Episode 167: When Was the Last Time You Raised your Fees?

Naren: Hello everyone, welcome to the less insurance dependence podcast the official podcast of the reducing insurance dependence academy www.rid.academy. This is Naren your co-host. Today’s topic is when was the last time you raised your fees. Before we get into today’s topic, I have a quick announcement. We have a thriving dentist master class coming up. Six steps to successfully drop PPO plans in 2022 and beyond. This is going to be happening on the 26th of January from 7 to 10 pm eastern time you get three hours of CE Gary will literally walk you through the six things you need to do if you want to be successful in dropping PPO plans. It’s time well spent less than 90 Dollar investment. We limit the seats so if there are seats available, we’ll put a link thrivingdentist.com forward slash masterclass please sign up look forward to seeing you in the new year. Now Gary let’s jump into today’s topic.  You know something I’ve noticed you know I’m in my 40s in 40s I’m 46 and I’ve spent pretty much my adult life in North America. So from the time I was 18 I was in the US or in Canada and I have never seen in my entire adult life where everything went up as much as it has gone up in the last six to nine months like usually yeah we see inflation in one thing like let’s say gas prices go up or something like that right, but now it’s foods it’s restaurants it’s you know just going to the grocery store even movie tickets are more expensive now like hotels you know we stayed at a hotel recently and it’s 40 percent more expensive and you know restaurants would be frequent even like doesn’t matter what price point you are at the low end the middle and the high and everything is more expensive and I’m noticing typically 20 to 30 percent and then I talk to my friends you know who live in different cities both small and big cities and across the US and Canada they are experiencing the same thing. That’s the funny thing is even though this is happening in literally every single industry where people are increasing fees to keep up with inflation, I don’t see that happening in dentistry. Can, can, we talk about this Gary, so I’m really looking forward to this topic today

Gary:  Yeah, you’re absolutely right Naren you’d have to rip van winkle in a cave to not recognize that everything is more expensive these days

Naren: Yes

Gary: quite literally everything whether we’re talking about a loaf of bread a gallon of milk a pound of hamburger vegetables gas restaurant prices are noticeably higher and I’m not talking about a little bit higher

Naren: not five percent

Gary: Yeah

Naren: like twenty percent thirty percent higher yeah

Gary: not the normal cost of living type increases these are big jumps up in prices

Naren: Right

Gary:  you know Teresa and I enjoy restaurants we try to support locally-owned restaurants in Scottsdale and Phoenix and you know it’s noticeable when the two of us go out to dinner you know the bill is  15 20 percent  and you know what I don’t have a problem with that because I want these independent businesses to stay in business

Naren: right

Gary: And it’s fair and they deliver an at least the ones we go to deliver a quality product quality sir awesome service at what I think is a fair price and I don’t begrudge them for making a profit, because if they don’t make a profit, they’re not going to be here the next time we want to go to that restaurant

Naren: absolutely correct

Gary:  yeah and if their costs are you know and it’s sometimes the consumers will take it out you know on the restaurant owner and it really isn’t the restaurant owner’s fault because their suppliers have gone up they’re simply passing along the costs  to consumers and that seems to happen in every other you know profession or every other industry with the exception of dentistry

Naren:  that is correct

Gary: yeah it doesn’t happen and that’s because most you know far about 97 percent of dentists are heavily involved with PPO plans and they don’t even set their fees anymore because you know this is maybe the blunt awakening as some of you might want to reflect upon you don’t get to set your fees when you’re a PPO provider. The insurance company sets your fees

Naren: it’s about literally the contract right it’s not like if you do it then you’re breaking the contract

Gary: yeah, and therein I saw something recently from the delta of new jersey where they hadn’t had a fee increase since 2009.

