Practice Plan Regional Support Manager, Donna Hall, makes some suggestions as to how to solve the problem of plan and pay-as-you-go prices being out of alignment.
Sadly, this is something I do see when I’m out and about.
On the face of it, everything might seem fine. You’ve got a decent number of patients on plan, the diary is busy and the team is getting through the work. But when we sit down and really look at the numbers, there’s a gap between the plan and your pay-as-you-go fees. More often than not, the practice owner hasn’t realised just how big that gap has become.
How does it happen?
It usually comes down to one of two things.
Either you’ve been raising your private fees but haven’t matched that increase in your plans. Or you’ve been increasing your plans each year, but your pay-as-you-go fees haven’t kept pace.
Both are easy mistakes to make. Fee reviews can get missed, or you may only make an increase to one of the two types of fees because it feels like the easier option at the time. Then a few years down the line you suddenly find things are no longer where they should be.
What it really means in practice
When we work it through with practices, the reality hits home as the consequences can be severe. You can end up effectively giving away appointments. It could be that when you break it down, a hygiene visit or an examination isn’t being paid for at the rate you need for it to be viable for your business.
On paper it might look like you’re only out by a couple of pounds a month. But when you multiply that across all your plan patients and across a full year, that soon adds up to a substantial amount of money. I have helped practices where they are losing £10,000 a year and more without realising.
This affects more than just the bottom line as it can start to shape your associates’ attitudes as well. If they feel they can earn more delivering pay-as-you-go dentistry, the plan becomes less attractive to them and they’re less likely to recommend it, which is not a good position for you to be in.
The misconception about plans
A common misapprehension I come across often is that a plan must be cheaper than pay-as-you-go. This is not the case.
Patients join plans for all sorts of reasons. Yes, value matters, but being on a plan isn’t just about saving money. It’s about budgeting, access and feeling looked after and belonging to the practice.
Having said that, it’s not OK to have a plan that’s more expensive than pay-as-you-go for the same thing. Trying to build in small savings just for the sake of it can leave your business worse off. If you’re only saving a patient a small amount each year, they won’t really feel that benefit. However, you will feel it, as it will come straight off your income.
What can you do about it?
The starting point is to get a clear picture of where you are now. Sit down and look at what your plan delivers in terms of appointments, then compare that to your private fees. When you do that properly, it becomes obvious whether things are out of alignment. From there, it’s about choosing the right way to fix it.
In some cases, it’s possible to bring things back into line over a period of a couple of years. Consistent annual fee increases will often do the job if the gap isn’t too big.
In others, you might need to look at what’s included in the plan. For example, do you need to offer the number of appointments you currently have built in, or could that be adjusted?
Another option is to stop adding new patients to a plan that you already know isn’t working for you. Instead, set up new plans at the correct price point for new joiners and deal with the existing base separately.
And sometimes, if the gap is big enough, you have to be braver with your fees, which is the part people find difficult.
The human side of it
This is usually where owners hesitate. You don’t want to upset patients, especially as the economic climate is tough for everyone. You’re also worried about jeopardising the relationships you’ve built with them. That’s all understandable.
However, you also need to consider the needs of your business. Costs have increased, overheads are higher and if your pricing isn’t right, you’ll be the one carrying that pressure.
On a positive note, what I have found is when increases are explained properly, most patients accept them. Personalising your communication, explaining why the change is happening and making sure they understand the value they’re getting help greatly in this situation.
It is possible you may lose a small number of patients, particularly if the increase is larger than usual. However, in many cases, the improvement to your income more than offsets that loss.
Don’t leave it
If you find yourself in these circumstances, the biggest mistake you can make is to do nothing.
It’s very easy to miss a fee review cycle or to put it off because you feel you have other priorities. But that’s how the problem starts and can build. If you think things might be out of alignment, it’s worth taking the time to look at it properly now rather than a year down the line.
If you have missed your review point, it’s wrong to assume you have to wait another 12 months before you can do something about your fees. There are ways to get things back on track sooner. You simply need to contact us.
To end on an optimistic note – this is a fixable problem. Most practices we work with have been through some version of it. The key is to recognise it early, be honest about the numbers and take action.
This blog is based on a Practice Plan Bodcast. You can listen to the full version here.
