Fee Increase? Know Where Yours Stand First.
The price of gas has topped $5 a gallon in some parts of the country. It feels like the latest volley in the seemingly never-ending match between economic recovery and continued uncertainty. The good news - it doesn't appear that the upsurge is having a detrimental impact on overall inflation.
For dental practices that are seeing improvements in new patient numbers, patient retention, and treatment acceptance, there can be a general sense that the time is right for an increase in their own fees. Certainly, many practices have made a concerted effort to keep the cost of treatment in check the last few years. And as a result, some practice owners may feel it's time for an economic adjustment.
However, with such jolts to the wallet as $5 gas prices, dentists must continue to be cautious about fees and think carefully about how they can best compete in today's marketplace. I recently had the opportunity to catch up with Tom Limoli, Jr. He is a noted expert on proper coding and administration of dental insurance benefit claims, and he serves as president of Limoli and Associates, which assists dental offices in establishing fee schedules and managing insurance reimbursement. Like me, Tom has watched the business of dentistry for many years. The common practice in the past for practices was to increase fees 3-5% annually. It was a widely accepted standard in the industry. Today's dentists, however, are encouraged to take a different approach and base fees on true overhead. In other words, what it is costing them to actually deliver the dentistry.
In setting fees, Tom notes that dentists need to be very aware of where fees stand in the area that they are practicing. It would not be advisable for a dentist to set fees that are at or exceed the marketplace. “Don’t establish your fees based on the dentist down the hall or across the street. Your fees should be based on your overhead, expenses, patient base, your individual level of professional expertise, and debt,” notes Tom. In addition, dentists should be wary of creating a fee schedule that is too high or too low because it is based on third-party reimbursement rates. “You don’t want to trap yourself by attempting to establish your office fee schedule based on what some third-party payer reimburses at 65% of the 85th percentile,” he explains.
Additionally, dentists need to recognize where they are on the skill continuum. For example, newer dentists do not perform dentistry at the same speed as more experienced doctors. For these doctors, what they don't have in speed they can make up in relationship building. Similarly, for dentists establishing new practices it can be particularly beneficial to hold off on hiring a hygienist right away. It allows the dentist to focus on building one-on-one relationships with patients and will help keep overhead down until production increases and it makes financial sense to add a hygienist to the payroll. As Tom emphasizes, when patients have a relationship with their dentist, they don't question the fee. Building good relationships with patients has never been more important.
Dentists also need to be cautious about setting fees too low for some services and too high for others. In the past, it was not uncommon for dentists to keep hygiene fees unrealistically low, and then make it up with much higher fees for other procedures, such as crowns.
In many areas of the country we are seeing smaller treatment plans, and that is translating into steady production and financial success for some practices. Regardless of practice location, what is imperative for every dentist in today's marketplace is paying close attention to what the patients want and why they are coming into the practice. Addressing the smaller issues and offering more conservative restoration options, provided they are in the patient's best oral health interest, can be absolutely critical in some situations before recommending larger, more extensive alternatives.
One thing is true across the board - the doctors who are successful in today's economy have a relationship with their patients. They are focused on providing the level of dentistry that achieves the greatest return for the patient. After all, patients are no different than the rest of us. They want to know they are getting the most value for every dollar they spend, be it at the gas pump or in the dental practice.
Next week, keep cash flowing.
For more information on this topic and for additional Dental Practice Management info, visit my blog: The Lighter Side.
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