Access Matters: Pricing Strategies for Inclusive Health Programs

In this episode of the Community Health Management Design podcast, Dr. Tami Moser addresses a crucial aspect of program design: pricing and access strategies within community health programs. Despite the primary goal of helping people, Dr. Moser emphasizes the importance of financial sustainability even for not-for-profit models, highlighting that programs must operate similarly to businesses to maintain operations. The episode discusses several pricing strategies, including cost-based pricing, where all direct and indirect costs are calculated with a margin for sustainability, and value-based pricing, which focuses on the value provided to the community. Sliding scale pricing and bundled pricing strategies are also explored, catering to different affordability and service needs of the community. Dr. Moser stresses the complexity and necessity of understanding and implementing these pricing strategies, taking into account factors such as insurance reimbursements, out-of-pocket payments, and willingness versus ability to pay. Access strategies are another focal point, with Dr. Moser outlining various methods to enhance accessibility, such as offering services in multiple locations, extending hours, providing telehealth options, ensuring cultural competence, and conducting outreach and education. She highlights the importance of aligning pricing and access strategies with the overall service design and program mission to ensure cohesiveness and effectiveness. Dr. Moser provides a real-world scenario of a mental health support program for low-income youth to illustrate how pricing and access strategies can be integrated with service design for improved alignment and impact. The episode ends with an assignment for listeners to develop their pricing and access strategies, encouraging alignment with their program design and mission for better service delivery.

Tami Moser [00:00:01]:
Welcome back to the Community Health Management Design podcast. I'm doctor Tami Moser. And today, we're tackling a critical aspect of program design that often gets overlooked, pricing and access strategies. We'll also explore how to align these strategies with your overall service design to create a cohesive effective program. Ready to dive in? Let's go. When we think about community health program, pricing might not be the first thing that comes to mind. After all, we're in the business of helping people, not making profits. Right? Although, I will say one thing I have to often explain to students is that a hospital might be a not for profit.

Tami Moser [00:00:43]:
It still has to earn a profit, because if it does not, it cannot keep the lights on or people paid. So when you're designing a service, you still have to think about many elements of it like a business. And if you're designing a program to reach a certain community, you really have to think about them as consumers, not just patients. Because if they have a choice about using your service versus another, if we go back to the competitive advantage component, and it's easy to switch, there has to be a reason for them to come to you and stay with you. A reality, no matter what kind of organization you actually run, it could be business to business, business to consumer. All of that requires the engagement of your customer base or your patients. But here's the truth. Even nonprofit programs have to be financially sustainable to continue making an impact.

Tami Moser [00:01:40]:
You can't serve the patient base, the community that you actually want to, if you don't pay a part pay attention to this component of it. Right? So let's start with pricing. In community health, this often means navigating a complex landscape of insurance reimbursements, grants and out of pocket payments or a combination thereof. And here's some key strategies to consider. You can go cost based pricing. This involves calculating all your costs, direct and indirect. Cost just isn't about money you have to outlay to bring an input into your business. It can also include man hours that go into working on that particular service, and you add a small margin to ensure sustainability.

Tami Moser [00:02:29]:
It's a good starting point, but be careful not to price yourself out of reach for your target population. And this is where it can get really challenging. Right? Because cost based pricing means, one, that you truly understand all the costs involved, which by the end of this, hopefully, you will. And the direct costs aren't the problem. Right? Those are really easy, generally speaking, to identify and quantify. But it's when you get into the indirect costs that people often miss things that are a part of the cost structure internally that you need to divide out by the total number you expect to sell to get the cost per. Right? And some of them may be, not only indirect, but not easily divided into units that make sense. So you have to really think about this closely.

