Dentist Annual Fee Increases: Dental Management

Dentist schedules: 55% are open lateDentist annual fee increases aren’t universal in a recession economy, suggests this survey. While half of dentists (54%) report that they have raised fees in the past year, it’s been over a year since their last fee increase for the other half (44%). And 2% have even lowered their dental fees.

Those who did raise fees did it by an average of 4.5%. “Staff realized how important it was and influenced me!” said one dentist. “I was hesitant at this time, but they insisted because of how expenses are increasing, etc, not because they want raises. They know the difficulties of today running a practice.”

It’s worth noting that not one pediatric dentist in this survey said they had raised fees in the past 12 months. “I’m holding fees steady this year. Economy and all,” said one children’s dentist.

Dental consultants tell dentists they should be raising dental fees each and every year as a part of their dental management. Here are some comments from dentists on the topic:

  • “I’ve had patients leaving to find a network dentist for a few dollars savings. A fee increase does not seem wise or humane.” (Texas dentist)
  • “In a down market, reducing fees can offer a competitive advantage.” (California periodontist)
  • “Don’t increase across the board. Some up, some the same.” (Periodontist)
  • “Although we have raised our default fees, my fees are primarily based on the complexity and difficulty of the case.” (Dental implant dentist)
  • “Will be meeting soon to review our costs and the economic situation.” (North Carolina oral surgeon)
  • “This year I raised them 5%, similar last year The demand for my services is high.” (West Virginia TMJ dentist)
  • “Difficult to raise dental fees during these difficult economic times.” (New Jersey dentist)
  • “Once per year we increase fees at least 3-4% to keep up with annual inflation. A few fees are increasing more than 4%, like gold dental crown fees.” (Ohio prosthodontist)
  • “We kept the basic services the same (prophys etc) but raised the other fees. We find that patients do not notice the increase unless we increase the prophy and exam fees.” (California dentist)
  • “Since some of our co-pays are based on a percentage of our registered fees, we had to increase our fees.” (New Jersey dentist)

Read more – Dental Management: Annual Dental Fee Increase

Taxpayers Footing the Bill for Braces in Texas

the house that braces built WFAA-TVThe business of charging taxpayers for putting braces on kids’ teeth has exploded in Texas over the last three years according to a story by WFAA-TV in Dallas.

In 2010, Texas spent $184 million on Medicaid orthodonticsmore than the rest of the United States combined.

I want you to understand, right up front, that I’m tremendous proponent of just about any program that put dollars in dentist’s pocket for providing quality dental care. Time to be honest, this level of government pork could only have been arranged in a smoked filled back room in the dead of night.

While Texas struggles with its Medicaid budget, 34 dental organizations collected more than $1 million in Medicaid orthodontics last year.

Orthodontic treatment for children is generally an elective cosmetic procedure that many parents spend thousands of dollars on for their children. Very few dental insurance carriers cover orthodontics or elective procedures such as teeth whitening.

But in Texas, Medicaid pays dentists for orthodontics per procedure, instead of a lump sum for the “finished mouth” of straight teeth, according to WFAA-TV. This has made Medicaid orthodontia a lucrative dental business in Texas.

So much so that just three years ago, dentist Richard Malouf’s All Smiles Dental Centers of Texas collected $5.4 million from Medicaid orthodontics. Since that time, All Smiles’ Medicaid orthodontics billings nearly doubled to $10.2 million. This caught the interest of Chicago-based hedge fund Equity Partners who recently acquired All Smiles Dental for an undisclosed sum.

Now Texas dental clinics are being bought up by hedge funds, making Wall Street the ultimate destination for millions of taxpayer dollars as reported by WFAA.

The following is a video of WFAA’s investigative report –

Nowhere is the lucrative business of Medicaid braces more evident than with dentist Richard Malouf’s mansion in Dallas. It is a massive French chateau with a pool house, big enough for the average American family of four to live in. The Maloufs also own the mansion next door. According to tax records the combined value of the two properties is more than $14 million.

It is known as the house that braces built.

Dr. Malouf isn’t alone in offering Medicaid braces; there are five other dentists’ offices that provide Medicaid orthodontia on the same half-mile street in Dallas. Many of them advertise free braces under Medicaid. Jefferson Dental is one such dental operation and, according to WFAA, it is owned by hedge fund Black Canyon Capital of California.

During a struggling economy, many question whether this is the best use of taxpayer dollars. A Medicaid dollar that is spent on braces is a Medicaid dollar not being spent on fighting cavities and procedures most dentists feel are necessary.

