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March 17, 2004

Have you ever had any of these thoughts?

"I will lose patients if I raise my fees."

"I don't make enough money to save for retirement."

"I don't want my patients to think they are paying for my new car."

These are the warning signs of a dentist who is fearful of raising fees.

Most dentists do not realize the impact raising their fees can have on their practice's bottom line. In addition to trying to control overhead costs, it is also important to raise your fees. Remember, your team members expect an increase in pay every year. How can you expect to increase your bottom line if your single largest expense keeps increasing without an increase in gross revenues?

Dentists should raise their fees 4 to 5 percent annually. While this may sound like common sense, far too many dentists do not raise their fees annually. A 20 percent "catch-up" increase in fees in one year is more likely to be perceived negatively by patients than a 4 to 5 percent increase every year.

One way to establish your comfort level with fees is to have a fee analysis survey performed. A fee analysis helps dentists make an educated decision about what fees to charge. The dentist chooses the percentile she feels most comfortable with based on the services provided, practice location, and overhead.

A fee analysis survey offers many benefits:

1. A range of fees based on the 40th to 95th percentiles in relation to your practice's geographical area
2. Comparison of your fees to those of your peers
3. A benchmark for the fees you should be charging
4. Elimination of a "schizophrenic" fee schedule
5. Minimal cost to have a fee analysis prepared
6. A way to increase gross revenue

Choose a fee schedule in at least the 70th or 80th percentile range. It is OK if some of these fees are above the usual, customary, and/or reasonable fee (UCR). When you exceed the UCR, you are not doing anything wrong, or even charging more than other dentists in your area. You are only charging more than what the insurance company has elected to pay you. It is important to receive top dollar for the services you provide, whether it is maximizing the UCR from the insurance companies or charging noninsured patients the appropriate fees.

Sometimes the first thought a dentist has about raising fees — "I will lose patients if I raise my fees" — is unfounded. Yes, you may lose a few patients if you increase your fees. However, some patients will return when they learn that other dentists are charging the same or higher fees. It may actually be a relief to lose some of your patients; they may be the ones who are causing your headaches! In the end, if 99 percent of your patients pay a 5 percent fee increase and 1 percent of your patients leave, you would collect 3.95 percent more than the prior year if you rendered the same services.

On one occasion, a dentist called our firm after implementing a fee increase to discuss a comment received from a patient. By the time we finished the call, the dentist came to the realization that the patient and her three children had received prophys and composite fillings, and all had bought bleaching kits. The patient complained about the dentist's fees as she drove off in her expensive sports utility vehicle. Of course, these are not always the people who complain, but the point is, some people will complain about an increase in fees no matter how small it is. When you decide to increase fees, coach your entire team ahead of time to field negative comments from patients.

Our firm has prepared numerous fee analyses for dental practices. On average, dentists have been able to increase their gross revenue by 8 to 12 percent. Their practice's bottom line has increased dramatically because the number of procedures performed is the same, but the fees for those procedures have increased. Simply stated, revenue has increased while overhead has remained constant. Remember, you owe it to yourself and your team members to charge the highest fees possible.

Angela C. Thomas
Mrs. Thomas is the director of client development for Bender, Weltman, Thomas, Perry & Co., PC, a CPA firm in St. Louis, Mo., providing services to more than 200 dentists. The firm is a member of the Academy of Dental Certified Public Accountants. Contact Ms. Thomas at (877) 253-5084 or athomas@bwt cpa.com for a fee analysis.

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