The Pricing Gap: How Small Adjustments Create Big EBITDA Wins
Pricing problems are common across healthcare practices. Fees stay the same while expenses rise each year. Owners want stronger margins but feel unsure about raising prices or adjusting cash services. They worry about coming off as pushy.
The truth is simple. Most practices lose profit because their prices do not match the value they deliver. Your work helps people move, feel better, recover, and return to their lives. Your fees should reflect that.
Below is a clear process that any owner can follow. It helps you review your pricing, raise your margins, and increase EBITDA in a steady and data-driven way. You will not feel salesy. You will feel aligned with the service you provide.
Why Pricing Problems Shrink EBITDA
1. Outdated pricing that never changed
Many practices set their cash rates years ago and have not touched them since. During that same period rent, payroll, insurance, software, and supplies increased. When pricing stays flat while costs increase, your EBITDA drops.
Industry expenses rise about 3 to 6 percent per year. If your pricing sits still, you lose ground every year.
2. Low cash-pay rates that do not reflect the value
Cash services often carry better margins than insurance services, but many owners underprice them. When this happens, cash services help patients but do not move profit in a meaningful way.
If your cash rate is close to or below your average insurance reimbursement, you are leaving money behind.
3. Underutilized billable services
Many practices have billable codes that are rarely used. This can happen due to habit, fast-paced days, or lack of training. Underbilling lowers your average charge per visit and reduces your EBITDA.
Your team should know the value of each service and when it is appropriate to use it. When every visit reflects the real work done, your margins improve without raising a single rate.
How to Review Your Pricing in a Simple Step-by-Step Way
You do not need a complicated analysis. You need a clean, organized review. Use this process once a year.
Step 1. Pull your current fee schedule
List every cash service and every insurance rate. Include:
average reimbursement per visit
average charge per visit
top payers and their percentage of your total volume
cash service menu with units and pricing
Owners often discover that they charge less than what the market currently pays.
Step 2. Compare cash services to your average reimbursement
A cash rate should always exceed your average insurance rate.
If your average reimbursement is 68 dollars and your cash visit is 70 dollars, the margin is too thin.
A healthy target is at least 20 to 40 percent higher than your average insurance payment. This gap protects your cash flow and raises EBITDA.
Step 3. Benchmark against your local area
Look at other healthcare service providers in your region. Do not compare yourself to chains or hospitals. Compare to similar outpatient environments.
If you are priced far below your market, you can adjust without worrying about fairness. You are simply matching the value others recognize.
Step 4. Review underused billable services
Most practices have at least three charges that are rarely used but clinically appropriate. When you find these, ask your team:
Are we forgetting to charge what we are actually doing
Do we know when this service applies
Is our documentation supporting the work
When done correctly, this single step increases revenue per visit quickly.
Step 5. Decide which changes matter most
You do not need to change everything at once. Start with:
cash visit rates
specialty services
wellness or performance visits
evaluation fees
re-evaluation fees
You can adjust these with little resistance when you communicate the value clearly.
How to Adjust Pricing Without Feeling Salesy
Most owners dislike raising prices because they care about patients. They do not want to seem like they are upselling. When you follow a clean and transparent process, patients understand the change. Here is how to do it.
1. Tie your pricing to the value delivered
Explain your updates with direct, simple language.
Example:
“We reviewed our pricing to match the rising costs of running the office while keeping the same level of care you expect. These changes help us continue providing high-quality service.”
This is honest and easy to accept.
2. Give advance notice
Send a short message 30 days before changes begin. Keep it simple.
“Starting March 1, our updated cash rates will go into effect. Thank you for trusting us with your care.”
Patients appreciate clarity and honesty.
3. Make sure your team uses the same message
Your staff must explain the change in the same clear and calm way. Patients feel confident when the message is consistent.
4. Train your team on value communication
Your team should understand the outcome your services create. When they explain why a service helps the patient reach their goals, the conversation feels natural.
Example:
“This session includes hands-on work and targeted exercises to help your mobility improve faster.”
It is not salesy. It is educational.
Align Prices With the Real Work Your Team Performs
A strong practice tracks a few key metrics. These show when pricing changes are needed.
1. Average charge per visit
If this number is low, you may be underbilling. Use this as your early warning sign. It is one of the first metrics listed in the Production Debug Checklist because it immediately affects cash flow.
2. Percent prescribed treatment
If patients do not complete their plan of care, your revenue per patient falls. Clear communication, stronger scheduling, and better education raise this number.
3. Over the counter collections
If your team does not collect money that is due at the visit, you lose profit. Tracking this each week helps you fix problems early.
These metrics give you control. When you know the numbers, you make better decisions, increase EBITDA, and avoid guessing.
The Simple Pricing Framework
Use this whenever you adjust your pricing.
1. Review your current rates
Look at what you charge. Look at what you get paid.
2. Compare to market standards
See how you stack up to the local market.
3. Raise rates where there is a gap
Close the gap between your value and your pricing.
4. Train your team
Make sure they can explain changes cleanly.
5. Track the results weekly
Monitor your key metrics and watch your margins improve.
This approach is steady and predictable. No drama. No big announcements. No pressure.
The Impact on EBITDA
Even small pricing adjustments move EBITDA more than most owners expect.
A 5 dollar increase in cash services
A 10 dollar increase in evaluation fees
A 7 percent increase in average charge per visit from proper coding
Better use of billable services
These changes often add tens of thousands in yearly profit. When combined, they create strong EBITDA growth and higher company value.
This matters if you ever want to reduce clinical hours. It matters if you want a better lifestyle. It matters if you want an exit strategy with a higher valuation.
Final Thoughts
Raising prices is not about squeezing more money from patients. It is about building a stable, healthy business that can continue serving your community. When your pricing reflects the value you deliver, your margins strengthen, your stress drops, and your EBITDA rises.
Most practices do not need a big overhaul. They need small, deliberate adjustments. These simple changes create measurable progress.
If you want help reviewing your pricing, increasing your margins, or building a plan that improves EBITDA without feeling pushy, you can schedule a coaching call. I walk owners through a clear process that raises profit and creates long-term stability.
If you want to start this process, reach out and we can walk through your numbers together.
