It comes as no surprise that COVID-19 has had a serious impact on the economy. Many businesses and individuals have simultaneously experienced a drop in income, and an increase in operating/living costs. It is therefore fair to say that in order for your practice to survive, you may have to review your fees and adjust accordingly.
But how do you set the right fee? If it’s too high, you risk losing patients; if it’s too low, you might not cover your costs. Basic guidelines provided by medical scheme tariffs are just that – guidelines. And since every practice is unique, there is no one-size-fits-all answer.
We looked at our data to uncover four important insights and indicators to help you set a suitable consultation fee for your practice:
1. Charge according to where you are located
From the graph below, you will see that just like the price of goods and services vary from province to province, the rate for medical consultations varies too depending on location.
Please note due to Northern Cape’s small sample size, findings may not be 100% representative.
- As expected, Gauteng has the highest consultation fee on average of all nine provinces. Considered the economic capital of South Africa, patient populations are by and large more capable and prepared to pay higher consultations fees.
- The graph shows that the average consultation fees in 2020 have increased by an average of 4% across all provinces, with the exception being Limpopo where fees dropped sharply by around 7%.
Although averages give us an idea of variation between provinces, taking a closer look at the data shows that there are significant variations in consultation fees within the same province. For example, the graph below shows a 39% difference between consultation fees in Sunninghill and Pretoria North.
While we know that there are complex dynamics that shape the price of consultations, what we can presume from the data is simply to know your demographic. A single practice’s patient population can vary from affluent to less affluent, but you will be able to determine the LSM of the majority of your patient base and set fees accordingly. Our data also shows that higher consultation fees are not necessarily an indication of practice profitability. A practice that largely sees less-affluent patients can do as well financially as one serving a small number of higher income patients.
2. Know which medical schemes your patients belong to
Look at your data to determine what medical schemes your patients belong to. If a large proportion of your patient population belongs to a medical scheme or schemes, it makes sense to explore entering into a contract with those medical schemes.
For example, the graph below shows the number of claims and rand value of these claims for a General Practitioner’s (GP’s) practice over a period of a year. As you can see, 60% of the practice’s patients belong to Discovery Health. With this information, the doctor can decide whether to enter a preferred payment contract with Discovery, increasing the average claim by R26.20 per consult or R32 619 per year1.
Knowing which medical schemes your patient belongs to also creates an opportunity for this GP to claim the maximum acceptable rates per scheme in the PMA. This ensures that the practice is paid directly from the scheme and minimises the need to collect directly from patients.
Graph extract from Healthbridge’s Business Insights Report
3. Consider the consultation type
Typically in-person consultations have been the norm, but for some practices, the pandemic has forced a change. For example, in an effort to keep staff and patients safe, the pandemic triggered an upsurge in the use of Telehealth consultations. The list below highlights the top ICD-10 codes used by General Practitioner during the pandemic for Telehealth consultations.
What can be seen is that there are specific types of consults that are better suited for Telehealth, such as repeat prescriptions, follow up with chronic patients, and COVID-19 diagnosis.
While Telehealth consults are billed at a lower rate than in-person consults, through time efficiencies, there is still the opportunity to generate income with efficient, practical use of Telehealth. Understanding your patient base and their medical requirements will help you decide whether to charge for an in-person visit or to encourage your patient to receive treatment via Telephone or video.
4. Include consumables in your fee
Consumables cost money and you have a right to charge for them. Too many practices regard consumables as trivial, and don’t bother capturing them when billing. Instead, they are absorbed by the practice but not charging for consumables will eat into your revenue. Charging even R12 for consumables might seem small in the short term, but multiplied by 15 patients a day, it adds an additional R3 9602 to your monthly revenue – or R47 520 a year. By billing for consumables as a separate line item, you can ensure that you are recouping the cost, even without increasing your consultation fee.
Every practice is unique, and there is no magic formula that applies across the board. Most doctors set consultation fees based on time, location, services and expertise and therefore there is no ‘average’ fee. It’s important that you engage with your business partners when setting your consultation fees. They will be able to provide you with insights into your practice and detailed reporting that takes into account your unique set-up and influencing factors.
By using your practice data to have a clear picture of the practice’s financial requirements, in combination with socio-economic factors, you will be more empowered to set fees that will sustain your practice.
1. Value-based on an increase in rate when moving from a Discovery non-contracted to a contracted rate at current claim volume indicated in the graph.
2. Figures based on 22 working day month
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