In January 2013, my rates for a one-hour physical therapy session will increase from $120 to $150. I started my cash-based PT practice almost 3 years ago, and my costs (though always quite low compared to most clinics) have been rising each year. I stayed very busy throughout 2012 and at times felt downright overwhelmed. With the increases in my business expenses and a continually growing confidence in my ability to stay fully booked, I feel the time is right for a rate increase. I did a good bit of research on how to most-successfully implement a rate increase, I’ve notified my patients of the pricing change, and I have already received some feedback from a few patients. So today I’d like to share my reasoning behind this decision and some of the things I’ve learned along the way.
Assessing the value of my time
As I was brainstorming on when and how much to raise my rates, I was also considering a few other possibilities for income growth, especially in regards to employing another therapist. As I hinted in this post, I decided that I want to stay solo for at least another year and focus my income-growth efforts elsewhere. I have other things I’d like to do and products I’d like to develop. I want to start creating an online CEU course on how to rapidly fix ankle sprains. I want to publish a big FAQ page on this site to add value for my readers and hopefully decrease the mountain of email questions I’m receiving each week :). I just reviewed my 2012 business goals and realized that although I reached my income goal, I fell short on a number of things I wanted to do on my clinic’s website that will produce more patients over time without continual effort (such as consistent blogging and use of video). As I analyzed all of this, it only reinforced the fact that there is something I need much more of …. TIME.
For all the above reasons, I’ve raised my rates 25%, and I’ll be blocking 1-2 days per week to focus on these other projects. If my rate increase does not result in me losing more than 25% of my business, I’ll be making the same (or more) money and will have freed up at least 20% more time each week.
My pricing strategy may have been wrong
This may seem like a pretty big increase, and in fact, it is. My business costs have gone up about 18% since I started my practice, and I didn’t want this rate hike to simply “catch me up” to my expense increases. For this reason, I overshot my expense growth so that I hopefully will not have to raise rates again for a good number of years. However, since I’ve now received some feedback from patients who are successful businesspeople, I’ve realized I may have been better off approaching it in a different manner.
Though some people will say they hate seeing steady annual price increases, if you raise rates in small increments on a regular schedule, those increases are much less “noticeable and painful” than a large hike every few years. Based on the feedback from a few patients, a 10% increase every 12-18 months would not have caught their attention as much as a one-time 25% increase after these first three years.
My service is worth the higher price
Am I worried about this feedback or about losing too much business? No. I offer a highly valuable service to every one of my patients and make sure they all have the best experience I can possibly provide. I care deeply about them and about getting them feeling and moving better as quickly as possible. I am completely confident that my treatments are worth $150/hour (and actually much more if they sprained their ankle and have a competition a few days away).
I do not say these things arrogantly … I purposely made these statements because I’m trying to reinforce something to my colleagues interested in cash-based PT: Confidence in the value of what you are providing is absolutely vital to a cash-based Physical Therapy practice. The way you speak about your services and your treatment prices can be the deciding factor in someone’s choice to see you rather than the insurance-accepting PT down the road. It can affect how motivated patients are to schedule adequate follow up visits, and how compliant they are with their home exercise program. It can influence how likely they are to tell others about your services or go online and post a good review of your clinic. The list goes on.
With that said, you can be completely confident in the price tag you place on your services, but go out of business if the value you provide is not congruent with the price, and/or if market factors do not support the price. These factors are numerous and covering them would take a book in and of itself … general economic health, geography, area demographics, prices of related services, competitor characteristics, etc.
Some of my patients act as business mentors and one said the following when asked about price increases and making sure they not detrimental to your business or your clientele: “People will typically pay for what they VALUE with little complaint. So the most important thing to consider is consistently demonstrating value to the customer/patient.”
Do you have any out-of-the-ordinary ways of creating value for your patients? If you are/were in a cash-based scenario, what could you do to demonstrate high value and compel prospective patients to choose your clinic over an insurance-based one?
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Thanks Dr. Carter!
You just gave me the last little lift I needed to believe in myself and the outstanding care I give to my cash pay clients. I CAN grow into a larger facility without using insurance where I live. I provide a unique service and I haven’t raised my rates in 7 years even though my rent goes up a little every year.
I get it. My clients get better quicker. I’m happy, they’re happy, everybody wins. My rates are increasing too. Thanks again for your insight.
So glad to hear that, Gina! Let me know how it goes.
And as I mentioned above, you may consider starting a policy that your rates go up a little bit every year or two.
