An Answer To Raising Fees 2014
Sadly, most dentists (unlike normal businessmen/women) establish their fees based on what the guy before them charged, what someone on the phone tells you they charge, and just what feels about right. Poor idea at best, and certainly a fast track to practice demise if you make no decision at all. If your fees are too high, then people don’t spend money with you. Too low and you have very skinny kids because while everything else you buy in the practice goes up in price periodically (raising your overhead), you fail to even pace your fees with economic inflation.
A few years ago the Kodak study showed that if you had a 70% overhead and increased your fees just 10%, you would have a 33% increase in income. Looking at it a different way, if we had a practice that was 10% higher than the norm and compared that practice to one that was 10% below the norm, you would see a 66% difference in take home. Now multiply that against the number of years you will practice and we are talking millions. Throw in the Obama Administration’s alterations in tax brackets, and tax code, and you have to produce a little over 11% more this year to even take home what you did last year. When we work with clients and we present current fee data to them, we are recommending that they try to position their fees in the 80th percentile range.
The fee information that we supply our clients is fee data that we pay to access and is routinely updated to reflect what the current fee-for-service charge is in your zip code by procedure code. It is accurate. If you find a large percentage of your fees above or below the 80th percentile, it will be the result of inattention to current fees built upon years of just pricing things by the seat of your pants. Keep in mind that we need to keep “comparable fees, comparable”. Consumers shop, but they also expect to pay the going rate. Feelings have nothing to do with it. You need to charge a fair price for a good product and comfortable experience. Your confusion stems from a non-assertive tendency tied to a desire for approval from those you interact with. We all have this. Just keep in mind that you still deserve the practice you always thought you would have, as well as a good living underpinned with the time, money, and training you have put in to do the best dentistry you can do. I would be glad to talk to you about this if you would like to call.
Michael Abernathy, DDS
PS — Just in case you are wondering, you cannot wave the co-pay on insurance. It is insurance fraud. At best you are talking about fines, loss of license, and loss of the insurance contract. At worst, it could have criminal implications. Don’t do it, and report anyone who does.