Henry Schein’s dental practice transition advisors help you sustain your practice
Periodically reviewing and setting the right fees in your dental practice is paramount to a successful and profitable future. Unfortunately most dentists do not routinely review or increase their dental practice fees. Not only is this damaging the long-term future of your fee schedule (by missing the annual compounding of increases), the decision not to raise fees is an inherent resignation to a comparatively higher overhead and lower profits when looking at previous years.
This phenomenon is primarily due to decreases in collections combined with the ever-increasing costs of business, regardless of the state of the country’s recession. The problem is even more acute to practices participating in managed care programs since many of these plans require annual fee submissions. Failing to increase dental practice fees annually only reinforces their heavily discounted fee schedules.
When Setting Dental Practice Fees, Consider the Longevity of Your Practice
Henry Schein offers localized NDAS fee reports allowing a rational basis for reviewing and setting fees. We look at practices for valuation and transition data and usually find dental fees far below the area norm. This costs the practice revenue year after year (on a compounding basis), but further affects the purchaser of the practice seeking to bring dental fees in line with the local norms as quickly as possible. Unfortunately, the new practice owner is handicapped when normalizing fees and faces patient reluctance in accepting increasing fees immediately after taking over the practice.
Our recommendation is selecting a dental fee schedule that accurately reflects the quality of care provided in your practice. All fees for services should be increased at the same rate across the board. Many doctors’ waste time and energy adjusting individual procedure fees based on perception of patient and insurance company reactions. An increase of at least three percent (3%) each year is recommended. If that seems drastic note the majority of survey respondents generally report fee increases of up to five percent (5%). If you stay in lock-step with Consumer Price Indexes (CPI), currently at one percent (1%), this doesn’t reflect specific increases in your expenses which are not tied to CPI and are most likely much higher than 1%.
It is important to remember that is is normally impossible to catch up for years of not incrementally increasing fees by simply submitting large fee increases in any one year.
Doctors should consider their primary business goal to operate their office at optimal capacity while practicing 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 Your Communication Strategy
You should take this opportunity to examine your communications practices with existing patients. Studies show it is easier and more cost effective to increase business from existing patients than to create it. Marketing is increasingly important as doctors constantly look for ways to get new patients. Most however, spend virtually all of their marketing efforts on new patients and neglect the existing patient base.
Doctors should communicate with their existing patients at least every six months. A simple informational letter about changes in your practice or new procedures can be delivered for free via email or for a minimal cost using regular mail. Now is an opportune time to reconnect with your patients, talk about the upcoming year and remind them that their insurance benefits have been reset as of January 1.
Get to Know Your New Patients
Consider your office strategy concerning new patients. What do your new patients want? Why have they come to your office? Ask them!
Traditionally, we’ve been taught to do a thorough clinical examination followed by a comprehensive full mouth treatment plan for all new patients. Remember, your new patients may have left another office because they perceived they were being “over-treated” and did not need or could not afford recommended treatment. Take the time to listen and make them feel comfortable with you, your staff and your office.
As we all know, economies are cyclical and just as they have turned down, all indications are that the economy is turning back up. Now is the time to comprehensively evaluate how your practice is positioned and make plans for this New Year. Your practice budget is vital for the ongoing success and health of your business. A little time now will save stress, and dollars, throughout the year.
Henry Schein Professional Practice Transitions, Inc. is a national leader in dental practice transitions. A subsidiary of Henry Schein, Inc. they provide expert guidance for selling and buying dental practices, assessing partnership and associateship opportunities, and performing dental practice appraisals and valuations.