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Charge the Right Membership Price

The right price for the right service makes the economy function properly. Sure, there is bartering and pro bono work, but we’re talking about how much to charge for the services you provide a patient. Let’s go over a framework to charge the right membership price.

The Wrong Price is Confusing

Don’t confuse your customer. And, yes, your patients are customers. When figuring out your service and prices, it’s important to think of yourself as a sustainable business delivering a product or service to a potential customer.

The healthcare consumer is accustomed to paying around $200 per visit with a family medicine doctor, albeit not directly out of pocket. Charging $100 or $150 for that same visit will throw everything off and confuse your patient.

Setting the right membership price takes some tinkering, but there is a clear math to it. Don’t try to imitate other models already out there. You don’t have to undersell yourself.

What Are Your Offering?

The first question to ask yourself is, what are you offering?

Next, what value is the person getting from this service?

Finally, what is the going rate for this service?

Suppose you are offering longevity medicine like many docs today, weight loss or endocrine care for diabetics, or preventative cardiology. In that case, you are looking at somewhere in the ballpark of $300 – 400 per hour.

You are offering the promise that with your insight, attention, and support, the patient will be healthier. They will enjoy several extra disease-free years.

The average human life in the US is valued at $100K a year. Living an extra year with disease might be worth $50K for the average person.

An extra year might be worth millions for those with more financial means. That’s how economic damages are calculated should you ever be unfortunate enough to end the career of a top-level athlete by botching their knee surgery.

Calculating the Hourly Rate

If you run a high-level service practice where you are paying proper attention to your patients, then you are likely offering them 30 – 90 minute appointments.

The average patient will likely have 4 – 6 hours of such visits with you over the year. But you also need to account for the admin time you must spend serving this patient, which is at least half of that, 2 – 3 hours.

Let’s say 8 hours per patient per year. And since you offer much better value than the $200/visit rate of mainstream insurance, you must charge at least $400 – 500 per hour, which comes to $4,000 per patient per year.

You have office or virtual practice overhead, which usually comes out to somewhere around $20,000 – $100,000 a year. Divide that by the number of patients your practice can support: 150? 300? 600?

So, let’s say another $175 per patient per year. Now, we are up to $4,175 PPPY.

Who is Your Clientele?

Are you serving the Long Beach inner-city folk, or are your patients mostly wealthy and earning $500K+? If it’s the latter, then your preventative medical care would earn them an extra, say, 5 productive years.

That comes out to an extra $5m you are saving them. You can’t have all of that profit but at least 5%. So you deserve a commission of $250,000 divided out over however many years you’ll have that patient – say, 3 years. That’s an extra $80,000 on top of the $4,175 a year you can charge that patient.

It seems incomprehensible, sure. But you aren’t the only physician charging their patients $10K monthly for concierge-level care. Of course, feel free to adjust your prices based on what seems right/fair to you. But don’t underestimate what you do.

People who earn a lot of money appreciate the value of that money.

How to Start Pricing Your Service

Good luck if you’re a nobody coming on the clinical scene and expect someone to pay you $10K a month. That’s tough traction unless you can clearly demonstrate to them why and how you are worth it.

Usually, physicians who are building new practices will set the price at $5K a month and offer deep discounts:

We are offering an introductory price for our initial 25 members from our monthly $5,000 membership down to $999, honored for the first 24 months of membership in our practice. Click here to join us today!

You are charging less, but you aren’t bringing on tire kickers or someone too cheap to pay for the value of what they are getting.

It’s worth reading about the psychology of price setting. There are many good books on it, but this article is a good primer.

Readers of this website may have noticed that I used to charge $250 an hour for my consulting. Once I changed it to $175 for 30 minutes, I got more calls than before. Less work, more money.

Understanding Wealth

Many families earn well over $5M a year, and quite a few earn $25M+ right here in California. While physicians believe they are rich because of their high income, it doesn’t compare to having $50M in the bank, $25M worth of real estate, and a monthly paycheck of nearly $500K.

A physician household earning $500K and buying a $100K car spends 20% of their salary on that luxury item. A household that earns $25M a year and buys a $1.5M luxury car is spending 6% of their salary, and that car will likely go up in value when they sell it.

Understanding Poverty

The average household who visits their local primary care office earns around $65K a year. They are spending $2,500 a year on health insurance premiums and another $2,500 on meds and office visits. That’s 8% on just healthcare designed to keep them sick. There is no proactive disease prevention in mainstream healthcare.

What’s the chance this household would spend even $100 monthly on prevention? They are likely bargain shopping at Target, Walmart, and fast food restaurants.

What if You Don’t Find Any Patients?

Let’s say you are charging $5K for your monthly clinic membership price but you are getting no traction. How much should you charge to get more patients?

Wrong question.

It’s not that you are charging too much or too little, it’s that you aren’t making it clear to the customer what value they are getting. Especially as a niche physician in a practice if you can’t make it clear what value you are offering it’s less likely for someone to sign up.

It’s also possible you don’t have good bedside manners or are simply trying too hard. Setting healthy patient boundaries is important. Just because people are paying you what you consider a lot of money, it doesn’t mean they should trample all over you.

Spending money on marketing and branding is important if that’s not your strong suit. Set the right membership price based on the numbers we discussed above and offer discounts and add-on services until you get the traction you want.

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