first of July, the start of our financial year in Australia.
But nowadays, some allied health business owners are putting fees up by a fixed rate of $5, which really isn’t too bad for your business if you’re charging $100 per hour. That’s roughly a 5% increase from your original fee.
However, if you’re charging above $100, that’s going to be well below the 5% mark.
- Managing the gap between the payments of self-funding clients and clients who have funding schemes behind them. This factor might be a bit more relevant to my Australian listeners. In Australia, many disabilities have NDIS funding but quite often, business owners are charging their self-funding clients a lower rate. My experience with NDIS putting their fees up significantly is really widening that gap.
- Allied health practitioners aren’t doing it the proper way Practitioners potentially aren’t sitting out there with a calculator doing their maths. There is a proper mathematical way of doing things to be able to critically think and have a look at the profitability of their services and prices.
- Practitioners are putting up fees by $5 When I had my private practice, we put our fees up by 5% every first of July, the start of our financial year in Australia.
Introducing a new fee structure with the right timing
The end of every financial year is the ideal time to introduce a new fee structure. It gives you a hole financial year at a level playing field with set predictable anticipated fees. Budgeting and cashflow forecasting will then be much easier to handle.
Ideally, you should start reviewing your fees 5 or 6 months prior to the fee increase. At 3 months before the implementation, it is recommended that you advise your clients to expect these changes.
Don’t panic if you’re working on shorter time frames, it can still work. It’s really all up to you.
Benefits of a fee review
A fee review is a good chance to have a look at your numbers and make well-informed decisions about shifting your pricing model as required. One of the most important benefits it can give you is the opportunity to look at and examine the profitability of all your services. It gives you the chance to have an eye-level view at the services you want to be providing, the services your clients want to purchase, and the services that referrors may be hearing about that nobody else in the market is offering (which is a possible niche opportunity for you!)
The process may be a bit tedious but you will certainly reap the rewards of it. It will give you the ability to look at which services are or aren’t working from a practitioner delivery point of view and a workflow customer service or admin point of view.
Reports you will need in the process
Reports will definitely be needed as you go through the review. And it’s important to know where these will come from – probably some from your practice management software and business finance software. Every single system is different and will produce different reports that you’ll need. I suggest to print these out on paper. It’s so much easier, in my experience at least, to have a look at the whole gamut of data in one big piece.
Starting the project with the goal of improvement in mind
One thing you need to ask yourself is: How can we improve? How can we improve our service delivery and our client delight and outcomes? How can we improve as a team in delivery and as a business owner? How can we improve the profitability, elegance, and practicality of what we are doing here as a business?
Thinking about doing it is just the first part. Working on it, adding it to your to-do list, and booking time into your diary to start this project is the most essential thing you need to do.
Allied health professionals are known as masters of task analysis. We are so good at pulling things apart and analyzing the steps. Let’s repurpose those incredible clinical skills into helping us better understand, review, and adjust the prices we have attached to our services.
Here are some things that you need to look into:
To work out profitability, you will need reports, a good working knowledge of the real truth, reality check time it takes for your clinicians (or yourself, if you’re practicing) to deliver the services and get paid for it. Also work out the time it takes to deliver an assessment, finish a 60-minute session, write a document and attend a meeting. Don’t forget to include the admin and customer service element of delivering the services.
I know of several businesses who have run down the dirty, nitty-gritty statistics. And I am quite confident that, like them, you will find those statistics interesting and informative. They may not be the numbers you want but they’re the numbers you have and you should love them. Approach the process with a mindset of growth and a spirit of continuous improvement.
- Time-based Billing
I also encourage you to think about time-based billing. Pull your numbers right down to your dollar per minute and build out your services based on multiples of that time. Think about the loadings you have on shorter sessions and on offsite community-based ones.
Explore the idea with your calculator and look at a time-based model for services and see how it fits. You’ll definitely get an idea if it’s for you or if there’s another way of doing it. Trust your business call on that.
- Mapping the new path of the fee change
Have a think about long-time clients who are in a lower fee and have not scaled up with you. Some questions you might be asking are: How are you going to bring them along with a lift in fees? Are you going to give them the same or are their fees going to increase? What about other income streams that you get from other agencies – where are they fitting in the spectrum of your fees? How far apart is your fee range? How tight is your fee range? Have a look at the effect that “percentage increase” will have on everybody. Whose fees can you technically adjust?
One of the main ideas you need to think about too is how to get everyone in a much tighter fee range. I know of so many business owners who are currently working really hard to have a single fee for all their clients. This was certainly my mission when I had my business. I eventually got there but it took a bit of time and went through it in staged phases.
- Assessment services, group services and travel
While doing all this analysis work, also look into and pull apart your assessment services, group services and look at travel. How are you paying your therapist to travel and how are you billing it out?
The big word I’ve got here is consistency. Be consistent with your cancelations and the fees that you charge for all the different products you offer.
The overall positive impact of a fee review and adjustment
As with any project, there is always light at the end of the tunnel. And in this instance, it’s clarity. You’ll gain clarity in many parts of your business such as your profitability, your customer service and your future both financially and profit-wise.
It’s also an opportunity to ask yourself – “what if?” What if we change our assessment package, our services? What if we constantly apply our cancellation fee, what is that going to mean? What if we decided that there are certain fees offsite, stick to that and be firm on rules? What if we charge fees that we are worth? What if we charge the fees that really support the amazing outcomes that we get with our clients?
You will also have a really good impact on the following by doing all the work of levelling up your fees and bringing in a fee range:
- A better view of your budget and how it will look like in the next financial year based on an adjustment of fees. Better visibility of your cash flow forecast and the cash you can anticipate coming into your business based on a fee adjustment. Both of which are reports that your bookkeepers and accountants can assist you with.
- A lot of people are going to think it’s going to be easier, comfortable ethically, referrors are going to love it.
- A good impact on your team, your independent contractors and their contracting rate and performance, and your employee team. Lovely opportunities will emerge in terms of how they deliver the services.
- Ultimately, it will impact your personal and business financial sustainability.
All this will be at arms reach if you do the work, understand it and make the best possible decisions based on that. The hidden side of the business doesn’t have to be difficult. It just has to be given your precious time and the right mindset. Get the right guidance around you and work through it systematically.
You got this!