A recent trip to a dental practice this week reminded me of an article published in the Seattle Times by Dr. Bob Maher about decreased insurance reimbursement rates to dentists in Washington.
I always scratch my head when I hear that dentists are angry, shocked, and surprised when reimbursement rates are cut. Of course they are getting cut. They always do…over time. The reason? Greedy insurance companies who want to make more profit? That is what most would like to blame it on. But, the reality is that there is a natural law in business that states that prices (exclusive of inflation) will always decrease over time. They always do. Think about the price of new technology. When it first comes out on the market, it will always be priced at its highest. As competition enters the market and the basic product becomes more widely available, manufacturers figure out how to produce the product more efficiently, reduce costs, and provide the product at a better price in order to stay competitive and profitable at the same time.
If you are in dentistry, think about what intra-oral camera technology cost when it first came out. Today, better technology is available at a fraction of the cost. More competition produces more expertise in the market place. That expertise creates more ways to produce a better product at a better price. That is what continual improvement is all about. It is also why companies are always seeking out new technologies and products to produce.
So instead of being a victim of the Natural Law of Decreasing Prices, go with it. Do the following to stay competitive and relevant in the market:
- Be disciplined in the effort to control and drive down costs. Do you know what your true costs are? Do you have budgets for these costs? Do you have discussions with your team on how to control and cut those costs?
- Find more ways to be more efficient without cutting quality. Other companies do it all the time.
- Measure quality and efficiency. If you don’t know how to measure these things in a dental practice, it is high time you learned!*
- Constantly be looking at new services you can add to your business or practice. The newest services always demand the highest prices. Over time they will decrease, so get in early before the competition.
- Quit complaining and being a victim and wake up to reality. For some strange reason, there are some professions that think they are immune to natural laws in business. They’re not. So you can complain about it and lose, or go with it, get ahead, and win. Winning seems like a better choice!
* The Total Patient Service Institute measures a unique set of data points in dental practices so improvements can be made constantly in service, quality and efficiency. To learn more, call the Total Patient Service Institute at 1-877-399-8677.