Show notes
In this episode, we address pricing and how to create a reasonable pricing model for long term viability. We discuss four models of pricing and give the pros and cons for each, along with tips for transitioning and growing your functional medicine practice. This topic is a passion of ours because we often see doctors with an immense amount of knowledge, and skills who are unsure of which pricing model is right for them. This decision will shape their practice, and help them understand how to transition into private practice, create a business model that allows them to fulfill their calling, and finally translate the calling to making a quality living.
Key Takeaways:
[1:25] Functional medicine requires more time spent understanding the root cause of our patient’s symptoms and creating a space for them to tell their story. Finding a business model that allows this is crucial, but so is creating a price structure where doctors can make a living.
[4:13] Insurance Model: Pros — It is often what we know best and what both the practitioner and patient are most familiar with, and can keep costs generally lower for your patient... Cons — Not a lot of time with patients; doctors must hit a higher quantity of patients when using the insurance model, which means they are unable to spend time deeply understanding each patient. This often leads to practitioner burnout.
[5:50] Hybrid Model: Dr. Morris would have been really nervous to move from an insurance model direct to cash, so he elected to use a Hybrid Model. The Hybrid Model provides a stepping stone for doctors transitioning from insurance to cash models in functional medicine. Pros — a great option to include insurance and create membership models to grow your patient base. This model may give doctors more time with their patients, and provides a stepping stone towards a full cash practice. Cons - Each doctor must delineate the benefits of the extra costs of membership, because patients are unlikely to pay the fee if
[8:30] Dr. Morris explains how the transition to functional medicine can often make doctors feel like they have to charge what the industry leaders are charging, even if it is a huge leap for them personally. When starting out, Dr. Morris kept his overhead low so he didn't have to charge as much and he could pass those savings on to his patients. As Dr. Morris’s reputation was growing and word of mouth referrals kept increasing he then felt ready to move to the cash model.
[9:10] Cash Model: Doctors may benefit from crawling, walking, and then running, or in pricing model terms - insurance, hybrid, then cash.. Pros — Cash practice can be a little scary but it allows a doctor to spend as much time with the patient as needed. Cons — It can also be difficult to know what to charge, and to find the sweet spot where you can make a living, but your patients can also afford the extra costs that come with paying for their own supplements and labs. New functional medicine doctors could benefit from offering a discount to their industry-standard rate as they grow their patient base.
[13:55] Direct to Primary Care / DPC Model: Pro — This model makes a lot of sense when you are transitioning to functional medicine. It creates a more affordable way to build your reputation and patient base. You can charge a set fee where people can manage their own appointments and Dr. Morris believes patients really do respect communication boundaries. Cons - ?
[15:35] Contracted Position: When contracted with a hospital, it is still possible to also transition into functional medicine. Pros - you already have a full patient population that you can say, hey, I would love to discuss this with you, but I don't have the allowance to do that during this visit. If you would like to see me in my functional medicine setting, you can see me there, Cons - contract positions often limit a practitioner, especially when it comes to pricing, patients, and practice decisions. To overcome this, Dr. Morris suggests creating a separate LLC or corporation that you can direct patients to, and work with a lawyer and/or accountant to make sure it’s done correctly.
[20:54] Overall, Dr. Morris likes about the hybrid and cash models because they create a space where people don’t have to wait months to see you, and the people that really need your care are able to get it in a timely manner.
Quotes:
- “At first, there will not be a lot of patients banging down your door until you establish that reputation.” Dr. Nathan Morris
- “The more time you spend, the better you are at functional medicine, the more your patients will refer their family and friends.” Dr. Nathan Morris
- It’s important to understand what your needs are in creating a pricing structure, while also leaving room for the patient to meet their needs." Dr. Nathan Morris
- “ It is truly a calling to be a doctor.” Dr. Nathan Morris
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