Oral Health Group
Feature

Practice Management: Should I Raise or Lower My Fees?

September 1, 2003
by Howard Farran


From 1992 to March 2000, the stock market created what is now referred to as “The Great Bubble.” During “The Great Bubble” it was very common for dentists to have excess demand. It was very common to have to wait weeks to get into the dental office. Many dentists adjusted to this line waiting outside their front door by hitting the brake pedal and raising their fees. This usually had little effect in decreasing demand. This is what we call ‘price inelasticity’, where price has little effect on demand.

During these times, if a patient line formed outside your door it made good economic sense to hit the brake pedal and raise your fees. Why should a patient willing to pay $100 for a cleaning have to wait two weeks to get in when the hygienist is busy cleaning another patient’s teeth for $80.00.

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During the boom years many dentists dropped all of their PPO dental insurance plans. About five to 10 percent did not even participate with Delta Dental, which historically has always been the market leader in US-style indemnity insurance.

If the dentist did not want to raise their fees, and a patient line was forming outside their front door, the other managerial economic options would be to hit the gas pedal by either increasing capacity or increasing turnover.

Increasing capacity could be accomplished in numerous ways. You could simply add additional operatories. You could add an associate dentist. You could sell a dentist partnership. The new associate dentist or partnership dentist could use your existing operatories for more hours per week, thus increasing the productivity of the existing operatories.

The other method is to increase your turnover, which is simply increasing your speed. We used to do endo in three one-hour appointments. With K3 rotary NiTi files by Kerr we can do the majority of molar root canals in one 60 to 90 minute appointment. Most materials come in fast set instead of just slow set (also known as dental school speed). We can use a RootZX by J. Morita to find our working length. We have powerful curing lights like the Sapphire light from Denmat that cure composite faster and deeper than ever before. We have self-etching bonding agents like Simplicity from Apex Dental, Adhese from Ivoclar, or Xeno III from Dentsply Caulk that eliminate placing and rinsing off the 30-40 percent phosphoric acid. You can anesthetize with Septocaine instead of Lidocaine and get twice the numbing in half the time. You can go with digital radiography like Trophy from PracticeWorks or Dexis and save all the time developing and mounting radiographs. The list of time saving dental materials and techniques is nearly endless.

In March of 2000, “The Great Bubble” collapsed. Since then we have been in a recession. North America has lost more than two million jobs. It has also gone from running US$250-billion surpluses to US$250-billion deficits. Where there was boom there is now bust. Where there was little to no boom, there is little to no bust. Today many dental offices practicing in post boom times have excess capacity. Where there was once a line waiting four weeks to get in, there are now holes in the daily appointment schedule. When you have excess capacity you have to reverse many of the things you did when you had utilized all of your capacity.

Maybe it’s time to reconsider taking indemnity insurance and even a PPO or two. Southwest Airlines is the only airline thriving in today’s economic downturn. Wal-Mart and Home Depot are booming! Meanwhile many dentists are still convinced all of the money is made from a Nordstrom’s style practice “Boutique” dental practice. In an economic downturn you have to work harder overall, for less money per procedure, to take home the same amount of money you were accustomed to making during “The Great Bubble.”

At least once a day in my Today’s Dental family practice in Phoenix, AZ, I see a laid off high tech worker mourning the loss of their once high-flying, high-paying career. Their number one and two questions are: 1) “How much is this going to cost?” and 2) “Do you know if my dental insurance will cover this?”

For me, the easiest way to adjust my income is simply deciding how much, how hard, and how long will I work. I know the laid off worker would love to trade shoes with those options any day!

Dr. Howard Farran received his DDS at the University of Missouri Kansas City, MO, 1987. Public Health Dentist of the Year Award – 1995, Office of Dental Health Phoenix, AZ 1995.