October 24, 2024

Raising fees in your dental practice annually is necessary to ensure your dental practice's financial health.

While it may feel uncomfortable, especially in a patient-centric field like dentistry, annual fee increases are a best practice to keep your practice aligned with rising operational costs. Now is the perfect time to start preparing for your next fee adjustment.

The Best Practice: A 5% Increase Each Year

The recommended approach is to increase your fees by 5% annually. This steady, moderate increase allows you to keep up with inflation, rising material costs, and increased labor expenses. Most industries, from retail to healthcare, adjust their pricing to maintain profitability as their costs rise. As a dental practice owner, you should do the same.

Even if you are an insurance-based practice, your Usual Customary and Reasonable Rate (UCR) should reflect the value of your services. The reality is that while insurance companies may not adjust their reimbursement rates, your UCR rate is still an important indicator of the value of your work.

Overcoming the Fear of Losing Patients

Many dentists hesitate to raise fees out of fear of losing patients. However, waiting too long between increases can lead to a much larger, more noticeable hike down the road—something that patients are more likely to balk at. A sudden, steep increase of 10% or more to catch up on years of stagnant fees can be alarming to patients. In contrast, a 5% annual increase is slight enough to be easily accepted but substantial enough to make a significant difference to your bottom line.

Compare Your Fees to Other Practices

Do you know how your fees compare to other dental practices in your area? If not, now is a great time to find out. Understanding where your practice stands in relation to your competitors can help guide your decision-making process. If you’re unsure, we can provide you with a fee survey for your specific zip code, giving you valuable insight into local pricing trends.

Avoid Over-Analyzing Your Fee Adjustments

When raising fees, resist the temptation to over-analyze or adjust them piecemeal. Targeting only certain procedures for a price increase can lead to imbalanced fees that don’t reflect the actual value of the care you provide. A uniform fee increase across all services is the most straightforward and effective way to raise prices.

If a 5% increase feels too large, start smaller. Even a 3% increase can lead to a noticeable improvement in your practice’s financial outlook without causing much concern among your patients.

The Impact on Your Bottom Line

Every slight increase in fees can significantly impact your overall revenue. A 5% increase may seem modest, but it can significantly improve your practice’s financial health over time. If you’re unsure about how a fee increase would affect your specific situation, we can help. We’re happy to run scenario projections based on your practice’s current financials to give you a clear picture of the potential benefits.

Start Preparing Now

Don’t wait until rising costs force your hand. Proactively raising your fees annually ensures you won’t fall behind and face the need for a drastic adjustment later. Start planning your next fee increase now and let us know if you need assistance analyzing your current rates or projecting future growth.

Raising fees isn’t just about staying profitable—it’s about ensuring the long-term success of your practice while continuing to provide the high-quality care your patients expect and deserve.

Not sure where to start? Contact us today!