Strategic and Defensible Pricing

Whether you are planning a rate increase this year or simply trying to reach targeted profitability while holding the line on prices, it makes sense to adjust your prices strategically, not simply across the board. The graph below documents results from studies we have recently completed. Through the use of Kreg’s proprietary strategic pricing model we have helped hospitals increase their bottom line by an average of $1,000,000.

Our system analyzes payer mix and various payment methodologies for each individual charge item thereby enabling sensitivity testing of each charge item to maximize net revenues by strategically setting your prices. Additionally, our process facilitates the review of the price adjustments by department managers for their review and input. You also have the ability to include procedural costs in the model to allow for “cost-based” or “defensible” pricing analysis in your pricing models

Based on Kreg’s extensive 20+ years experience assisting hospitals with strategic pricing, we are uniquely qualified to provide assistance and conduct strategic pricing studies. Our experience indicates that charge based payments can generally be increased by 2% to 4% yielding a return on investment of over 10 to 1. In addition to identifying charge-based payers by procedure, our model accounts for price changes on cost based payments. Also, prices are set at or above applicable fee schedules to avoid being reimbursed below a payer’s fee schedule.

Our strategic pricing model allows you to forecast the effects on gross and net revenues related to changes in payer mix, changes in volumes by charge code and the addition/deletion of specific charge codes. Our model allows you to group like or similar charge codes and price them consistently by CPT4/HCPC or revenue code.

We also offer the option to license our Strategic Pricing model for ongoing use. In addition to strategic pricing, the model provides you with the ability to build a detailed revenue budget by department, by charge code and by revenue category (e.g. inpatient, outpatient, emergency etc.) and spread the charge item volumes by month across the fiscal year.

Please use our free Online Price Study Calculator to get an estimate of the projected net revenue increase your organization could receive from one of these studies.