From Confusion to Clarity: How Cash Pay Pricing Really Works
“Price is what you pay. Value is what you get.”
-Warren Buffett
“How much is this?” Indeed, that is a question we ask often, whether it be for a doctor’s visit or that dinner you thought your plus-one was gonna pay for. Pricing is just as crucial in the realm of cash pay medicine. You might wonder—how much should be a routine visit be? What about monthly/annual membership fees? Let today’s article be a windshield giving you clear sight on how to tackle this.
Let’s briefly cover what you might encounter (Note: this analysis is for outpatient medicine, not inpatient work done at hospitals, etc.). We’ll sprinkle in a little business model refresher. I’ll also show examples of how our fee-for-service direct pay clinic handles fees.
Today’s TLDR—price expectations for the major cash pay models
Price shopping your healthcare
“I have problem XYZ, and I need to see a [insert specialty here] doctor,” is probably where you start. But immediately after that, few things communicate value better than the price tag as well as what those charges entail. Any doctors better understand their prices. Especially at cash pay clinics. Here’s what our clinic posted in plain view on our website’s “pricing” tab:
So, what’s on the page?
The target patient (new vs established)
Fee ranges with time estimates
Style of visit (e.g. skin cancer screening, mole mapping)
Procedures with some variations
These elements are what’s relevant to the specialty. However, we need more context. The clinic has to answer what patients are paying for. We then added a narrative to the numbers just a bit father down the page:
Our clinic highlighted a couple frequent scenarios linked with specific floors. This helps patients better understand what they are paying for. Getting an insurance-based clinic to disclose this is like opening sealed plastic-on-cardboard clamshell packages with your bare hands. I wouldn’t recommend doing that. The usefulness of example visits can vary by specialty. If a clinic frequently performs a certain procedure, outlining fees and setting expectations with pictures or diagrams is better.
Why are we (and other clinics) willing to spell all this out?
Our care is framed as an investment, not an expense. Patients must feel they’re getting a bit more out of the clinic than what’s put in. Regardless of whether you, dear reader, are a patient or doctor, how can we know a cash pay clinic’s pricing is “working?” For us, it’s when there are absolutely no monetary surprises before, during, and after the appointment. It helps when patients know the fees upfront. A skilled office team will be able to present multiple concrete possibilities of fees and negotiate with patients. Then there’s little trouble collecting receivables (or, everything is handled same-day, there are no receivables).
T^2—Transparency and Trust
Isn’t it great when the office says ahead of time that your visit is $150 and then your final statement after the fact is… still $150? Wow. The trust built with price transparency is easier to lose than a politician losing their train of thought. What’s behind those two factors?
Transparency)
Linking dollars with services and value-adds (e.g. $150 gets you an office visit involving X, Y, and Z)
Mentioning conditional factors, especially regarding procedures
Getting ahead of common questions the patient may ask, such as:
What am I getting?
What happens after the visit?
Trust)
Executing everything stated above, not just once, but every time—much easier to say than do. This is where the best cash play clinics stand outs
The ink behind the price tag
Any list of factors affecting the price of a medical visit is probably too short. God knows that even the moon’s effect on the tide level changes what a clinic feels like billing the health plan. In any case, there are several key drivers.
Cash pay medicine price adjustments
Zip codes and demographic
Who lives in the clinic’s general vicinity? Is there a smorgasbord of young work-from-home warriors, without family and just settling in, wishing to establish care with multiple physicians? Do the locals prefer to buy a killer pair of Amiri jeans instead of getting a physical? Is the neighborhood a big fan of Chinese and Ayurvedic medicine?
You get the idea. The core group and the cash pay clinic’s approach have to mesh well. Patient circumstance remains teh cornerstone here.
Specialty
Huge determinant of price. A neurosurgeon’s services don’t quite match with a gynecologist’s. This is where patients must probe the clinic to learn what they’re getting. If visiting the dermatologist for a skin cancer screen, are you indeed getting a complete exam with pictures and, if needed, plans to tackle any problem spots?
Patient age
This matters in two ways. 1) A core patient demographic (e.g. Medicare patients) being on the older side can influence services. I’ll speak for derm. Elderly patients who’ve built up decades of sun exposure generally have greater vulnerability to skin cancer. The work required to take better care of them expands. No mole can be left unturned. Exams go longer. More pictures are taken. More documentation is required. Greater complexity, depending on the speciality usually accompanies higher prices
For concierge setups in particular (and retainer to a lesser extent), age is an explicit price lever. Most direct primary care offices show membership fee tiers by age group.
Materials for procedures
Stitches, gloves, sterile equipment, and Lidocaine cost money. There will be price adjustments for that.
Naturally, stellar care has to back up whatever’s billed. At our clinic we embrace the ‘underpromise and overdeliver’ concept. That’s not to say we understate the value of the appointment upfront. We mainly choose to give better service than what’s stated. That’s a key nuance for patients and doctors alike to understand. Hence the separation between a good and great clinic.
Let’s not forget the scourge of inflation (esp. in recent years)
With many businesses, you might see a wee little fine print saying that prices are “subject to change at any time.” This stays true for medical clinics as well. Why? Standards, of course, must be updated. Imagine if a new car is sold at 100 horsepower. That’s astronomical in the Model T era, but a pittance today.
Also critical: here’s what NOT to do for cash pay clinic pricing
Keep your price changes under the inflation rate over a year. See above.
Surprise patients with fees.
Never update your initial pricing even when your service improves over time.
Offer the world and give a mountain. The mountain’s nice, but patients expected more.
Patients should take note of the aforementioned behavior.
If there’s some price competition between direct pay practices in a given area, those clinics will be scanning each other’s publicly-known fees as well. Want to know more about tackling prices at a cash pay clinic? Start a conversation with me on Substack or @caretocash on x.com.