It will be interesting to see how this story unfolds. I really want to see the which legislators initiated and signed off on this this piece of legislation and who the lobbyist where who pushed it through.

I not sure other state dental boards should hire them or hang them?

For more on this story see: Tax Money for Unneeded Braces Goes to Hedge Funds

Dental Management & Marketing: Fun – or No?

Dental management & marketing - responsibilities and enjoymentDentists are split over dental marketing and management — almost half hate those responsibilities, but just as many say they sometimes enjoy them.

“I hate the management, but like the marketing,” said one dentist.

In this survey, 43% said they sometimes enjoy dental management and dental practice marketing, 16% say it’s not the best and not the worst, and 41% absolutely hate it.

  • “I like patient education and motivation.” (Endodontist)
  • “I like the dental surveys and hearing what other dentists are thinking.” (New York dentist)
  • “I enjoy bringing out the best in the team and coming up with a marketing plan that works!” (California dental professional)
  • “I love the marketing; it is fun and profitable. Dental websites are essential, and I have many.” (Illinois sleep apnea & TMJ dentist)
  • Internal dental marketing, where my patients tell their friends about the appointment they had at our office, is what I prefer most.” (Wisconsin dentist)
  • “I don’t like that we have to advertise, but the general public has been so brainwashed to accept marketing that we are almost forced to do some form of marketing in order to stay competitive.” (Florida dentist)
  • “I wish I could have someone buy my practice and do the management! I have been told often that I am an excellent manager, but it is not my favorite part of practice ownership. I never seem to get a total break.” (Alabama dentist)

Read more: Enjoying Dental Marketing & Management Dentist Responsibilities

Dentists Beware: The Government May Want To Tell You How To Manage Your Practice

dentists' hands in chainsThe North Carolina Senate recently upheld Senate Bill 655, which would require the North Carolina Board of Dental Examiners to examine all business contracts entered into by dental practices in their state.

No other state in the union has implemented such restrictions on dental practice management, or sought such inclusive authority over how dentists manage their business.

Talk about the far-reaching arm of the government!

As reported by Dr. Clifton Cameron in the Fay Observer –

“As a practicing dentist in Fayetteville, I know how this legislation will impact dentistry in North Carolina.

When my partner and I established our practice in 2008, we quickly realized dental school taught us much about clinical care, but little about running a business. And the dental industry, much like the rest of the health care industry, is changing and becoming more complex.

So like many small-business owners, we looked to outside companies to help finance the practice, manage billing, handle payroll, file insurance and execute other administrative tasks. The arrangement helped our dental practice operate so efficiently that we can charge lower rates and accept dental insurance from patients.

Instead of helping foster lower fees for patients and wider insurance acceptance, Senate Bill 655 would require dentists to personally handle all the administrative tasks of their practices.

The bill would forbid dentists from taking advantage of the types of business services that millions of small businesses use. Many dentists like me would be forced to spend less time on patient care and more time on managing the complexities of a modern dental practice.

Senate Bill 655 would give the Dental Board complete control of how dentists in North Carolina run their practices so they can keep fees charged to patients artificially high and insurance acceptance artificially low.”

The North Carolina State Board of Dental Examiners position on on Management Agreements with dental practices is as follows:

“The Board has become increasingly concerned about the expanding scope and nature of management company services and agreements, and their impact on the control of dental practices by the licensed dentists.

The bundled services offered by management companies typically involve some combination of (1) administrative management services; and (2) financial management services.

Based on its knowledge of the operations of dental practices, and after reviewing management arrangements with dental practices for almost ten (10) years, the Board has identified features of management arrangements which it has determined to be highly likely to create a situation where the ownership, management, supervision or control of a dental practice is impermissibly conveyed to an unlicensed person or organization because either separately or when bundled, those features interfere with the licensed dentists’ professional decision-making and their exercise of clinical skill, judgment and supervision in the dental practice.”

Have you read about this story? What are your thoughts about the government and a State Board of Dental Examiners dictating how you administrate your dental practice?

We look forward to hearing your thoughts on this subject.

For more on this story see: Op-ed: Legislation would restrict dentistry in the state and the North Carolina State Board of Dental Examiners position at www.ncdentalboard.org (opens in a pdf file).

Dentists: Protect Your Dental Lease from Inflation

Dentists: Protect Your Dental Lease from InflationHow an Inflation-Hedged Tenancy Agreement Can Save Your Dental Practice and Give You a Competitive Edge

Last week I started talking about what I see as the upcoming “perfect inflationary storm.”

While some indicators suggest that a slow economic recovery may be underway, there continues to be skepticism among many economists.

