Your dental practice needs patients to survive, but you also need to earn enough money to pay your overhead expenses, make payroll, update equipment as necessary, and market your practice to attract new patients. For many dentists, the rising cost of running a practice necessitates an increase in prices.
At Titan Web Agency, we work with dentists every day to help them market their practices and increase their profits. One question we are often asked is the best way to update a dental fee schedule without alienating or losing patients.
There is an art to price increases, so here’s what you need to know to determine when to increase your prices, why you need a dental fee schedule, and specific steps to raise prices while retaining your most important assets: your patients.
A dental fee schedule is a list of prices a dentist charges for specific services. Some of the services that might appear on a typical dental fee schedule include the following:
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One of the things that can be confusing for patients is that the amount a dentist would charge a patient who pays out of pocket might not be the same as the reimbursement that a dentist would receive from an insurance company. Insurance companies set “reasonable and customary” prices and abide by them when paying claims.
Some things that may help a dental practice owner determine the right fees to charge include the cost of living, geographic area, competitor pricing, materials used, equipment used, and laboratory fees.
We often talk to dental practice owners and learn that they haven’t raised their fees in years. While nobody likes having to tell patients that prices have increased, it’s important to recognize that every product and service is tied to the Consumer Price Index and as your costs increase, it is necessary to pass some of that increase to your patients.
Because prices increase annually, Dental Economics suggests conducting an annual price and profit analysis. An analysis will help you compare profits to last year and determine if you need to raise your prices to keep up with inflation.
One benefit of increasing your entire fee schedule annually is that your patients will expect it and are less likely to balk when it happens. Many of your patients may not even feel the increase as their expenses will be paid by their dental insurance company. Annual increases are likely to be small, whereas if you ignore your prices for several years, you may need a bigger increase to catch up.
There are three significant benefits to having a dental fee schedule and reviewing it yearly.
When you have a set fee schedule, it becomes easy to manage your finances because you know how much revenue to expect, and you’ll be confident that your practice revenue will keep pace with inflation.
It can be difficult to manage your financial obligations if you’re ignoring inflation and it may be difficult to attract new patients without a fee schedule for them to reference.
It’s always a good idea to have an accurate valuation of your dental practice to streamline the process in the event you decide to sell. Since your practice needs patients and profits to be attractive to buyers, it stands to reason that having a dental fee schedule that you review annually will help you maintain (or increase) your practice’s value.
Many people who buy dental practices use the annual revenue as a starting point to determine what they’re willing to pay. If you keep your prices in line with inflation, you’ll maximize the value of your practice.
Attracting high-value patients is one of the best ways we know to increase revenue for your dental practice. High-value patients use your dental services frequently and may be willing to pay a premium for concierge services.
When you charge a price that reflects your expertise and experience, you’re more likely to attract people who are willing to pay more for dental care and make them feel comfortable with your services. Your patients will value you more if you value yourself and your practice.
Here are some pointers to help you raise your dental prices without losing patients.
It’s important to know why your patients are loyal to your practice before you increase your prices. For example, one survey found that 74% of dental patients cited trust as the most important thing that drives loyalty, and another found that 46% of patients were most concerned about the quality of care.
If your patients stay with you out of trust, they’re unlikely to leave over an incremental price increase, and the same is true about the quality of care. Patients don’t want to change dentists once they have found someone they trust.
It may be helpful to increase your prices for new patients first before you tell existing patients about the increase. New patients will accept your new prices as the standard, and charging them (or their insurance companies) your new rate will result in an immediate increase in profits.
An additional benefit is that you and your staff will see that your new fees are reasonable as you bring in new patients, something that may boost your confidence to approach existing patients.
The patients who are paying out of pocket or who struggle to meet their dental insurance deductible may be less nervous about a price increase if you meet them where they are and offer payment alternatives.
You can mitigate patient reactions to price increases by providing third-party financing or offering in-house dental membership plans that will allow patients to continue with your practice.
When you review your existing dental fee schedule, you’re likely to notice that your prices aren’t all out of line with the market or with inflation. For that reason, we suggest considering increasing prices one procedure code at a time. This is something you'll want to test. It may make sense, based on the typical fees in your area, to increase all your prices at once. As a related note, not attempting to make up for years of stagnant prices with a huge price increase.
For example, you might notice that your fees for dental implants are lagging behind inflation while your fees for fillings are not far off. A solution would be to increase your dental implant prices to boost your profits. Also, we suggest keeping price increases for dental hygiene appointments to a minimum if you can since hygiene appointments are where patients are most likely to feel the pinch.
Communication is essential in any dental practice. Once you have decided to increase fees, you should communicate your new prices to patients as soon as possible.
Giving a month or more of notice will help patients adjust to the idea of the rate increase and prepare to pay more on their next visit. Communication also enhances trust, which can help with patient retention. It’s never a good idea to spring a fee increase on a patient at the last minute, so don’t skip this step. Inform everyone via email or text and put a notice on your patient portal.
It might seem counterintuitive to offer a discount after increasing your fees, but it’s a gesture of goodwill that can go a long way toward making patients feel good about the increase. It acknowledges that you are asking something that may not be welcome and that you understand that patients who pay out of pocket may feel the pinch.
We’re not suggesting that you offer a discount to bring your prices down to where they were. However, offering a small discount on a patient’s next appointment can help to increase their loyalty to you and build more trust.
Another way to make patients feel better about your price increase is to provide them with more value in return for their money. In many cases, the value doesn’t have to be high. Small gestures of goodwill can go a long way.
Some examples of how to increase value might include giving a free gift bag to every patient, offering concierge services, or updating your technology to improve the patient experience. You may also want to acknowledge gratitude for your patients by sending annual birthday greetings.
In addition to adding value for patients, you may also want to consider wowing them before you raise your prices. If you go above and beyond for your patients and make them feel appreciated, they’re far less likely to have a problem when you increase your prices.
For example, you might redecorate your waiting room, introduce new services, or hold a patient appreciation event in your dental office. Any of these things will ensure that your patients know you don’t take them for granted.
While raising your prices may be necessary, it’s important to keep an open mind and encourage patients to provide feedback. It may be difficult for some patients to pay your new prices, and you’ll need to be open to hearing them talk about that.
Another reason to encourage feedback is that it will let patients know they can trust you and allow you to talk about third-party financing or payment options to alleviate patients’ concerns.
Many of the patients who frequent your practice have some form of dental insurance and that means they will be minimally affected by changes in your fees. What that means in practical terms is that you’ll need to approach insurance carriers to renegotiate your fees with them.
We’ve found that a lot of dentists think that it’s not worthwhile to negotiate prices with dental insurance companies but that’s not the case. The very worst that will happen is that they’ll say no, so it never hurts to ask because the answer may not always be no.
We suggest doing some research ahead of time to find out what a reasonable increase would be for each procedure and, if you can, what the usual, customary, and reasonable charges are for these services on average. That way, you’ll be negotiating from a position of strength.
As you look to the future, it makes sense to review your dental fee schedule and increase your prices as you see fit. Remember, the keys to a successful price increase are research, open communication, and mindfulness of the impact of price increases on your patients.
Are you ready to update your dental fee schedule and attract new patients? Titan Web Agency can help! Contact us to learn about our dental SEO marketing services and schedule a consultation today.
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