4 Concepts To Consider In Charging Your Medical Services | Episode 13

Hey everybody, welcome to the Practice Profit System. And today on our podcast, we're gonna answer the biggest question of all time. What should you charge for your medical services? Yeah, this is a good one. Get ready. I'm about ready to rattle a few cages. Thanks for joining us on the Practice Profit System. All right, everybody, it's Matt. Let's talk about this topic. What in the world should you charge for your medical services? Now, in the context of this, I wanna understand, let you understand We are talking about what do you charge for your cash services? Now, here's one of my favorite things that I hear all the time. I travel all over the country. I'm at a lot of events. I talk to a lot of doctors. And what I hear all the time, the big question that I hear doctors at— one of the big questions, not the biggest question. One of the bigger questions that they say is they talk about price. And doctors inherently don't want to be viewed as greedy or salesy or anything like that. And so inherently what they do is they charge way less for their services than they should. And then on top of it, they've been beaten down by the insurance industry. They think that they really aren't worth that much. You know, once you start getting paid $703 for an ACL reconstructive surgery or $500 for delivering a baby vaginally or $600 for a C-section or $29 for an office visit, you know, you really start to think in the back of your head and your subconscious, That you're really not worth all that much. And so you have to overcome this. We'll talk about that probably in another podcast, but let's just talk about how we come up with pricing or how doctors come up with pricing. There are a couple of ways that doctors come up with pricing. The first is they ask their friends. So I get this a lot in the regenerative space and they go, well, how did you come up with your pricing? And this happens, by the way, in functional too. And it happens in, it happens in all. So it's not just, this is not just in the regenerative space. I should clarify that. And so what they say is they go, well, I was at an event and I was hanging out at the bar, or I was talking to some of my friends, and we're asking— I was asking them what do they charge. And like in the case of Regenerative, he goes, you know, some guys are charging $950 for PRP, some, some folks are charging $650. So I just kind of put in the middle. I decided to come up and charge $790. That just felt like a good place to be. To which my answer is, I wanna make sure I get this right. You asked a bunch of dead broke doctors who know nothing about business and nothing about pricing and who can barely make payroll what you should charge for your services. And they kind of look at me and they go, oh, I see your point. Going out and checking and see what your competition is charging is actually the worst way to figure out what to charge for your medical services. Why? Well, it doesn't matter what your competition is charging. We're not in a price-sensitive industry. That's a business term. It's not like we're Walmart. Nobody wants discounted healthcare, right? So here's another way that people come up with pricing. A recent study said that the average price for a PRP procedure nationwide was $1,100. So then people want to point to that. See, Matt, the average price for doing a regenerative PRP injection is $1,100. So you're being greedy by telling doctors to charge $2,500. Here's the problem with that study. The study is inherently flawed. Now, if you really think about what goes on in medical studies, you have to start with a very basic premise, right? We're basically trying to figure out, prove or disprove something, or figure out the answer to something, right? That's the big— any study starts with this concept of, okay, we want to study the impact of X, Y, and Z on the outcome for whatever. Okay. And so what you do is you take a look at this and you do it. You have a couple of different variables that you're going to test. You could test a cell count of this, cell count of that. You could test, you know, the type of injection. You could test a bunch of different things. You can test the health of the patient. There's a bunch of different factors that you can test. And you have these control groups. And what you do is you then have to track the results over time in order to get a scientific result. Well, the problem with this study that says Well, you know, they, they did a survey around the country and they said the average price is $1,100. Here's why the study is inherently flawed. Imagine if you asked a group of people on public— let's say we wanted to find out what does it take to become a billionaire? Okay. And let's say we wanted to find out what it would take to become a billionaire for people that grew up on public assistance. Okay. Well, if we went out and we asked a bunch of people, who were on public assistance and were still on public assistance and had never been a billionaire, and we asked them what it took to become a billionaire or become a multimillionaire, their answers would be flawed because they didn't have the result, right? They didn't know what it took. If I went to a group of people that grew up on public assistance and they had become multimillionaires, and we asked them what it took to become a multimillionaire and to get off public assistance, then guess what? We would get really good data. Well, the problem is the people that we were asking this question of about what's the average of what you charge, they're the people in that study that are public assistance that aren't multimillionaires. They don't know what their market can really stand. You're starting with a flawed concept. You're asking doctors that know nothing about business. Let's assume they know nothing about business because they don't get any training on business. Maybe some in that group knew more. Maybe some knew less, but they don't really know. All right. They never factored in the equation for their business skills or medical training. There was nothing revealed as to whom the doctors were offering the services to. Okay. Because what you can sell your services to the right type of customer, the perfect type of customer is going to be dramatically more, probably 5 to 10x more than what if you were selling it to somebody who was not your perfect customer. So all of these things factor into the equation. So how do we know what the best price is? What do we want to know? We want to know the best price and what do we want to charge? Well, simple. The best thing to do is follow the science of pricing. Now, in our events, we always talk about this, but the best thing to do is work backwards using basic business principles for pricing. The first basic concept is the concept of cost of goods sold. Well, what is cost of goods sold? The cost of the goods sold is everything that goes into the production of the thing. This shirt that I'm wearing, right? It's from Lululemon. Okay. You don't wanna think of it so in the pants anyway. So this shirt comes from Lululemon. It's obviously a very expensive shirt. Why? Because the materials that they use to make the shirt are of higher quality than something that you would buy at Old Navy. So therefore this shirt is more expensive. I don't know. This shirt's probably $90 or something like that. Which means that their cost to produce it was about $45. Whenever you see a shirt, it's usually marked up 50%. It's, they usually double the price. That's how it works. If