Setting the rates for your services can be a nerve-wracking process. If you charge too much, you may lose potential clients. But if you charge too little, you may not be able to easily cover expenses or make enough profit to sustain your business. It’s difficult to find information online, and asking other therapists in your local area what they charge isn’t a good idea since it can be construed as price-fixing. So, how do you set your private speech therapy rates? In this post, we’ll share what to consider when setting your rates and a formula to help.
What Private Speech Therapy Rates are Typically Based On
There isn’t an exact science for setting private speech therapy rates because various factors go into average fees. We recommend starting by calculating your expenses. First and foremost, you’ll need to be able to cover costs and pay your salary. Consider all of your expenses, both ongoing and one-time costs. Expenses will include things like the rent for your office space, utilities, supplies, and assessment tools. You’ll want to have a buffer for unexpected costs as well.
Speech therapy rates are typically based on three factors:
Education and certifications — What’s your education level, and do you have any extra training that provides added value to your patients? The more education and higher the level of your certifications, the more you can charge.
Experience — What’s your range and length of experience? And is your experience general, or do you have expertise with a specific population or specialization? The longer you’ve practiced, and the more specialized your experience, the higher the fee.
Practice area — What are the costs of living like in your area? And is there a shortage of therapists in your location? Practicing in New York City will command higher rates than working in a small town in Georgia, for example.
Each of these factors plays a role in the value you provide your patients and the fees you can charge. These factors, in addition to your business expenses, will impact your rates.
Start With the CMS Fee Schedule
The CMS (Centers for Medicare and Medicaid Services) fee schedule is a helpful place to start when determining the rates your market will allow. It sets rates for reimbursement for patients covered by Medicare. The rates are listed by CPT code, enabling you to look at the reimbursement amount set for each service. You may also want to look at ASHA’s in-depth analysis of the fee schedule since it shows national average payment amounts by CPT code.
However, there are three problems with exclusively using the CMS fee schedule for your rates. First, this schedule is for Medicare only. It does not cover Medicaid, as the states set those rates. Nor does it cover rates set by private health insurers through third-party payers. And third, the Medicare fees tend to be low and may not adequately cover your expenses. The CMS fee schedule provides a starting point for identifying your rate minimums, but you shouldn’t rely on it alone.
Check Out the Fair Health Consumer Guide
The Fair Health Consumer Guide is another helpful resource to determine appropriate rates in your area. It’s a tool designed for consumers to get a ballpark of costs by medical procedure and zip code. It also shows in-network and out-of-network rates.
This guide is not specifically a rate-setting tool, and it’s not designed for medical practitioners. But SLPs and other medical providers can use it to get a baseline for typical fees in a practice area. It provides a reliable overview of costs by procedure in various locations, letting you know what you can expect to charge as a minimum.
1. Determine Your Billable and Non-Billable Hours per Year
Figure out how many hours you plan to see clients daily. Be sure to factor in enough time for non-billable tasks like phone calls, documentation, marketing, and other essential tasks. Keep in mind that non-billable work may account for up to 50% of your time. So, if you expect to work an eight-hour day, you may want to plan for four hours a day of billable time. Next, determine the number of working days during the year. Be sure to save time for holidays, vacations, sick days, and any other non-working days. Now you have your total billable hours per year.
2. Forecast Your Expenses and Desired Profit
Next, you need to account for your business expenses. These include all of the costs involved in running your business and can include the following:
Ongoing costs — These include your rent, utilities, marketing, continuing education, licenses, insurance, supplies, compensation to your CPA, assistant, and others you’ve hired to help you, and any additional expenses you pay regularly, whether monthly or annually.
One-time or infrequent costs — These include office equipment, furniture, software, professional materials, and other items that you purchase infrequently.
Unexpected costs — It’s a good idea to also factor in a buffer for unplanned expenses like weather-related issues, cancellations, or an illness or injury.
Once you’ve calculated your anticipated annual costs, you need to determine the salary and profit you wish to make.
3. Calculate Your Hourly Rate
Take your expenses plus your salary and profit and divide it by the number of billable hours you calculated in the first step to determine your target hourly rate.
Once you have this number, you’ll want to compare it to what you found in your research. Depending on where your calculated hourly rate falls relative to the comparables for your market area, you may want to consider an adjustment based on any unique value you offer.
Don’t Forget to Update Your Rates Periodically
Reimbursement rates for Medicare, Medicaid, and private payers are subject to change. They’re typically reviewed annually, so it’s a good idea to schedule your own review once a year to see how changes may impact what you can expect. You’ll also want to consider adjusting for inflation and for your increased experience over time.
Setting your rates is much less arduous when you know what to base them on and how to calculate the minimum you need to operate a successful practice. Using the steps in this guide, you can have confidence that your rates are within a healthy range.
Request a Demo
If you need a practice management system that works for you, then fill out this form. One of our pediatric therapy specialists will reach out to schedule a call with you.
By submitting this form, you authorize Fusion Web Clinic to contact you with more content and information.