Discussion and Comments

Setting Your Fees

Setting your fees can be just as important as your location, your business name, and your style of practice. If your fees are too high for your locale, it may deter potential patients from considering your services. On the other hand, if your fees are too low, you will not survive long or at least not thrive in the world as we know it.

So, how do you figure out your rates, especially when opening your first clinic?

There are a number of factors you must consider when making this decision: the lifestyle and income level in your area, the going rates of other practitioners in your area, the amount of money you need and want to be comfortable, and what you think the value of your products and services actually is.

What’s the going rate in your area?

First things first. Before you do anything else, find out what the going rate for acupuncture is in your area. In Section 1, Chapter 3, about things you can do to build your practice while you’re still in school, we discuss the fact that this task can and probably should be done before you ever get out of acupuncture college.

If you are or will be the only acupuncture practitioner in your town, find out the prices in two or three neighboring towns.

This is an easy task that can be performed in an afternoon. With pen, paper, and the Yellow Pages (or an Internet connection), jot down a list of all of the practitioners in your neck of the woods.

Then, one by one, go down the list and call them.

$100 x 50 patients =

$5000

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Introduce yourself as the new acupuncturist in town. Don’t be shy. There are more than enough patients out there for all of us to share. One new practitioner only increases the number of potential converts to our wonderful medicine. You should, therefore, be up-front about what you are seeking. Tell them that you are trying to figure out your own fees and ask what they charge. After they answer, ask them how people react to their prices. Are their patients easily able to pay and continue with treatment, or do they notice that sometimes patients balk at rescheduling for “financial reasons?” If this is too scary, get a significant other or friend to call and simply ask for the rates at each clinic.

Once you have contacted your peers or someone has done it for you, take some time to digest the information. In general, what is your impression of the numbers? Do they seem too high for the area you are in or too low? Perhaps they only seem high to you but are the usual and expected fees in your town. Also, are there different rates for different payment types or are people offering a payment at the time of services discount (which is not legal in all states)?

Other practitioners’ numbers may or may not be a factor in how you set your rates, but you need to know this information. If nothing else, you have introduced yourself to everyone else in the area. These practitioners are your colleagues and you may come to rely on them in the future for referrals, for covering your practice when you are out of town, or for a bottle of herbal medicine that you need for a patient but your clinic has run out.

How much is too much? How much is too little?

So what do you feel comfortable charging? What can you bill to your patients and not feel guilty? If you are charging more than what you believe your services are worth, it will come through

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in your body language and your voice, and patients or potential patients will think them too high as well, even if the rates are really quite fair.

If there is a maximum value for your services, does this number come in under, over, or at the rates of others in your area? Be careful here. Many Oriental medical practitioners tend to undervalue their services from our point of view and that will not serve you or your patients in the long run nor help your practice grow. If you don’t feel comfortable charging as much as the other practitioners in town, this may have nothing to do with the real value of your services. There is such a thing as charging too little. If you charge extremely low rates,

undercutting all of the local competition, or you provide no-cost treatments, you may find that your patient load slowly decreases into nonexistence. Why is this?

People assign worth and value to things based on what they cost. It is logical to believe that something more expensive must be better. Take, for example, the experience of purchasing a new vacuum cleaner. There you are, standing in the aisle, staring at 15 choices. Some of the vacuums have extension wands, some of them are bagless, while others have a cool little light on the front or hypoallergenic filtration. Of course, the first thing we do is whittle down our choices to include only the ones that have the features we need and believe to be valuable in a vacuum cleaner.

The next step in the process comes down to price. At one end is the least expensive; at the other is the most expensive. At this point, research has shown that most people involved in any buying decision will start discarding choices based on the price.

“Do I really want to buy the cheapest one?” “Why is it so

inexpensive?” “Maybe it will break quickly and I will be back here again paying for repair services.” So away go the one or two least

expensive choices. Those will be discarded first, before the ones that are too expensive!

At the other end of the spectrum, we have the BMW, Mercedes, and Lamborghinis of the vacuum world. They are sleek and shiny, have huge sucking power, and boast not just one light, but three. “Do I really need all of those bells and whistles? That red one won’t make me vacuum any faster or better. Plus, it’s so

expensive.” And away go the two or three most expensive choices.

