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Several years ago, Reader’s Digest magazine had a phantom
patient that went from office to office. And I forget
the situation, but apparently the fees that came back
ranged anywhere between $2,000 and $25,000. One of
the journals had the patient’s X-rays and all that. And I
looked at that case and thought: The only dentist who
got it right was the dentist who charged $20,000. Because
he was the guy that took the models, was putting
them in the splint, who did the equilibrations, who did
the case well. And the dentists who cried about it
were the ones losing money because they didn’t know
how to set fees, and they thought this guy was a bandit.
He’s not a bandit; he just knew what he was doing.
Big difference there.
MD: You mentioned to me a study that you have in which
more than 100 dentists participated, doing the same type
of thing as the Reader’s Digest article. This is probably long
overdue in dentistry, because dentists had a knee-jerk reaction
to it: Oh my gosh! It’s not like in dentistry we take an
FMX into a machine and then out comes a treatment plan
with the fees already on there. It kind of would be nice in
a sense: “Your case is going to be $20,000.” And the patient
gasps and we just say, “It’s the machine! We all use the same
one. Go to the dentist down the street and he’ll tell you the
same thing.” Because now you’re taking the emotion out of
the dentist and the guilt about telling somebody they need
$20,000 worth of dentistry. So, it was a study that was done
by some friends of yours, where they had 126 dentists treatment
plan an 8-unit case, with some other things that needed
to be done. There, you also saw fees all across the board. Tell
our readers about that study.
PH: Ken Mathys and I teamed up years ago, and taking
what I’ve described as this right-fee solution, that’s the
brand we use for this. And that’s taking your fee schedule
and proportioning it so that the fees of different procedures
you do make sense to each other. For example, the
care and skill and judgment of doing a simple posterior
crown may be less than the skill needed to do a Locator ®
Bar Overdenture. So there’s going to be a difference of
skill between those two.
Ken is a CPA, and he runs a company called Dental Practice
Advisors (dentalpracticeadvisors.com). I asked Ken to
use his CPA stamp-of-approval on the spreadsheet that I
gave him. That is, take it up to the CPA level of accountability.
Well, he and his team did a wonderful job. What
they did in 2006 is take 126 of their best clients, dentists
who are working under a financial plan and who care,
and they gave each of these dentists the same 8-unit case.
And this 8-unit case involved changes in vertical dimension
and anterior guidance and those sorts of things.
Ken worked it out; he worked with another dentist to put
this case together, all the different appointments,
what they would need to do. Then
he gave this sample case to 126 dentists and
asked them: How much time would you
spend doing it and what would you charge?
The numbers these dentists came back with
were all over the place. Fewer than 15 percent
of the dentists made any change in fee
relative to changing those four variables –
anterior guidance, vertical dimension, condylar
position or incisal edge position.
MD: So, essentially, they just took their crown
fees and multiplied it times eight?
PH: Exactly. Eighty five percent of the dentists
did that. When you look at the profitability
aspect of it, close to 20 percent of the
dentists were netting out less than if they
were doing single-unit posterior units.
MD: Wow, talk about a kick in the groin.
PH: It’s amazing. When you see the math
you just want to shake your head. The big
culprit is time. The biggest mistake a dentist
can make is to look at his profit and say, I
need to find a cheaper lab. A cheaper lab is
not the answer. What you want is a lab that
can get the job done right the first time. The
answer to many of our profitability issues
has to do with time and leadership. Time
is the divisor. That is, if you use two hours
instead of three hours, that’s a huge difference
in profitability. Time is a big culprit.
Ultimately, Mike, you arrive at a fee that
might be 40 to 70 percent more than you
would normally charge.
MD: What does the average dentist say when
it’s suggested to them that they need to do that?
Do they say, “I can’t do that”?
PH: Exactly. They look at it and say: “I have
a hard enough time selling a $10,000 case.
Now you’re saying that it’s a $17,000 case?”
Well, it is based on the amount of time and
risk that you have to do. And they say, “Well,
I can’t sell that.” That’s where it goes into
leadership. That’s when the dentist needs to
look in the mirror and say to him or herself,
“What do I need to do in how I present care
to patients? How do I train my team? How
do I run my facility? How do I earn the right
Interview with Dr. Paul Homoly35