This episode is brought to you by PAR.
The Feifer Assessment of Writing examines why students may struggle with writing. The FAW and the FAW screening form are available on PARiConnect- PAR’s online assessment platform. Learn more at parinc.com\faw.
Okay, everybody. Hey, welcome back. This is the 3rd and final episode of Summer Slam 2021. If you haven’t heard of the previous two, you can go back to the past couple of Thursdays and check out Summer Slam 1 and 2.
Just as a refresher, Summer Slam is a short [00:01:00] series I’m doing just to give you some quick, actionable tips for the summer that you can put into play in your practice and hopefully move the needle quite a bit with some aspects of your practice that are pretty meaningful and important.
So for the episode today, I’m going to be talking about revisiting your rates. I’ll be talking about how to do this both in an insurance-based practice and a private pay practice. Again, the hope is that you can walk away with an action item or two and move forward to raise your rates starting over the next few months.
So, without further ado, let’s jump into talking about rates.
[00:02:00] Fees, fees, fees. What do we do with our fees? My goodness. Today, I want to talk with you about what to do with your fees. This is such an area of concern and confusion for a lot of practice owners that I hope to provide a little bit of clarity and a little bit of a fire under you to move forward and consider raising your rates. So that’s the moral of the story here. Spoiler, I am going to ask you to raise your rates. But here’s some background.We should be raising our rates at least 3% each year just to match inflation. I’m no economist. So, if any of you out there are like, “No, it’s not 3%” [00:03:00] feel free to let me know. But my understanding is that inflation is going to happen. So, just to keep up with the standard of living and how to live in our society, in the US at least, we should be raising our rates about 3% each year. What that means is if you charge $100 an hour, you could raise your rates to $103 an hour. If you’re charging $200, it would be $206 and so on and so forth. So we’re not talking about huge increases in fees. You could certainly do much more and you could raise your rates much higher than that, but 3% would at least keep up with inflation.
But how do we actually do that logistically and practically?
Well, the first stage or the first step as is true with many actions is to [00:04:00] give yourself a deadline. Now, many people will raise their rates in January. It just kind of goes along well with the new year. It provides a nice demarcation or breaking point to let your clients know. A lot of us revisit and make resolutions around the new year anyway. So, there’s concordance there.
But a lot of people will also raise rates in September, particularly if you work with kids because the school year starts and a lot of the time we’re seeing increased referrals in September, and folks who work with kids are kind of used to academic calendar. So you could also do it in September.
But don’t get me wrong. You don’t have to wait for anything. I do think if you have existing clients that it is only fair to provide some lead time and then give them a little bit of warning before you raise your rates. I would ballpark 3 months, [00:05:00] I think is always a good timeframe for me to give a warning to any existing clients. A lot of us, if we’re solely doing testing, we don’t really have to worry about that. But if you do have some therapy clients in your practice, then I think that 3-month window is pretty fair. It’s plenty of warning for them to accommodate increased rates.
So, the first step again is just to decide when you’re going to do it. So, if you’re sitting down here and you’re taking a little time in the summer, you could say, okay, I’m going to raise my rates, starting in September or I’m going to raise my rates starting in January. Whatever you pick, just pick it, put it on the calendar, and stick to it.
So how much do you raise your rates? That’s a great question. I do have folks comment about how they get concerned about raising their rates too [00:06:00] much. And I totally understand that. I mean, if you raise your rates 20% every year, I think that’s going to potentially be excessive.
There are a number of factors to consider. One is when was the last time that you raised your rates? So if you haven’t raised your rates in a number of years, the longer it’s been, the more you’re going to raise. The shorter it’s been, I think the smaller and increment you can raise them. Again, we have that 3% baseline just to account for inflation. So, if you’re feeling kind of timid about it, start at 5% and see how that feels. So again, that’s going from $100 to $105. It’s going from $200 to $210. These are really not huge increases by any means. But if you want to just do the math, let’s say if you’re making $100,000 a year, an extra 5% is [00:07:00] not insignificant. It’s $5,000. That’s quite a bit of extra each month. That’s a vacation. So, you can see even a small percentage is going to make a difference.
Let’s take a quick break to hear from our featured partner.
The Feifer Assessment of Writing™ or FAW is a comprehensive test of written expression that examines why students may struggle with writing. It joins the FAR and the FAM to complete the Feifer Family of diagnostic achievement test batteries, all of which examine subtypes of learning disabilities using a brain-behavior perspective. The FAW can identify the possibility of dysgraphia as well as the specifics of it. Also available is the FAW screening form which can be completed in 20 minutes or less. Both the FAW and the FAW screening form are available on PARiConnect-PAR’s [00:08:00] online assessment platform, allowing you to get results even faster. Learn more at parinc.com\faw.
