Some considerations when setting consultation fees
Healthcare costs are rising, and consultation fees have to keep pace if medical practices are to survive; but how do you set the right fee? If it’s too high, you risk chasing patients; if it’s too low, you might not cover your costs. The basic guidelines provided by medical scheme tariffs are all very well, but they are just guidelines – and every practice is unique.
We crunched some stats in our extensive user-base, and although we are aware that there are many complex dynamics in the healthcare industry, we take you through three interesting factors we have identified that could help you to set a more suitable consultation fee for your practice.
1. Charge according to where you are located
*Please note due to Northern Cape’s small sample size, findings may not be 100% representative.
Just as the prices of goods and services vary from province to province, the going rate for medical consultations varies too. Rather surprisingly, the graph based on GP consultation fees across South Africa shows that Limpopo province tops the list in average consultation fees at R469.447, while the Western Cape’s is 25% lower, at R374.08. However, averages can be deceiving: there are large variations in consultation fees even within the same province. For example, the graph below shows a 41% difference between Parktown and the Johannesburg CBD.
So the lesson here is to know your demographic. Know the numbers of patients and their income/wealth levels, and set your consultation fees accordingly. A practice having many less-affluent patients can do as well as one serving a small number of wealthier patients.
2. Know which medical schemes your patients belong to
If you have a large proportion of your patients belonging to a single medical scheme, you should consider entering into preferred payment contracts with that scheme.
For example, the practice in the graph below has nearly half of its patients coming from just two medical schemes – Polmed (21%) and GEMS (30%). That suggests the GP should enter into a preferred payment contract with just these two schemes. The move could grow the average GEMs fee by R19.60 and Polmed by R27.00 – which equates to R5 588.60 extra per month1.
This GP could also set up the maximum acceptable rates per scheme in the PMA to ensure he/she is being paid directly from the scheme, minimising having to collect from patients.
Graph extract from Healthbridge’s Business Insights Report
3. Include consumables in your fee
There’s no such thing as a free lunch, and that applies to medical consumables too. Consumables cost money. You have a right to charge for them, otherwise they will eat into your revenue. Too many practices regard consumables as trivial, and don’t bother capturing them as distinct cost items. Instead, they become absorbed by the practice. Charging for even R12 of consumables might seem small, but multiplied by 15 patients a day, it easily adds an extra R3 9602 to your monthly revenue – or R47 520 a year.
There are no average medical practices, and therefore there should be no average consultation fees. Your practice is unique and that is why it is important for you to engage with your business partners when setting your consultation fees. They will be able to provide practice insights and reports that will take into account your own unique set-up and influencing factors in detail.
1.Value based on increase in rate when moving from a Polmed/GEMs non-contracted to a contracted rate at current claim volume indicated in graph.
2. Figures based on 22 working day month