Lead-Balloon Letter: How Not to Announce a Fee Increase

Right up front we want to say that we’re more than understanding about the financial struggle that goes with operating a medical practice. The nation’s economy remains soft, reimbursements are down, overhead costs are up; private practice is a tough business. (Most businesses—large or small, product or service, retail or otherwise—feel a financial pinch, including our own business.)

What’s more, it’s always a painful and difficult task to announce a fee increase anywhere in the business world…to patients, patrons, clients or customers. No doubt the following “Dear Patient” letter was a struggle to compose. This is a real letter (provided to us by a real patient) that announces that patients will soon be charged a new $350 annual administrative fee.

Although we’re sympathetic to the business problems of this specialty practice, this letter is an example of how not to announce a fee increase. If you were a patient of this practice, what would you be thinking and feeling? How would you respond?

“Dear Patient,

“[Our medical practice] is committed to maintaining the highest level of medical care possible. We have the most competent staff, and we treat every patient as an important individual.

“The cost of running such a practice, however, is becoming prohibitively expensive because we are forced to perform more and more administrative tasks without reimbursement. For example, our physicians only prescribe quality and necessary drugs and treatment, but both they and our office staff spend an inordinate amount of time filling our extensive forms and making phone calls to insurance companies to justify the treatment plan. In addition, insurance companies make many mistakes on their reimbursement, from 20 to 40 percent of the time, and our staff spends more and more time with them re-billing for their errors. This simply was not the case several years ago.

“All of this necessitates extensive phone calls, more paperwork, and more staff to cover these complex administrative jobs.

“Other time-consuming and costly administrative problems that have increased in the last few years include the following: Calling in prescriptions to save patients an extra visit to the pharmacy; prescription refills by phone, fax, or mail to save patients an office visit; phone calls giving patients test results rather than having them return for an office visit; phone calls for test pre-authorization; utility forms for lower electricity rates; disability forms; airline forms; re-billing to correct insurance company errors; letters for jury duty; disability parking forms, increasing number of general form, signatures and phone calls on hold to get tests and procedures done at the hospital, etc.

“Moreover, we do not use answering machines so that our patients are always able to receive immediate and personal attention.

“A better alternative [to charging a $2,000 concierge retainer] is to simply receive a yearly $350 administrative fee from all patients. The fee will be billed [60 days from now and annually there after.] This allows us to continue to participate in Medicare and private insurance plans. Because all administrative costs will be covered, including the charges mentioned above, we will be able to continue our practice of uninterrupted, excellent medical care.

"We truly appreciate your support and understanding.”

The original letter—about two pages in length—was poorly printed (photocopied) and not personalized. But appearance aside, the main reason that this is will be a “lead-balloon” letter is that patients do not care about the administrative problems of the practice. (Not the slightest bit. Your problem, not the patient's concern.)

Patients are likely to see the rationale of “performing more and more administrative tasks,” “filling out forms,” “re-billing for insurance errors,” as not their problem. And tasks such as “calling the pharmacy,” “test pre-authorizations,” and “disability forms,” are (or should be), they think, included as standards of service.

Although the issues are real and serious to the business of the practice, few patients will be understanding or sympathetic…and, we predict, nobody will be rushing to find their checkbook.

Patient attitudes about healthcare and medical service providers are well documented and not always flattering. Patients and the public perceive that doctors and dentists are well paid if not overpaid, and that the cost of health insurance and medical services are already expensive and are increasing. Privately, some patient attitudes are even more critical. And true or not, their perception is the reality.

We suspect that this notice to patients will be about as unpopular as Bank of America’s proposed Debit Card fees of late last year. (The announced new fee was quickly withdrawn in the wake of a loud consumer outrage.)

The more likely response here is not a flood of protest, but a patient base that will simply and silently shrink away.

Please let us know how you read this letter. How would you deal with this challenge?