Tami Moser [00:03:24]:
But once you get that detail, then the question becomes, what kind of margin are you looking for? There was a time in retail when the markup was a 100%, so that was your margin. Right? If you spent $5 was your total cost and you're doing cost based pricing, your margin is a 100%, then you charge $10 for that $5 costing item. And that $5 should encompass both direct costs and indirect, which means that margin of $5 is actually the profit that you can use for other things. So that's you know, the cost based pricing, while it's simple in many respects and it's easy to understand, it can be challenging to actually get a accurate number that both covers all the costs, but also has a margin that does allow for sustainability while also keeping it below whatever the pricing threshold for that target population is. And then you're also talking about who's paying it. Right? And this also becomes part of the conversation. Is it insurance reimbursements, grants, out of pocket pocket payments by patients? Would it be considered something that their FSA or HSA would allow or not? And so this all becomes part of the conversation you need to have surrounding cost based pricing. Then there's value based pricing.

Tami Moser [00:04:46]:
I actually like this more, but it can be more challenging to both understand and quantify. So this approach focuses on the value your service provides to the community. For instance, if your diabetes prevention program can save the healthcare system 1,000 of dollars per patient, you might be able to justify a higher price point to ensure that your service patients are paying directly for it, then you have to think of things related to value based pricing and how much would they value that in their lives. Pricing and how much would they value that in their life, and what would you be able to quantify that to with a number that acknowledges the value to them it provides, but also at the same time, does not go over that pricing threshold of what they're willing to pay for that service. And willingness to pay often really does connect closely to value. Right? My willingness to pay certain amounts really connects with the value I see in going with that product or service versus another. I think a good representation of this, at least for me, is the willingness to spend more on an Apple computer than on a generic, and I consider Dells and HPs and all of those generic computers, Word or Windows based computers versus Apple. I see a higher value in the Apple products.

Tami Moser [00:06:25]:
I find them easier to use. They're more and because of that, I'll pay a premium. Right? I'll I'll pay extra. So if I just go apples to apples on specs, I'm gonna pay more for the for my apple, if you will. So that's what we're talking about with value and willingness to pay. You have to really be able to define what the value to the end user is. You probably are going to need to quantify it in some way and attach it to things that people want. For instance, weight loss is a good example in value based pricing.

Tami Moser [00:07:17]:
It's a $1,000,000,000 industry. People are willing to pay out of pocket a great deal of money to get in better shape because of the value it adds to their life, life expectancy, quality of life, when they're ready to make that shift. Right? And so value based pricing is more complex to understand and to actually set in place, but I do like it more because it more aligns, I think, with that value. And you are able to often if you can tell the story of the value that it will provide clearly enough, then you can often charge a higher premium without question or detriment to your overall program. So something to consider. They're citing scale pricing. So this model adjusts fees based on a patient's ability to pay. It's a great way to ensure access for low income individuals while still generating some revenue from those who can afford to pay more.

Tami Moser [00:08:24]:
And so you've got a couple of issues that come in here. If you're gonna make sliding scale pricing and it's gonna be based on a patient's ability to pay, then that means that you need to understand how you're actually gonna determine a patient's ability to pay. Is it going to be on their word? Do you want if they're a part of a certain state or federal program, would that mean that they fall in the low income? And so because they're a part of that program, once they verify that, you don't need anything else about income. So for instance, if they were a SoonerCare patient, then you might go, well, if they're a SoonerCare patient, then I'm gonna say that they've already established that they're low income individuals and therefore we'll put them at a different, at that point in the sliding scale. And we could just say SoonerCare, this is where they go on the sliding scale. You you have to be careful there because if you're gonna ask patients to actually validate income, you need to understand how you want to do that. And I will throw this in there. Just because someone has income, which might jump them up on your scale, does not mean that they have available disposable income.

Tami Moser [00:09:38]:
And so that's what you've got to keep in mind. Even someone who has a larger check every month doesn't necessarily have disposable income. Sometimes it could depend on the size of their family. Right? If that was a single person, that amount of income would be great. But if they're a family of 5 and that's their only source of income or one of 2, they still might not have an ability to play pay. And there is a huge difference between willingness to pay and ability to pay. Right? I might have a willingness to pay for that Apple product, but not have the ability to pay that for the Apple product. And so that also is part of this equation you have to consider.

