There are only two ways to grow a dental practice, either by increasing the number of patients seen or by increasing the amount collected per patient. Assuming the schedule does not have holes in it, a full schedule indicates that either capacity must be expanded or fees can be raised. For those who decide to go the route of increased capacity, this may mean a larger office, increasing hours, adding an associate or considering a partnership. The upside to this route is that with solid systems in place, more profit can be obtained and the practice itself is growing in value so when it is time for the dentist to sell or retire it’s worth more. The downside is typically more administrative headaches, more staff to manage and, unless planned for appropriately, less profits for more work. For those who decide to go the route of increasing fees, dropping the poorer paying insurance plans can be a good route to go. This allows the dentist to keep a similar schedule within the solo practice model while collecting more for the same production.
If you are a solo dentist getting ready to add an associate because you are busy, first do an insurance analysis to determine your profits on each plan. It’s a great situation to be “too busy” so the next logical step to consider is adding an associate. The problem can arise when failing to realize that maybe 20% of the patient base is on fee schedules with 40% write offs. By adding an associate rather than dropping the plans with bad fee schedules, the dentist is adding headaches instead of profits. The dentist may have been able to squeak by with a 40% write-off but that is because he/she was providing the services himself. When adding an associate there is not only the 40% write-off to consider but now the associate must be paid their percentage on top of that. A typical solo practice has 65% overhead so having fee schedules that pay well becomes critical before adding an associate to the mix.
If you aren’t sure about your insurance write-offs, give Sandi a call at 303-204-9515. We can quickly summarize your insurance data to give you a clear snapshot of your practice so that you are armed with the tools to make the best decision.