Navigating Rate Increases in Group Practice

By Maureen Werrbach, LCPC on February 23, 2022
Stacks of coins increasing in height

At some point in your group practice ownership journey, you’re going to have to navigate a rate increase. It sounds complicated and like a hassle, so it can be tempting to avoid the particulars. However, it’s important to remember that the cost of living goes up every year, rent increases (usually yearly), staff requests raises, overhead expenses go up, as well as the cost of inflation each year.

Once you start keeping track of all the expenses that increase year after year, you’ll probably be looking for ways to increase your revenue every year—one great way to do that is by increasing your rate. The trickiest part? Communicating the raised rate to clients. We don’t want to upset our clients, and we want to be as fair as possible while also being fair to the needs of the business. Here’s how you can approach it.

Have a system in place

Don’t approach raising your rate without developing some sort of system. Think through the process of who will need to know and when: new clients, current clients, billers, etc. When clients know what to expect, they’re less frustrated. Consistency can also help. One example is increasing rates every January 1st. It’s a time when things change, and therefore clients are more likely to accept changes around the new year. Benefits tend to reset then and insurances tend to change around this time, so it’s not a huge stretch for practices to adjust their rates at the beginning of the year as well.

Put your rate increases on paper

Once you’ve figured out how you want to approach your rate increase, put it down in your intake paperwork so clients know what to expect. This also lets you refer to it later if they need clarification. An example for this is having your intake paperwork state that increased rates happen every January 1st, at an increase of $5/year. Clients won’t be surprised by the new rate, which leads to less frustration.

Keep your increases consistent

There’s a lot of practices out there that wait years before making their first increase, and then they’ll increase it in large increments, like $20. That can be a hard pill to swallow for many clients who weren’t expecting it, or who were maybe paying their limit to begin with. Having smaller yearly increases tends to be easier for clients to manage.

Remind clients when changes are scheduled

Even if they’ve signed paperwork saying they understand the rate increases, that doesn’t always mean clients remember that agreement when the time rolls around. Make sure to remind them at least one month in advance of the change. You can use the same notice every year. Put it up in your waiting room and have your clinicians remind clients leading up to the increase as well. If you have a HIPAA compliant way to send out mass emails, you can do a blast letting them know about the increase.

Navigating rate increases in group practice is a lot easier when you have a plan in place. Take some time to come up with how you’ll approach it and then just follow the system you’ve laid out so that you don’t have to reinvent the wheel every time.

* The content of this post is intended to serve as general advice and information. It is not to be taken as legal advice and may not account for all rules and regulations in every jurisdiction. For legal advice, please contact an attorney.

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