THINKING BUSINESS
a blog by Chris Barrow

Explaining prices rises

So your patient writes:

Dear dentist  Thank you for your letter 14 November 2008, in response to my letter  Tuesday 04 November 2008.  I understand and acknowledge the comments you make.  We greatly appreciate the quality of dental care we received, and thank  you personally on how you treat us as a family.  As I am sure you can appreciate, as private patients our expectations are  higher than if NHS – however you and your team continue to deliver good  service and meet these expectations – thank you.  For clarity, the question I was asking relates to how annual rises are  calculated/decided, etc. as they are clearly ‘excessive’ increases above  annual inflation rates.  This has resulted in the the net rate of £17.31 per person from January  2009, compared to a starting point of £12.73 net per person in September  2005 (just over three years ago).  Again thank you for your response – but I do not feel this addresses the  question I was trying to ask.  To try and avoid ambiguity, there is absolutely no issue regarding the  quality of the service you provide – thank you – but a genuine surprise (?  concern) at the annual increases in the amount we pay – which each year  has been well above the rate of inflation.  The question being asked is how annual rises are calculated/decide?  I look forward to hearing from you.  Yours sincerely

and you reply:

Dear Patient Many thanks for getting back to me. I’ll do my best to answer your question. When arriving at the calculation for current pricing, we are obliged to take the following influences into consideration: 1. The non-clinical operating costs and upkeep of the buildings; 2. The clinical operating costs and upkeep of the surgeries; 3. The recruitment, compensation and training of support staff in a competitive marketplace; 4. The recruitment, specialised training and compensation of self-employed clinical staff in an even more competitive marketplace; 5. The ability to take advantage of the latest advances in clinical technology, equipment and procedures: 6. The choice and quality of suppliers for clinical procedures and the quality and longevity of materials used; 7. The maintenance of robust systems for financial control, marketing and customer service; 8. The overall pricing strategy of the dental market; 9. The national and global economy; 10. The economic situation of the community in which we operate and the patients we serve and, by no means least; 11. The need to generate profits to remunerate the owners and to reinvest for the future. It is self-evident that our prices have risen “faster than inflation” over the period to which you refer — due to the necessity to restore differentials that existed when we left the NHS. We had some “catch up” to do if the business was going to meet its customer service and clinical promises. We believe that we now offer a dental practice that sits at the forefront of “best practice” in all of the areas mentioned in my list and we are very proud of that. Yours
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