Fee Increases - How Much is Enough?
The Christmas holiday shopping season appears to be off to a strong start. Many retailers saw longer lines on Black Friday this year, as shoppers were happily opening their wallets to purchase laptops, clothing, electronics, and the like. Consumer confidence is growing, and along with it, so is consumer spending. While retailers certainly made bargains available, they weren’t exactly giving away the goods. What’s more, they are expected to pace those discounts over the holiday buying season. The sentiment that prices have to be slashed ridiculously low simply to get bodies in the door has gone the way of Christmas past.
What does this mean for dentists? During the last couple of years, many dentists have been locked in financial maintenance mode. Fee increases stopped, and for many, professional and personal aspirations were shelved as they hunkered down to wait out the Great Recession. Today, we are watching the strongest holiday season in three years unfold, a clear indication that as we approach 2011, the economy is poised to make significant strides. The question is, are you? It’s time to take a close look at adjusting fees in the coming year and dust off that list of dreams and goals while you’re at it.
Start with the very basics that shape your quality of life. What is your definition of success - money, time, family, technology, early retirement, three-day work weeks? How much vacation time do you want to take? How much does the practice need to produce to meet your financial needs and wants - i.e. goals? How much do you need/want to pay your staff and yourself? What are the mortgage and the utility bills? How do you pay for all these? By renewing those production-per-hour goals and adjusting fees to achieve those goals. Let me explain.
For purposes of example, we’ll say your goal is to break $900k for practice production, including hygiene. Your hygiene department is on track and producing 33% of total practice production. Therefore, your production goal for the year is $603,000, which calculates to just over $12,563 per week (taking four weeks out for vacation). Working forty hours per week, this means you’ll need to produce about $314 per hour. If you want to work fewer hours, per hour production will need to be higher.
A crown charged out at $950, which takes two appointments for a total of two hours, exceeds the per hour production goal by $161. The excess can be applied to any shortfall caused by other procedures. Use the formula below to determine the rate of hourly production and see if the practice is meeting production objectives.
If you’re not meeting your production per hour goal, you have two choices: reduce the time you take to perform procedures, or increase fees. Ideally, you should adjust your fees twice a year: 2% then 3% for an annual increase of 5%. Even if you increase fees only slightly, say $4-$5 per procedure, that will make a huge difference in your bottom line.
However, it doesn’t stop there; consider practice expenses as well. Examine where current expenses are as compared to where they should be. Overhead costs should line up according to the following benchmarks:
Knowing your expenses will help you 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. Establish a solid fee for each service, and when your second cousin Sue asks if you’re giving “family discounts,” tell her that she’ll have to take that up with your Collections Coordinator. I recommend you leave the price breaks to the Black Friday jockeys and the big box retailers. You’ve got a practice to run.
Listening for Practice Success
If you aren’t familiar with Hallmark’s Maxine, she is a brazen older woman with a stooped back, a mop of curly gray hair and an abrasive personality. One of her infamous pieces of sage advice is “If you have something to say, raise your hand and place it over your mouth.”
Let's face it… the deck is woefully stacked against us when it comes to true listening. We are all hard-wired to evaluate and plagued by an endless internal monologue. To top that off we have to contend with external distractions in our environment. Time, to-do lists, noisy equipment or crowded rooms can all get in the way of listening.
The art of listening is truly a challenge. Hearing what is needed from your patients and your employees isn’t easy. You must seek this knowledge by deliberately asking questions and listening. Only then can you plan and decide what actions must be taken. Whether it is treatment compliance or job performance, influencing others can’t happen until you listen.
Hearing is not the same as listening. That’s why it’s called “active listening.” It is not a passive activity because it demands your attention and focus. And if you want to be a “black belt” in listening, listen for what isn’t being said in words. Non-verbal gestures, facial expressions, volume and tonality of speech give insight into the speaker’s true message.
Even as a psychologist with years of practice, I know that listening is one of the most difficult things a human can do. Yet the ability to listen effectively is an essential component of leadership. Unfortunately few leaders know just what it takes to become a better listener. You can improve your ability to lead effectively by learning the skills for active listening.
