Game Changers: Fee Wars in Orthodontics by Dr. Roger P. Levin

Game Changers: Fee Wars in Orthodontics 

by Dr. Roger P. Levin


One of my favorite business publications is the Harvard Business Review. I’ve been reading it for more than 30 years and find many of the articles to be directly relevant to what is happening in dentistry. Occasionally, I come across an article that doesn’t seem directly relevant to me, my company, or the dental industry. But I’ve learned to pay attention—because whatever it’s describing is happening somewhere, and that situation could eventually become relevant to me in some way. So I’m going to suggest this: An article about fee wars may not seem immediately relevant to every orthodontist reading it—but every orthodontist should pay attention. This is a topic already affecting practices in certain regions and towns and it will eventually make its way everywhere.

A prediction about the fee wars in orthodontics
I was recently lecturing at a national orthodontic software users group meeting when I was approached by a young orthodontist who was facing a common dilemma. Her case fees ranged from $6,000 to $7,000, but a new orthodontist in town was offering treatment for $3,700. Quite simply, she wanted to know how to compete.

This is not the first time I have had this conversation. Levin Group receives emails, texts, and phone calls almost every week from orthodontists who want advice about some aspect of their practice. And we are definitely noticing that we are getting “fee wars” questions more often than in the past. In fact, two weeks before my encounter with this young orthodontist, I received a call from another doctor facing a similar challenge. A new orthodontist in their area was offering $500 discount certificates to general dentists who referred patients to his practice. Moreover, there are states, such as Florida, where you will see billboards advertising orthodontics for one-third to one-half of the national average fee.

Given all this, it’s essential for orthodontists to recognize the reality of what’s happening: Fee wars are on the rise and will only continue to grow. If you have any doubt, let me give you one example—it’s happening in at least 1,400 places. One of the largest dental service organizations (DSOs) in the country now offers aligners. That move was predictable; what’s notable is that the fee for treatment is less than $2,000. This DSO was not only profitable last year but grew by 13% overall. Although this growth was not simply because of orthodontics, it did contribute to its overall success. My theory is that the organization believes the lower case fee (for care provided by a general practitioner) will outweigh the desire to have a specialist or specialty practice in orthodontics.

How do you compete with lower fees?
I’m going to approach this by posing three questions and providing three potential answers. It is my sincere hope that you are not experiencing a fee war in your area. However, even if you aren’t, you should still be aware, prepared, and have at least as semblance of a plan of how you would compete if things were to change.

Question 1:
Are your brand value proposition, patient satisfaction, and team skill set high enough?
Most orthodontic practices work very hard to create great experiences for patients and team and have some of the most highly trained team members in dentistry. But is this good enough to justify higher fees during a fee war with another practice or DSO?

We recommend orthodontic practices take time to perform what we refer to as a “brand scan.” A brand scan is a meeting where you perform a dive deep into analyzing your current brand, how the practice is viewed, and what the practice has done to communicate its brand to its patients and its community.

Keep in mind that, in most cases, you haven’t created your brand—your brand has chosen you. And it’s likely not “competition-ready” for a fee war. The good news is that even practices that have done little to build their brand are still viewed as quality orthodontic offices and have developed referral patterns that work—for now. However, those strong referral networks built on traditional marketing models can collapse quickly in a fee war.

Take the time to identify your brand by understanding how and why patients come to your practice and asking key questions like these:
Are you a young orthodontist with children that spends a lot of time in the community interacting with families?
Are you a 40-year-old practice with a great reputation?
Are you the dominant practice in the area?
Is your location better than others?
Are you more expensive or less expensive, and is there a reason you can use to justify it to patients?

Developing a brand is the first step. After that you must “drive“ the brand by ensuring that it is included in every communication and referral marketing strategy. Having a great brand is useless if no one knows it.

Question 2:
Should all orthodontic cases have the same fee, even in the same office?
I believe we are going to see orthodontic practices that have different fees for different levels of service, such as a comprehensive fee that includes everything; a lower fee that only includes the basic treatment and no retainers, post-op, or emergencies; and another fee for different complexity of cases. I also anticipate that remote monitoring will incur a separate fee.

This is just a general overview and not a recommendation. At this stage in a discussion of fee wars, it is more important to have general thinking rather than attempting to create an absolute plan.

Question 3:
Is your office running at a level sufficient to compete in a fee war?
Most orthodontic practices are reasonably well run. But will that be good enough in a fee war?

We recommend practices bring their systems for new patient experience, treatment consultation, and patient communication and customer service to the highest possible level. An excellent stream of referrals today is not a guarantee for tomorrow and a fee war could change things very quickly. So operate as if you’re in a crisis today. Build a culture of excellence within your practice—and communicate that excellence to parents and patients as quickly as possible.

To paraphrase a quote I recently read, people always think they have more time than they do. This applies to people in their daily lives, and it also applies to orthodontic practices.

Summary

Are fee wars coming tomorrow? Although we predict they will continue to grow, they are not yet impacting practices on a national level. However, you should be prepared for what is almost an inevitable next step in orthodontics as more and more service delivery models develop. Practices that prepare today will remain strong tomorrow and be more successful than ever before.


Author Bio
Roger P. Levin, DDS Roger P. Levin, DDS, is the CEO and founder of Levin Group, a leading orthodontic practice management consulting firm that has worked with more than 30,000 practices to increase production. A recognized expert on orthodontic practice management and marketing, he has written 67 books and more than 4,000 articles, and regularly presents seminars in the U.S. and around the world.
To contact Levin or to join the 40,000 dental professionals who receive his Practice Production Tip of the Day, visit levingroup.com or email rlevin@levingroup.com.
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