Tami Moser [00:10:17]:
And I think oftentimes it goes to, well, they're low I'm gonna throw them in the high income because of this, but they've got 2 kids in college that they don't qualify for any help with because of that income. They're paying for those kids in college. They also have 3 at home. And so, yeah, that $300,000 a year looks huge, but they don't have any extra disposable income. It's being eaten up by their children, so to speak. You've gotta just think through those issues and exactly how you're gonna make a determination, and a lot of that has to do with the patients and community you're trying to reach. But just be aware. Then we've got bundled pricing.

Tami Moser [00:10:55]:
So if your program offers multiple services, consider bundling them for a single fee. This can make your program more attractive and easier to budget for. If they can go with just certain items or they can bundle, then showing the difference or the discounted price if they go with a bundle, can be very useful. Bundling pricing probably won't work a large amount of the time, depending on the programs you're designing, but it might, for some of you, be a good option in a way to show that the bundle is more valuable to them even though the cost is a little higher. That bundling and discounting can make it attractive to go with everything. But, again, it really depends on your program design because part of that design also has to consider, you know, if I'm moving a person's health from one level to the next, in other words, I want them to get better. And let's say I have a 5 kind of a 5 scale, design, and depending on some of the different tools we use, we decide where on that scale they sit, and then based on where on that scale they sit, that's the bundle of services that they would be eligible for. And as they get better, then they need less of our services.

Tami Moser [00:12:18]:
And so I would bundle based on where they sit in that, assessment. And that is also something that may or may not be a part of what you're doing depending again on the patient and the service you're trying to offer. Now let's talk about access. So the best program in the world won't make a difference if people can't use it. And and if you design it for yourself and you are not really a part of the personas of the community that you're putting together, then bottom line is you may not be designing something they want or can use. And so you really have to think about the design in terms of access too. So maybe it's great for that population, but the way you've designed it is such where it would fit your scheduling, but not the majority of the patients you're trying to reach. So you really do have to step outside of yourself and have to think about, one, what can we do? What what are we able to actually do to provide the access that our particular community needs, or what are the boundaries to access based on our design and the community we're trying to reach? Access should always be something you think through closely and it's a good idea here to have, you know, in most workplaces you happen that you, you should have a person.

Tami Moser [00:13:41]:
There are at least one that when somebody brings something up, they'll tear it apart. They're great at tearing things apart to see where the challenges are, which tends to upset people because people are, like, quit just being so negative. But they actually are very used I happen to be this person. So I'm really good at looking something and going, what about this? What about that? You've got a hole there, and it's not that I'm being negative about it. Usually, it has to do with questions about access, funding, just holes in what's been designed so far. You need someone who can look at what you've done and say, yeah. I don't know if that's gonna work, and here's why. Well, by figuring that out before you ever go live with the service, you can take care of that gap or that issue or that boundary, or know that you can't mitigate it in any way.

Tami Moser [00:14:34]:
It exists, but now you're aware of it and you can talk to your community about it as they're signing up. So if it is a problem or a boundary, there's something maybe that you can talk to them about as an option. Don't look at people who, and if you are one of these people, you'll be probably able to tear your own work up quite a bit, but you still want someone who's not in the mix of it. Because when you get really into the weeds of this and building it out, you are going to be blind to some things. And the more it becomes your baby, the more likely you are to get upset about anyone being able to highlight issues. But, you know, if you know you have that person in your workspace, ask them to look at it and tell them upfront, I want you to find every problem you can see with this. If there's a question you have, I want you to document it and then give it back to me. And then all those little red notes everywhere you take and you think through them.

