Doctors must set their fees based on their overhead costs, geographic area they practice in, and profit goals.
Dianne Glasscoe, RDH, BS
Dear Dianne,
I work in a large eastern city and have been a registered hygienist for three years. I came to this practice fresh out of hygiene school and have never worked in another practice. My co-workers and I have a great working relationship and, while everything is not perfect, I generally enjoy working in this office. However, there is one thing that really bothers me. I feel the fees charged here are too high! I find myself feeling sorry for patients, especially those without dental insurance. Our high fees have made me lose respect for the doctor. How can I admire my boss when I feel he is ripping people off? Should I let the doctor know how I feel?
Frugal Felicia
Dear Frugal,
Your letter tells me several things about you, and I`d like to address these issues separately.
First, you state that you live in a large city. Dental fees in large cities (and even nearby suburbs) are typically higher than those in small or medium sized cities. Since the cost of living is generally higher in large cities than in rural areas, the cost of goods and services is correspondingly higher.
Another thing I notice is that you are young to the profession.
You haven`t had a "wealth" (pardon the pun!) of different office experiences with which to draw comparisons. You say your practice fees are high, but compared to what? You have to compare apples to apples.
However, I can identify with your feelings. Many years ago, I worked in what I perceived to be a high-fee practice. I marveled that any patient could afford the fees. I think the reason that I felt fees were high was because the doctor never shared any of the practice statistics with his staff. We had no idea about the overhead costs. We knew we had a booming practice with lots of patients. In addition, all staff were compensated at an excellent rate of pay.
In my travels as a consultant, I`ve had the opportunity to sample fees in a variety of offices in several states. I always survey a sampling of patients, and one of the questions I ask is the patient`s opinion of the doctor`s fees. Nearly 100 percent of the time, the patient will say that the fees are too high. So, whether the fees are high, medium, or low, our patients feel that fees are too high.
Dental practices have tremendously high overhead. Lab fees, dental supplies, equipment and facility costs, staff salaries, and taxes are just a few of the items that contribute to overhead. The doctor often has to be content with the amount that is left over after all the bills are paid. The amount can vary greatly from practice to practice, but I`ve seen the amount be as little as 9 percent to as much as 35 percent of collections. The point is that the doctor doesn`t get anywhere near all that is collected.
In low-fee offices, staff often complain about low wages. The profit margin is low, so the doctor simply cannot afford to render better wages. Staff turnover usually is a problem in such practices. However, rarely (if ever) have I seen a high-fee practice pay low wages. I find that doctors often position their fees as a matter of self-esteem. Those that are lacking in self-esteem tend to have low fees. These doctors often do not value their services appropriately.
Conversely, doctors with inflated egos can price themselves right out of the market if they?re not careful. Finding the proper balance between self-esteem and the value of your services is not easy.
It also is noteworthy that some doctors have positioned themselves as cosmetic/esthetic practices that cater to the desires of people who seek those services. This is a different target market than the average Obread-and-butterO practice targets. Neither type of practice is good or bad. However, they are different in their clientele. Cosmetic practices typically charge significantly higher fees.
For any business to remain financially healthy, a profit must be realized. Every practice owner has to deal with the issue of fee-setting. It?s often difficult for the doctor to know what the market will bear. (By market, I mean the population group in any given area that will seek care in an office.) Doctors must set their fees based on their overhead costs, geographic area they practice in, and profit goals.
Aren?t you glad that you don?t have to worry about such things as setting fees? Let the owner deal with that issue. If the fees are too high for the market to bear, you will eventually have no patients. But as long as the practice is busy and patients desire and are willing to pay for services, the fees are not too high.
Dianne
Dianne Glasscoe, RDH, BS, is an adjunct instructor in clinical hygiene at Guilford Technical Community College. She holds a bachelor`s degree in human resource management and is a practice-management consultant, writer, and speaker. She may be contacted by e-mail at [email protected], phone (336) 472-3515, or fax (336) 472-5567.