you're in a restaurant, cost of goods sold are about 60% of what the food is. So if you pay $10 for a burger, that means the total cost to produce that burger was $6. That doesn't factor in staff usually. Well, most people go, well, gosh, I only pay $2.50 for a kid. I can charge $7.50. But what about your malpractice? Yeah. What about the front desk person? What about the med tag? What about your rent? What about your utilities? What about your advertising costs? What about the cost to bring in that customer? What about your fee for doing the procedure? If I add all of those up, the average cost, the average cost for a regenerative PRP procedure, single PRP injection nationwide, you ready for this, is $1,100. $1,100. So that tells me if I'm going to double that price, I have to be charging at least $2,200 for a PRP injection in order for you to be profitable. The second equation is what is the profit percentage that you want? A good business should be profit netting 20%, dropping 20% to the bottom line. So when I factor in all those other things, that means that I've got to at least double my cost. And this is true, by the way, in hormone replacement therapy, in weight loss. This is true in longevity. I have longevity clients that we started working with a year ago. They were doing $1.2 million. A year later, just by upping their price, their revenues went to $2.1 million and their profitability Went through the roof. Okay? You have to follow the scientific principles. So here's the other thing that is key when it comes to what should you charge for medical services. There is a concept in marketing called top of the funnel, middle of the funnel, bottom of the funnel when it comes to people that want to buy. People at the bottom of the funnel are more connected to you, and therefore, they're more likely to spend more with you because they know, like, and trust you. How do we do that? Well, it's very simply as we nurture that, that prospect. Over time, so that normally what people are doing is they're talking to people at what's called the top of the funnel. These have very low intent. We want to talk to people that are more at the bottom of the funnel, people that have engaged with our content, that have followed us, that have watched YouTube videos, or they've read articles. We used to notice that— we notice, not used to— we notice in our clinics that if people stalk us for 6 months, stalk us on social media, stalk us on the website, all of those things, They're more likely to spend money with us, and when they do, they'll spend a significant amount of money with us. Okay? All right. But here's the last concept that I'm gonna end with, and that is when it comes down to getting prices to what you should charge. Okay? And we do actually, we have pricing packages for our clients. If you'd like to learn more about that, you can contact our office. You can go to Mavericks Profit System. That's MavericksProfitSystem.com. And we can share with you, you can set up a call with one of our ambassadors that can talk to you about our programs and things like that and do a breakdown of your business and all of that. Okay. But the final thing is you have to develop what's called a signature solution. Now you might be wondering, what in the world is that? Let me tell you a quick story. A few days ago, I'm 56 years old at the time of this recording, and I'm on every anti-aging protocol you can find, right? I take it all. I'm on hormones. I do peptides. I do it all. Right? Love it. And I've decided that I want to, you know, work on some skin protocols, right? Long story short, I wound up going to Ulta Beauty, which is this massive cosmetics store chain across the street from me. And I went in there and it was full of all these different types of face creams and things and lotions and scrubs and washes. And I didn't know what I was looking at. And they tried to help me. And eventually what happened was they took me into this back corner and there were 2 shelves of men's stuff. And even that was confusing. There were all these different things of like for men. And what I wanted is I wanted something that was in a box that told me exactly what to do and how to do it, as opposed to figuring out on myself. And I would've paid way more for that box that told me how to do it, that would help me get the outcome if I were to follow it, that would help me get the outcome that I desired. more youthful looking skin and feeling skin. Well, that wasn't the case. I had to buy a bunch of individual things and I had to guess what is right. And I'm sure that I probably didn't get the right things. Your signature solution is that box that is being sold to your prospect in the cosmetic store. If you let your prospect choose the things that they want to do, they're not going to get great outcomes. So all of our clients develop a signature solution. Our definition internally of a signature solution is a unique process that takes the prospect on a journey to their desired result. The process is named so that even if it is similar to other solutions in the marketplace, your customer attaches emotionally to you and your name of that product. We have a lot of our clients that call stuff VFit, or they call it, you know, Simply Slim if they're doing weight loss, or all of these things. These— they name their signature solution. Guess what? Our stairway system, it's a signature solution. And so you want to create this so that that way you put together a package to get the best result for your prospect. In future podcasts, we'll talk about how do you get referrals, and this is an important component. You want to set it up so that you get the absolute best result for your patient. I don't care if it's hormone replacement therapy, weight loss, longevity, anti-aging, regenerative therapies. It doesn't matter. You want to create the ultimate package so that you get the ultimate result for your patient. Okay. All right. So that's how you do it, folks. That is the concept of pricing. I'll leave you with this. What should you charge? My average client in regenerative, the average package price that they charge is over $8,000. My average package price that my clients charge in weight loss after they've been working with us Is $3,500 for three months. Our average price point for my clients that are in functional medicine or anti-aging, $18,000. Yeah, you heard that right. $18,000. Just had a client yesterday do $295,000 last month, and they're at $150,000 halfway through the month this month. That is not the outlier, folks. That is the standard. And the reason why is your clients, your patients want a solution and they want it to come from you. They want it to be unique. They want it to be different. They don't want what everybody else has. So check it out. You can always get our book, The Anatomy of a 7-Figure Medical Practice. There is a link right below. I highly recommend that you get it. We dive into these topics in that book along with set up a call with one of our ambassadors. It's called a discovery call. When you sign up for the book and you get the physical book, we'll ship it to you. It's no charge. We'll send— we'll pay charge for shipping. We'll send it to you for free. Check it out. You'll love it. And take advantage of a discovery call. See what our team can do for you. All right. Thanks. This is Matt. This is the Practice Profit System. As always, keep grinding, folks. Look, there's no future in insurance, but there's definitely a future in cash services. Let's help you be a doctor again. Have a great day. See ya.