WHAT ABOUT FEE INCREASES IN 2018?
An annual fee increase assures growth in collections leading to more profit from year to year. A significant increase in profit each year of a 35 to 40 year dental career can amount to several million dollars in additional earnings over a dentist's lifetime. With this in mind, I have always advised consulting clients to raise fees annually, preferably at the beginning of each fiscal year, using the Consumer Price Index (CPI) inflation measurement for the previous 12 months plus the fee profile for the practice's zip code to determine the percentage increase.Any practice which participates fully in managed care or government assistance programs should also raise fees annually. Doing so will affect the fee profile for the area. Many managed care organizations, insurance companies, and government program directors monitor regional fee profiles as they make decisions about the timing of their reimbursement rate increases. Furthermore, as many as 50% of the patients in any practice do not participate in managed care or government programs, and will, therefore, pay full fee, adding significantly to collections.
According to the CPI, the inflation rate was 2.2% during the 12-month period ending September 30, 2017. Therefore, after you determine into which percentile your fees fit within your zip code, I recommend a 2.5% to 3% fee increase for 2018. If your fees are significantly lower than the average profile for your zip code, you may wish to add another percentage point or two to your 2018 increase.
It is unwise to increase fees in any given year by more than the inflation rate plus 1% or 2%. While an increase commensurate with inflation is not objectionable, an unusually high increase may bring resistance from patients or third party providers.
Resources to help you determine how your fees compare with others in your zip code are available online from both the American Dental Association and the National Dental Advisory Service, among others.
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