To maintain the right level of practice production, you must periodically raise fees. Even though raising fees does not automatically increase insurance reimbursements, it’s a necessary strategy to offset annual inflation, especially when inflation is high.
In a recent analysis, Levin Group identified a method to increase fees by 5% in a practice that was already in the 86th percentile. The approach we took, which had a goal of offsetting inflation and increasing profitability, was to increase fees by 1% in 90-day increments until reaching a total increase of 5%.
The reason we implemented the fee increase slowly was so the practice would have the opportunity to evaluate patient reaction. The only fees most patients typically recognize are in hygiene or hygiene-related services. They usually don’t know the costs of a crown, veneer, or root canal. We believe that if you can’t comfortably raise your fees by 5%, you need to reevaluate your customer service proposition.
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What happened when fees gradually rose to 5%
- Every 90 days, the practice increased fees by 1% and found no attrition regarding patients or case acceptance. By adding new patients, the practice continued to grow and was able to experience additional profitability from fee increases.
- As the practice scaled to a total increase of 5%, it did not experience any negative effects from patients. By taking this slow approach, it was able to evaluate, and if necessary, offset any negative results or prove there was no negative reaction to the fee increase.
- One side benefit was that after receiving the new fee schedules, two of the insurance companies increased the reimbursements on some services. We encourage all practices to always submit new fee schedules to insurance companies annually, even if it does not result in higher reimbursements.
Dental fee increases, like price increases in businesses, are a central part of keeping up with inflation. If inflation grows by 7% and the practice does not raise fees, profitability will erode. It’s a good business strategy to keep up with inflation so that you can keep your practice healthy and strong.
This article originally appeared in DE Weekend, the newsletter that will elevate your Sunday mornings with practical and innovative practice management and clinical content from experts across the field. Subscribe here.
