Not Enough New Patients? Maybe You Cost Too Much!
You’ve heard it before, but “Customers Shop”. In a small consumer driven business like a dental office, customers mean potential new patients. Most large nationwide businesses know that pricing can be everything. For example, there is a company called Eye Masters and they compete head to head with Texas State Optical (TSO). Their surveys and statistical analysis tells them that if they raise their initial exam fee from $36 to $39 they will lose 46% of their customers. A couple of years ago Fortune magazine did a huge survey of Medical patients to find that 87% of them would change providers for a $5 difference in co-pay. Five dollars and it’s adios. Five dollars and they leave their primary care physician, and this could mean life or death. What will it take for a patient to leave a dentist? What I am seeing is that the thread that binds us to our patients is getting finer and finer. When I began practice in the early seventies our society was not as nomadic (today 20% of the population moves each year), not as likely to shop around (there were fewer products, choices, and the prices were all similar), and there was not such an air of entitlement and unrealistic expectation from so many dentists (it was mainly bread and butter dentistry, with little or no elective cosmetics). Currently there are 78,000 lawsuits filed each day in America. Welcome to the new emerging economy, where pricing, location, convenience, and services offered is everything, and more and more consumers are spending less and less. Consider that there is more and more competition, with a dentist on every corner.
“But I have invested in countless hours of continuing education, graduated from the most prestigious institutes in the US, bought the top of the line equipment, have every piece of technology, and frame these in a “Nieman Marcus” type office in the most affluent part of our city. My fees are high, and they are well worth it If you have a superior product, then you should charge a superior fee. There are people out there who appreciate what I do and are willing to pay for it.”
This is a word for word quote from a recent phone call. This doctor was asking me for help because he was averaging 5 new patients per month with few or no direct referrals. Production per new patient was huge, but the production was so low when compared to the fixed overhead that it made it almost impossible to pay the bills, let alone take anything home. In the process of discussing his plight, we did a free fee survey and found that his fees were indeed the highest in the area, by 20-30%. His 26 hours of practice each week were positioned in a way to pick the exact times that most consumers would never find convenient, and his marketing outreach was targeted at less than 1% of the population demographics in his practice area. You have heard me write these words before, but if your practice is not growing, you are not meeting your patient’s needs. You cannot get better at giving patients what they don’t want. Far too many of us decide that patients want what we have to sell them. This will be fatal in any business. It is like selling bathing suits and popsicles to Eskimos, or having a restaurant open only from 1-4 PM (no one is hungry those hours). Failure to inspire them with compassion, convenience, consumerism, and yes, pricing, will doom you to a slow and painful business collapse.
I need to stop here and get back on track. We are talking about pricing. The doctor in his epiphany finally said: “I think I’m too expensive.” The only person whose vote counts is the patient’s, and they seem to be voting with their feet in this practice. This doctor and his staff have gotten real good at seeing the back of their new patient’s heads (as they depart to never be seen again). So what does “being too expensive” really mean? Here are some of the symptoms: Few or no new patients, few or no internal referrals, 15 to 20% cancellation and no show rate, lots of requests for second opinions, and most of your patients fail to start treatment after going through your case presentation. They really embody most of the symptoms of a Donor Practice from my previous Profitable Dentist article (email me for a copy — [email protected]). Charging exorbitant fees while failing to listen and consider the budget, dental IQ, and overall patient needs versus the desire for the doctor to produce is a dinosaur mentality whose time has passed. It epitomizes the attitude of entitlement for no apparent reason. It reminds me of the movie describing a convicted felon walking from his cell to the execution chamber as “dead man walking”. We see this every day: “Dead practice going through the motions”.
There are two ways to be too expensive:
1. Cost: What you charge compared to what others charge for the same service. In today’s environment we need to keep our comparable fees (cleaning, a filling, a crown), comparable. In other words our fees need to stay in the ball park of what is usual and customary for our area. Email me at [email protected] or call at 1-800-252-0955 and we will be glad to send you a fee schedule for your zip code. We recommend that your fees fall around the 80th to 85th percentile. Being too high or too low will insure that your patients will question your treatment plans. Bottom line: You either charge more than anyone else or you don’t. You need to know because price is a huge factor, and it will affect the number of new patients and referrals you will get. Speaking to many patients of doctors who were the most expensive dentists in town was revealing. They wouldn’t go anywhere else until they can’t afford it any more. They loved the office. They knew that they were paying more than anywhere else in town and right now they were OK with that. When asked why they never refer anyone to the office they all answered the same way. “I love this office, but my friends probably couldn’t afford to come here.” Do you get it? They like you, they know you’re expensive, and they won’t refer because they don’t wish to be embarrassed if or when a friend can’t afford you. For whatever reason, you will die without these referrals.
2. Perception: Factual or not, they believe that coming to you costs them more than any other dentist they have been to. This is a little counter intuitive. Yes you could be charging more than anyone else in the area and that would be bad, but there is another way that can create the perception that you charge too much. I have had several doctors who, after checking what they charged against the usual and customary fees for the area, were in fact charging less for each procedure than anyone else in the area. Even so, they were perceived as being too expensive by most of the area residents. The problem was that every patient that came in was diagnosed with thousands of dollars of dentistry. A lot of these new patients were surprised that after going for years to a doctor they trusted, and moving to your city, you diagnosed $10,000 worth of new, never before diagnosed problems that needed immediate attention. Surely you can see how this creates doubt and suspicions about your motives and integrity. It is all about how you present and bundle your fees. I would love to send you a fourteen page strategy for 100% Case Acceptance (email me at [email protected]). Without going into as much detail as our report, suffice it to say that we need to listen for what the patient wants and happily give it to them, and then tell them what they need while helping them understand that they will control when, and how quickly we will proceed. After reading the report you should increase your case acceptance and double your internal referrals within 60 days. This report, if you read it with an open mind and implement its strategies, will break plateaus, increase production, and lower overhead. It is the first step in propelling your practice to the next level.