Pricing of Common Occupational Health Services Q&A

Q: Should we routinely gather information about our competitor’s pricing? 

A: “We do it once or whenever we are responding to an RFP.” 

A: “It depends on what we are pricing; for example, drug tests and labs run about the same everywhere. We routinely do secret shopping by setting up appointments and asking about prices.” 

A: “I know we get 89 cents on the dollar for injury care.” 

A: “We are not a price cutter. If the competition goes down to match our price we are then in a bad place.”

Q: We are responding to our city’s annual request for proposal. Do we go for the low bid or do we just price it out? 

A: “We would price it in terms of projected profit margin and try not to lowball.” 

A: “I start with labor and benefits and try to at least recover costs.” 

Q: What about discounts based on volumes?

A: “Be careful how you structure such arrangements. We give discounts only after a threshold is reached (e.g., for all drug tests after the first 100).” 

A: “Employers speak to other employers, and often compare pricing. Try to make such discounts consistent across your market.” 

Q: Are there any benchmarks for pricing? 

A: “We are in a multi-state market and need to understand the nuances in each state.” 

A: “Understand your market and know your overhead.” 

A: “Pricing can vary from market to market or county to county.” 

A: “Do not look at benchmarks in isolation. Be able to associate with value.”

Q: Our hospital seems to always raise our prices across the board. Is there anything they can do? 

A: “Can be fuzzy. Getting paid for quality.” 

A: “Our occupational medicine does its own pricing unless it is a hospital department such as the ER or lab.” 

A: “I emphasize that occupational health is a ‘retail market’ and not an inpatient market.” 

Q: Who sets the prices for our services, and how? 

A: “Customers set the prices. Beyond our state (Tennessee) fee schedule we find that employer services are ultimately a market-driven number.” 

A: “You don’t want to change prices every year; we do it every two or three years. If you do it every year, clients may start looking at competitor pricing.”

Q: I recently became director of our program’s on-site services. Is there a process for establishing prices for mobile services?” 

A: “We charge by the mile ($2.20 per mile) and adjust by fluctuating fuel prices. We try to split mileage prices with multiple clients on a single run. 

A: “We charge per test. We have something called a ‘parking rate’ which is a small fee if they fall short of promised volumes.”