In case you haven’t noticed, the Consumer Price Index was up 7.5% in January, as compared to 2021. In short, this means that a basket of goods like food, energy, and other consumer goods cost 7.5% more in 2022 than the year before.
Practice owners feel the squeeze in multiple areas: utilities are higher, the labor market is a mess, and add to that the fact that vendors are raising wholesale prices. What is a business owner to do?
Evaluate Your Processes to Minimize Inflation’s Impact
If necessity is the mother of invention, it’s now necessary to consider how often you evaluate different parts your business. Consider questions such as:
- How often do you look at your employees’ wages relative to the market in your area?
- When do you evaluate markups and fee schedules, or your packages and frame choices?
- How and when do you evaluate your billing and coding practices?
- How are you doing at getting paid by insurers? How do you handle rejected claims?
Optimizing and staying on top of revenue-related processes matters more when inflation is eating into your “real” income. Minimize inflation’s impact on your practice by regularly evaluating all aspects of your financial health.
Don’t Fight Basic Economics
If you’ll recall high school economics: when producers’ and service providers’ costs go up, they pass those costs on to consumers. You should too.
Many owners will feel that it’s not fair to ask their patients to pay more, but remember that your responsibility doesn’t stop with your patients’ pocketbooks. You still have an obligation to your team, to continue to make payroll, and perhaps even adjust employee wages due to their increased cost of living. You still have obligations to their vendors, their lenders, and even (especially?) themselves and their families.
Don’t Apologize for Inflation-Related Price Increases
When practices raise their prices, staff will often be uncomfortable. They will worry about what patients might say. I recommend you make a bet with them and give everyone an out if patients do react badly.
Here’s the bet:
“We’re going to make this change and stick to it for four weeks. If patients balk, we will change back. But I’m willing to bet they won’t say a thing.
Here’s the deal: for the next four weeks you cannot apologize for the new fee, call attention to the fact that we raised it, or mention that we changed it.
Do that, and if patients still complain, we’ll change it back. But I bet they won’t say a thing.”
Position Your Practice for Financial Growth
It’s painful to have to make these changes now as we’re faced with inflation we haven’t seen in decades while coming off an exhausting pandemic. But regularly reviewing and updating your pricing—among other parts of your practice—is an important habit to develop as an owner.
Need help evaluating your pricing, markups, or wages? IDOC’s financial experts are here to help. Our financial management team offers customized, one-on-one guidance and advice as well as the most advanced business analytics in the industry. Stay financially protected and positioned for growth amidst economic changes with IDOC Financial Services.
After graduating, he spent a year working abroad. During that time, he worked for two firms in San Jose, Costa Rica. He interned with Grupo Juridico de San Jose, working in environmental policy to protect a threatened parcel of land, then he worked as a project manager for a US-owned precision machining shop. Nathan then spent 6 months working with street children and orphans in Mexico.
Before getting into the healthcare industry, he was an Assistant Store Manager and completed the Corporate Training Program with Haverty’s Furniture Company in Atlanta, GA. Nathan and his wife Heather have a son, Daniel, and a daughter, Hannah. In his spare time, Nathan enjoys reading and outdoors activities - especially cycling and hiking.
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