The economics of restorative dentistry
Frank SPEAR, DDS
Have you ever wondered why extreme variables exist in dental-practice productivity in this country? Fees, hours worked, time taken per procedure and supplemental productivity from associates or hygiene account for many of these variables. Remove the extraneous elements and examine hourly production of the primary dentist, and you`ll find that huge variations still exist. I believe many of these variations can be accounted for because of a lack of awareness by the dentist and staff, newer procedures requiring lengthier appointments, fee differentials and the scheduling methods of procedures.
The majority of practitioners in the United States still operate out of a model of what a dental practice looked like in the 1970s. At that time, patients were plentiful and dental insurance had the same limits it has today, but fees were lower, enabling the same insurance dollars to cover more dentistry. Increasing productivity meant doing more procedures per hour by working faster or by using multiple operatories and assistants.
So what`s different today? Patients are not as plentiful and people have far less dental disease. Fees are higher, but insurance limits haven`t changed, so annual insurance dollars don`t cover as much dentistry. New technologies have increased the time to treat the same dental problems. A simple comparison of time required to perform an MOD restoration out of amalgam vs. a composite is one example. The time to prepare and bond a set of veneers vs. porcelain fused to metal crowns is another. So what is the answer?
We must first recognize that the model practice style of the 1970s still is effective for the types of patients and procedures performed for them, but it is very ineffective in dealing with many of the types of procedures and patients we see today. I believe today`s patients can be categorized into four major groups (Types I, II, III and IV). Dental practices tend to have a mixture of all four types. The difficulty is that, to treat each group effectively and profitably, Types I and II will require different methods of scheduling and office requirements than Types III and IV. For clarification, I will describe each type and its requirements for maximum treatment efficiency:
Type I - These are healthy adults with restoration-free mouths who have no occlusal problems, no periodontal problems and no esthetic complaints or desires. This group has grown significantly in numbers over the years. In evaluating how they are best served in a dental practice, it becomes clear that what they need most is preventive maintenance. Their requirements of a dentist`s time over the course of a year are minimal, other than re-evaluation to assure their stability. These patients most often are treated by a dental hygienist in a multiple-operatory facility. As the percentage of Type I patients grows in a practice, so, too, does the need for additional hygienists and operatories. Type I patients account for very little of the dentist`s personal productivity, but they are excellent for supporting hygiene productivity and in giving referrals.
Type II - This group is made up of healthy adults who have occasional restorative needs with no occlusal problems, no periodontal problems and no esthetic desires. They are typical adults who have had previous restorations that occasionally require replacement. They are the "bread and butter" patients of most general practices. Of the current types of patients, this group most closely fits the practice model of the 1970s (multiple operatories, multiple assistants and several Type II patients having restorations replaced simultaneously). Very little dentist time is required by these patients over the course of a year, but they can be a major part of the dentist`s personal productivity if scheduled and treated efficiently in a multi-operatory/multi-assistant facility. It takes a large number of these patients to keep a dentist busy, so an increase in hygienists and operatories is required as the number of Type II patients in a practice grows.
In examining Type I and II patients, it becomes obvious that they have similarities in their treatment requirements with regard to dentist time, staffing and number of operatories. The difficulty for today`s practitioner arises when a practice designed to effectively treat Type I and II patients acquires a Type III or IV patient.
Type III -These are healthy adults with no occlusal disease and no periodontal problems, but a desire for an esthetic change. Type III patients could be described as cosmetic patients who are dentally healthy, but wish to make a change in appearance. These patients are in great demand by most dentists, yet require a very different office style to treat effectively and profitably.
The hallmark of treating the true cosmetic patient is the requirement of time with the dentist. There must be time for the dentist to communicate clearly with the patient before treatment begins regarding what the patient truly wants. There also must be time to communicate the patient`s wishes clearly to the laboratory technician and, finally, time to perform the clinical procedures at a very high level of expertise. These time requirements are in direct contrast with the office style for Type I and II patients. It is difficult to treat several Type III patients simultaneously in multiple operatories and provide the care and personal attention they desire.
Profitability also is a factor. Most of today`s cosmetic procedures require more time to complete. Laboratory fees for cosmetic restorations usually are higher than those for conventional restorations. The extra time and higher lab fees translate into a significantly lower hourly production rate compared with conventional procedures. And yet, the cosmetic procedures bring a rewarding sense of excitement and enjoyment to dentistry that is lost in many traditional procedures.
Type IV - This group consists of adults whose dentition is failing and who may have occlusal/periodontal disease with multiple restorative needs and missing teeth. Type IV patients are the complex reconstruction patients in your practice.