If you apply the six skills required for active listening, you will not only be known as a good listener. You will become a better leader as well. And remember that we have two ears and one mouth because we are supposed to listen twice as much as we speak.
Dr. Haller provides training for leadership effectiveness, interpersonal communication, conflict management, and team building. If you would like to learn more contact her at email@example.com
Interested in having Dr. Haller speak to your dental society or study club? Click here.
The First Line
Tell me if you think this is a stretch: dentists are part of national security infrastructure.
Am I going too far? Consider some troubling news from the Pentagon just brought to light by conservative columnist David Frum on CNN: In 2008, over 4,500 recruits were discharged for failing to meet military weight standards. When we say “military weight standards,” we aren’t talking Army Rangers or Special Forces. Male United States military recruits have to have a body fat percentage below 26%. That’s just under the body fat percentage, 30%, that defines clinical obesity. It’s far above what a soldier in good physical condition typically carries. And it means that over 4,500 people literally ate their way out of the service. Worse, it means that millions of young Americans are physically ineligible to wear a uniform.
If the future looked safer than the past for any of us, maybe all this would be acceptable. Sadly, no one reading this thinks that’s the case. This puts dentists in a position they might not know they occupy: you’re the first line of defense.
The Battle Lines
If all this sounds like an exaggeration, well, I’ll concede a little. It is. But, only a little. Any reader here with military experience knows the importance of every soldier’s good health to the overall fitness of the unit. Compromises can’t be tolerated for long. The same level of attentive fitness pays off in everyone’s life, whether civilian or military. We’re all fighting a daily battle against aging, sickness and chronic illnesses - for ourselves, our families, and the whole country. We’re still in the middle of a national debate over the bloated healthcare costs we face as a nation. The future on that front doesn’t look any safer than the one on actual battlefields. Health, fitness, and the investments we all make in them are front-and-center in our budgets and our behaviors every day. Am I exaggerating when I say we need to reverse the trend towards obesity, poor dietary choices and their outcomes? Am I exaggerating when I say that if we don’t, we’ll be weaker, sicker, and less prosperous?
Business and Battles
The greatest generals were the ones who could get their soldiers to march fearlessly and proudly with full hearts and firm purpose. I’d humbly suggest that for every healthcare professional, and particularly for dentists, there’s no better cause to march for than your patients’ overall good health. For them, there’s no better purpose. The dentist who can connect the big healthcare picture with the small one, the big effect with the small act like flossing or basic preventive care, can help a patient rediscover motivation he or she might have lost. That dentist is more than a drill-and-fill practitioner. That dentist can make a difference in a patient’s whole life.
Wellington said that “The battle of Waterloo was won on the playing fields of Eton." A dentist’s equivalent might be that “Victory over bad diet choices starts with a motivated, informed consumer.” As a patient, I keep hoping that the dental profession will take a more prominent role in collaboration with physicians, dietitians, and the media in linking together all the facts that lead to better overall health and wellness. The need is obvious: in the big picture, America needs better healthcare habits, and we need them now. The dental profession has an important role to play in this fight.
I’d also welcome advice from you when I’m in your chair. One-to-one, our collaboration might help me see my role in this more clearly. The big picture seems overwhelming to me sometimes, as I suspect it does to many patients. But once I’m motivated, I march. And the general, even the one in the white smock, who gives me a full heart and a firm purpose, wins my ongoing loyalty. That’s the dentist I come back to again and again.
One more thing: you’re in a battle to be the best dentist in your market area. I’m ready to help you if you help me. Tell me if you think that’s a stretch.
On behalf of McKenzie Management, David Clow consults with dental professionals on practice culture, case acceptance, and patient expectations.
David Clow is a writer/consultant for Fortune 100 companies. His book, A Few Words from the Chair, is the first book written by a patient for dental professionals and students and is available here.
Listen to David’s FREE podcast. Click Here
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