Money Talks

Nov. 1, 2003
Setting fees and discussing them with patients is both art and science. Communication skills are the key variable for case presentation and acceptance.

by Sandy Roth

Many years ago I attended a workshop in San Francisco. During one of the discussions, an orthodontist from Texas stood up to make a comment. I remember what he said well:

"For years I have heard that my fees are high and that I had developed a reputation as the most expensive orthodontist in town. So, I decided to check it out. My staff took on a research project to find out what fees were being charged by the other orthodontists in my neck of the woods, and they called their friends in other offices to gather the data. Boy, was I surprised to learn that I not only wasn't the highest, I was way down the line compared to many of my colleagues. So I decided then and there to raise my fees. Hey, I figured, why have the reputation without the revenue?"

I often think of this dentist when I hear my clients worrying about how patients will respond to even the slightest increase in fees. And while I would not recommend that you raise fees just to see if you can get away with it, fee increases are part of the normal process of conducting business. There is, of course, an art and a science to setting fees. Your fees must be high enough to cover expenses plus maintain a healthy profit margin for your compensation and reinvestment in the business, yet not so high as to price yourself out of the market.

Many commodities are highly price sensitive — but more services are becoming price sensitive as well. And when there are third-party payers (those pesky insurance companies) that have a vested interest in managing their own costs, the price competitiveness increases. This means that, for most of your patients, fees matter.

Yes, there are a few famous dentists who report that price is not an issue for their patients. Because they have positioned their practices so well, they are relatively unconcerned about people comparing their fees to other dentists, and they successfully operate cash-only practices. It is not coincidental, I suspect, that many of these practices operate teaching centers and, while some patients are "normal" people, the bulk are other dentists and their spouses. I say, "Good for them," for they have developed a special niche, and it is great that they can operate their private practices this way.

But the reality is that most dentists don't function in that niche. Most have more broadly-based patient populations comprised of average folks who go to work every day or live on their fixed incomes and deal with real-life cash-flow issues. Most dentists do not have a patient base full of the independently wealthy. Most have patients who must budget for dental care as they budget for other wants and needs in their lives. Most have patients who will struggle with some if not all fees. While they may love you and your dentistry, almost everyone wishes it were free or at least a little less expensive. I think this is normal.

It is to the connection between you and these normal people (most likely a lot of your patients) that I ask you to turn your attention today. Let's review a few principles about fees and see how they apply to your practice.

1) You must set and regularly review your fees. Don't just make them up on the fly based on what you think the patient will tolerate. Be prepared to adjust them for degree of difficulty or other special circumstances. A crown is not a crown is not a crown.

Certainly, involve your staff in this process. The scientific part of setting fees involves reviewing your numbers to ensure that you will remain financially sound, given the variables of time, overhead, and other factors. The art is positioning yourself so that you don't drive patients elsewhere simply because your fees are routinely higher than makes sense or are out of alignment with your community. Don't frustrate your staff by undermining their authority to operate within the guidelines you have set. If you agree not to involve yourself in quoting fees, abide by that agreement and let your staff do their jobs. Don't change agreements when patients do an end run around the person or persons designated with authority to quote fees. You want your staff to protect you from your own insecurities about fees and financial arrangements, so let them.

2) Fees are a given and patients accept this. People always want to know the fee, but they will not always ask about them. People are entitled to know fees in advance. Therefore, you must initiate the discussion about this topic.

If you intend to charge a fee for a service, you must ensure that your staff reviews both the fees and how you expect patients to manage their account before they are asked to commit to an appointment. One of the greatest factors in cancellations is lack of clarity about fees and financial arrangements. It is always better to have patients wait until they can pay your fee than to cancel at the last minute when they discover the dentistry isn't affordable. And finally, if the patient says the fee doesn't matter, insist on reviewing it anyway to prevent any misunderstandings. Many accounts receivables rosters include patients who never asked for fee clarity or said the fee was of no consequence. Do not put yourself at risk by failing to have clear discussions and understandings with each patient about every fee.

3) If a patient refuses to acknowledge that there is a problem, the fee is irrelevant. If the patient believes there is a problem but does not want to address it, the fee is irrelevant. If the patient wants to address the problem but not in the way you have proposed, the fee is irrelevant. Relevance is everything.

This is one of the most critical principles and one that is overlooked regularly in many practices. If you don't want a Widget, it doesn't matter how much it costs or how many easy payments might be arranged. Don't presume that a patient's resistance to scheduling dental care is a financial one. The patient may feel that the dental condition is not worth addressing, or that you are more concerned about it. Or the patient may have lived with the condition for a long time and, consequently, it's no big deal. Your behavioral specialists (facilitators, patient-care coordinators, etc.) must have an ear for hearing what the patient is trying to convey. They should refrain from sales banter or glib lines to "overcome objectives." I still hear "Is there any reason you can't schedule that crown now, Mrs. Jones?" too often. This is a manipulative sales technique that has no place in dentistry.

4) There is a huge difference between the patient who does not think the service is worth the fee, the patient who does believe it's worth it but has a cash flow problem, and the patient who simply cannot afford the service no matter how many payments you arrange. When you and your staff understand the distinction between these three sets of circumstances, you have the opportunity to work with each patient differently. Cash flow may be the problem for many patients, but it isn't the problem for everyone. Some just don't believe that dentistry is important.

Sadly, we live in a time when many people are so deeply in debt that it will take years or even bankruptcy to eliminate their burdens. We also live in a world where many single parents are barely able to take care of housing, food, and clothing for their children. Even basic dentistry is a luxury for far too many people. And while many patients are not in that situation, it is important to honor and respect those who are. It is not a friendly act to allow people to owe you money when they have no reasonable prospect of paying you.

In each of these situations, the communication skills your team members bring to the patient relationship are the critical variable. I contend that dentistry today can't afford to hire any team member who can't or won't address fee issues with patients. Discussions about fees and financial arrangements come up at unscheduled times in unscheduled places. Every employee with patient contact must be aware and skilled enough to respond to a patient's cautious inquires about the fees and payments. (For more information about how to help team members develop these skills, call Sandy at 1-800-848-8326 and ask about her audiocassette program, Money Matters: How to create healthy financial arrangements with your patients.)

While you might rely on a particular team member who specializes in the discussion of fees and financial arrangements, the rest of the staff has the obligation to create a safe culture that invites patients to raise questions about fees and payments. When that culture is in place, patients will have more honest discussions that will lead to more planned and intentional care. When it is not, they are more likely to avoid you altogether — something no one wants!

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