From Guest writers Fortune Management:

Inflation is at 9%, your overhead is increasing, your profitability is increasing. Despite this, many dentists are fearful that a raise in fees will cause a loss of patients. Those dentists end up sacrificing profitability. Just like death and taxes, however, raising fees is also inevitable.

Keeping low fees are like a slow drain over time. The effects are compounded with every new piece of equipment purchased, staff salary increase and insurance payment adjustment. This path of diminishing profits can create questions should you want to sell or bring on a partner into your practice. Low fees undervalue the practice. They also threaten the potential buyer with loss of patient base when raised after purchase.

Fees are a natural part of doing business. Every single business needs to evaluate costs and adjust accordingly. That’s true whether you sell shoes or root canals. Patients expect fees to increase over time. If the adjustments are small and the level of service remains exceptional, you’re not likely to hear a peep. An increase of a few dollars won’t have a huge impact on their pocketbooks but could have a significant impact on your bottom line.

If you think about it, raising fees feels painful. No one really likes to do it, but if you put it off too long, it ends up being more uncomfortable than it needed to be in the first place.

Overcoming Your Fear of Raising Fees

At Fortune Management, we believe a practice owner should adjust their fees every 12 months. If you haven’t done a fee analysis in the past 12 months, schedule your fee increase today and make sure you do it at the same time every year. The best time is at the calendar change when insurance companies update their procedure codes.

Besides the turn of the calendar, there are other signs it’s time to examine your fee structure:

  • Your fees are the lowest in your area
  • You have no idea how your fees compare to your competition
  • You are falling short financially

Pretty simple right? And so is the process of adjusting your fees. Why are so many dentists afraid to do it then? We have determined three major reasons—and just like the fear of going to the dentist, they’re purely psychological.

Top 3 Fears of raising your fees

  1. Approval– We all crave approval, and for many dentists the craving is even more acute. It is easy to let that desire to win approval lead to undervaluing your services.
  2. Fear of Losing Patients– Most people don’t take time to price shop for dental services. They initially go with whoever is on their plan, personal recommendations or location and typically will stay with them if they offer a comfortable experience. Also, does anybody really want to go to the cheapest dentist in town?
  3. Fear of Criticism– We’ve established that patients don’t really shop around, so what are price criticisms based on? They base it on what they could have spent that money on, for example, if they didn’t have to get a crown, they could have bought a new TV. Just like any other medical provider, unless you are free you will be accused of being expensive. It’s important to work past this personal fear and learn how to handle push back in advance for the sake of your business.

So What Should You Charge?

Every market and practice is unique, but the questions you should ask are the same whether you are in pediatrics or endodontics, in New York or New Mexico.

  • What are other offices charging? – Fortune recommends that your usual and customary fees should be in the 80th percentile in your market. Your Fortune coach can acquire the latest National Dental Advisory Service (NDAS) for your market and go procedure code by code to see how your fees compare to practices in your zip code. NDAS gathers submitted fees and classifies them by zip code. There’s no benefit in being in the 40% range when there’s always someone who will do it cheaper. The price game is a race you shouldn’t run in.
  • What does the procedure cost you? – Materials, staff salaries, time spent; you must understand the margin associated for each procedure. Let’s say there is a lab you prefer to use for crowns, but they charge a premium. You may think they’re worth it and you are likely right, but your fee should reflect that premium expense.
  • What is your time worth? – Dentists are notorious for undervaluing their time. You need to know what your time is worth by the hour. Remember, patients are paying for your experience and expertise, not only your time. What do you have to charge to make a the procedure worth your time?

Dental Benefits will also impact your fees. Just like a natural law, insurance companies are always at work to pull prices down.

When you are in network, your insurance company dictates how much the patient portion of a procedure will be. Once a dentist signs the contract with a provider, they have lost control of the fee. In the end you want to land on a fee that accurately reflects costs and profit margin and is consistent with your market.  A Fortune coach can walk you through an insurance analysis to determine if it is the best time for you to go insurance free, or to drop certain carriers.

Fortune’s Tips for Managing Fee Changes

  1. Do it every year– When your fees adjust a little every year your accountant is the only person likely to notice.
  2. Don’t do anything drastic– If your fees are way out of line. Increase them gradually 10-20% over a two to three year period to alleviate unwanted perceptions developing.
  3. Update fees procedure code by code– Review the differences code by code. Many of your fees might be in line, however select procedures may need adjusting. In other words, don’t increase all fees by x% each year. Use NDAS to determine how much you should increase procedure by procedure.
  4. Offer third-party financing options– If you are not already, allow your patients options to invest in their dental health. It is great to have several options for your patients to complete payment, including third party options and also membership plans. Give your patients options that can meet them where they are financially.

Where to Start

Reach out for a complimentary Dental fee schedule review to compare how your fees are versus others in your zip code. If your percentage is low while overhead is up, it’s another sign that it’s time to increase your fees. Request Your Complimentary Fee Schedule Fee Here.

For over 30 years, Fortune Practice Management has helped practices of every shape, size, and specialty re-engineer their approach to the business of dentistry. Along the way, they managed to dramatically increase practice production and profitability for thousands. Use this link to have a Fortune Coach do a fee analysis for you—see where you stand when it comes to procedure fees. It’s time for all dentists to get paid what they are worth.