Setting the right price for aesthetic procedures fuels the financial health of the cosmetic practice and the physician’s professional satisfaction, according to Flora Levin, M.D., an oculoplastic surgeon in Westport, Conn.
But arriving at the magic number requires careful consideration of several factors. Doing so helps to avoids cosmetic procedure commoditization, according to Heidi A Waldorf, M.D., of Waldorf Dermatology Aesthetics , in Nanuet, N.Y.
“What core cosmetic physicians should not be doing is worrying about matching prices with medi spas or others in the community who do not have our level of training. We should not compete on price, but instead on our skill,” Dr. Waldorf says.
Drs. Levin and Waldorf point to these seven key considerations when pricing procedures in cosmetic practices.
1. Disposable Costs
In the last 20 years, there has been an explosion in the number of injectables and devices that have disposables, according to Dr. Waldorf.
“Disposables add a significant amount to physician overhead,” Dr. Waldorf says. “Equipment is a fixed cost, but disposables add cost to each procedure. When considering two otherwise equivalent procedures (time required and whether physician or staff is provider), the one with higher disposable costs will generally need to be higher in order to cover cost and make a return.”
There are variables, however. In some cases, physicians might get discounts on disposable costs, which they can choose to pass on to patients as a special. Physicians frequently bundle procedures into a single price package, to better meet patients’ desired outcomes and better absorb the costs of expensive disposables, according to Dr. Waldorf.
It is critical to make sure that patients are comfortable with the price of the procedure relative to the expected clinical result. The cost to the physician and price to the patient of a technology-heavy noninvasive procedure may be high and the results may be subtle. That needs to be considered both when setting prices and when recommending procedures to a given patient, Dr. Waldorf says.
2. Time Required for Doctor vs Staff Member to Perform the Procedure
The doctor’s time is more expensive than a staff member’s time.
“If the doctor is in the room doing a procedure for an hour, that’s taking the doctor away from doing other things that only the doctor can do,” Dr. Waldorf says. “Procedures done by ancillary staff free the physician to see other patients.”
States vary in laws about physician oversight and regulating which procedures staff members can and cannot perform, according to Dr. Waldorf. In states in which physicians only can use energy-based devices, for example, the pricing will need to be set higher or the doctor may need to accept a lower profit, she says.
Next: Physician Skill and Experience
3. Physician Skill and Experience
Dr. Levin says she factors in whether a procedure is unique to her specialty or whether she has specific expertise or experience that adds value to her offering it.
“The price should reflect the skill and expertise of the physician,” according to Dr. Levin who says that she charges a premium for cosmetic eyelid surgery because of her level of expertise in that particular area.
Another consideration, she says, is whether she’s the only one or one of a few in an area offering a procedure or if it’s widely available.
Some physicians prefer to price by area or outcome rather than syringe or unit, but either way patients must be educated that deciding where to have treatment is not like seeing the same dress at two stores and picking the one on sale, Dr. Waldorf adds. “…the patient is not ‘buying’ the product. She is paying for you to help her achieve an outcome with it.”
4. Practice Overhead
A practice’s general overhead includes everything necessary to function in a practice, according to Dr. Waldorf.
Factoring general overhead into pricing is a general business principle, she says.
“You have to make sure that you’re going to cover your overhead to stay open,” Dr. Waldorf says. “It’s not just the cost of the procedure; it’s not just the disposable; it’s everything else going into it, including the staff required and fixed costs.”
Fixed costs include rent or mortgage payments, equipment costs, electricity and more. In essence, the doctor would look globally on what it costs to offer a procedure and determine pricing based on the desired return on investment.
Factoring in overhead can also help doctors determine whether to offer procedures or how to offer them for less. Dr. Leven takes into account her overhead for each procedure and the time it takes to perform it versus what it brings in. Then, she can decide, she says, whether it makes sense to do at all.
5. Geographic Location
Doctors in or close to major metropolitan areas generally have to charge more because their overheads are higher, according to Dr. Waldorf.
Dr. Waldorf, who practices in metropolitan New York, says experienced colleagues in practices elsewhere often charge less for the same procedures. Despite that, they have the same profit margin because it costs less to run their office. Meanwhile, she sees recent graduates who can charge much higher prices because they practice in New York City.
Geographic location can impact many costs associated with practicing, including staff pay, rent, etc., according to Dr. Waldorf.
6. Anticipated Outcome (and What It Takes to Get There)
It makes sense that doctors should consider factoring in likely outcomes.
“For example, if multiple sessions of a given procedure are expected to achieve the desired result, like skin tightening with Pelleve [Cynosure], the per-treatment price should be lower than a one-and-done procedure like Thermage [Valeant Pharmaceuticals] or Ulthera [Merz Aesthetics] on the same area,” Dr. Waldorf says.
7. What Colleagues Are Charging
Dr. Levin says she does market research, looking at the range of prices for a procedure charged by other physicians in her geographic area.
“There is often a wide range for the same procedure based on geography. Today’s patients educate themselves and are often aware of the average cost of procedures. I don’t set prices so low that it attracts those looking for the ‘cheapest deal.’ Those patients tend to not be loyal. Patients often know the ‘you get what you pay for’ concept. However, I also do not set prices at the very top of the spectrum, so not to drive away patients who are cost-conscious,” Dr. Levin says.
Dr. Waldorf says it’s wise to ask friends and colleagues in similar regions what they’re charging for a particular procedure to get a sense for pricing. She’ll also quiz sale representatives about what physicians in the region are charging on devices they’re selling.
“To screen out the ‘doctor shoppers’ and ‘sale seekers,’ my staff doesn’t quote any prices on the phone other than the consult,” Dr. Waldorf says, “and I certainly would never participate in a GILT or Groupon discount.”