Clinics that take tests below cost

Calculating costs in the Radiology and Diagnostic Imaging segment is a complex task. Often on the quick account, considering only the highest direct costs or the most apparent, we get the wrong impression of the production price of our exams.

Unfortunately, today's expenses in our segment are in many cases equal to or even greater than our direct costs. This is due to our pre-production activities such as scheduling, authorization, patient reception and file opening, as well as post-production activities such as report typing, printing, exam delivery, billing, conciliation, disallowance, collection and storage of images.

There are also some historical interpretations that strengthen the culture of accepting to take the exam for any value. One is that it is better to take the exam than to leave the machine stationary. The logic is not that simple. When I get to the situation where the clinic is in a market where there is not enough demand for exams priced at least above cost, I need to review my business. Simply continuing to take below cost will not solve the case. In addition, the clinic may miss a more lucrative exam because the time was filled with a patient.

In fact, the main point I would like to address is the effect on the market that such a practice generates. In economics, it is a widely known concept, the effect of “demand versus offer". Practically, this means that as long as someone sells a service for $ 40 in response to the buyer's demand, why will they pay $ 50 for the same service at another clinic?

In many cases, clinics that practice such practices defend themselves by claiming that the volume of tests that are priced below cost is small, but there is a second bad point in practice: the reference the buyer uses when justifying his dealings with another clinic , who does not understand why the clinic can not do the same exam for $ 40 if your competitor does. Once, at a negotiating table, I heard a health care provider insinuate that the clinic owner was incompetent, could not run his clinic, and therefore could not cover the value of the competitor.

Most operators have not passed on a third of the last ten years' inflation to the amount paid for the procedures, but the cost and expense structure of clinics has risen along with or above inflation, because now inflation, now dollar, costs and expenses always rise.

The Brazilian Hierarchical Classification of Medical Procedures (CBHPM) is an excellent reference, but while clinics are offering cost-effective exams, health insurance providers will hardly adopt the values of the most up-to-date versions because their demand is being met.

Remember that the exam amount must pay 100% of your costs, expenses and investments. Otherwise, it will be a downward spiral in business profitability until it affects its financial sustainability. The grow exam volume model works only if it is over cost at the end of the day.

CBR Economic Advisor

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Written by

Thiago Braga

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