Tami Moser [00:15:32]:
And I would do it early and then again at a later stage. This is a good stage to have someone look at it because you're putting all these pieces in place that if you miss something, it could have a detrimental impact later on. So don't don't be scared of letting people look at it and tear it apart. Thank them for doing it and then see what you can do to fix those areas. And sometimes just be aware you can't. It's just gonna be an issue with your program, but you know it so you can address it when it comes up. Okay. So here are some strategies to enhance access.

Tami Moser [00:16:07]:
1, multiple service locations considering offering your services in a various community settings, health centers, schools, community centers, or even mobile units if you have access to them. But those multiple service locations allow for people in different areas to have easier access. So you really have to think about it. Maybe if you're in a town the size that I am, where with the college it probably runs 10 to 10 to 11,000 somewhere in there And it takes max probably 6 minutes to drive from one side of town to the other. Multiple service locations may not be an issue in terms of access. Right? But if I'm in Norman, Oklahoma City, Dallas, Texas, that could be a difference because it can take 40 minutes to drive 10 miles. So multiple service locations might be necessary. Extended hours offering services outside the typical 9 to 5 or 8 to 5 can accommodate working individuals.

Tami Moser [00:17:12]:
So do we have not all of your times have to be that way, but, you know, I've got at least one time slot that's later that would allow for people that don't get off till 6 to come or people who go to work at 8 could get in there. I mean, and again what you know about that community health outreach plan and who you're actually trying to reach and what their working environment looks like. And you should have some idea. Right? What would if we go back to looking at the personas or your primary types of patients, then you should know something about them because we've walked through, you know, building out this profile of patients, or you should have profiles of patients, to help you better understand who you're working with. Telehealth options. So using technology to reach patients who have transportation challenges or prefer the convenience of a remote remote care or just prefer the privacy that that would allow. Where this can be very useful is if you know that your population actually has access to the type of technology that would be necessary for telehealth, which now really just a smartphone can handle that. And it's not just about their ability to come in, but it's also about their willingness for people to know they're using your service.

Tami Moser [00:18:38]:
And regardless of where it's located, there can be some stigma or barriers to people wanting to be seeing going in and out of certain places, then the telehealth option is awesome because it really does start to eliminate all those issues. And the mental health field would be an area where I think that this really is prevalent. This is something that we faced a lot when we tried to get SBIRT into family care and then needed to transfer someone over for counseling of some kind. Where that location was became really an issue even in the same building because they're walking into, OU family health. And so there's a lot of options as to where you go and what kind of practitioner you're seeing when you walk in. But what was found is when it has to do with mental health, people still have quite a bit of a stigma associated with that. Sometimes it's just their internal, feelings about it or the stigma that they hold for it. And sometimes it's fear of others realizing they need some kind of help and speculating on what that is.

Tami Moser [00:19:40]:
And so telehealth really solves many of those issues because I can access, I can talk, I can do it from the privacy of my own home or at lunch in my office, on break in my office. I can really keep it private and not fear someone's gonna see it. So telehealth solves many things, but that particular type of stigma service, it really does help with. Cultural competence. Ensure your services are culturally appropriate and available in multiple languages if necessary. So, again, if I have a community that I'm trying to reach where there's gonna be a good percentage of them that speak Spanish fluently and English sort of, then I may really want everything translated into Spanish too, because then I can provide them something that's easier for them to understand. And even if it's just a translation services for transcripts or a translator, Google Translate, something like that, can actually be close enough to to address some of language issues. But there's other things available or necessary in cultural competence.

Tami Moser [00:20:52]:
And so you really just have to think through those elements and we'll talk about that in a different, podcast. And then outreach and education, proactively informing the community about your services through local partnerships, media, and community events. So how you reach out and educate people about the service is part of access. Right? Where do you do that so that people know about it? But here's the key. Your pricing and access strategies need to align with your overall service design and strategic approach. So let's break down how to create this alignment. 1st, mission alignment. Your pricing and access strategy should reflect your program's mission.

