Craft an effective pricing strategy for your chiropractic office

An optimal pricing strategy balances profitability with patient satisfaction, attracting and retaining a loyal clientele.

Yet, few resources offer a comprehensive how-to guide for DCs on creating an effective pricing strategy for their offices.

Know your demographic

Before embarking on the journey of creating a pricing strategy for your practice, it’s crucial to understand your demographic. EHR software provides insightful reports that break down demographics. It’s not uncommon for a practice owner to assume their demographic is male 35-45 and paid out of pocket, only to be surprised by the actual data. This understanding of your target market is the first step in crafting a pricing strategy. By identifying and segmenting your potential and existing patients based on demographics, such as age, gender, income, location, health conditions and insurance coverage, you can feel more informed and empowered in your pricing decisions.¹

Analyze costs

Understanding your costs is crucial in setting your prices. Calculate fixed costs (rent, utilities, salaries, etc.) and variable costs (supplies, marketing, etc.). For instance, to calculate your fixed costs, add up your monthly rent, utility bills and salaries. To calculate your variable costs, consider how much you spend on supplies and marketing each month. Knowing your break-even point, the minimum revenue needed to cover expenses, helps you set a baseline for your pricing. You can use this online calculator to determine your cost of doing business (break-even point).²

Fair market value

Charging fair market value (FMV) ensures your pricing is reasonable and complies with the rules and regulations. In simple terms, FMV is the price a willing buyer would pay to a willing seller when neither is under any compulsion to buy or sell and both have reasonable knowledge of the relevant facts. Nearly every healthcare business transaction must be based on some measure of fair market value. Setting a transaction at fair market value attempts to ensure the price paid will be comparable to that which unaffiliated third parties would typically pay. The ZIP code of all healthcare providers in that area determines FMV for services. Two great resources for determining your clinic’s FMV are chirocode.com and fairhealthconsumer.org.³

Review provider contracts

Have you signed contracts for less than what it costs to deliver care? You must read your provider agreements and understand every stipulation you agree to with your signature. For instance, if you sign a contract that doesn’t cover the cost of a procedure you regularly perform, you may end up losing money every time you provide that service. Far too often, DCs find out well after the fact that a procedure regularly performed in the practice is not covered or bundled under the terms of the contract. Additionally, providers may choose to add a new service or product, such as spinal pelvic stabilizers, and find that their provider agreement allows for reimbursement in the fee schedule at a level lower than the cost of the product or service.

If you are getting paid less than your cost to deliver care, double-check your demographics. In one case where a payer was paying us less than the cost to provide care, we found they were our top referral source; those patients had the highest patient visit average and were paying out of pocket for services after their insurance benefits were exhausted. We chose to stay in-network. Be sure you are looking at all the key data before making a decision.⁴

Communicate your value

Transparent communication about your pricing and the value you provide is not just a strategy, it’s a commitment to your patients. By clearly explaining what makes your services unique and worth the price, you can build trust and value with your patients. Use testimonials, case studies and statistics to demonstrate success stories, making your patients feel valued and confident in their choice of your services.

Outline your fees, including any additional costs for special services or products recommended in your treatment plan. Providing a formal financial report of findings to your patients helps eliminate confusion and anxiety about the cost of care.⁶

Profitable discount strategy

Even patients with health insurance are not immune to the burden of healthcare costs. Nearly half (48%) of insured adults worry about affording their monthly premiums, and many rate their insurance coverage as “fair” or “poor” regarding premiums and out-of-pocket costs. Moreover, about half of adults could not pay an unexpected $500 medical bill without incurring debt. So, how do you help patients have access to affordable care while following the rules and regulations and remain profitable? Consider a discount medical plan organization (DMPO) for your practice.

A DMPO offers discounts on healthcare services. It may allow members to save money on services not adequately covered by a health insurance plan. DMPOs are regulated by the departments of insurance in most states. While a DMPO is not health insurance and cannot legally replace health insurance, it can bridge gaps in health insurance coverage. Look for a DMPO that allows you to set the discounted rate for your patients, not a rate set by the DMPO, to ensure your practice remains profitable.

Monitor and adjust your pricing strategy

Your pricing strategy should not be a one-time decision, but a dynamic and responsive plan that adapts to changes. Regularly reviewing your fee schedule, at least annually, is a proactive step that keeps you in control of your practice’s financial health. As everything around your practice is changing, such as your costs, your salary, what other providers are charging, what insurance is allowing and many other economic considerations, this regular monitoring and adjustment will make you feel more in control and confident in your pricing decisions.

Final thoughts

Rising healthcare costs are a significant concern for many Americans, including those seeking chiropractic care. Don’t let the cost of care become a barrier to care. Creating an effective pricing strategy requires a deep understanding of your market, costs and the value you provide. By following these guidelines, DCs can develop a pricing strategy that balances profitability with patient satisfaction, ensuring long-term success for their practices.

KRISTI HUDSON is a certified professional compliance officer (CPCO) and VP of Business Relationships for ChiroHealthUSA, a DMPO, where she has helped educate DCs and CAs on establishing simple and compliant financial policies. She also serves as the Vice Chair of the Chiropractic Future Strategic Plan. You can contact Kristi at Kristi@chirohealthusa.com, or visit chirohealthusa.com.

References

Hashimoto N. How you can increase your practice’s profitability. Chiropractic Economics. June 13, 2023. https://www.chiroeco.com/how-you-can-increase-your-practices-profitability/. Accessed August 30, 2024.
Necela T. Setting Chiropractic Fees For Maximum Profitability (Part 2). The Strategic Chiropractor. https://strategicdc.com/setting-chiropractic-fees-for-maximum-profitability-part-2/. Accessed August 30, 2024.
Lefko, L. Fair market value in health care transactions. World Services Group. July 2007. https://www.worldservicesgroup.com/publications.asp?action=article&artid=2086. Accessed August 30, 2024.
Foxworth R. The high cost of not focusing on your fees. ChiroHealthUSA. November 2017. https://www.chirohealthusa.com/providers/the-high-cost-of-not-focusing-on-your-fees-2/. Accessed August 30, 2024.
Salazar R. Are you communicating value to your patients? LinkedIn. November 2019. https://www.linkedin.com/pulse/you-communicating-value-your-patients-rafael-salazar-ii-mhs-otr/. Accessed August 30, 2024.