Naren: wow

Gary: so so dentists that are participating providers and they’ve been stuck with that fee schedule when it was you know 2009 and, and, they just sent out an announcement saying no increase for 2022. So despite the fact that it’s double-digit inflation, they’re saying sorry sucker we’re not giving any more money and that’s literally what they said you know well they didn’t use that word but they might as well have and, and, I want to just kind of rail on this for just a minute Naren, doctors does it make any sense for you to allow some other entity to set your fees. I think we can all answer that very quickly, no because they don’t know what your card they don’t know maybe you’ve invested four hundred thousand dollars in your practice for  CERAK for CBCT and for lasers so compared to an office next door that doesn’t have those things that didn’t have the four thousand dollars invest four hundred thousand dollar investment in CERAK, CBCT, and lasers why would they be comparable you know so in other words if you’ve invested that 400 000 dollars in that technology I just picked those technologies you can pick any you like. Wouldn’t it be justifiable for you to have slightly higher fees to justify the investment in those technologies, sure? So, it makes no sense to let some third party set your fees especially when that third party has zero interest in your sustainability or, or your profitability, zero. So really the question is when was the last time set your fees. I’ll tell you where this comes up  Naren this this question comes up because it’s something I have to deal with every day as a coach and you know one of the core reasons why a dentist becomes a client is to successfully drop PPO plans, there are many other reasons but that’s the core reason and once we’ve done that then we have to re-index fees and oftentimes I go through that process with them I ask that question when was the last time you raised your fees and oftentimes I, you know we’re doing a lot of these meetings by zoom now I notice a very quiet dentist on the other end oh my gosh I’m sorry I don’t know the answer to that Gary. It’s been a number of years and I say let’s get specific how many years and, and, they have to pull it up on their computer to realize it might have been eight or ten years ago since they raised their fees eight or ten years and I think there’s a core reason for that. I think the core reason is one thing we’ve noticed in my coaching is that when an office is PPO involved the percentage of patients that are PPO patients usually isn’t a minority of the patients. It’s usually a majority and it’s usually not a little majority it’s a significant majority

Naren:  like seventy percent eighty percent ninety percent

Gary: Yeah, like literally I was going to say 75 85 90 percent or PPO, and the reason for that is the office the, the dentist becomes dependent on getting new patients from their PPO plan because they’re listed as a PPO provider. They feel like they don’t have a budget to invest in marketing because you know they’re, they’re, they’re, taking a 45 to 50 percent haircut on their fees and I feel like and then and maybe that’s very, very, really they don’t have to invest in marketing and they just become one-dimensional and where patients come from. They come from the PPO plans and so I think one reason why doctors don’t they could still raise their fees for the percent of their patients that are fee-for-service patients but I think one of the reasons that don’t happen Naren, is I think of a core level dentists feel like that’s not fair let’s, let’s, say only 10 percent of your patients are PPO patients so you raise your fees who are you raising your fees on just that 10 percent

‘Naren: exactly

Gary: and while in fact, that’s a business reality I think I, I, recognize most dentists as being inherently fair. I believe that’s a characteristic that is, is, true of most there are certainly outliers we won’t name them but there certainly are those that aren’t but I think the majority of dentists are inherently very fair and I think they look at that and say I don’t make I don’t think it makes sense to have 10 percent of my patients subsidize the other 90. So, you know what just leave our fees where they are

Naren: yes, let me share a call I had today Gary and this particular lady attended the RIDA summit and she’s on the east coast I don’t want to you know mention the area more specifically than that because of confidentiality. She literally asked her you know what percentage of your patients are you know you know the fee for service or non-PPO patient she said probably six I mean literally like it’s everybody’s PPO and then

Gary: was those six patients or six percent

Naren: six patients literally six

Gary: I would say six percent was bad well six I don’t even know how to just I can’t even put an adjective on that

Naren: I know and then we went through the numbers of how much he’s you know producing versus collecting, it’s crazy she even though she’s a small practice she’s giving away like 400 000 dollars every year and again the same story she has been in practice for like 11 years and she hasn’t done a fee increase because what’s the point of raising fees on six people when your hands are tight on everybody else you know it’s just

Gary: Yeah, you know I would certainly concur with that that makes zero sense

Naren: right

Gary: but I really think many dentists feel that that’s inherently unfair because you’re asking whatever percent is a fee for service or uninsured, you’re asking them to subsidize the other you know a mass group of your patients and so because of that many dentists have lost track of where fees even should be

Naren: right

Gary: now because the only reference they have is what they’re getting on their fees their contracted fees with their PPO plan which like in the case of the delta of the new jersey goes back to 2009. What in the world makes any sense about that, I mean can you buy if you’re buying a house and they’re in Toronto can you say no I want to pay the 2009 price?

