You know you should probably raise your fees, but the thought of it makes you more than a little nervous. You're confident a bump in your prices will send patients running to the practice down the street, and you really can't afford to lose any patients. So instead of slightly increasing your fees each year, you opt to keep them the same -- a decision that is costing your practice.
Sally McKenzie, CEO of McKenzie Management.And I'm not just talking about the money you're losing from not raising your fees. If you don't increase your fees every year, you're not growing your practice. In fact, I'm willing to bet your practice is suffering. Think about it. Do you have enough money to invest in new technology or to take advantage of opportunities to improve your skills? Have you decided to skip much-needed practice updates because you can't afford them or skimp on team training because it's too expensive?
Not only is this reluctance to raise your rates keeping your practice from meeting its full potential, it's also affecting the quality of the care you provide. But if you commit to adjusting your fees $4 to $5 every year, you'll soon notice a more robust bottom line -- giving you more money to invest in your practice without scaring away patients because your fees are too high.
Like it or not, if you want to run a successful dental practice, you have to make adjustments to your fees. Not sure where to start? Here are a few tips designed to help you develop a solid fee schedule without losing any of your loyal patients.
1. Set goals
Decide what kind of lifestyle you want to live and what you'll need to earn to get there. Factor in how much you want to work, how many patients you want to see each day, and all the expenses that come with owning a dental practice, from employee salaries to equipment upgrades. Use these numbers to determine your daily production goals, which will serve as a guide as you establish or adjust your fees.
2. Find out how your practice compares
Not sure what other dentists in your area charge? Now is the time to find out. Make sure your fees don't fall too far below -- or rise too far above -- your local market.
3. Establish a standard fee for each service
Determine how much it costs you to perform the dentistry before you set or adjust your fees. Base your fees on the number of patients you have and your debt, practice expenses, overhead costs, and experience level.
4. Build a rapport with patients
Patients won't think twice when you raise your fees if they feel a connection with your practice. But that connection doesn't just happen; you need to work for it. Talk with your patients about their oral healthcare goals, their jobs, and their families. Take the time to educate them about their condition and the services you provide. Let them know you care and you'll create loyal patients who continue to call your practice their dental home even after you raise your fees.
5. Avoid the fee ceiling trap
Don't trap yourself by attempting to establish your office-fee schedule based on what some third-party payor reimburses at 65% of the 85th percentile.
6. Track overhead expenses
Make sure your overhead expenses are in line with industry benchmarks. Not sure what those benchmarks are? Here's the breakdown: Laboratory: 10%, dental and office supplies: 7%, rent: 5%, employee salaries: 19% to 22%, and payroll taxes and benefits: 3% to 5% of collections.
7. Plan fee increases every year
Establish a solid fee for each service you provide, and then commit to adjusting those fees twice a year -- 2% and then 3%, for a 5% yearly increase. This might not seem like a lot, but trust me, it will provide a nice boost to your bottom line without giving patients sticker shock.
If you want to be the proud owner of a successful, profitable dental practice, you simply must adjust your fees. Take the time to connect with your patients and educate them about the importance of maintaining their oral health, and they won't run for the hills just because you raised your fees a few dollars. And the extra revenue will not only boost your bottom line, it will enable you to make much-needed enhancements to your practice -- and that, dear doctor, will improve the patient experience and, ultimately, help you grow your patient base.
Sally McKenzie is CEO of McKenzie Management, which offers educational and management products available at www.mckenziemgmt.com. Contact her directly at 877-777-6151 or at [email protected].
The comments and observations expressed herein do not necessarily reflect the opinions of DrBicuspid.com, nor should they be construed as an endorsement or admonishment of any particular idea, vendor, or organization.
