Case Studies

Fee Schedule Optimization

Client: Multi-Specialty Clinic, 1995

Fees Changed to Enhance Collections, Improve Internal Consistency

In the early 1990s, contracts based on relative value units were not as pervasive as they later came to be. Still, products paying on a percent-of-charge basis were in decline. Large clinics seemed to face a difficult choice: maintain high retail rates because of the remaining traditional indemnity insurers, or overhaul their charges to reflect internal costs and the emerging relative value systems.

By employing linear programming algorithms, this project found a middle ground: a fee schedule that maximized expected collections from the traditional insurers, while reducing deviations in the charge-to-cost ratio to acceptable levels.