How Often Should You Raise Your Fees?
Over time, you may find that you need to modify your fees based upon patient feedback, equipment and supply prices or overhead costs. Routinely raising fees by 3-5% every 10 months has many advantages. When implementing this adjustment, raising every fee by the same percentage across the board is beneficial. I would suggest not wasting time and energy attempting to adjust each fee separately, perceiving possible negative reactions from patients and insurance companies. These perceptions are usually much worse than reality. The adjustments typically go unnoticed by patients, but serve to add significantly to your bottom line.
Raising your fees every 10 months gives you an additional fee increase every five years above what a typical yearly increase would provide. Set a reminder on your scheduling software when your next fee increase should occur. Since it is very difficult to institute large fee increases to make up for lost time, doctors who do not raise their fees annually commit themselves to greater overhead percentage and lower profits for the remainder of their careers.
It is commonly recommended to raise your fees 5% across the board in order to keep pace with inflation. This fee increase helps defray the costs of investing in new technology for your office and rising payroll expenses. On average, operating costs for the typical practice are advancing at a rate of 3-4% annually. In order to maintain or improve profitability, practice fees must be raised above that level.
Being mindful of the economy at large, go easy on fee increases in times of economic downturn. A 3% increase will normally keep pace with inflation during these periods, as overall growth and spending will wane. Though some practitioners will continue to operate with apparent immunity to any recession, most will find practice volume to slow in accordance. The goal is to take the patients along for the long haul, so absorb some of the recessionary pain with them while striving to keep them in your operatories.
If you practice in a state which allows resubmission of your fee schedule to Delta on a yearly basis, by all means take advantage of this. I have my office manager keep a note in the software alerting her to the day in which we are able to do this each year. Therefore, every twelve months to the day we submit our fee schedule to Delta reflecting the new, higher fees for the codes we use in our practice. Although Delta does not regularly grant us the full value of the increases we appeal, Delta is required to enter our new fees into its database as those of a provider in our zip code. This ultimately raises the level of approved fees in our area, as Delta bases its fee schedule on a percentile of the overall fees submitted for each zip code.
In determining your fees, do not underestimate the value of the efforts you have made to create a unique dental environment for your patients. They value that, and therefore, so should you. You are taking pains to provide high quality care and a comfortable encounter. It takes time to provide exceptional clinical care and service. Low fees and high volume encroach upon that time. Being rewarded for your efforts will allow you and your business to continue to satisfy your patients’ desires and expectations for the best dental experience available.
Dr. Edward Logan is a general and cosmetic dentist practicing in O’Fallon, Missouri. Dr. Logan graduated from the University of Washington School of Dentistry in 1993 and has since built three successful practices from scratch, one in Southern California and two in the Midwest. Though his dental education had trained him well in the area of clinical dentistry, he had learned very little regarding how to operate a successful business. Dr. Logan therefore sought extensive training in the areas of dental practice management and marketing. In his new book, Dentistry's Business Secrets: Proven Growth Strategies for Your New or Existing Practice, Dr. Logan shares the vital information he has learned.
Connect With Us