The most astute dentists when dealing with dental practice management of budgets (certainly many of our Program members are in that category), often have an epiphany moment when they look at their gross fee production/collection/write-off tally in a given year and find that on $1M in gross fees, $100K went to insurance write-offs and the proverbial light bulb lights up that this is both unacceptable and that they could do bigger and better things without the insurance companies “help.”
Speaking from personal experience both as clinician (having been PPO addicted and ultimately 100% FFS) and as a leading consultant, $100K directly invested in external marketing can generate $1.5M-$2M in gross fees with less than a 1% write-off.
The minority who get this (typically clinicians who can provide more complex niche services beyond everyday single tooth treatment) then seek out ways to disengage from the forced discounting game that everyone else is madly playing.
So, what’s the real deal with % of gross fee “budgeted” for marketing?
For those who want to truly attract more fee for service cases, especially complex procedures (implants, apnea, sedation, cosmetics, same day crown procedures, cosmetic dentures, fast ortho, etc.) your marketing expenses for direct external marketing could be up to 15% of gross fees in the most expensive markets and still be in far better shape than any practice in a headlock with delta. In more rural settings, that number can drop to 5-6% and still deliver $2M in collections related to performing advance services IF serious attention is also paid to sales process.
In the dental practice management of budgets, a PPO based practice often cannot afford to compete with those getting their full fees simply because there’s not enough margin left by the time everything is paid especially if everything is leveraged and the owner is living a crazy over-sized lifestyle. While they simply can’t “afford” to market because of the amount they are consigning to the insurance company, those opting to change to a different playing field can invest in ways that bring greater returns. And actually help more patients.
For those truly understanding this, they can get and maintain a permanent marketing advantage ahead of competitors.
FYI: It’s very unlikely that suddenly we’ll have more middle class patients buying outside insurance, insurance maximums suddenly going up, or plans getting “better”. To read more about how to put a proven sales system in place and how to go about dental practice management as it relates to budgeting for marketing, try my book on Amazon.
Here’s the rub with those whose desired marketing budget is being sucked up as part of the write-offs, the longer one sails on the ship of discounted fees, the harder it becomes to market your way off that ship and onto one where all thing are better. Don’t wait too long.
As with all marketing, the first step is fixing sales first. 10-15% gains from existing business flow are easily had just by doing that. That one thing can be the thing that helps you bridge from where you are to where you want to be related to the topic at hand. Check out my website where program members learn how to correctly sell and help more patients.