Work smarter, not harder
James R. Pride, DDS
The 1999 Dental Economics Fee Survey reveals a tendency to undercharge, as well as evidence of inefficiency in many dental offices. Both have a significant effect on profitability. Why do I make this diagnosis? What are the causes of the condition? Is there a cure?
A total of 587 dentists responded to the survey, virtually all of them in general practice. Sixty-three percent indicate that they raise fees across-the-board annually. This is up from 57 percent in the 1998 survey.
We are glad to see more dentists raising fees yearly. However, the fee increases average only 4 percent, and the fees are still low. For example, respondents report a crown fee [porcelain fused to high-noble metal (#02750)] of $630, up $19 from the previous year, or 3 percent. The survey shows a comprehensive oral examination (#00150) at $35, unchanged from the previous year. A resin two-surface posterior, permanent (#02386) was at $107, up $5 from last year, or 5 percent.
Comparing the respondents? median fees to those median national fees published in the 1999 Comprehensive Fee Report of the National Dental Advisory Service indicates that some dentists are undercharging. The crown cited above (#02750) at $630 is only in the 48th percentile. Both the comprehensive exam (#00150) and the resin mentioned (#02386) are below the 40th percentile ($112). This means that 52 percent of dentists are charging more for the crown, and greater than 60 percent are charging more for the exam and resin.
Of the 30 fees in the Dental Economics survey for which the Comprehensive Fee Report has values, only four were above the 50th percentile. Thirteen fees ? almost half of the fees surveyed ? were at or lower than the 40th percentile. Dentists seem to be giving themselves modest cost-of-living increases that are not even boosting fees up to national averages.
The surveyed dentists may be hesitant to raise fees, fearing the loss of patients. However, as we will discuss later in this article, it is not the fee that makes dentistry unaffordable, but rather the lack of convenient financial arrangements.
By undercharging, the dentist`s expenses will seem higher than they should be. A low fee structure will prevent staff and dentist from receiving proper pay increases, and it will have other deleterious effects on the practice.
We do not advise increasing all fees at the same time or by the same percentage. Most dentists raise fees by guesswork, then pray they did the right thing. We have a formula that bases each fee on the time involved, the costs of performing the procedure, and the desired profit.
In a nutshell, set your fees objectively for each procedure by determining the time in hours necessary to perform the procedure (1.75 hours for a crown, for example) multiplied by all of the following:
* Your fixed hourly expenses in keeping the office open (take the total operating expenses for the year from your P&L statement, excluding depreciation, and divide by the number of clinical hours you are scheduled to work each year).
* Your variable expenses for performing the specific procedure, such as lab fees.
* 7 percent of the full fee for the dental supplies needed.
* The profit per hour essential to pay for your skill, training, and judgment, as well as to give you a proper return on your investment.
The total derived from this formula is your fee. In response to factors typically affecting fees, we offer the comments below.
Managed care. We are delighted to see that 82 percent of respondents have no patients in capitation programs, 81 percent have no patients in EPOs (Exclusive Provider Organizations), and 64 percent have less than 15 percent of patients in PPOs. Three-quarters percent of respondents, up from 70 percent in 1998, believe it is possible to have a private practice without direct participation in any dental benefit programs.
However, even though less than 20 percent of the dentists are significantly involved in reduced fee programs, 72 percent report that they have been told by an insurance company that their fees are too high. This revelation comes despite fees between the 40th and 50th percentile. These figures indicate to us that the surveyed dentists may still be keeping their fees low in response to insurance pressures, either past or present.
Approximately half of the dentists surveyed see between 41 and 75 patients per week, the same as reported last year. If this figure indicates the dentist?s restorative patients exclusive of hygiene checks, the number is far too large for comprehensive, all-inclusive dentistry and its resultant multiple procedures during the same appointment. The dentist who sees 10 to 15 restorative patients per day is unlikely to be doing comprehensive treatment planning, which would be less costly, less time consuming and better for the patient?s oral health in the long run. Such treatment planning would substantially increase the dentist?s production per hour. Fewer patients in longer appointments receiving necessary comprehensive treatment is the model that allows the highest quality care. So it?s quality, not quantity, that counts.
Comprehensive, complete dentistry is appropriate for all patients, in blue collar areas as well white collar ones. Our research has shown that much of the total-treatment-plan dentistry is being performed in rural and remote suburban locations, rather than in big cities.
Forty-six percent of respondents are using e-claims. This is wonderful. We recommend that others follow suit. With electronic filing, the waiting time for insurance to pay on claims, which manually takes from 45 to 60 days, is now down to seven to 10 days. E-claims are a tremendous boost to cash flow. One caveat: There needs to be a monitoring system, so the office does not lose track of e-claims submitted. Without a system to track this new way of filing, the practice is vulnerable. We have seen this problem occur in offices, so it is a real concern.
Despite the boost to cash flow that e-claims makes possible, dentists have not become any more flexible in extending credit. Respondents show 50 percent of accounts receivable under 30 days, 20 percent at 60 days and only 10 percent at 90 days, virtually the same as reported last year. How do ordinary patients afford to buy $25,000 cars or $5,000 in furniture? They pay over time. Limiting price increases on cars to 4 percent per year does not make them affordable, but offering convenient monthly payments does. With more flexible financial arrangements, dentists can improve case acceptance on comprehensive treatment plans and practice the high quality dentistry they want to do and which best benefits the patient.
