10 Steps to Solid Fees
Fee adjustments are simply a necessary part of running a high quality dental practice. If you are reticent to increase them, it’s important to ask yourself if you are compromising quality for low fees. Do you continue to forego necessary investments in staff training? Do you bypass updated equipment and more efficient systems because you fear you can’t afford any more than the status quo? Are you compromising your own continuing education opportunities because of the impact on the budget? If so, this commitment to being cheap is costing you a fortune in lost opportunity, higher production quality, staff efficiency, and probably your reputation.
I don’t need to tell you that the cost of running a dental practice increases every year. Establishing a sound fee schedule allows you to be fair to your practice and improve care to your patients. Lean years may still be lean, but their impact will be lessened because you will have kept pace with the cost of doing business. Consider these 10 steps when establishing a fee schedule.
1. Know where you stand. Make sure you are well aware of where fees stand in your area. Your fees should not be far below or well above the local marketplace. But that’s not the only consideration. Your fees need to reflect your business.
2. Establish a standard fee for each service. You need to consider what it’s costing you to actually deliver the dentistry. Base fees on your overhead, expenses, patient base, your individual level of professional expertise, and debt.
3. Track your overhead expenses. They should line up according to the following benchmarks. Laboratory: 10%, Dental and office supplies: 7%, Rent: 5%, Employee salaries: 19-22%, Payroll taxes and benefits: 3-5% of collections.
4. Recognize where you 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. This allows the dentist to focus on building one-on-one relationships with patients. It will also help keep overhead down until production increases and the practice can handle adding a hygienist to the payroll.
5. Build relationships. Remember, when patients have a relationship with their dentist, they don’t question the fee. And building good relationships with patients has never been more important.
6. Avoid the “seesaw” fee structure. Don’t set 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.
7. Pay attention. Listen to what patients want and why they are coming into the practice. Addressing the smaller issues and offering more conservative restoration options, provided that it’s in the patient’s best interest, can be absolutely critical before recommending larger more extensive alternatives.
8. Avoid the fee ceiling. Don’t trap yourself by attempting to establish your office fee schedule based on what some third-party payer reimburses at 65% of the 85th percentile.
9. Establish goals. Identify specific production goals based on the number of days per week you will see patients and the number of hours you will spend on treatment.
10. Plan for increases. Establish a solid fee for each service and plan to adjust your fees twice a year, 2% then 3% for an annual increase of 5%. Even if you increase your fees only slightly, $4-$5 per procedure, that will make a huge difference in your bottom line.
Lastly, never lose sight of your vision and goals. Step back and take a look at what you want to get out of your career, now and in the future. No matter what your personal/professional desires, they all have a price tag attached. The key is to determine how much your practice needs to produce and collect to achieve them. And remember that the most successful doctors 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.
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For more information on this topic, visit my blog: The Lighter Side
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