What we are left with now is a realistic selection of comparable items all within a few dollars of each other. We can pick the one at the low end, the high end, or just take the one right in the middle. It won’t matter because now the playing field is relatively equal from the point of view of price.

The point here is that, if you are the vacuum at the low end, you are likely to be immediately discarded as too cheap or possibly ineffective. Of course, there are some few who will gladly accept the cheap services you provide. But if a new client who has never heard anything about our industry decides to call around and consider several practitioners, they may decide that your fees are so low there must be something wrong with your services. They will assign less value and worth to you and your services and ultimately choose a higher-priced practitioner because of the perception of value. In the end, most people will make purchasing decisions based on perception of value and trust, not strictly on price.

Consider another example. Most of the people we know are not driving around in the least expensive cars on the road.

Otherwise we’d all be driving Yugos and Kias. We buy a car based on a complex set of perceptions and beliefs that include a wide variety of issues. Price may be among those concerns, but not really that high up on the list compared to many other

issues. The same is true of how we purchase health care services.

People don’t want cheap health care. They want trustworthy, caring, reliable, and effective health care.

There are yet two other things that you need to consider here.

First, it is well known that your personal income will be the same as that of your average patient. If your patients all make

$25-$40,000 per year, that’s what your income will be as well.

That is one of the reasons why we suggest that you check out the financial demographics of any town in which you plan to set up a clinic. It may be wise to pick a town or area where the median annual income is $75-100,000 if that is how much you want to take home. Second, it is a proven fact that people who are not charged at all or who are charged very low fees rarely get well as quickly and completely as people who are charged more.

PRACTITIONER POINTER

“When working with a local fire department to get my employees CPR certified, I decided to pay for the cost of the training. My thought was that if there was no cost to the employees that they would have no excuse for not getting certified. What happened was a disaster. Of three classes offered at different times on different days only three of 80 employees showed up. The rest called in with stories of car problems, or ‘I forgot.’

Two months later I posted sign-up sheets in the employee break-room offering CPR classes for a cost of only $5 per person. As before, the classes filled quickly. To my surprise, I had a 100% employee turnout. Why? Because even though the class was only $5, that money meant something to those employees. They had a stake in their future, and had to reach into their own pocket in order to attend. They had assigned value to the class—monetary value.”

—Anonymous

That means there is some relationship between placebo effect and money paid for services rendered! If your clinic is lovely, your treatments good, your customer service better than just adequate, and your bedside manner compassionate, you may actually get better clinical results if you are charging a little more for your treatments than if you are charging too little. It bears repeating that people don’t want cheap health care; they want effective, compassionate healthcare from someone they trust.

How much money do I need?

Have you ever thought about what it would be like to do, mostly, whatever you wanted, whenever you wanted to do it with regards to your finances? Pay all your bills on time, retire your student loans in half the time required, take those weekend trips without four months planning and

saving, or repair your clinical equipment without having to forego a monthly paycheck. Who has not dreamed of living the life of the financially well-off or at least financially stable practitioner?

So what would it take to get there? We want to take you through an exercise to determine how much money your clinic needs to generate per hour to grant you the paycheck you deserve.

Set aside any of the numbers you have come up with to this point, and now let’s look at how much you need to make in order to live the life you want. For this exercise, we are going to use a few worksheets that you can find on the companion CD Rom. You can see an example of the last page of these worksheets on the next page, but we suggest you go and print these out and fill them in with pencil as we discuss this information.

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“O money, money, I’m not necessarily one of those who think thee holy,

But I often stop to wonder how thou canst go out so fast when thou comest in so slowly.”

—Ogden Nash

We’re going to start with the desired end result. How much money do you need for personal expenses per month? Or how much do you want? $4,000? $10,000? What’s your number?

This has to at least cover your expenses at home, including any student loans, car payments, bills, and the like.

Take your desired income and enter it on the income line for your clinic budget. Now, take a moment and fill in the other budget items: clinic rent or lease amount; building, general liability and malpractice insurance; supplies including needles, herbs, cotton balls, etc; utilities; phone; Internet; and be sure to add in the cost of front desk help.