The time is right
The winds are propitious for the dentist to sail. We are living in an economic boom period. Fewer dentists are graduating. The number of patients per dentist is going up, and this trend will continue as baby-boomer dentists retire. Baby-boomers patients are aging and in need of oral care. Dentists are seeing just as many patients as before. In addition, HMOs are losing favor among patients as a result of negative experiences in medicine as well as in dentistry.
This is a time when dentists should be more prosperous than before. Are they? To find the answer, let?s look at a key indicator: Production per hour is up; however it is still low.
Dentists are not realizing their full potential in the favorable climate described above because of low production per hour. Both doctor and hygiene production per hour rose over last year. Hurray for the increase! However, as we will explain, the values are still quite low.
The median doctor production per hour reported in 1999 is $248, up from $220 the previous year. The median hygiene production per hour is $89, up from $80 the previous year. (Incidentally, the average, as opposed to the median, production per hour figures went down this year ? doctor from $282 in 1998 to $266 in 1999 and hygiene from $110 in 1998 to $97 in 1999. If any dentist has seen this kind of drop in production per hour, he or she should consider this a red flag that needs immediate attention.)
Can dentists boost production per hour? Absolutely! Dentists need to look at scheduling more efficiently, including reducing no-shows and cancellations, and maximizing comprehensive treatment planning to give quality care that matches their practice philosophy and vision. Hygiene needs to look at maximizing the appointment and at minimizing no-shows and cancellations. I?ll explain.
Our nationwide research has shown that $350 is the starting point for doctor?s production per hour in a general restorative practice without special emphasis on aesthetics or implants. This production level is achieved by scheduling for what we call the Oideal day.O This day usually consists of three pre-blocked appointments that will be filled with significant dentistry of a crown fee or higher, one new patient exam and the rest of the day filled with fillings, crown seats, and other such procedures.
Using the same fees as the dentists reported in the survey, the ideal day would result in the doctor production illustrated in figure 1.
This thoroughly achievable $351 in production per hour is $103 higher than the respondents? figure of $248! Multiple $103 by seven hours per day times four days per week, and a total of $2,884 per week in additional production is possible. Multiplied by 48 weeks per year, $138,000 in additional production is possible over the production reported by the dentists in the survey. This money represents the difference between an efficient and an inefficient practice.
In figure 2, fees at the 80th percentile for the high quality practice yields even higher production per hour for the same procedures.
This is the level at which the doctors? production per hour should be when their fees are commensurate with quality dentistry, when they are scheduling efficiently, and when they are doing comprehensive treatment planning. How are the three production blocks for significant dentistry filled each day?
* By presenting quality treatment plans that are consistent with your vision of the best and finest care and with the long-term oral health of the patient
* By developing a strong relationship with patients in which they trust you and value your vision of ideal care
* By making comprehensive treatment affordable through more flexible financial arrangements.
These are the factors that gain treatment acceptance, not limiting fee increases to 4 percent and keeping fees below the 50th percentile.
To increase hygiene production, consider maximizing the hygiene appointment. If it?s time for the hygiene patient?s full-mouth series, then do it, rather than let it slip through the cracks due to lack of time or focus. The survey respondents reported a complete series (#00210) at $72. If two of these series are missed per week, that means a loss of $144 in hygiene production per week, or almost $7,000 in a 48-week year. If the hygienist is performing a periodontal maintenance procedure, the office should be charging for this level of care, rather than calling it an adult prophy. If a periodic exam is performed, it should be charged for. If the hygienist can do sealants or teeth whitening, make sure these procedures are being done. Consider improving your soft tissue management program to boost hygiene production.
Of course, the big killer in hygiene is cancellations and no-shows (which no doubt affects doctor production, as well). When we survey dental teams, not only in this country but internationally, no-shows and cancellations are the most common regret. Last year, the national average for hygiene cancellations was 28 percent.
There will always be some cancellations in an effective recall program because you will be pre-appointing. However, a finely tuned continuing care department can substantially reduce them. This is achieved by properly educating the patient on what was done at the appointment, what needs to be done, which areas need special attention in home care, and why it is important to return for the next visit.
Restorative patients also need to be debriefed after the appointment by the dental assistant in the same thorough manner. When patients call to cancel, the appointment coordinator needs to pull the chart, indicate why the next appointment is necessary for the patient?s oral health, and ask the patient if there is any way for him or her to keep the appointment. These are just some of the skills that result in minimal cancellations and maximum scheduling efficiency.
Dentists? production per hour and hygiene production per hour are up from last year, but still below their potential. Fees are up by only 4 percent and still low compared to national averages. A 4 percent increase on a fee that is already 15 percent too low is still going to be a substandard fee. Inefficient production plus timidity about raising fees results in an unhappy dentist.
Doctors, it does not have to be this way. You have enough patients. The baby boomers are aging, and the dentistry is there to be done. Necessary treatment not yet performed can be found in the charts of every dental office. You can move it into the treatment room. You can improve your efficiency through effective management systems while at the same time fulfilling your vision of high quality care for the patient?s long-term oral health. Look at your production per hour, Doctors, and ask yourselves if you can work smarter, not harder. I hope next year?s survey shows some real gains in this area.