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FEES & STRATEGY Get Your Practice in Sync

In the first edition of our newsletter each year, we include an article about fees, because in survey after survey it is reported that dentists, in Florida and nationwide, do not routinely increase them. 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 has come about primarily due to the decrease in collections, but also as a consequence of the ever-increasing costs of business, regardless of the state of the country’s recession. The problem might be even more acute to practices participating in managed care programs since many of these plans require annual fee submissions. Failing to increase fees annually only reinforces their heavily discounted fee schedules.

When Setting Fees, Consider the Life of Your Practice
Annually, we offer localized NDAS fee reports to allow for a rational basis for setting fees. We often look at practices for valuation and transition data only to find fees far below the area norm. Not only has this cost the practice revenue year after year (on a compounding basis), but also further affects the purchaser of the practice 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 the fees, and may face patient reluctance in increasing fees immediately after taking over the practice.

Our recommendation is to select a fee schedule that accurately reflects the quality of care provided in your practice. All fees for services, once set, should be increased at the same rate across the board. Many doctors waste time and energy trying to adjust individual procedure fees based on the perception of patient and insurance company reactions. The increase of at least three percent (3%) each year is recommended. If that seems drastic, note that the majority of survey respondents generally report fee increases of up to five percent (5%). If you only stay in lock-step with Consumer Price Indexes (CPI), which is currently at one percent (1%), this doesn’t reflect the specific increases in your expenses which are not tied to CPI, which are most likely much higher than 1%.

It is important to remember that it is usually not possible for doctors who do not increase their fees annually to catch up or make up for years when they did not incrementally increase their fees simply by submitting large fee increases in any one year.

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 Your Communication Strategy
You should take this opportunity to also examine your 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 of their marketing efforts on new patients while forgetting about the existing patient base.

Doctors should be communicating 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 relatively minimal cost using regular mail. Now is an opportune time to reconnect with your patients, talk about the upcoming year and, at least, remind them that their insurance benefits have been reset as of January 1.

Get to Know Your New Patients
Also 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 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 because they perceived that they were being “over-treated” and did not they needed or could afford the recommended treatment. Take the time to talk to them 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 in the past, all indications are that they are now 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.

Have more questions about your practice in 2014? Email us at question@ADSflorida.com. For a local overview of fees for 2014, we offer a customized, complimentary report. If you are interested, please visit http://feereport.ADSflorida.com and complete the form.

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