Setting your own
fees
Central to the business of traditional private practice is the ability to set your own fees – the decision as to what you are worth in your local market. These decisions – especially when made for the first time – are often taken with a great deal of uncertainty. This page will help you understand how many people have set their fees to date, as well as helping you avoid some of the common pitfalls that others have failed to avoid.
What is money worth?
Perceptions
It is important to understand that one person’s perception of the value of money is very different from another’s. While you can decide on your fees based on your own perceptions, you will potentially be aiming too low or too high and it is vital to consider the going market rate for the type of service you plan to offer.
With a several years’ experience now, I always find it very interesting to see the very different reactions that patients make when they discover the costs of a potential treatment, some visibly gasping, others smiling and quickly uttering, “...is that all..?” Provided you have done your homework and can justify your fees, the answer to these responses is the same: “that is my fee.”
£10,000?
An orthopaedic colleague of mine had the opportunity during his early training to work with an eminent, senior and successful gynaecologist in London in the late 1990s. For whatever reason, he was finding his private practice increasingly trying and – in a bid to dispatch his remaining patients to his colleagues – he decided to increase his fees. He decided to charge £10,000 for any procedure – be it a simple D&C, or a complex total hysterectomy. While he expected the occasional patient to still insist on seeing him in his twilight years, he had anticipated that the overwhelming majority of patients would vote with their feet. They did, and he rapidly found himself utterly inundated with women demanding to see the most expensive gynaecologist in London. £10,000 is a vast fee by the standards of most of us, but remember that for many patients this will be a drop in the ocean.
Leaving ‘registrardom’ – and its sessional pay structure – behind…
UK Doctors are paid well, at least in comparison to other EU countries, something that successive governments – and some third party health organisations – have cited in bids to reduce doctors’ pay and fees. The situation in other Anglophone countries, such as Australia and the USA – in which UK doctors usually choose to work over the EU - is usually not cited as frequently, as earnings are typically considerably higher!
As a trainee clinician within the NHS, many of us will have carried out extra ‘sessions’ for an NHS sessional fee and have a concept of what our ‘free time’ – in which private medical practice may be performed – may be worth. Each of us has our own ‘price’, the amount that we are willing to forego precious time with our friends and family for. Before you agree to do an extra session as a consultant for your Trust, or before you agree to start doing some private work - perhaps for a managed care organisation – take some time to establish what you should be paid for such work.
For example, as a new orthopaedic consultant you may wish to compare the income received from (i) an NHS session at your Trust carrying out three hip replacements, with (ii) the income received by doing exactly the same NHS work within your local private hospital but being paid on a case-by-case basis. For specialities where procedures are less time consuming, e.g. dermatology and ophthalmology, the differences between sessional and case-based payments are typically larger still. When you factor in indemnity costs, secretarial and administrative fees, anxieties and the chair time required had these patients been private patients, you may start to get an idea of the level of fee that you will need to charge for your services.
History
The BMA used to provide a list of recommended fees for various procedures that consultants could consult when deciding on their own fee structure. Unfortunately, due to the restraints of competition law, the BMA is no longer able to recommend such fees.
Many practitioners used to use the 1993 BUPA schedule of reimbursements as the basis for their fees. At its inception, the schedule was widely seen as an appropriate level of reimbursement for many procedures, however, with no inflation in medical fees for many procedures since that time, coupled with a more recent downward trend for many fees, many now regard the schedule as of limited historical interest only; exceptions to this include new BUPA providers, who have been compelled to charge no more than the fees included in the schedule for BUPA members (with similar compulsory arrangements for some other insurers).
Many other private medical insurance (PMI) companies
publish their own schedule of fee maxima, including WPA, Aviva and AXA PPP, and it is worth examining these too – in detail - to help you determine what you wish to charge.
You should bear in mind that charging patients above their insurance company schedules may lead to the patient being liable for a shortfall payment. Conversely, it can be very time-consuming (and hence more expensive) for your secretary to bill patients with different insurers at different rates. It is also worth considering that some PMIs may list you on their website as ‘fee-assured’, meaning that other PMIs can see the level of reimbursement that you are willing to work for; this may then come to haunt you at a later stage if you are billing differentially. See the page on relationships with insurers
for further details.
"...time and tide wait for no man, and neither does inflation..."
