The Price Is Right

All practices benefit from regularly reviewing their procedure pricing. Below are some strategies to get you started.

The Price Is Right

It’s no surprise—the cost of an elective cosmetic or dermatologic procedure is an important factor for patients as they consider not only who will perform a procedure, but whether they will even have it done. According to a recent study by the American Academy of Facial Plastic and Reconstructive Surgery (AAFPRS), cost is a major deciding factor for 71% of patients.

For practitioners, pricing can be as much an art as it is a science. It’s not just about calculating how much is needed to cover overhead costs, salaries and supplies—including equipment and disposables—setting prices also attaches value to more intangible items, such as a doctor’s experience and expertise.

“Patients are buying our ability and our skill in treatment with that product,” says Heidi Waldorf, MD, of Waldorf Dermatology and Cosmetic Surgery in Nanuet, New York. When patients raise a question about cost, Dr. Waldorf, who is also director of Laser and Cosmetic Surgery at Mount Sinai Medical Center, has a ready reply. “If a patient says, ‘It took only 20 minutes to do,’ I say, ‘Actually, it took 20 minutes and 20 years of experience.’”

Part of the challenge is weighing what you need, what you deserve, and what consumers in your area are willing and able to spend on treatment.

Setting prices low may attract a volume of patients to your door, but it may not bring the type of patients that will sustain a practice. “Customers who constantly shop prices are not as valuable to us as those with whom we develop a long-term relationship,” says Edwin Williams, MD, of the Williams Center for Plastic Surgery with offices in Manhattan and Latham, New York. On the other hand, setting prices too high may scare away prospective patients.

Starting Points

Both new and existing practices benefit from comparing their pricing strategies to other similar practices, and there are several resources available to help you get started. The American Society of Plastic Surgeons (ASPS) offers statistics on procedure pricing nationally. These figures are available on the ASPS website (plasticsurgery.org). Input on pricing can also be sought from marketing managers or manufacturing representatives. “You can get some feedback from reps as far as what they think the market will bear,” says Edward Farrior, MD, a facial plastic surgeon in Tampa, Florida, and president of the AAFPRS.

Dr. Waldorf recommends seeking information from other practitioners at professional meetings and conferences. “When you’re at a meeting, you’re learning from people speaking on the podium, but even more, you’re learning between sessions when you’re talking to your colleagues,” she says.

For procedures, such as injectables, the standard approach is to double the price of the materials used. But practices will benefit from delving deeper when setting competitive prices that will support the facility’s bottom line. “You can come up with a cost based on expenses and what profit you need to send your kids to college, but you also need to be competitive in the market,” says Dr. Farrior.

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Dr. Williams advises physicians to study the marketplace and know what their competitors charge for the same procedures, even if it requires picking up the phone to do a bit of secret shopping. “Every area of the country has fees that are different based on the geographic area,” he says. “We benchmark and try to figure out what others are charging. If I see that in my area rhinoplasties are $7,000, I’d be silly to charge $12,000.”

He does tend to keep his prices a little above his competitors, however. “My fees are 5% to 10% higher than everyone else because I believe I am worth it,” he says.

Prices and Branding

In addition to benchmarking prices based on national statistics and local competitors, practices will benefit from looking at their specific location and brand. “Do you want to be the Nordstrom of high-end providers or the Walmart of low-cost providers?” asks dermatologist W. Philip Werschler, MD, of Werschler Aesthetics in Spokane, Washington. “I’m not critical of being Walmart; it exists for a reason.”

He feels that most practitioners don’t spend enough time considering what they want their brand to be and who they want to serve. For instance, much of Dr. Werschler’s patient base is farmers and small business owners, so he keeps their incomes in mind as he considers pricing. “I think one of the most critical mistakes is not looking at your consumer base when you price,” he says.

Location also affects pricing. Typically, practices based in urban locations charge more based on their higher overhead costs, while patients in rural areas expect lower prices.

While prices vary by region, so do strategies for how prices are calculated. On the east coast, the area of the body being treated typically determines the price of botulinum toxin procedures, according to Dr. Werschler. Someone with a large forehead, for example, would pay more than someone with a smaller one. On the west coast, the practice has been to determine the cost based on the volume of neurotoxin delivered.

Dr. Werschler keeps the prices of fillers in his office at the same price no matter what company manufactures them; that way patients aren’t tempted to choose a product simply based on price. “When I make recommendations to patients, it’s solely based on their best interests. It makes things easier,” he says.

Discounting and Promotions

Many of Dr. Waldorf’s patients are savvy enough to ask if there are any discounts or rebates from the manufacturers that can be passed on to them. Today, she ties manufacturer discounts and rebates to special open house events to introduce new procedures.

She also provides discounts to patients undergoing multiple procedures at the same time. “If patients have more than one treatment done in a day, I will group it so they will get a discount,” she says. “It makes sense because I am already there. I’ve done the preparation and I want them to do all the procedures so they will have a better result.”

However, she shuns the idea of offering pricing discounts on Groupon, LivingSocial or other social media websites. She thinks they devalue the expertise of the physician and send the wrong message to consumers. “I didn’t train in the Ivy League to offer Groupons,” says Dr. Waldorf. “These are medical treatments. It’s not like getting a hair cut.”

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Dr. Williams also shies away from these types of discounts to avoid alienating existing patients. “How would you feel if you were my patient and you saw a Groupon for rhinoplasty for $5,000 when yours was $7,000?” he says.

Dr. Werschler does not offer discounts for medical procedures. He does, however, offer discounts via Groupon to promote new skincare products. These promotions are typically tied to in-house promotional efforts. “There are times we offer discount pricing, sales and promotions, or we may offer gifts with purchase,” he says.

Introducing Prices

In Dr. Farrior’s practice, his patient coordinator goes over pricing with the patient. During the initial visit, the coordinator provides patients with a broad price range. When a follow-up visit is completed, the precise price is given to the patient. Once an official fee is quoted, it’s good for a year. “If we’ve given them a fee, there won’t be any increase if we do the surgery within 12 months,” he says.

Dr. Farrior also charges a 25% booking deposit. “It keeps people from occupying the schedule and then canceling,” he says.

Once prices are set, they need to be revisited on a regular basis. Dr. Williams recommends reviewing them annually. While setting prices may seem a difficult task with ample ways to go wrong, the advice Dr. Williams offers on setting prices is simple. “The answer is to be fair in your pricing and deliver value consistently,” he says. “You can set the fee at whatever you want, but people are going to judge you on the results.”

Annemarie Mannion is a Chicago-based freelance writer.

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