Can a 'Value-Added' Strategy Boost Revenue?
by Dr. Eric Kaplan
The answer is simply yes. The key is to provide more services, not bill more for the same old services. The future of our profession is bright. Technology is adding a new paradigm to the 21 st century. Professional athletes are getting results and honoring chiropractic like never before. Often this is done by adding new technologies to your clinic. How old are ultrasound and electric muscle stimulation? Recently, one of my clients Dr. Gerald Mattia was featured in The Orlando Sentinel . Why? Because of his treatment of athletes and the technology he has utilized. The key to getting reimbursed is not "doing the same thing the same way and expecting a different result." We must grow and improve our practice with the times. This is one way to avoid the insurance trap. I have watched doctors flock to cash practices. Why? You need to have a hybrid--an insurance and a cash component to your practice. What this means is simple: In a time of declining insurance reimbursements, your practice does not have to decline.
One Way to Fight Declining Reimbursement
There are three basic ways your practice can generate more revenue.
1. Deliver more of the same services.
2. Expand to deliver new services.
3. Charge more for the same services.
Granted, charging more is largely a theoretical option in today's reimbursement environment. But there are different ways to charge more for essentially the same service-without triggering a fraud investigation. Just ask the "manufacturers" of bottled water.
The technique is called "value-added marketing". Simply put, it capitalizes on consumers' willingness to pay more for an enhanced level of goods or services. In certain situations, doctors can apply it to their practices.
Going First Class
Many people-especially baby boomers and subsequent generations-love the perception that they're getting a better product or service than other folks. More importantly, they're willing to pay more for such enhancements. People stand in line to pay three or four times more for a cup of coffee similar to the one they'd buy at Dunkin' Donuts. Starbucks absolutely sells top-of-the-line coffee, but the product's cache allows the company to charge higher prices-and operate with a fatter margin-than a donut chain that's simply been selling a first-rate cup of Java with its crullers for many years.
You might be able to take advantage of this concept by discovering what your patients want and are willing to pay for. Begin by looking at your specialty's core services. Consider what life events bring patients into your practice and how you can add value to what you already provide. The world is leaning toward alternative health care. Starbucks brought a better line of coffee; we need to provide the better paradigm of healthcare.
Value-added marketing is not about different levels of clinical quality. It's about added features. The passengers in the first-class cabin pay for added amenities, not added safety. Harvey Mackay, author of How to Swim With the Sharks Without Getting Eaten Alive , says, "Provide your customer with everything you promise and then a little more." All your patients deserve the same quality of care. You must also make certain your commercial insurance contracts don't prohibit providing extra services by interpreting them as a different level of care. And, of course, Medicare and Medicaid require equal treatment for all patients. If you see many self-pay patients, you have a freer hand to implement a value-added services program with them.
Even if what you do is perfectly legal and in accordance with your contracts, you must consider the perception that you're offering two levels of care. In a sensitive area like healthcare, a patient could sue you over that perception. So consider that risk-management aspect before proceeding. Review this with your healthcare consultant or attorney. Know your state laws and don't hesitate to contact your state board.
Become a Specialist
Flight attendants draw a curtain between cabins to divert coach passengers' attention away from what they're missing. You might accomplish the same by opening a second practice catering to upscale clientele. For example, a diplomat in orthopedics or acupuncture might develop an "elite athlete" sports medicine practice under a different practice name right next door.
Declining reimbursement has pushed many offices to shorter, limited visits for routine cases. The patient may not even see the physician at each visit. But by offering an enhanced option, you can add a new line of treatment to your practice. Yes, this can be done with massage, rehabilitation, laser treatment, etc. And if your insurance contracts permit, you might be able to offer longer visits, more access to the doctor, and enhanced office visits.
Apply this principle to your own specialty. Figure out how you can provide-or partner with other businesses to provide-services that your typical patient needs or wants. Create an optional program and charge for it. Learn from other businesses such as the airlines. It costs less than $50 more to fly a passenger first-class, but airlines can charge hundreds more for a first-class ticket.
A Huge Opportunity
Surprisingly, Americans spend more out-of-pocket dollars on medical care than Medicare and Medicaid pay combined , according to the Eisenberg study (citation?). That amount is growing, from $203 billion in 1995 to approximately $300 billion in 2000. Numerous patients willingly go beyond their health plans, into their own wallets, to get the medical care they want. Now, add in the world of Anti-Aging, and this number will continue to escalate. People will pay to feel good, people will pay to look good, people will pay to be healthier and more energetic. A wellness office is the office of the future, a one-stop shop for health. Now is your time.
Given the downward pressure on traditional reimbursement, it makes sense to consider establishing this new revenue stream. Many of my clients go to the MD/DC approach; however 50% stay just a DC practice. Now the hot topic is DC/PT, but be careful; the same Stark rules apply. There is no right way to do the wrong thing. Don't cut corners. If you do it, do it right and consult with experts in this arena. The key is same store growth . Now is our time. The world is looking for a better model of healthcare. Chiropractic is not a philosophy, art and science. Chiropractic is a science, with an art and a philosophy. The key is that chiropractic is a science, documented by research; we are more than bone movers. We live in the world of healthcare, a trillion-dollar industry. Fortunately, our specialty is chiropractic. We can do a lot under the scope of our license. Expand your knowledge, work to the extent of your license, follow all state and federal laws, and watch your practice grow.
(Originally published in The American Chiropractor magazine)