The Audacity to Charge—A Fee for Service Model from the Trenches: An Interview with Dr. Angela Esterline, Evansville, IN

Author: Brian Taylor, Au.D.

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Angela Esterline, Au.D., epitomizes an entrepreneurial spirit rarely found in audiologists. As she mentions in her brief interview, she spent the first two and a half decades of her career employed in several settings. It was a calling to provide better care to her patients that got her into private practice. Once she established her practice, it was that same dedication to delivering high quality patient care that inspired her to try charging a fee for the services provided. Along the way, she discovered that her fee-for-service model increased her practices profitability. Read her interview to learn how one private practitioner from the heart of America made it happen and exceeded her wildest dreams.

Brian: Angela, tell us about your path into private practice.

Angela: Over the past 26 years I have worked in a number of different settings. ENT, hospital, state residential schools, nursing homes, an air base, and finally (thankfully) private practice. The different settings all had strengths and weaknesses. The weakest point shared by all the places I have worked is time spent with the individual. Third party insurance and other billing issues made it difficult to spend quality time with patients.

Brian: What were some of the reasons you decided to unbundle or itemize services from the hearing aid?

Angela: It’s really all about value. Clients place value in the things they pay for. They pay for their insurance and whatever the insurance pays for ... all of it has value. Insurance might pay toward a hearing aid, and as such hearing aids are marked up so the provider gets reimbursed for “free service”. But that doesn’t seem right to me. I want to be open with my clients, develop a relationship of trust with them. So, I have chosen to not offer free service. I charge a fee for all my services. My hearing aids are reasonably priced, and my services likewise. When we add the two together, I am very competitive with other offices in the area. The difference is the service and individual attention. My clients know what they are paying for and they are seeing the value in …. me!

Brian: Can you share with us how you went about establishing your unbundled services and setting up price points?

Angela: I started with a business analysis to determine how much income was needed to fulfill my financial obligations and my personal financial goals for the year. I divided that number to determine what my per hour charges needed to be. Then we looked at common insurance reimbursements for different tests and procedures. We also looked at some of the pricing around us through “secret shoppers”. (Our secret shoppers gave us a lot of good information about not only pricing but also how callers are treated in other offices. This has been invaluable when training our front desk.) From all this input we were able to come up with a very competitive list of services and prices. Over the past couple of years we have made adjustments and I think we are running more smoothly than when we first started.

Brian: Given you’ve only been in practice for two years, how has unbundling effected your bottom line?

Angela: Bottom line—that phrase makes me smile. In the first year our bottom line started at, well, it was nothing. By the end of the first year we were on par with the national average for a single location, one full time provider office (based on the Phonak-sponsored benchmarking survey). That kind of blew us away. Our first year! And, we were on par with the national average. Cool! Our second year-end report showed a 49.6% growth over the first. I have to say unbundling has had an amazingly positive effect on our bottom line. The business continues to grow at a double digit clip well into our third year.

Brian: I know some audiologists are a little nervous about changing how they price things in their practice, Do you have any insights that might quell their fears?

Angela: Change is a scary thing for everyone. Making that decision to throw out the old, comfortable way of doing things in exchange for something new that someone else says will work....nerve wracking, indeed. I started from scratch so the only one who had to change was me. Transitioning an entire office will take time. Get everyone on the same page first. Educate the client base on the changes that are coming. Respect the clients’ intelligence. Once we explained to the clients what we were doing and why we thought it was in their best interest, we have not had any push back from them. This process works!

Brian: I know one of the bigger concerns is related to giving patients an incentive to not come in for necessary follow up appointments….that is, a patient does not want to incur another fee for a visit they think they may not need. How do you address that in your process?

Angela: That is absolutely a concern, I am glad you asked about it. We have a fitting fee that is billed with each newly fit hearing aid. That fee includes: the fitting appointment, four follow-up (adjustment) appointments, and four six-month checks. Technically, we are bundling several appointments together, but the client knows the itemized cost of those services. When questioned about this “bundle of services” I simply explain that routine maintenance is a necessity in keeping the hearing aids functioning at their highest potential. The “bundle of services” gets the client into the habit of coming back. It shows them that I am invested in their long term care. This relationship we are building has value to me and to them. I’m not going to “kick ‘em to the curb” as soon as I get paid. And, letting them know I want to keep their instruments functioning rather than sell them a new one or make them pay for preventable repairs builds trust.

Brian: What are some of the services you charge for?

Angela: We charge for testing, of course. That has been our toughest hurdle, believe it or not. In our town there is a lot of advertising around FREE testing -- hearing tests, vision tests, even computer diagnostics on your car. But again, consumer education has come to the rescue. We also charge for cerumen management, in-office repairs, out of warranty repairs, accessories, batteries, and of course our time. I believe charging for our time is vitally important in keeping our profession professional. So, I guess you can say we charge for everything, or at least the client knows there is a fee associated with each procedure or office visit.

Brian: What has been the reaction of patients to your unbundling scheme that received services previously from another clinic that were all bundled around the hearing aids?

Angela: The overall reaction has been one of, “Well, that makes sense.” Especially when the service we provide is more personalized than what they have experienced in the past. When we have exceeded their expectations, some of our clients have actually become angry with how they were treated elsewhere. Anger is never the emotion I want to elicit, but those clients have become very assertive marketers for us.

Brian: Any other words of advice you’d like to share with your colleagues with respect to going to a fee for service model?

Angela: I’m not a prophet, but I do see our industry changing with the different delivery models out there. Valuing our service and showing that service value to the client through unbundled pricing, I believe, is the only way we as independent service providers can survive the shift coming in our market.    
Angela Esterline, Au.D. can be contacted at Hearing Healthcare Center, Inc. at (812) 303-4300 or contactus@hearbetterevansville.com.