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March 20, 2019

It Is Not About the Price

As a young consultant, I figured out quickly that I had a knack for selling and embraced my inner ‘BS-er.’ More importantly, I found myself working for an old partner who was the proverbial peddler of frozen water to native tribes in the far north. This guy could really sell.

Invariably, the first time you make a pitch to the prospect, you get to that moment of truth where you put the price on the table. And just as invariably, the prospect objects to the price. That is when you learn that new deodorants should be tested on rookie sales people.

The first time I went back to my mentor to discuss the client’s objection to our quoted price, I was sure the answer was a discount. The old guy leaned back in his chair, looked at me and said, ‘The price is not too high; your solution is too small.’

His point was that if you solve a big enough problem for the client, pricing becomes less of an issue. There is a lesson here for physician practices looking to become focused care platform as a way to sustain long-term independence.

Historically, it was fine for a physician to simply play her role in the broader process. Patients flowed in from somewhere, you did your part, and passed them on to whoever was next. Collegiality, cooperation, and the fact that everyone made enough money along the way were all it took to make healthcare work. 

Obviously, things have changed.

Now, the customer cares about the price. And by customer, I mean everyone who participates in paying the bill – employers, payers and individuals; the government and the tax payers.

They have collectively said, ‘That price is too high.’

So, you have two choices: you can discount the price, or you can come back with a bigger solution that solves a bigger problem that makes paying your price a good deal.

This is the opportunity for physician practices who want to become a platform…broaden the scope of your services so that you were not just a bit player in the overall scheme of things. Solve a bigger problem; take responsibility for integrating and delivering the services that are logically next to yours so that you provide a more complete answer to what the patient needs.

Value-based care is a big principle, not just a form of reimbursement like capitation or something that only applies to big health systems. You can deliver and get paid for value in a lot of ways, and when you do, you change the discussion around price.

Tim Coan
Tim Coan

CEO and founder

Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.