All right, let’s get back to the podcast.
So you could start at 5%. You also want to keep in mind what the market rate is in your area. I don’t place a whole lot of stock in the average rates for services in your area simply because other folks may or may not be charging what they’re worth. And if you have an incredibly valuable service like testing, which is often a specialty, I think you can often charge a higher rate than some other mental health practitioners in the community because the service is valuable and it’s often in very high demand. [00:09:00] That’s what determines fees. It’s the market. It’s not other practitioners. And who knows whether they’ve tested the market or not.
So, start at 5%. 10% is also pretty safe especially if you haven’t raised your rates in a while. I’ve known some clinicians that are going to go up even 20% or 30% this year simply because they were either underpriced before or haven’t raised the rates in a long time. So, you can think through what actually works for you in terms of an amount, but pick something and just do it.
Let’s see. Raising rates is important both for private pay and insurance. Private pay, that’s pretty straightforward. You just raise your rates and it increases your revenue. When we get into raising rates with insurance though, that’s a little bit more of a detailed discussion. [00:10:00] A couple of points though. The first is, just very literally with raising rates, you want to do it. Even though your insurance reimbursement may not go up, insurance panels do look at private pay rates in determining their reimbursement and their fee schedules.
So, even if you don’t see that play out immediately in how much you’re getting reimbursed from insurance panels, know that that data is being tracked and can influence future reimbursement schedules. So, don’t just take a backseat and let this slide by because you don’t think insurance cares.
If you want to raise your rates with insurance though, and actually increase your reimbursement, there’s the whole process to do that. It is absolutely recommended. This [00:11:00] is part of my job just once a year sending letters to all the insurance panels requesting a raise request, requesting an increase to our reimbursement.
I did an entire episode on asking for raises from insurance panels. What episode was that? I can’t find it right off the top of my head. Sorry about that. I think it was like 130 or something like that. So, maybe about a year ago, maybe a little more. You can go back. You could search for it pretty easily. I’ll also link to it in the show notes. I’m not going to go into great detail here about how to request increases from insurance panels because I did do so in that episode, but suffice it to say, if you’re an insurance-heavy practice or even if you’re not and you just take two panels, it absolutely behooves you to request increases from [00:12:00] those panels regularly, like yearly. They’re not going to say yes every time, but you got to do it. So check out that episode if you are interested in figuring out more of a strategy for requesting raises from the insurance panels.
Let’s see. What else?
I mentioned giving your clients 3 months of notice if you are going to raise your rates. I think that’s fine. Yeah, I think I’ve hit all the high points today. The main thing to take away is that you just need to raise your rates, period. You just need to raise your rates. This is a common business practice. Rates and revenue are really what drive our practices, whether we are solo or have employees, across the board keeping up with the standard of living and cost of living is super important. So, if for nothing else, [00:13:00] then to match inflation, raise your rates so you’re not falling behind. Summer’s a great time to do that. Hopefully, you have a little bit of extra time over the summer and can sit down and put some thought into this.
This is a pretty short exercise. So, you could easily find an hour to just dedicate to raising your rates and determining an appropriate rate. And there’s going to be some action items from that. You’re going to need to update it on your website and in your paperwork and those sorts of things. But this is a relatively quick process that shouldn’t be too tough for you.
So this is it. I think I’m going to wrap up the Summer Slam series with this 3rd episode. Like I said, go back and listen to the others if you haven’t. We talked in the previous two episodes about revisiting your schedule and revising your battery. [00:14:00] So hopefully, you’re taking away some actionable tips and some things that will just get you thinking, get the ball moving, and help you make some changes that will actually make a difference in your life and in your practice.
Thank you as always for listening. If you haven’t subscribed to the podcast, I would love for you to do that. It’s really easy in iTunes and in Spotify and anywhere else that you listen to podcasts. And we’ll keep increasing the reach and spreading the word about testing.
Well, I will be back with you this coming Monday with another clinical episode. I hope that you have a good weekend in the meantime. Bye-bye.
[00:15:00] The information contained in this podcast and on The Testing Psychologists website are intended for informational and educational purposes only. Nothing in this podcast or on the website is intended to be a substitute for professional, psychological, psychiatric, or medical advice, diagnosis, or treatment. Please note that no doctor-patient relationship is formed here, and similarly, no supervisory or consultative relationship is formed between the host or guests of this podcast and listeners of this podcast. If you need the qualified advice of any mental health practitioner or medical provider, please seek one in your area. Similarly, if you need supervision on clinical matters, please find a supervisor with an expertise that fits your needs.