Each year dental practices face higher costs for supplies, materials, equipment, labor, service contracts, and more. And practices that participate with dental insurance plans will likely face decreased reimbursements. To help mitigate these increases in costs and decreases in revenue, I recommend you consider raising your fees. Raising fees annually allows a practice to keep up with inflation or gradually increase practice profitability.
For those concerned about raising their fees, keep in mind that most patients aren’t aware of your current fees except for the most common ones, such as dental hygiene. As such, I suggest raising your dental hygiene fees more slowly; however, other fees should be raised by at least the amount of the consumer product index, which is relevant when it comes to assessing inflation and higher costs.
I often meet with new practices that haven’t raised fees for several years. This is due to a variety of reasons, including fear of losing patients, setting fees based on levels of insurance reimbursement, or simply not thinking about it. However, most good businesses conduct an annual price or fee analysis and the easiest way to perform this is to evaluate the overall practice profit margin.
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Today’s tough times
Dental practices are currently facing their highest cost increases in memory. This is most likely because of today’s staffing challenges. When there is a shortage of anything, costs will go up, and this also holds true for dental staffing. Levin Group currently estimates that approximately 9%–10% of dental hygienists have left the profession, and it’s going to take time to replenish the number of hygienists available for positions and practices today.
The 2021 Dental Economics/Levin Group Annual Survey also found that 46% of practices are currently looking to hire a staff member. We estimate that staff labor costs and dental practices could increase by as much as 6%–8%. This may be the number one factor for raising fees on an annual basis. The only way to make up for a large jump in labor costs is to increase practice production, which is the number one metric that dental practices should pay attention to in terms of the short- and long-term success of the business.
Keep in mind that one goal is to increase practice production every year. This is especially important considering that costs and inflation will increase annually, and if production hits the right level, then the practice will achieve and maintain success. I will continue to provide recommendations on different ways to increase your practice production, and raising fees annually is one of those standards.
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