Naren: oh yeah that would be like a hike

Gary: that’d be a big conversation

Naren: three times what it is I mean the prices in 2009 was this 2021 is 3x in Toronto it’s crazy

Gary: I mean that’s so you know and yet we’re the only ones that are doing it this way

Naren: yeah, and I remember even going to a restaurant in 2009. I think I’m paying at least double today than I did into like everything has gone up everything

Gary: Yeah, everything has gone up and you know hopefully inflation you know gets under control but still we’re going to end up with higher, higher, prices, even, even, once it settles there’s going to be higher prices than that

Naren: yeah, because nobody’s going to say oh, I’m going to charge you less tomorrow every single restaurant every single hotel will charge me whatever they’re charging me now. They’re going to go back in prices it is it’s going to stay

Gary: so, let’s take this and move it into actionable I hope we’ve been persuasive with ours

Naren: one other thing I just realized Gary is it’s not just like goods but even you know team members right I mean you have to pay them a lot more today if you want to keep them you know because many people are like four million people in America quit their jobs last, last, month, because they are getting a better place somewhere else

Gary: I received an SOS a text message from one of my clients yesterday I haven’t told you about this Naren but it was literally SOS and sadly he  lost a dental assistant for some health reasons and lost a loss to the dental assistant and  so he’s, he’s, applying now here’s the good news  he had in the search to replace the dental assistant, he got two really good resumes, really good,  and that’s kind of surprising because we’ve seen situations where you know a doctor has been looking for analysis and not gotten a single or hygienist and not, not, received a single reply, he got two really good ones, but  incidentally both of them independently wanted twice the hourly rate that he was paying this previous  assistant who was departing twice, twice the rate and he’s you know and the SOS was what in the world can I do, I mean how can I do this

Naren: right

Gary: and let’s take this from you know a rant which I hope it hasn’t been an offensive rant all of you but I think I think I hear a chorus of our listeners ranting with us you know Naren,

Gary: Not against us but with us

Naren: With us

Gary: let’s take it from a rant and let’s move it to, actionable. So, so, what are the solutions here well number one, if you aren’t already on the train moving down the track to drop PPO plans, get on that train

Naren: Yes

Gary: and I’ll bring it back to what you said in the opening there may be a good next step for you would be to join our master class on January 26th six steps to drop PPO plans in 2022 and beyond come join us it’s, it’s 89 bucks. We try to make it as affordable as possible you get three hours of CE and I will literally provide you a blueprint to successfully drop PPO plans, and, and, by the way, if you were to take action after that master class, it’s entirely possible that by December 31st, 2022, about a year from when this episode is coming out, you will have successfully dropped PPO plans in your practice. I hope that’s really encouraging. Now you’re going to have to apply the information and but by the end of 2022, you could be radically reducing your insurance dependence if not completely fee-for-service. So, I hope that’s encouraging too so that would be my first recommendation, now but what do you do in the meantime.  You really need to index your fees where they should be today and that that is going to be a challenging exercise if you haven’t raised your fees in a while. So, I do have a resource for you on that and by the way, we can’t tell you what to charge.  No, no, one can tell you they can simply provide some guidelines because actually, the department of trade calls that price-fixing. So, we can’t tell you what to charge and we would never do that has to be based on your own cost your own expenses your own variables but you have an advisor that can be very helpful with you on this and that is your CPA, your accountant, and hopefully, by listening to this podcast you are a client of an ADCPA member accounting from the academy of dental CPAs ADCPA. Naren let’s put in our notes a link to the ADCPA website. It’s, it’s, ADCPA.org

Naren: yes

Gary: they’re a non-profit it’s ADCPA.org and what ADCPA is if you’re new to the podcast or you haven’t heard us talk about it, ADCPA is  24 independent accounting firms located all over the country that work exclusively with dental offices or the vast majority of their clients are dental offices and they represent over 10 000 practices collectively in those 24 firms and they’re a great source of information about how to come about setting your fees with, with, you know with respect to inflation and other costs and everything else. So, let’s put ADCPA.org in the show notes, or now you have the link and I’d encourage you if you’re not a member reach out to them and that would be a very useful service that they can provide you and again they can’t tell you what to charge because that would be called price-fixing and they won’t do that, but they can certainly give you some guidelines

Naren: yeah, like I know personally like many, many, of our mutual clients I think have reached out because you know like you said PPO dependent practice more than likely hasn’t increased fees in years if not a decade or more so correct

Gary: In a practical sense they haven’t because the majority of their patients are PPO patients and in fact you know they’re not raising fees and they haven’t for a long time

Naren: right so this is a great exercise and I think what they typically do is they reach out to the ADCPA firm and that firm looks at that particular state you know the type of services and say hey based on my other clients this is what I am saying so they can give you some guidance

