In preparing a practice for an eventual sale, we often take a deep dive into financials for valuation and during that process find fees that are far below the area norm. While true this costs the practice annual revenue (on a compounding basis), but it also further affects a purchaser who wants to bring fees in line with the local norms as quickly as possible. Unfortunately, the new practice owner is handicapped in the ability to normalize fees immediately following a sale for fear that it would cause patient reluctance.
Our recommendation is to select a fee schedule that accurately reflects the practice. All fees should be increased at the same rate across the board. Many doctors waste time and energy trying to adjust individual fees based on the perception of patient and insurance company reactions. If you find yourself in a position where you have not raised fees in recent years, we suggest obtaining an analysis from a qualified dental representative and consider an increase of at least three percent (3%) per year. If that seems drastic, note that if you only stay with Consumer Price Indexes (CPI) (currently just over one percent (1%)), this doesn’t reflect the specific increases in your expenses, not tied to CPI, and most likely much higher than one percent (1%), particularly given the significant impact that COVID-19 has on most businesses expenses.
The time to act is now. It is important to remember that it is usually not possible to catch up or make up for years when fees were not incrementally increased. Even a large fee increase in any one year cannot make up for years of lost revenues.
Doctors should consider that their primary business goal is to operate their office at optimal capacity doing the type of dentistry they want to do. In addition to conservative fee increases this year, extending more liberal credit terms to patients may be necessary to help increase treatment acceptance and build goodwill with patients.
Examine Communication Strategy
Take this new year to also examine the communications practices with existing patients. Studies have shown that it is easier and more cost effective to increase business from existing patients than to create new ones. Marketing is becoming increasingly important as doctors constantly look for ways to get new patients. Most however, spend virtually all their marketing efforts on new patients while forgetting about the existing patient base.
Plan to communicate with existing patients at least every six months. A simple informational letter about changes in the practice or new procedures can be delivered for free via email or for relatively minimal cost using regular mail. For example, discussing new procedures relative to COVID-19 pandemic safeguards will help instill comfort in patients who may be reluctant to return to the office. Now is an opportune time to reconnect, talk about the upcoming year and, at least, remind patients that insurance benefits have been reset as of January 1.
Get to Know Your New Patients
Also consider your strategy concerning new patients. What do they want? Why have they come? Ask them! Traditionally, we’ve all been taught to do a thorough clinical examination followed by a comprehensive full mouth treatment plan for all new patients. Especially now, your new patients may have left another office. Take the time to talk and make them feel understood and comfortable.
As we all know, last year was not easy for anyone but we are looking with optimism at this upcoming year. Now is the time to comprehensively evaluate your practice and make plans for this New Year. A little time now will save stress, and dollars throughout the year.