Great post Jared. The biggest part is about the confidence. I join you in having confidence in my results too. I charge $90 for a 30 minute evaluation for ART treatments and $76 for 15-20 minute ART treatments. These are so effective that the person usually needs between 2-8 treatments to be 100% even after a major injury. We even include some mobility in those sessions but it’s really a 15 minute session with about 10-15 minutes with my strength and conditioning coach for the mobility work. I have about 30% of my patients taking advantage of that and even had a MD say he wishes he could make $76 in 15 minutes of work. It truly is about results and you are doing a great job at joining the force to elevate our profession to that of a “professional” not a “tech carrying out protocols” like so many people IN AND OUT of our profession think we do. Congrats man.
And congratulations to you too! Those are solid rates. Thanks for sharing.
I’m still getting started. My plan is to go to their homes (convenience) with my own table and light equipment. I will only accept patients who don’t need a lot of equipment (unless they have their own).
I give good treatment in their environment
(How I’m going to lug around the table I don’t know)
Great post Jarod. I’m excited to see how things go with you next year. We are doing something very similar up/over here in Seattle! 🙂 If you want to read an amazing book about providing value to people, check out “The Go-Giver” by Bob Burg and John David Mann. Our good friends at Impact Strength and Performance (www.goimpactstrength.com) in Bellevue, WA let us borrow it. They built their entire business on the principles presented. I finished the entire book in less than 3 hours. Easy read. It changed how we practice and live our lives. I will be looking forward to more posts from you as well as making a few posts of our own in 2013!
Thanks for the suggestion, Austin! I read The Go Giver a few years ago before starting my own practice and it had a huge impact on my approach to business and creating value for my patients. I even suggest the book in my own eBook 🙂 Here’s an amazon (affiliate) link to the book for anyone interested – The Go Giver
How’s that ankle CEU course coming along?
Thanks for asking, Shane. I had planned on being well into its development by this summer, but then I had three unexpected things happen: I had to find and move into a new office, sell my condo, find and buy a new house (about to start renovations)… so every bit of time I had carved out of my schedule to work on the ankle CEU course has gone in to those things. I also had to put a good bit of time into this year’s TPTA attempt at Direct Access.
I will definitely start producing it at some point this year, and certainly will announce it at this site. I’m also looking at creating some group coaching courses on the cash-based business model so I can provide more detailed and practice-specific info for those looking to really start/grow their cash practice.
Well, sounds like you’ve had your hands full.. Thanks for continuing with all of your great info throughout your blog posts. Cheesy as it may sound, you’re changing lives.
It means a lot to hear that! I deeply appreciate it!
I’ve been following you for a while now and find your posts very informative. We have been in touch before and we talked about my cash based practise in Ireland.
Every now and again I seem to get a “bad week” with late cancellations and even “no shows”. I wonder what your position regarding these is as regards amount of notice required and charging.
Much appreciated and keep up the good work.
All patients sign paperwork that includes my late cancellation policy, which states that cancellations with less than 24 hours notice will be charged $75 (half of a normal treatment session fee). I give everyone a break and do not charge them on the first offense, but when it occurs I definitely let them know that future late cancellations will cost them. It is not easy to be firm with these policies, but if you do not, people will take advantage of you and your time.
Thank you Jarod, that’s helpful. You’re right it’s not easy to be tough with these rules. Funny how they only happen when patients feel a lot better…. I will have to get stricter though. Thanks.
Thanks for your insightful blog posts! I’m a little late to this discussion, but I am wondering what methods you used to notify your clients about your rate increase. Do you have any recommendations based on things that went well with your experience, or anything that you would do differently? We are discussing a future rate increase ourselves and would love to hear your input!
Sorry for the delayed reply. I simply notified my previous patients of the rate increase via email ( Along with some other more helpful and lighthearted news in the same email 🙂 …
One thing I would probably do differently is to raise the rates more frequently but at a smaller percentage. The 25% jump in my rates was a lot to swallow for some of my patients. With that said, my schedule really didn’t slow down so I guess that the rate jump was not so high that it was perceived as” too much” by “too many”
Hi Jared. I’ve been asked to do a PT night at a local brewery. I know this sounds weird but they are good friends of mine and always looking for new and fun events to have. Idea is ppl come, I assess and TX. And hopefully they have a beer too lol.
They have asked me for a list of dx and pricing. I’m trying to think of some ways I can show quick changes for a value. I’m thinking 30min $50. My fear is I’m going to get some ppl that are going to need more sessions. I have started a relationship with a chiropractor and could send them to my office there for further TX.
I’m not sure I fully understand…why wouldn’t you want people that need more than just that one treatment? Then you would be able to develop new clients. Definitely try to showcase some quick changes, but if people require more than 30 minutes (which most do) then you can’t be afraid to sell your services. PT is rarely a quick fix, so at an event like this the service you are offering is more the assessment than the actual treatment.