Fees: key principles
• You and you alone decide the level of fees that you wish to charge in your private practice. Your private practice is exactly that: it is your
business and you have the freedom to run it as you wish. Exceptions to this include those clinicians who have contractual agreements in place with certain PMIs; for patients of these PMIs (only), fee maxima are in place.
• The BMA recommends that your charges should be fair, based on your individual experience, training, ability, effort, skills and resources required, as well as the time needed for the service you are supplying. These are good principles and adhering to this advice will help you to defend your fee structure from third parties, who may be unhappy with your charges.
• Unless you work within a corporation, chambers (LLP) or equivalent, you must not discuss your fees with your colleagues, as to do so may infringe competition law. However, you would be wise to establish via other means the level of fees that your competitors are charging; this is typically easily accomplished through enquiries to competitors’ private secretaries or hospital customer service desks.
• Do not feel compelled to charge at a similar level to your colleagues. If your services are better on many levels – or perhaps are more comprehensive (e.g. if you do not use an anaesthetist but others do, or follow-up consultations are included in your fee) – then your fees may need to reflect this. Remember that consistently providing a quality service will ultimately prove successful in gaining significant market share.
• Ensure that you regularly review your fees: time and tide wait for no man, and neither does inflation. Conversely, you may potentially wish to alter your fees to make your practice more competitive. Remember to factor in your overheads, which rarely fall.
• Inform patients in advance of your anticipated fees, being completely transparent about these charges, providing a written quote in every case. It is important to do so even if a patient is insured. From 2019, relevant fees need to have been available online, as per recent CMA orders.
• As a commodity, private medicine does not seem to be desperately price-sensitive. As the extreme example of the gynaecologist above shows, some patients are looking for the truly reassuringly expensive. You should not
assume that being the least expensive consultant in a particular speciality will necessarily be good for your business.
• Consider whether you want to charge patients based on the type of procedure that you are carrying out, or whether you wish for time-based invoicing, as per most legal or accountancy practices. As your practice gets busier, you may not want to offer procedures that do not command a fee below a certain level; one way around this is to charge based on the time involved in a patient’s care.
• If you do insist on using PMI schedules
to determine your fee levels, you should examine them carefully as there are many procedures that lead to either spuriously high or unusually low fees, which are inappropriate.
• Consider a consultation fee for every interaction, even if you are also performing a procedure that day, and even for virtual consultations. Some PMIs do not reimburse clinicians for this, which can be incredibly unfair on the patient, as some procedure-associated consultations may be very lengthy and entirely necessary.
• If you are a clinician in a ‘service speciality’, for example anaesthesia, radiology or pathology, then you need to ensure that your physicians and surgeons know what your fees are. If these are greater than PMI schedule maxima, then it is good practice to alert your colleagues to this fact. Some surgeons will be very open to you charging your own level of fees; others will prefer you to charge at a more uniform level. Again, providing an excellent level of service and being forever available and affable will stand you in good stead for charging your own level of fees, rather than having them dictated to you.
• If you not recognised by particular PMIs, it is good practice to ensure that members of those PMIs know that, prior to undertaking any treatment on them.
• According to GMC guidance, you must tell patients if any part of the fee charged goes to another healthcare professional. This is important if your fee includes a charge for nursing or other ancillary care.
Who pays?
In private medical practice, the patient is responsible for the payment of clinicians’ fees, even if the patient is privately insured. It is vital to ensure that your administration team always includes patients in the financial aspects of their treatment. Some PMIs will assist patients in resisting settling fees that are in excess of their schedule of fees, unless a written quote has been provided in advance; these schedules are subject to change from time to time and it may prove difficult to establish whether a patient is indeed liable unless a quote has been provided.
Several PMIs have introduced new terms of recognition for new providers, effectively forcing clinicians to charge not only within certain fee levels for procedures and for consultation fees, but also introducing strict rules about how fees for bilateral and simultaneous procedures are charged. For clinicians seeing customers of these PMIs, you may not charge above their schedule maxima or you may face derecognition – i.e. you would be unable to treat any of their patients at all. Relationships with PMIs are covered elsewhere.
Self-funding patients may pay you directly, either in advance or in arrears (by negotiation), or may pay all charges to the hospital in which their treatment is being received. This may be a satisfactory arrangement, however, you may find that considerable amounts of time pass before you receive the funds themselves and you need to be sure that you still maintain control of your fees; ideally, the hospital should consult with you regarding changes in the cost of the overall procedure too.