How to Establish a Solid Fee Schedule
Establishing fees can be tricky, and if you’re like most dentists, the thought of adjusting them makes you a little nervous. You know a raise in your fees is probably long overdue, but you worry that an increase might upset your patients enough that they will take to social media to complain about your high rates or even opt to find a new dental home.
Not only is this resistance to increase your rates costing you money, it’s also keeping you from growing your practice and achieving true success. If you haven’t raised your rates in years, I can almost guarantee your practice is suffering. Maybe you haven’t been able to invest in new technology, or provide your team with the training they need to excel in their roles. Perhaps you’ve skipped opportunities to expand your skills because you didn’t want to take on the extra cost, or you’ve decided to forego much needed practice updates because you just can’t afford them.
You might think you’re giving patients what they want by offering low fees, but in reality you’re compromising on the quality of care they receive and the experience they have while visiting your practice. A small adjustment of just $4 or $5 per procedure each year wouldn’t pinch your patients, but it would do wonders for your bottom line, enabling you to make necessary enhancements to your practice and improve the quality of the care you provide.
If you’re going to run a successful, thriving dental practice that patients are proud to call their dental home, you have to make adjustments to your fees from time to time. Here, I’ve put together a few tips to help you create a solid fee schedule that will boost your bottom line.
Know how your practice compares. If you don’t already know, find out what other dentists in your area charge. Make sure your fees don’t fall too far below or go too much above the local marketplace. You also need to make sure your fees reflect your business.
Establish a standard fee for each service. Before setting or adjusting your fees, you need to determine how much it costs you to perform the dentistry. You should base your fees on your patient base, overhead, expenses, debt and your level of professional expertise.
Keep track of your overhead expenses. It’s important to make sure your overhead expenses line up with the industry benchmarks, which are: Laboratory: 10%, Dental and office supplies: 7%, Rent: 5%, Employee salaries: 19-22%, Payroll taxes and benefits: 3-5% of collections.
Recognize your skill level. If you’re a new dentist, chances are you’re not going to perform procedures as quickly as a dentist who’s been practicing for 20 years. While you’re building up your speed, focus on building relationships with your patients. In fact, if you’re establishing a new practice, I recommend not hiring a hygienist right away. Why? This will give you a chance to really build patient relationships and start making connections. Not only that, it will help keep your overhead down until your production numbers increase and you can afford to bring on a hygienist.
Connect with your patients. When patients feel connected to your practice, they won’t think twice when they notice a slight raise in your fees. Take the time to talk with patients about their families and their jobs, and about their oral health goals. Provide education and let patients know you care and want to help them maintain their oral health. This is a great way to create loyal patients who will stick with you even when your prices go up.
Avoid the fee ceiling trap. 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.
Create goals. Determine what kind of lifestyle you want to live, and then determine how much you need to make each year to achieve that lifestyle. Think about how many weeks you want to work each year, how many hours per week and how many patients you want to see each day. Use these numbers to come up with daily production goals that will help guide you as you establish or adjust your fees.
Make fee increases part of the plan. Establish a solid fee for each service you provide, and then plan to adjust those fees twice a year: Example, 2% the first time, then 3% for a 5% total increase each year. Trust me, this slight increase will do wonders for your bottom line.
Making fee adjustments is an important part of owning a dental practice. Patients who have a connection with the practice and who value the care you provide won’t leave just because you raised your fees a few dollars, and the increase in money coming in will help ensure you’re able to make necessary enhancements to your practice.
For additional information on this topic and more, visit my blog: The Lighter Side
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