Tami Moser [00:21:32]:
If you're aiming to serve the most vulnerable populations, for example, your pricing needs to be affordable and your service needs to be easily accessible to these groups. 2nd is target population fit. Consider the characteristics of your target population. This goes back to those personas. What can they afford? What access barriers do they face? And your strategy should address these specific needs. 3rd is service design integration. So your pricing and access strategy should complement your service design. For instance, if you're offering a high touch intensive intervention, your pricing needs to reflect that level of service while your access strategy ensures that those who need this intensive support can get it.

Tami Moser [00:22:19]:
4 is financial sustainability. While serving the community is the primary goal, your program needs to be financially viable to continue its mission. You have to ensure your pricing strategy supports long term sustainability. And that goes back to really understanding the cost that you're gonna incur with this program. And just to be clear on that, you know, if you're designing this for the Department of Health or a hospital that already has funding for something like this, then the goal might not be to make money. Right? Well, really, with the not for profit, that's never the goal. Financial sustainability is about being able to keep your doors open and supply the services that you need to or plan to. Right? So you gotta think through who is paying and maybe all we need to do is break even.

Tami Moser [00:23:17]:
If I can break even, then that means it's financially sustainable because it's covering all the costs. We're not bringing in anything extra, but we can take care of everything we've designed to do. And so that is also part of what you're talking about. You may want to make an actual profit, so over time your your program can become more and more of a stand alone kind of service and not have to rely so heavily for outside funding. So you have to think this through. Right? It doesn't necessarily I'm not talking about making a profit as in we're adding to the overall business coffers, but I'm talking about sustainability and being able to pay for everything we wanna do and survive without that external support. So let's look how this might play out in a real world scenario. Imagine you're designing a mental health support program for low income youth.

Tami Moser [00:24:13]:
Your service design includes individual counseling, group therapy, and a 20 fourseven crisis hotline. So your pricing strategy might involve accepting Medicaid and major insurances, so you would need to make sure that your services could be covered by those. Offering a sliding scale fee for uninsured clients. So then I've got methods for making sure that I can determine where they would fall on that scale, and then then insured clients would pay and I would have a determination of how that payment would need to be made for the services. And then providing the crisis hotline for free is a community service. So that might be even in addition to and open to others. Your access strategy could include locating your main office near public transportation, offering teletherapy options, providing services in local schools, and having extended evening and weekend hours available. 1 or more of those might be part of what you do for access.

Tami Moser [00:25:14]:
To align this with your overall strategy and service design, just as a reminder, we're talking about a mental health support program for low income youth with a design that includes individual counseling, group therapy, and a 247 crisis hotline. Right? And we've gone over possible pricing and price, possible access strategies that you could include. But now we're gonna talk about aligning it. So we're gonna ensure your sliding scale goes low enough to be excel accessible to your target population or the lowest income individuals within that target population. We're gonna train staff in cultural competent care for diverse youths. And so they need to be trained in a way where they can deal with the different ages involved. Right? We're gonna partner with schools and community organizations for referrals. So they're gonna refer people into us, and then we're gonna use a portion of revenue from insured clients to subsidize the services for uninsured youth.

Tami Moser [00:26:13]:
So this would be how I would take what I'm doing with pricing and what I'm doing with access and really align it to my service design and my overall strategy. And you can see how this all starts to fit together. Your pricing makes the service financially viable while ensuring affordability. Your access strategy removes barriers to care and both align with your mission to support low income youth and your service designed for providing comprehensive mental health support. So now it's your turn. Here's your assignment. Take your community health program idea from module 1 and then write a, develop a pricing and access strategy and then write a brief explanation of how these strategies align with your overall program design and mission. Be prepared to share and this is something you can bring to our first group meeting if you wanna talk through or have any questions about these.

Tami Moser [00:27:12]:
Remember, in community health management, success comes from creating a cohesive plan where every element from your high level strategy to your pricing and access details works together to serve your community effectively. So keep strategizing, keep aligning, and keep striving to make health care accessible to all who need it. Until next time. This is doctor Tami Moser signing off.