The hallmark of these patients is multiple appointments over months or even years, depending upon their orthodontic, periodontal, endodontic, surgical and restorative needs. The number and length of appointments, along with the increased complexity of procedures, make these patients very challenging to treat efficiently and profitably. But, as with the cosmetic patient, these patients bring challenge and excitement to our practices and, as with Type III patients, these patients most often are best treated in an office in which they are the primary focus. Due to the increased number of appointments and lab fees, they often yield significantly lower hourly production - unless there is a fee adjustment.
Choice to make
Today`s practitioners face a choice: to effectively and profitably treat all four types of patients within their practice or choose to limit their practice to the types of patients they are best suited to treat. For example, a practice with one dentist, two or three assistants, two or three hygienists and five to seven operatories is ideally suited to see a large number of Type I and II patients. This same practice would struggle if the decision was made to see only Type III or IV patients. They are best seen without the interruptions of a typical busy practice. In contract, the office with one dentist, one assistant, one hygienist and three operatories may do very well with a small volume of Type III and IV patients. However, this practice would have difficulty maintaining efficiency if it decided to add a large number of Type I and II patients.
Usually, neither one of these idealized scenarios occur in a practice. Rather, there is an undifferentiated growth of all four types of patients, followed by an undifferentiated form of scheduling. In this scenario, patients are placed wherever an open block of time exists, rather than where their needs and the dentist`s needs may be best served. The result usually is a compromise in quality of care, enjoyment and profitability.
Evaluate your situation
The system I recommend is quite simple. First, evaluate your current situation. Is your office set up with multiple operatories and staff, or do you have a smaller facility with only a few employees? Regardless of the type of operation you have created, it will have some ideal efficiency level.
For example, the small office in which the dentist uses one operatory will be at a high level of efficiency, seeing Type III and IV patients for long appointments, while being highly productive with a relatively small overhead. As this dentist`s patient base grows, however, a new problem develops. The efficiency enjoyed earlier is interrupted by the need to service a larger number of patients, most likely a mixture of all four types. Now, the small staff working in a small facility is ineffective when trying to do routine procedures - such as replacing a simple MOD restoration - because there is room to treat one patient at a time and the operatory must be turned over before the next patient can be seen. For most dentists, it is at this point in their practice that they begin planning for office expansion.
Increasing the size of the facility and the number of staff allows the dentist to accommodate a much larger patient base and see several Type II patients at the same time. With this increase in size comes an increase in overhead. Now, the dentist feels that the facility and staff must be fully utilized to meet the overhead. Full utilization means full chairs and schedules. This is ideal for Type I and Type II patients, but very frustrating for the Type III and IV patients requiring long appointments and individual attention.
I believe there are multiple ways of dealing with these dilemmas, whether your office is large or small. All of the answers I propose require an awareness by dentists of what they have created and what they ultimately want. I have heard that most dentists are happy if the schedule is full and there is enough money to pay the bills. But if your goal is to be as efficient and productive as possible while enjoying your days in practice, then a full schedule and money are not enough.
Small facility options
First, we`ll examine the options for dentists with a small facilities. The advantage they have is lower overhead. The restriction is the inability to see large numbers of patients at once. The small office is ideal for doing multiple restorations on one patient at a time. The challenge is having enough of these patients in your practice. You must attempt to attract more Type III and IV patients, along with Type II patients who need multiple restorations done at one time. If you want to serve this patient group well, you will need to limit the overall numbers of Type I and IV patients. Emotionally, this is a very difficult thing for most dentists to do. Typically, we are anxious to get new patients; the concept of screening or not accepting all patients into our practice is foreign. Yet, if some screening doesn`t occur, the dentist with a smaller facility will become frustrated with the lack of reasonable hourly production and the problem of scheduling patients he or she wants and needs to see.
It is when the frustration level rises that the dentist with a small facility must ask the most difficult questions: What do I want? Do I want a large family practice with all four types of patients? Do I want to maintain the lower volume my facility accommodates? If the decision is to grow a large family practice, then expanding the facility and staff is one option. Expanding the hours the current facility is used by adding an associate and staff is another option.
A third option is to raise fees so that even doing a routine MOD restoration produces the same hourly production you would get from doing multiple restorations. The justification for the higher fee is the increased care, service and quality that seeing one patient at a time can provide. The downside of this approach is that it requires patients who appreciate this increase in care, service and quality. This, typically, is an even more thoroughly screened patient group.
Determining which of these options is the correct one for you is a matter of looking at your current schedule. If there are openings in your existing daily schedule, then the issue of efficiency from the standpoint of not being able to see patients doesn`t exist. If you can see most patients you want to see within one to two weeks, then the issue of efficiency is a minimal problem. But if the patients you want to see must wait more than two weeks or require you to work on a day off or after hours, it`s time to consider making changes. If you want to maintain a small volume, then choose Type III and IV patients and limit the number of Type I and II patients; or, have an associate see the Type I and II patients in your existing facility by expanding hours.
