When you consider the initial investment cost of starting your own optometry practice combined with factors like insurance reimbursements, it’s important to be strategic when setting the fees you charge for professional services and optical products.
Two truths: (1) While the average cold start doctor doesn’t earn enough to pay themselves until month 13, the amount of money we’ve seen left on the table in the meantime is astounding; and (2) every dollar is vital to your survival.
PECAA Cold Start Advisors Jenny Wiley and Shaun Damico examine factors to consider when establishing your pricing structure, including the local Medicare fee schedule, your target patient and nearby competition, as well as how often to revisit your fee schedule and optical product markup.
Pricing Factors
Understanding your local Medicare fee schedule, including the geographic practice cost index and relative value units (RVUs) for different services is an effective way to establish pricing for your professional services. (Also, be sure to get a copy of your fee schedule with each of the plans you contract with to ensure accurate reimbursements and billing.)
At a high level, you should aim for your usual customary fees to be more than the allowed amount from your highest paying insurance company. If you aren’t writing off at least a small amount on each CPT code at the end of the year, this is an indication that you are not charging enough.
Additionally, it’s important to consider your competition when it comes to fees. However, don’t make the mistake of simply mirroring the pricing of the practice on the other side of town or the practice you just left prior to starting your business.
Instead, consider your ideal target audience and how you want to show up in the landscape. Will you offer a boutique ambiance with unique frame styles? Can patients come to you for specialty services like dry eye and myopia management? In this case, you can position your practice as a premier experience where patients may be willing to pay more for services and products.
Pro Tip: Aim for your usual customary fees to be more than the allowed amount from your highest paying insurance company. (Contact Billing and Coding Advisors Teri and Dianne for customized guidance.)
Annual Price Reviews
The key is to initially set your pricing structure according to your practice goals. From there, evaluate the financial health of your practice each year to determine if it’s time to charge more. Incremental changes on an annual basis are easier to incorporate than raising prices for the first time after five years – and your bottom line will feel the impact sooner.
Patients may still take notice of higher costs. You and your entire staff should be well-versed in pricing conversations in the event you have to patiently and thoughtfully explain your fee and pricing structure.
Jenny loves putting her extensive practice management experience to work guiding cold start practices through all aspects of planning, development and execution. She provides both business strategy and emotional support, dispensing the right type of wisdom at the right time to support emerging practice owners throughout the cold start journey. Jenny joined PECAA in 2015 after managing a 10-location ophthalmology/optometry practice in the Pacific Northwest and is a Certified Ophthalmic Technician.
Shaun enthusiastically applies his more than 20 years of ophthalmic leadership to helping PECAA Launch members create the best possible foundation for their success. He has performed every position within an eye care practice and has advised hundreds of practices across the country, giving him a unique vantage point for guiding new practices on how to maximize both patient experiences and business outcomes.