Making Private Practice Work: Money Matters

Let's talk money. In earlier articles, I stressed that in order for you to build a successful practice, which allows you to do what you love - treating people in need with our beautiful and safe healing art - you need to come to grips with the fact that a private practice is a business. Many artists struggle with earning a living from their art; why should the healing arts be any different? Although focusing on financial matters may seem distasteful to some practitioners, it is a subject that must be addressed in order to build a successful business.

While there are many factors to consider regarding money matters in private practice, I want to jump right in and consider the most controversial - fees for service. There is no magic formula for setting charges for acupuncture services. I know acupuncturists that charge $200 or even $500 per treatment, while the fastest growing practice model in the United States, community acupuncture, starts their sliding scale at $15 per treatment. The main problem with establishing fees is gauging acupuncture's value. We all know acupuncture is a valuable therapy, but how do you establish its value?

Value is defined as the extent to which a good or service is perceived by its customer to meet his or her needs or wants, measured by customer's willingness to pay for it. It commonly depends more on the customer's perception of the worth of the product than on its intrinsic value.

The above definition of value is useful for our purposes because it points out that the value of a service is relative to the patients' willingness to pay for it based on their perception of its worth. Different people will perceive the worth of an acupuncture treatment differently as seen in the great variation in what acupuncturists charge. When setting your fees, an important factor to consider then is the type of patient you will be treating in your practice. Wealthy people may be willing to pay hundreds of dollars for an acupuncture treatment while those of modest means will not and could not even if they thought it was worth that amount.

The 2009 census, complied just as the economic crisis was getting started, showed that 70% of U.S. households generated less than $75,000 per year with half of those generating less than $35,000 per year. These are households, not individuals. While very few acupuncturists charge the hundreds of dollars per treatment I mentioned above, many charge in the $80 and up range. Again, the value of a service is measured by what people are willing to pay for it and while there are those willing to pay those rates, common sense should tell us that most of these are people in the statistically rare upper income ranges.

Making the Case for Lower Fees

I know some people believe it is a good strategy to work at building a clientele that can pay higher fees per treatment. Doing this, they say, means that you can make more money treating fewer people. That may be true from a strict mathematic sense, but I believe there are flaws in that logic. For one thing, as eluded to above, when you charge higher fees you limit the number of people who can afford your services. People with lots of money who can afford higher fees can also afford lower fess while average and lower income people cannot afford higher fees.

The only potential patients you may lose with more modest fees are those who expect to pay higher prices as a sign of their "success." I think it is great that some acupuncturists have been able to build practices servicing upper income clients, but that is not a sustainable model for the majority of acupuncturists as our young profession continues to grow rapidly. How can acupuncture ever go "mainstream" if our practitioners focus on catering only to upper income patients?

Another flaw in the "treat fewer patients for higher fees" model is that building a sustainable practice depends on the exponential growth that comes from satisfied patient referrals. The more people you successfully treat the more people who will be out there telling others about you. Treat twice as many people for half the cost and you will have twice as many people referring others to you. And, if your motivation for becoming an acupuncturist was a desire to help people, the more people you treat, the more you will be helping.

The rapid growth of community acupuncture clinics has proven the viability of a low fee, high patient volume practice model although there is more to that story than testing a practice model. The community acupuncture movement has evolved into a comprehensive support system for those passionate about their mission of making acupuncture affordable and available for all including the underserved working-class while also supporting living wage jobs and practices for practitioners. It involves specialized training in both clinical and practice management that is seldom if ever taught in our AOM schools. Pursuing the community acupuncture model is less about a calculated business decision and more about a commitment to support their mission.

I fully support the community acupuncture movement's mission of accessibility and sustainability. The model I am trying to promote is likewise built around the ideas of accessibility and sustainability, but attempts to achieve that in a somewhat different manner.

I based this model around my own practice of more than 25 years and I believe it offers a realistic chance of success for the majority of those coming out of our current AOM schools. I call my model the "Middle Way" because it attempts to strike a balance between low fee/high volume and high fee/low volume approaches as well as the balance between under-treating and over treating. I am working at building a support system for those wanting to pursue this model as ongoing support for those trying to build practices is crucial. While I have received feedback from others who practice a similar model with success, the only way to really test this is for enough people to start applying it in different markets and then share their results. Anyone interested in doing this can contact me.

In my next article, I will describe the details of the Middle Way model and why I feel it affords those employing it a solid chance of practice success. Thanks for reading.