Is there anyone out there that can’t remember the smile brought on when, as a kid, you found a quarter under the cushion of the couch? How about finding a crisp twenty dollar bill in the front pocket of a coat or pair of jeans you haven’t worn in years (especially if you haven’t worn them because you had gained too much weight to get them on)? I think everyone would agree that found money is awesome.
One of the keys to remaining profitable is to always begin with fees that adequately reward us for our efforts while keeping up or slightly exceeding inflation. There is not a day that goes by that the cost of goods and services don’t actually increase. The problem for dentists is that we tend to forget or ignore this fact. A few years down the road, we find that we are having trouble paying our bills or not being able to execute on a marketing strategy or a new equipment purchase because money is just too tight and we have entered the twilight zone of financial captivity, where our efforts and profits are so low as to prevent us from making the right choices at the right time. Our stress has increased, and our profits have plummeted. Like it or not, it takes money to make our practices function on all eight cylinders. This condition is not unusual and we tend to find both good and not so good practices in this situation from time to time.
Summit Practice Solutions has always encouraged our clients to review their actual fees against the normal fees being charged in their own town or zip code. The benchmark here would be adjusting what you currently charge to about the 80th-90th percentile of this “normal” fee schedule. We suggest that you raise all of your fees about 2-4% every January and June to pace the automatic cost of living index. You just adjust that incremental increase with what the economy is doing at the time. It will vary year to year but a total adjustment for the year has been in the 4% range for the last 8 years.
While this strategy still needs to be adopted, we have run up against a simple fact: 94% of all dental practices participate in some form of managed care insurance which dictates what you can charge for most services. So why would we recommend a fee increase when it does not actually result in the insurance reimbursement going up? Unless you continue to file what you would normally charge for a “fee for service” patient, you will never receive a fee adjustment from the insurance companies. Granted, this is a slow, methodical strategy that just begins to scratch the surface of what you need to stay profitable in an insurance driven economy. But it’s the first step. The second step would be to contact Becky Balok (602-908-8118 OR [email protected]talconsulting.com) and have her renegotiate your insurance reimbursements. If you are just thinking about adding an insurance company, she can do the research and negotiate the reimbursement level prior to signing up. Either way you will be pleasantly surprised at her expertise in the field of being your advocate in this insurance dominated negotiation.
Let’s go one step further and actually find a hand full of hundred dollar bills in our pockets. Do you know the significance of $83,333.33 a month? Think. That $83,333.33 is what you have to collect per month to have a million dollar a year practice. Second question: What is 1% of a million dollar practice in dollars? That’s right; every percentage point is an extra $10,000. If it were a two million dollar practice it would be $20,000. You get the idea. A 1% lack of collection costs you $10,000, while a 1% decrease in expenses or costs makes you an extra $10,000. For every percentage point you save, you stuff $10,000 dollars of profit in your pocket. That found money should put a smile on your face. So where are we going with this? Each and every one of us is overpaying for supplies, lab, equipment, marketing, legal, accounting, credit card costs, compliance, etc. It goes on and on. As an individual we lack the clout to effect much, if any, change in what we pay for any service or product. On the other hand, as a collective cohesive group we become an 800 pound gorilla with a lot of weight to push around, and surprisingly we can get the attention of any vendor out there. I know this has taken about 9 months, but it is time to get on board and start to change the way that we deal with our costs. Saving money is found money, and BEST for Dentistry is about to change you from a victim to a doctor that can control his or her future. This new group is not about me. It is about us. This is “our” group. This is “our” chance to level the playing field with corporate dentistry. This is “our” last best chance at preserving the independent dental practice. This is your chance to say you are “mad as hell and you are not going to take it any more”. Go to www.bestfordentistry.com and start getting your “found money”. It’s time to put a smile on your face.
Michael Abernathy, DDS