Gary: I want to end this episode with the story and it goes back 40 years.  40 years ago I was a young coach working in a large dental consulting firm and one of our clients was in the early 60s if I recall 62 years old I won’t use his name, he’s long since retired but he who was burned out, and one of the things he wanted to do was   have me as a coach look at his fee schedule and provide some recommendations and so I made a pretty good case, that remembers this is 1982 what also was going on in those early 1980s

Naren:  what else was going on in the 1980s oh inflation was really, really, high yeah

Gary: inflation was, was, was, the same thing. I remember doctors this will maybe make our listeners feel really good. I remember clients in 1981 1982 signing loans to buy their practice with a 21 or 22 percent interest rate, 21 or 22 percent yeah and they made it and they survived. One way this was the early 1980s and the doctor wanted some advice about raising fees, so I, I, made a point how we always have to adjust fees you know because costs go up and we just went through I said, for example, look at the wage increases you’ve given your team. Look at you know you spent fifty thousand dollars last year investing in new technology. You’ve taken you to know fifty thousand dollars worth of CE  in the last year so we’ve got to somehow you know to balance out those costs and I’m making a case for raising his fees and he said okay Gary I got it I’m doubling my fees. I said no, no, no, no, no, no, I’m, I’m, was there anything that I said that that made you hear you should double your fees because if that’s the case I want to retract that I didn’t say double your fees

Naren:  yes

Gary: and he said Well, Gary I heard everything you said and you’re right you didn’t tell me dumb my fees but if everything you said makes sense then I’m going to I’m going back home I’m double on my fees. I said no, no, and anyway, he said no he said there are a couple of things I haven’t told you, Gary, as well I’m all ears please, please, tell and he said  I I’m actually financially independent  I’ve done pretty well in real estate kind of accidentally I’d love to say I was a real estate guru but it was an accident and I bought some properties both commercial and residential and they’ve done well and  I am financially independent, I have enough to retire on I have enough you know for the rest of my life and my wife’s life and it will still leave a big inheritance to my kids and I can retire. He said I’m not enjoying dentistry right now I feel burned out and he said I’m going to  I’m going to go back I’m going to double my fees and I figure one of two things is going to happen either I’m going to get a whole lot more profitable I’m going to start enjoying dentistry again or I’m going to lose all my patients and then I’ll be forced to retire which is actually fine with me and I still said no but there was no talking him out of this and he literally went back home doubled his fees Naren he lost less than five percent of his patients

Naren: wow

Gary: he lost and, and, the the the punchline to the story is he practiced another four years she was a very, very, very, good clinician  and you know his new fees did reflect the quality of care he was providing and we look at the ratio of his lab fees and everything else it was it was actually a fair increase but he lost five percent of his patients and, and, he enjoyed he, he, said to me we kept you know he was a client of mine all through that period  and kept in contact with me many years after his retirement he said Gary that epis that that consult we did  you know where you talked to me about raising my fees was the best thing I ever did in my career you know that season from, from, age 62 to 66 was the most enjoyable time in my career and thank you for that wisdom and anyway I’m not suggesting any of our listeners do that but I want to tell that story because what’s the fear of raising your fees

Naren: that you would lose your patients

Gary: And what, what, is the acronym a, a, way to look at fear as an acronym false evidence

Naren: yeah, false evidence appearing real

Gary: fear, yeah anyway I shared that story with you it certainly isn’t what I’m suggesting but the concept of raising fees does apply.  Hey, thanks for listening I hope this has been an enjoyable conversation for all of our listeners. Most importantly I want you to take some action at the very least contact ADCPA and get some information about you to know where you should index your fees maybe another piece of action would be to come to join us, on January 26 for our next masterclass, six steps to, to, drop PPO plans in 2022 and beyond.  One more actionable item comes to join us in the first digital dental association Naren and I created that a couple of years ago it’s called RIDA R-I-D-A, RIDA is both a play on words we want to help you get rid of the insurance, I know that’s not grammatically correct but I do like the sound of it but it’s also an acronym R-I-D-A. It stands for reducing insurance dependence academy. Come join us we are gifting your membership there is no membership fee. It’s free to come to join us rid dot academy and become a member and get all kinds of cool information and benefits of being a member at no cost to you.  One thing we’re hoping to do and we are well on our way to doing it is creating a grassroots movement of like-minded dentists and offices all over the country that are moving down this track to kick the dental insurance companies to the curb so if you haven’t done that yet jump on jump on the train there’s room for you we’ll add new cars to the train hey on that note thank you for the privilege of your time and look forward to connecting with you on the next less insurance dependence podcast.