Some feel the current rebound is unsustainable and driven primarily by the massive – but temporary – fiscal stimulus promoted by the Federal Reserve.

In the past three years, for example, the Fed has injected more liquidity into the U.S. economy than in the previous 25 years, combined.1 Never before in human history has so much money entered the world’s economy so quickly, and certainly never before in American history have we tripled the money supply by 300% in less than 4 years.

Preparing for Inflation

This is setting up our economy for what could be an inflationary period of time longer and more extensive than ever experienced before.

Indeed, some business owners and financial analysts with whom I have consulted have commented that many policymakers are already well aware of this. However, many of them – as well as corporate executives and Wall Street bankers – often have vested interests, thereby making implementation of these policies difficult. Further, many have been trained as expert systems managers rather than generalists, and thus only see piecemeal solutions to these very complex problems and will be unable to replace a failed system with a new one.

What does all this mean for dentists? In my view, today’s dentist must both have the foresight to read the writing on the wall and create the tools necessary to effectively manage their dental practice during rising and high inflation. This may start with an annual inflation rate of 7% within the next 1 to 3 years, rising to double-digit inflation within 4 to 5 years.

Preparing to manage a dental practice through an inflationary period can be a daunting task when you stop to think about it. Imagine your costs going up significantly and not being able to pass those costs onto your dental patients at the same rate.

However, the good news – as the saying goes – is that you don’t have to outrun the tiger; you just have to outrun the person next to you.

Being One of the Survivors

Hedging your long-term business commitments today will give you the edge needed to outlast and outperform your competition. Many of today’s dentists opt to listen to the financial cheerleaders as if they’re financial planners because it “feels” good and because it “fits in” with their view of how the world works.

Instead, take this opportunity to be a reflective strategist and critical thinker about tomorrow. One of the greatest of these was Herb Kelleher, the former CEO of Southwest Airlines. He had a reputation for thinking outside the box, and his proactive risk management style – including his fuel-hedging program implemented in the 2000s, which allowed the airline to enter into aggressive fuel futures contracts – allowed them to better manage their costs.2

As the price of jet fuel rose dramatically during that period, Southwest emerged as the most profitable airline in the industry, driving out competitors and avoiding Chapter 11 bankruptcy – the fate that ultimately awaited all major U.S. air carriers. Southwest’s fuel-price inflation-hedging strategy provides a great lesson in how to compete in difficult economic times and emerge victorious.

Hedging against Inflation

America’s tenant-based businesses like dental offices should, in my opinion, act like Herb Kelleher by identifying the major expenses in today’s dollars, in order to hedge against future inflation.

As occupancy and tenancy costs remain top priorities in long-term lease contracts for dentists, these are critical costs to contain. As your tenancy leases roll over for renewal, avoid locking into existing options to extend the terms of the previous NNN Lease Agreement protecting the landlord against inflation by passing the costs on to you.

Be willing to “step out of the box” and renegotiate hard, both the base rent provisions, and triple net components of the lease, much like the hedging strategy employed by Southwest.

In particular, ask for longer-term rents with locked-in fixed rents, which do not rise based on the Consumer Price Index (CPI), but rather, have set increases and thereby cap off the percentage increases year over year. Landlords will generally object to this, but given today’s real estate environment, they will often concede, as they are unlikely to want to lose a good, paying tenant.

An excellent window of opportunity still exists to take advantage of struggling landlords by implementing such a hedging strategy. Only agree to triple net provisions with a cap on increases of no more than 6% year-over-year. You’ll want to do this while most landlords are still operating in a non- or low-inflation mindset and remain insensitive to this request as they do not yet foresee a high-inflation period ahead.

Although putting in place an inflation-hedging strategy will take time, planning and effort, the pecuniary benefits would be a significant competitive advantage similar to the one Southwest had if you feel there is a reasonable risk that our economy will enter into an inflationary period of time.

Considering Your Risks

What do you have to lose? Ask yourself where the bigger risk lies: paying marginally more in rent on the front end, or not having the ability to stop landlords from loading you up with additional expenses, so that in the end your triple net charges begin costing you more than your base rents?

If we hit a period of 12% annual inflation – which many believe to be a real possibility – it will only take about 3 years, under most lease agreements, for your triple net charges to start costing you more than base rents.

More importantly, consider how it will affect your competition’s bottom line. Should they fail to heed the inflationary warnings allowing their landlords the unrestricted ability to pass inflationary risk on to them you’ll have the same advantage Southwest had on its competitors.

Bibliography
1 St. Louis Federal Reserve
2 Cobbs, Richard & Wolf, Alex (Spring 2004) “Jet Fuel Hedging Strategies”

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