The Dangers of a Poorly-Costed Dental Plan

The Client:

"Hi Chris

I've been looking through the price of our plan and the cost of delivering it. Unless someone has a very low OCPSPD (Operating Cost Per Surgery Per Day), I'm not sure how anyone makes any money from their plan!

With £800 OCPSPD, having 2x 20 min exams and 2x 30 min hygiene appointments, we have a 'time cost' of £177.78.

Our dentists and hygienists get paid 45% for plan as though it was private equivalent. Meaning that they get paid 45% of £70 for each exam and 45% of £60 for each hygiene. This associate & hygienist split costs £117.00.

So a TOTAL COST of £294.78.

The patient then pays £19.90 per month and we get £1.23 taken off by our Plan Provider per month per patient. So, the practice gets £18.67 per month or £224.04 per year.

This gives an overall LOSS per patient of £70.74 per patient per year!

To hit 15% practice profit we would need to charge £30.12 per month or to at least breakeven on it we would need to charge £25.80.

We have just over 430 patients on our plan so we are losing £30,418 per year on our plan.

This is without factoring in that we also include a free emergency assessment each year (another 30 minute appointment for free at a cost of £53.33 in the year if used) and that there is a monthly standing charge of £406.66.

What are we doing wrong? What do we need to change?"

The Coach:

"Good morning.

• The way that you are paying your fee-earners is normal;

• The way that you are calculating is correct;

• You haven't included Lab and Material costs in the OCPSPD (correct) - so you need to sense check your fee per item prices as well - it could be worse than the picture you paint;

• You are losing money;

• The numbers don’t lie;

• The plan does need to be £30+ per month;

• Which is why some of my clients have already increased their 2+2 plan to that level - early £30’s per month;

• Those clients are reporting back to me that the patients have just paid up - they get it - a recent example of 600+ plan patients - less than 6 left, a few grumbles, the rest paid;

• And the only other way you can deal with the issue is

  • Recruit more patients, hire more clinicians and build more surgeries - to reduce your OCPSPD by spreading the load;

  • Reduce the frequency of patient visits;

  • Reduce what you pay to the dentists;

  • Change the clinician - to therapy-led maintenance and then pay the therapist less than the dentist (and I'm sorry therapists but that's what a lot of practices do - don't shoot the messenger).

• All of the above alternatives carry quite some hassle and risk - as opposed to just putting your prices up.

It’s yet another clear and present danger in dentistry that most people are ignoring."