If you do not already have a clinic, then use the following figures to help you get started. The going rate for beginning reception help is between $10–12 per hour. If they are working 40 hours per week, then you can use something between

$400–480 per week. On top of this, figure you have to add 7.65% (FICA) and usually around 2-3% unemployment. If you are planning to provide employee benefits, then add that in under their salary amount, after tacking on the taxes, etc.

Now, add up all of your figures (including the front desk wages for a month) and multiply that total by 12 months. The resulting number is your overhead for one year. High, isn’t it?

Don’t panic yet. We are going to break this down into

manageable bites as we go down this form. The next step is to divide your yearly overhead by 50 weeks. I say 50 because you do want some vacation, don’t you? If you are planning to take more time off, then use the remaining number of weeks to divide into your yearly overhead.

How many hours per week are you planning to work or do you presently work now? Are you a part-time practitioner at 20

hours per week? Or do you work full-time at 35–40 hours?

Divide your weekly overhead by the number of hours per week.

Ta-dah! The number you have before you is the amount of money your clinic needs to produce each hour.

Where does this number fit when compared to the results of the previous questions in this chapter? Is this required income per hour higher or lower than the average treatment price of other practitioners in your town? Will you have to see two or three patients per hour to get there, or can you meet your hourly overhead with one patient every hour and a half? The answers to these questions will also have a lot to do with how many

treatment rooms you have available and, therefore, how many people you can see per hour. If you do lots of massage or tui na, you may only be able to see one patient per hour. Also, if you have access to only one room, then you are definitely limited in the number of people you can see and your cost per treatment may need to be higher or you may need to consider moving.

Remember, however, that your clinic can and should generate income in other ways besides just the treatments that you give.

You may have a room to rent out one or more days per week or during the evening. You can and probably should have product lines that you sell in your clinic, whether Chinese herbal

medicine, skin care products, nutritional supplements, books, or something else. Just as it is difficult to balance on a chair with only one leg, your clinic and personal budget will be easier to balance with more than one source of income.

Keeping a budget

As your practice grows, we suggest you keep very careful track of where you actually are financially in relationship to where you’d like to be. Keep a log of expenses, income, and net worth each month or each week and compare it to your financial goals.

Every day you should have in your mind how many new patients you need to see and how many bottles of whatever you sell in

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your clinic you need to sell to reach your goals. If you are short by one or two patients per week, take actions to bring in those one or two more. Visualize a full patient load. Call your inactive patients to see how they are doing or take some other marketing step to fill in your empty clinic spots. See Section Four below on

marketing for other ideas on how to fill up your appointment book. The act of staying conscious of where you are in relationship to your “dream” budget will help you realize that dream.

On any month that you are doing better than your budget, either use the extra cash to pay some extra on any debts you may have, put the money into savings, hire that person you’ve been meaning to hire to manage your front desk, or buy

something to help you grow your practice, such as a new clinical tool, better treatment table, or new carpet.

Keeping a budget requires some attention to detail, but you will be surprised at the fact that it will actually help you reach your financial goals to know where every cent you make is coming from and where each one you spend is going.

What about a sliding scale?

Many public clinics, like Planned Parenthood or other social service style clinics, base their fees on a sliding scale related to the patient’s income. This is usually tied to the federal guidelines for what is considered above and below the national poverty line for the size of your family. However, if you bill insurance, you must charge all patients who receive the same service the same fee. Otherwise, you may be prosecuted for insurance fraud. The only exception to this is if you decide to have a formal hardship waiver, which stipulates in writing at what income level a person qualifies for a reduced fee based

“By no means run in debt;

take thine own measure.

Who cannot live on twenty pound a year, cannot on forty.”

—George Herbert

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on economic hardship. While this sounds easy and straight-forward, it means that you have to have some way of

determining what your prospective patient’s income actually is.

The point is, if you are going to offer some kind of discounted services due to economic hardship, there have to be written guidelines which are equal and transparent to all. You cannot arbitrarily offer one patient a discount because you feel sorry for them and not offer the same discount to another patient in the same or similar financial situation. See Section 3, Chapter 2 for more detail about sliding scale fees.

What feels right?

This is the last step. If you have done your research, asked your

This is the last step. If you have done your research, asked your