Large facility options
What about dentists in large facilities and with large staffs? In many ways, these practitioners have greater flexibility than dentists with smaller offices. Your challenge: taking the time to give Type III and IV patients the care, service and quality they desire. If you see only one patient at a time, it means that several chairs and staff members may not be utilized. But if you book all the chairs and staff, you can`t dedicate yourself to the Type III and IV patients in your chair.
There are several solutions for this dilemma. Screening and limiting patients to Type II or IV is not a logical solution for the large office. But separating the month into days when the office sees primarily Type II and IV patients and no Type I or II patients is a very effective solution.
Let`s say you are an established practitioner with a busy family practice of primarily Type I and II patients, but a growing number of Type III and IV patients. You may consider choosing set days each month where, for the first five or six hours, you work one operatory with one assistant to see Type II and IV patients. During this time, the other assistants can be off or perform other duties in the office. And, ideally, all patients seeing the hygienists during these days will be simple Type I or II recall patients requiring very little dentist time. The number of these special days for Type III and IV patients will be dependent upon the number of these patients in your practice. As their numbers increase, so will the number of special days.
The key is to tailor the days for Type I and II patients and the days for Type III and IV patients to the patient demands of your practice. If the number of Type III and IV days is hindering your ability to properly care for your Type I and II patients, you are faced with the same dilemma as the dentist with a smaller office. You must limit Type I and II patients or Type III and IV patients, depending upon what you want in your practice. Another solution is to add an associate to assist with the volume and allow you to choose your patient type and load.
The other element, of course, is fees. Quite often when I ask dentists how they set fees, they respond by saying they ask their friends or that the insurance companies set them. Yet, their friends may have an entirely different style of practice, and insurance companies certainly don`t take into consideration variations in care, service, quality or the type of patient being treated. Actually, dental insurance today is suited for Type I and Type II patients - those needing primarily maintenance or routine restorative care. I explain to patients that dental insurance is designed to cover simple problems and, if they are Type III or IV patients, they do not have simple problems.
Separate fee schedules
For these reasons, I believe Type III and IV patients should have separate fee schedules from the routine-care patient. The fairest formula for establishing fee schedules is based on time. I believe dentists should know the hourly overhead of their office. They also should have an hourly production goal to cover the overhead and provide the profit they desire. Dentists should calculate the number of hours needed for treatment and multiply this by their hourly production goal to determine a fair fee for the treatment they render. The per-unit fee, when done this way, will be higher than for a simple Type I or II patient, but will fairly compensate the dentist for the treatment rendered to the more complex Type III and IV patient.
Let`s take a simple example. A dentist sees a typical Type II patient who needs crowns on two adjacent lower molars. On average, the total time to prepare and seat two metal ceramic crowns on both molars may be two hours. If the fee charged is $600 per crown, the total fee is $1,200. Subtract an average lab fee of $125 per crown, and the hourly production after the lab fee is $475 per crown.
If this same dentist does two bonded, all-ceramic crowns on both central incisors, the total treatment time to prep, try-in and have the patient verify the appearance and bond easily could be three hours. In addition, the lab fee may be $200 per unit for anterior pressed ceramics. If the dentist charges the same $600 per crown, the hourly production is: $1,200 total fee less a lab fee of $400 equals an $800 after-lab fee divided by total treatment time of three hours. This yields an hourly production of $266 after the lab fee. Compared to the posterior metal ceramic example, this is a reduction of 44 percent productivity per hour. To correct this, take the desired after-lab fee hourly production of $475 times the three hours to do both centrals. This yields an after-lab fee total of $1,425. Now, add the lab fee for the pressed ceramics of $200 per unit times two equals $400. The total crown fee for the two centrals should be $1,425 plus the $400 lab fee, for a total of $1,825, or $907.50 per unit, to equal the normal hourly production for posterior metal ceramics.
This certainly is an arbitrary example, but I believe it illustrates the problem dentists face when they are unaware of the issue of fees and time. Also, it illustrates the importance of patient education and care so that the patient understands why the fee varies from other crowns or what the insurance company will pay.
The purpose of this article is to bring an awareness to the reader of the economic dilemmas facing modern dental practices. I believe it is imperative that we classify and closely look at the types of patients we have accumulated. Increasing quality, efficiency and productivity will come only through an understanding of the relationship between the types of patients we have and the ability we have to service them, how patients are scheduled and the fees we charge.