Practice management surveys report that approximately 74% of
dentists raised fees in 2015. Those of us
involved in the management side of dental practice would prefer that 74% were
closer to 100%. I agree with many other
management consultants who recommend an annual fee increase, every year.
Why an annual increase?
- An annual fee increase allows a practice to better control overhead (as a percent of collections), and, thereby, steadily increase profit.
- Fee increases each year raise the fee profile in a dentist’s zip code area, thereby applying some pressure on managed care companies, including Medicaid, to increase reimbursements. The greater the number of dentists who increase fees annually in any given area, the greater the chance of increased reimbursements under managed care contracts.
- Without a regular annual increase, a dentist has no hope of staying ahead of inflation. A dentist who skips an annual increase can never sufficiently raise fees some year in the future to make up for lost revenue. Additionally, managed care plans that require providers to submit an annual fee schedule will not allow an inordinately large fee increase in a single year to compensate for previous years in which a dentist did not increase fees.
If you’re unsure of the percentile
into which your fees fall compared to other practices within your zip code
(first three digits), do some homework.
Remember, you want to know where your fees rank in the overall scope of
fees within your zip code; you cannot collude with other dentists to set your
fees. An excellent source of information
for making this comparison is Dr. Charles Blair’s comprehensive Revenue Enhancement Program which provides analysis of fees for every ADA procedure
code listed by specific zip codes. For
more information about Dr. Blair’s Revenue
Enhancement Program, call
866-858-7596 or go online to www.practicebooster.com. If you find your fees are well below others
in your area, use 2016 to adjust them to a percentile that reflects the quality
and scope of your practice.
The Consumer Price Index predicts
inflation to be 2% - 3% in 2016; therefore, I recommend a fee increase of 2.5%
to 3% in 2016 once your fees are within an acceptable range commensurate with
others in your area. If you have let
your fees lag well behind averages for your area, it may take several years of
fee increases greater than the inflation rate to bring your fee schedule in
line. Begin to do so in 2016.
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