The Art of the Sliding Scale, Part Two: Establishing Cash Flow
By Lisa Rohleder, LAc
In the first part of this series on the sliding scale as a tool for social entrepreneurship, we looked at why an acupuncturist might want to use a sliding scale. In part two, we'll consider how.
There are some very specific things you need to do in order to make a sliding scale work for you and your patients.
I have heard a number of acupuncturists say they wished that they could just treat all of their patients for free, and somehow still have their own needs magically provided for. This is just as much a fantasy as the idea that every patient really should be able to pay $75 per treatment, if only they'd get their priorities straight. One of the goals of this column is to talk about reality, and reality includes dealing with money.
To use a sliding scale well, you need to be comfortable with the reality that you are running a business, and your business needs a steady, consistent flow of cash. A sliding scale is a way of establishing that flow from a multitude of small sources, as opposed to seeking one big pipeline to tap - for example, insurance. Your job as a business owner is to engage with the cash flow between you and your patients, just as your job as an acupuncturist is to engage with the flow of qi in your patients' meridians. Too many acupuncturists think money is dirty, and they cringe when they have to as much as think about it. The problem is that owning a business requires not only thinking about money - clearly, objectively and thoroughly - but also communicating about it, clearly, consistently and openly. We're going to break down this discussion of how to use a sliding scale into exactly those two categories: things you need to do that involve thinking about money, and things you need to do that involve talking about money.
Thinking About Money: Looking at the Big Picture
1. Define your boundaries and know what you need. Be clear. A sliding scale is a system. It is not the same thing as having different payment arrangements with each individual patient, or just saying "pay me whatever." Done right, a sliding scale meets your needs and your patients' needs without requiring you to figure out something new with each person who walks through your doors. Setting up your sliding scale involves some simple arithmetic. How much money do you need to have coming in to break even? To pay yourself? To pay off your debts? As a business owner, those answers should be on the tip of your tongue. Our experience with a sliding scale suggests that one third of patients will pay at the bottom end, one third will be in the middle, and one third will pay at the top of the scale, with the average payment coming in around the low end of the middle. Do the math to understand approximately how many clients you'll need.
On a couple of occasions, practitioners have said to me that they used to use a sliding scale, but then stopped when they noticed that the patients availing themselves of it were also driving Lamborghinis. (Just kidding. That's not quite what they said.) My response to that is if you feel that you have to police individual patients' use of the scale, your scale itself needs more work. Part of what a good sliding scale does is allow you to not have to worry about what individuals pay. I'm sure that if I happened to audit all of my patients' personal financial records (gosh, that sounds like fun), I would find some patients are paying me "too little" and some are paying me "too much." The point is that as long as everybody pays me between $15 and $35 per treatment, I consistently make enough money (even if some individuals are selecting the "wrong" amount on that scale), so why should I care? My job as a business owner is to think about my finances, not my patients' finances.
2. Accept the need for a high-volume practice. If you want to use a sliding scale that truly makes your practice accessible, you are going to have to see a lot of patients and spend less time with each of them than you would in a conventional practice. Personally, I love doing lots of very simple treatments. If all of my patients simultaneously won the lottery and wanted to pay $75 each for me to spend an hour treating them, I'd say no. Not only would I be really bored, but I'd also have to work 75 hours a week to see them all.
A high-volume practice protects your cash flow from the ups and downs that can result from relying on high fees from only a few clients. If one out of my 75 patients who pays me $15 to $35 stops treatment unexpectedly, it doesn't affect me nearly as much as it would if I were seeing only 20 patients at $75 each.
Talking About Money: Respecting Each Small Source
3. Offer your sliding scale respectfully and consistently to everybody. Once you are quite clear on what your scale is, put it in writing and offer it to every patient, without exception and without asking for proof that they deserve it. "Sliding scale available upon request" makes patients feel they have to grovel for your charity. Very few will do so, and it can make you feel like you should be checking your parking lot for hidden Lamborghinis. Remember, to create a reliable cash flow, you want lots of patients coming in for treatment often, which means they are using the sliding scale freely, because they feel comfortable about it. I have actually seen Web sites that offer sliding scales only if patients bring in three months' worth of bank statements, to verify their lack of income. Wow, what a great way to simultaneously promote classism, discourage business, and create more paperwork for yourself.
4. Use the initial discussion to build trust and commitment. As I hand the form that describes our sliding scale to a new patient, I say, "This is our system and it seems to work well for everybody. The reason we have a sliding scale is to make sure you can come in for treatment often enough and long enough to really get better. You choose what to pay, between $15 and $35 per treatment. You see there are suggested income guidelines on this form, but that's just because some patients requested them, and they're just suggestions. We don't care what you earn. We also know that everyone's financial situation is different; some people who have good incomes on paper also have a lot of responsibilities - aging parents, kids in college, medical bills, who knows what. All we care about is that you can commit to treatment with us. In order to really deal with some of your health concerns, you may need to come in daily for several weeks, or weekly for several months, so as you decide what to pay on our scale, please think about what you can comfortably commit to." This is not only respectful, it's superior customer service. It's making your relationship with your customers your highest priority, instead of trying to squeeze maximum cash per treatment out of them.
What this all adds up to is dealing with money in a structured way that makes both you and your patients feel empowered. It's a solution to the desperation around money that often arises in the context of a private practice. I'm tempted to use the term "radical abundance," but I won't, since words that sound New Age-ish make me irritable. A sliding scale that works is, after all, not magical; it depends entirely on mundane virtues such as consistency, clarity and good communication.
Note: My warning in part one deserves repeating: You'll probably have to choose between using a sliding scale vs. billing insurance companies at a fixed rate, or you could be accused of insurance fraud. You can't have it both ways.
Click here for previous articles by Lisa Rohleder, LAc.