Let’s review some basic business principles around fees. Of course, you know this: Collections – Overhead = Profit, right? Play with the elements of that simple equation and you can easily see why fees are so critical.
Many doctors are somewhat schizophrenic about their fees, especially raising them. All sorts of factors come into play. What if my fees are too high? How will my patients respond to the fees? Am I worth the increase in fees? Why does it matter since I am in so many PPOs?
There are several points you should take into consideration.
- Every year you don’t increase your fees you fall behind in keeping up with the increase in your overhead, thus shrinking profit and making it less likely you can keep pace with reasonable salaries for team members, purchase equipment, and on and on.
- Generally, fee increases should somewhat mimic the Consumer Price Index. However, that is not always the case. This year I am personally increasing by 4%, although some experts are advocating 5%.
- If you participate in even one PPO, your fee is being recorded and taken into consideration when the insurance company decides on their fee schedule. Avoid affecting other doctors who are also in that network by making sure you increase your fees.
- Patients rarely notice a fee increase. In my office, we honor any treatment fees we presented for the previous six months; this is what is printed on their treatment plan estimate that they sign. Studies show that you will always have a certain percentage of patients who think your fees are too high, some that feel they are just right, and some that feel they are too low – no matter what you set your fees (within reason).
- If you have not had your fees analyzed, consider working with one of a few licensed professionals who can give you detailed information on fees in your area. I recommend setting them at least at the 80% percentile.
- If your fees don’t keep pace, you won’t be able to keep equipment up-to-date, keep yourself and your team trained in current technologies and techniques, and much more. Your practice will fall behind, and it will be difficult to catch up.
I hope 2019 is a great year for you! Call me if you’re interested in working with me as your coach. The most successful business owners have their own coach to keep them focused and on top of their business. Shouldn’t you be one of those?