How do you charge for ‘deadhead miles’ in NEMT?
One of the most common and frustrating questions NEMT providers face is how to charge for the miles traveled without a passenger—otherwise known as “deadhead miles.”
A provider recently completed a routine trip from a care home to a doctor’s appointment and back. However, soon after returning, they received a call asking them to make a round trip to pick up a patient 20 miles from their office.
How should an NEMT provider price these 40 unoccupied miles traveling to the site and back?
This article will help you answer this question by showing you how to create a fair and competitive pricing strategy for your NEMT business, considering your costs and customers’ needs.
What are deadhead miles?
In the simplest terms, deadhead miles refer to the distance a NEMT vehicle travels without a passenger onboard.
This typically occurs when driving to pick up a patient or returning to base after dropping them off.
For instance, if an NEMT vehicle must travel 20 miles to pick up a patient and then another 20 miles back to the base after dropping them off, those 40 miles are considered “deadhead.”
For NEMT providers, these miles represent a cost without direct revenue. They consume fuel, add wear and tear to the vehicle, and demand the driver’s time, all without a patient in the vehicle generating income.
It’s a delicate balance—charging too much for these miles can drive customers away, yet not charging enough can erode a provider’s profits.
Challenges in Pricing Deadhead Miles
While understanding deadhead miles is one thing, accurately pricing them presents a whole new set of challenges for NEMT providers.
The Variable Cost
One of the biggest challenges of pricing deadhead miles is accounting for the variable costs.
For example, suppose your vehicle travels 20 miles to pick up a client. That sounds straightforward, right? But what if the driver encounters traffic congestion, road closures, or detours? These factors increase the time and fuel consumption of the vehicle, but they don’t generate any revenue.
How do you factor these unpredictable elements into your pricing strategy? You need to find a balance between covering your costs and offering competitive rates to your clients.
Customer Perception and Value
Another challenge of pricing deadhead miles is customer perception (especially for private pay clients).
Clients may not fully appreciate the necessity of charging for unoccupied travel, seeing it as an unfair extra cost. They may not realize that deadhead miles are part of any NEMT provider’s operating costs and affect the service’s availability and quality.
NEMT software offers promising solutions to optimize routing and reduce deadhead miles in this digital age.
However, integrating these technologies comes with its own set of challenges. Not only do you need to invest in the right software, but also to train your staff, ensure data accuracy, and constantly update your systems.
It’s essential to recognize that not every software solution is a perfect fit for every NEMT provider. Some might find the initial setup complex or struggle to adapt to new systems.
The key is finding software that addresses the challenges of pricing deadhead miles and aligns with your specific operational needs.
How Tobi Enables Effective Dead Head Mile Pricing
Tobi is an all-in-one software solution for NEMT businesses. It streamlines and simplifies your daily tasks by automating and optimizing them. With Tobi, you can manage everything from your fleet, drivers, trips, invoices, and more on one platform.
It also helps you reduce and manage deadhead miles effectively by offering features such as optimized routing, scheduling, billing, and more.
Traffic jams, road closures, and unexpected detours are everyday realities for NEMT providers. Tobi’s routing capabilities are designed to navigate these challenges effectively. Using real-time traffic data and route analysis, Tobi helps drivers avoid common roadblocks and delays.
This saves valuable time and reduces vehicle fuel consumption and wear and tear. The result is fewer deadhead miles, more efficient operations, and a pricing structure reflecting the actual service delivery costs.
Scheduling in NEMT involves arranging trips, maximizing vehicle utilization, and minimizing downtime. Tobi’s scheduling system helps providers organize their services efficiently, reducing unoccupied travel and supporting a fair pricing model.
One of the standout features of Tobi is its integrated billing system. Medicaid claims are complex tasks that require careful record-keeping and data analysis.
Tobi simplifies this process by providing a comprehensive billing solution that tracks every aspect of the service, including deadhead miles. With all the necessary data, providers can easily file accurate Medicaid claims, ensuring timely reimbursements and financial sustainability.
Sign up for a 30-day free trial of Tobi and take the first step towards more efficient and profitable NEMT services.