How to target your healthcare organization advertising for the best return and profitability.
Not to say that a lot of doctors are out of touch, but…
If you were to ask 100 doctors what Procedure “X’ reimburses, more than 90 would be able to shout out an answer with 100% certainty. The trouble is, at least 80 of them would be 100% wrong.
The unfortunate truth is that most doctors – regardless of the profession and specialty -are painfully unaware of the nitty-gritty details in rates, charges, margins, and other crucial money matters.
Sure…you’re busy and your Business Manager and billing staff are the detail watchdogs. Furthermore, you (like all ethical doctors) provide care based upon what is in the patient’s best interest, not based upon what reimburses well.
However, if you are actively promoting to attract certain types of cases (those that either reimburse well or are professionally fulfilling), understanding the ground-level economics of case size, profitability and other factors can make or break promotional success.
The objective, of course, is to attract larger and more profitable cases with your advertising dollars. To give your Return-on-Investment the greatest efficiency, your selection of the service or procedure that will be your advertising focus should be done carefully, not casually. Here are some points to ponder as you sharpen your pencil.
Assume that you don’t know: The playground rules change all the time. What’s “usual and customary” the last time you looked could have changed when your back was turned. And some reimbursement allowances, for example, indeed go down, but some others go up. You can’t shoot from the hip…keep your pencil sharp.
You can’t lose a little on each case and expect to make it up in volume. While large cases are likely to be more profitable, you need to also factor in a realistic allowance for your time.
In selecting what to promote, think in terms of a “dollar-per-minute” barometer. If, for example, Advertised Procedure “A” generates $5,000 in gross new patient revenue, but typically requires several patient visits over many weeks, the effective margin may be a lot less than you realize.
By comparison, Advertised Procedure “B” might generate $2,500 per case in gross revenue, but “B” rarely requires more than 2 patient visits to complete within a couple of weeks. Consider time-versus-revenue as you focus on exactly what to promote. The amount that drops to the bottom line will count the most.
Some elective care is not always the professional’s favorite procedure. Here’s an illustration from urology where there are not a lot of promotional options. We have never met an urologist who took his/her specialty training in order to do vasectomy procedures. But this quick and simple elective procedure is often in demand and reimbursement is good. It is especially good when the urologist can do several procedures in an hour or 2.
The urologist who chooses to advertise vasectomy procedures often realizes good revenue for the professional time required-even when it’s not a procedural “favorite.” It’s a promotional hook that more than pays for itself and brings in new patients who have other needs that the urologist can treat.
What if you don’t have high-dollar services to promote?
The economics of smaller case sizes require greater efficiency for your marketing dollars. In other words, each dollar spent has to work harder in generating a solid, measurable response with each exposure. Done well and done right, your initial Return-on-Investment needs to be positive. And, as your external advertising effort brings new patients into the office, your internal tools (such as one-minute message, brochures, video and other tools) can also go to work for you.