The Dental Practice: Business Foundations Fee Policies in the Dental Office Dr. Dave Willis Dental Simulations

Fee Setting Issues Where you are in your practice cycle What were the fees of the former dentist? How much “insurance” do you do in the office? How much do you want to maximize profit (vs. make “adequate” living) How aggressive / sophisticated are you in your business practices?

Fee Setting Objectives Market Skimming Satisficing Market Penetration

Fee Setting Methods Cost Based-Method Demand-Based Method Competition-Based Method

Methods of Fee Determination Cost Based Third party programs Demand Based “Specialty” service Profit maximization Competition Based UCR

Elasticity of Demand Question: Would you rather sell (do) 20 crowns a month @ $1,000 each, or 33 crowns a month @ $600 each? Answer: It depends 1. Your practice growth phase 2. The size of your patient pool 3. Your practice philosophy 4. How much you enjoy crown and bridge procedures 5. Your insurance plan participation 6. Your practice’s cost structure

When and Why to Raise Fees Annual (Jan 1 or July 1) Every 6 months Occasionally Why Raises profit Keep up with inflation Annual “regular” increases vs large “catch up” increases Increases the value of the practice

How to Raise Fees Flat Percentage Fee Positioning Median Percentile Frequency of Procedures Third Party Determination

Fee Positioning Dr. A Dr. B Dr. C Fees 10 % Below Average 10% Above Prophy $45 $50 $55 - 10% + 10% Gross OH 130,000 Net

Fee Positioning Dr. A Dr. B Dr. C Fees 10 % Below Average 10% Above Prophy $45 $50 $55 - 10% + 10% Gross 180,000 200,000 220,000 OH 130,000 Net 50,000 70,000 90,000 - 29% + 29%

Louisville Fee Profile, HPC, LLC Dec 2009

Louisville Fee Profile, HPC, LLC Dec 2009

The Dental Practice: Business Foundations Fee Policies in the Dental Office Dr. Dave Willis Dental Simulations