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Increasing Fees Without Losing Patients
Dr. Joe is losing sleep. For longer than he cares to admit, he has been watching his gross income level drop. If that weren't bad enough, income is now slipping, and financials, to put it mildly, are starting to get a little scary. The price of everything keeps going up - rent, supplies, laboratory, salaries, and on and on, laments Dr. Joe, everything except Dr. Joe's fees that is. They've held steady almost since the days of big hair and narrow ties.
Dr. Joe is charging in the 50th to 60th percentile for his area. Patients keep coming and the doctor is booked solid, which Dr. Joe fooled himself into believing would sustain his practice and off-set increasing costs. It hasn't worked that way. Dr. Joe could be bringing in thousands of dollars more every year. A few simple fee adjustments can have him resting easy and his practice thriving quickly. But, as I have found time and again, raising fees is a process fraught with anxiety for many dentists.
Establishing a sound fee schedule allows you to be fair to both the patients and your practice. Objectively taking control of your most important tool for generating income can remove the emotion and put you on solid financial footing.
First, look at gross income and consider that your goal is to corral overhead expenses so they line up according to the following percentages:
Laboratory expenses - 10%
Dental supplies - 5%
Rent - 5%
Employees' salaries - 19%-22%
Payroll taxes, benefits - 3%-5%
Miscellaneous - 10%
Your costs increase every year. Usually those increases translate into better materials and improved services for the patient. Enhancements that patients don't expect to get for free. Patients fully expect to pay for quality dentistry and being among the cheapest dentists in town is not a reputation you want to strive for. It is possible to establish a fee structure that is affordable for patients and fiscally sound for your practice, but you will need to do a little homework to base your fees on solid data rather than how you "feel" they will be received by the patients.
Establish a fee schedule that has a standard for each service, look at each procedure and determine the time required to perform the procedure, the fixed expenses necessary to run the office, variable expenses such as supplies and lab fees, and the income required per hour to compensate you, the dentist.
Determine how many days per week you will see patients, as well as how many hours you will spend on treatment. If your annual production goal is $650,000 and you work 48 weeks per year, 36 hours per week, then your hourly production goal is $376. Our sleepless Dr. Joe schedules his patients back-to-back but with no overlapping. Changing his schedule to overlap patients during just the first 10 minutes and last 10 minutes of each appointment will increase income even before fees are adjusted.
Dental practice fees often reflect the personalities of the doctors. Extroverted doctors tend to have higher fees. Those doctors whose temperament is the "feeling type" will adjust fees, often having a "range of fees" for a specific procedure. When establishing your fees, consider the quality of dentistry you provide and the quality of the entire dental experience in your office -- from the time the patient walks in the door until the time they get in their car and drive away.
Study dental fees in your area to determine if yours are in line. Information on dental fees is available online and through your local dental society. Income and demographic information, which can be extremely helpful in establishing fees, is available through the local chamber of commerce. In addition, a variety of surveys and reports regarding the costs associated with the dental practice are available through the American Dental Association.
Keep in mind that you have established a personal relationship with most of your patients. They come to you because they respect the quality of dentistry you provide. While upward fee adjustments will not go unnoticed by patients, they do not cause a mass exodus to the dentist down the street.
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