The best way to update pricing for your medical practice

Many doctor’s offices work hard to have direct relationships with their patients and offer personalized, high-quality services. Sooner or later, your medical practice will reach a point where your prices no longer reflect the value you provide to patients, and you’ll have to consider increasing your fees.

While you may want to put it off, delaying price increases can cause short- or long-term damage to your medical practice. But with a thoughtful strategy, careful planning, effective communication, and transparency, medical offices like yours can navigate the process of raising prices and ensure your practice’s long-term stability and growth—as well as patient satisfaction.

How do medical practices set fee schedules?

All medical practices have a fee schedule with prices for different medical services and procedures, such as office visits, diagnostic tests, surgeries, and other treatments. Reviewing Medicare allowances is a great starting point for determining the fees for different procedures, because they provide standardized procedure pricing. Charging less than the Medicare allowance means that your medical practice is underpaid and losing revenue, while charging drastically above the average can make patients feel like they’re overpaying.

To set fair fees, use Medicare allowances as a base, then add a markup. It’s standard for a family medical practice to charge 150%–200% of the Medicare allowance, while specialists may charge up to 300%. 

Best practices for setting medical care pricing

Here are some tips and best practices for setting medical fees:

• Stay consistent with your local market. Your fees should be similar to those of competing medical practices in your area. 
• If your practice has multiple physicians, choose a uniform fee schedule (or tier by specialty). If you have doctors with different experience levels and specialties at your practice, set a fee schedule by specialty or by tiers that reflect their experience. 
• Look into self-pay and “pay now” discounts. If you offer these discounts, be transparent to avoid confusion and ensure that patients feel like they’re all paying a fair rate. 
• Consider your insurer contracts. Read all insurer documents thoroughly to understand their roles, responsibilities, and implications.
• Increase prices incrementally instead of suddenly. Price increases should be gradual to avoid a negative impact on patients and transparent to accurately set expectations.

Reasons to raise your practice’s rates

Increasing rates is a standard strategy for growing any business, including a medical practice. Here are two of the most common reasons to raise rates:

• Keep up with inflation: Medical practices have high (and growing) operating costs, like office rentals and expensive medical equipment. Inflation increases these business expenses, and not increasing rates in turn will decrease your profits.
• Increase staff pay: Medical practices have teams that include receptionists, nurses, and other medical experts. It’s standard to conduct annual performance reviews and give raises to staff to show appreciation for their hard work—and to help them keep up with the rising cost of living. Growing medical experience and professional skills should be compensated fairly.

How to change prices at your medical practice

Raising prices may feel like you’re giving your patients bad news. But doing it transparently and with adequate notice can maintain trust and foster positive relationships.

Here’s how to determine new pricing and communicate new fee schedules to patients:

1. Determine a fair price increase

In addition to looking up Medicare rates, research what your competitors are charging. Make sure you are comparing apples to apples by researching doctors with the same experience and specialty. Then, think about your practice’s current patient base. For example, if your practice is at maximum capacity with a growling waitlist, you can raise your rates without worry because demand is high. If the schedule has gaps, it might be best to increase prices only slightly. 

2. Communicate changes to patients

Communicate fee changes clearly and well in advance. If the increases are drastic, give patients a 4–6 week notice so they can budget accordingly or schedule an earlier appointment under the old rate. For smaller changes, a shorter timeline might be acceptable. 

Send your patients email notifications with follow-ups. Reach out again via courtesy calls to inform patients who may not have read the emails. Make sure to post multiple signs with bolded titles in the reception area and on your website. And finally, if you have a receptionist, ask them to communicate the new rate to those who call to schedule an appointment over the phone.

3. Don’t get discouraged

While many patients will understand and even support a rate increase, some will be frustrated and leave your practice. Unfortunately, that’s completely normal. Remember why you are increasing your prices: to serve your community better and deal with increasing business costs. You can’t provide medical care if you can’t stay open.

4. Continue providing exceptional care

Even if your medical practice does experience a dip after you roll out new prices, remember that it’s only temporary. If you continue to provide exceptional service and medical care, you’ll keep attracting and retaining new patients. Focus on prioritizing relationships with longtime patients who are likely to advocate for your medical practice. This long-term approach will help attract more loyal patients. 

Increasing prices is a natural part of managing a business and is necessary to continue to grow and provide your patients with better care. When it’s time to raise your medical fees, ensure you’re honest and transparent, and give your patients plenty of time to plan ahead. Managing this process well will help retain and attract new, loyal patients while you continue to grow your medical practice.