In my last article (November 2012 issue), I discussed setting fees and mentioned the model I promote that attempts to strike the right balance between low fees/high patient volume and high fees/low patient volume as well as the balance between under-treating and over-treating.I refer to this model as the "Middle Way" both because it alludes to finding that balance and also because that phrase has great significance in Taoist philosophy. I suppose one could also think of this as the "Goldilocks" model. The Middle Way model is a low overhead, moderate patient volume (8-12 a day) with a low rate of patients' average out of pocket expense. I will explain what I mean by average out of pocket expense a little later but first let's consider some additional delicate balancing acts you should be concerned with.
In addition to trying to strike to right balance between your target patient volume and your treatment fees, you should also work at finding the right balance between such things as spacing your treatments too far apart or too close together, spending too much time or too little time discussing things with your patients, and stopping your treatments too soon or continuing them too long. These issues will have a direct impact on your clinical effectiveness especially your ability to squeeze the most benefit out of the least number of treatments.
In the managed care industry, the term "Maximum Therapeutic Benefit" (MTB) is used to designate when you have gotten the most benefit out of a given therapy. The Middle Way model attempts to reach MTB with as few treatments as possible. If you can get more benefit with fewer treatments, it allows you to have better control over the treatment cost. This, in turn, gives you more flexibility in setting your fees. To only consider the fees charged per treatment without seriously considering how to get more benefit with fewer treatments is leaving an important component out of the equation.
In my last article, I warned against having fees set too high because I think that is a common problem in the AOM field, but you can go too far in the other direction by setting fees too low. In addition to finding the delicate balance between under and over charging you should also work at achieving MTB with the least number of treatments by finding the right balance between the frequency of the treatments, the time you spend advising your patients about herbs, lifestyle, or self-care instructions, and when to alter your treatment approach or stay with it or when to keep treating or stop treating.
Of course, you also need to find the right balance in your overhead especially between under or overspending on marketing and your office space. While there are several "practice management" resources offering advice on marketing and the business related aspects of running an acupuncture practice, I believe the biggest problem most acupuncturists face is obtaining MTB with the fewest number of treatments. Another important problem is explaining to a largely unenlightened public how acupuncture works. Please see my earlier articles in this series for more on that.
In my August, 2012 article, I focused on accessibility and encouraged accepting insurance as one of the things practitioners can do to make themselves more accessible. When I describe the Middle Way as a model that employs a low rate of patients' average out of pocket expense, I mean that by accepting insurance, having a moderate fee structure, and charging different fees based on the time you spend with different patients, you lower the rate an average patient pays out of pocket while allowing the practitioner to average a bit more per treatment than a strictly cash based practice.
I am not saying accepting insurance is the key to practice success. I am saying accepting insurance gives you another tool you can use to keep your patients' average out of pocket expense lower than the average fee you collect for your services. People who have insurance for acupuncture want to use it. They know money came out of their paycheck for that insurance and they would like to be able to collect on that. Although the percentage of people with acupuncture coverage is frustrating low, there are millions out there and those with that coverage often have co-pays in the $10-$20 range and some with no co-pays. And, while no one knows what the future holds, having acupuncture listed as an Essential Health Benefit in at least two states might encourage more insurance coverage for acupuncture services in the future.
In most areas of the U.S., I advocate charging fees somewhere in the $40-$60 range. I charge $40 for seniors and $60 for most adults and then as low as $10-20 for children depending on the time I spend with them. Some states do not allow for discounts for different age groups (a really dumb regulation I am glad my state does not use). However, you can justify different rates based on the amount of time you spend. If you average $40 per treatment and see 10 patients a day, five days a week, 50 weeks a year, that gives you a gross income of $100,000 per year. If you keep your overhead low (30%-40%), that amounts to an income of around $60,000-$70,000 per year. I believe that to be an achievable income for most acupuncturists if they learn how to find the middle ground between all the balancing acts I mentioned above.
Unfortunately, not many Acupuncturists build practices generating that type on income or see that number of patients consistently over time. I think there are many reasons for this and I have tried to identify some of those in this series of articles. But because building a practice is such a serious undertaking requiring a lot of smart effort, I believe it is important to have on-going support to help deal with the dozens of questions and challenges that arise. I am committed to trying to build such a support system for those wanting to employ the Middle Way model I described above. I am also committed to offer this support for free. I want to put the Middle Way model to the test to see if others can duplicate what I have achieved in my own practice.
I invite anyone interested in getting support for applying the Middle Way model to visit my website at www.MakingAcupuncturePay.com I am working hard at building the means to answer questions on both business and clinical matters related to applying this model such as a Forum section and offering some conference calls. I extend my offer to work with those interested in this model to our AOM organizations including schools and membership organizations. I hope to attract others to help me in this as the more support we give each other, the more we can accomplish.
Here is hoping you find the blessing of a rewarding and successful AOM practice.
Click here for previous articles by Matthew Bauer, LAc.