Strategic Pricing: The Key to Transparency & Profitability
Read time: 3 minutes
As consumers get more savvy about healthcare spending, providers need to balance transparency and profitability.
Providers are no longer the sole owners in the healthcare reimbursement market. With price transparency making its way into healthcare, many consumers are shopping around to find the best out-of-pocket costs for procedures. So, how do you strike a balance between maximizing revenue and satisfying patient demand for transparency?
First, understand where your patients are coming from.
Many have rising deductibles, which makes care decisions more value-driven and shifts the focus from convenience (e.g., the local primary care physician) to getting the most bang for their buck. They’re also doing their own reimbursement research using fee schedules and procedure lists published by the Centers for Medicare & Medicaid Services (CMS). This research validates their requests for bigger self-pay courtesy discounts, which are often higher than CMS reimbursement.
Next, understand how to use procedural margin to your advantage.
Procedural margin is about more than factoring in wRVUs, PE, and MP as a cost baseline; it’s about understanding how to maximize across your procedure library without overindulging.
To raise prices a flat percentage across the board often creates an artificial net revenue growth that doesn’t trickle down to the bottom line. The same is true for setting a fixed percentage of a baseline fee schedule (e.g., 200% of Medicare). Understanding which procedures are price-sensitive, then strategically moving prices to maximize reimbursement is the most effective way to manage price transparency and the revenue side of margin support.
Without knowing your competitor’s prices and fee schedules, you need to determine the minimum price to remain financially sustainable and adjust from there. The best way to find it? Analyzing your contracts and fee schedules.
Before you can start adjusting your pricing or reimbursements, you have to fully understand your payer mix and know which levers will result in the most reimbursement. To do that, your fee schedules have to be in a format that enables quick and insightful analysis. The bottom line: Take the time to invest in organizing, structuring, and analyzing your fee schedules.
To learn how Rivet can help you organize, structure, and analyze fee schedules, request a demo today.