Challenges Facing the Business of Dental Practices

Wednesday, August 3, 2016

Challenges Facing the Business of Dental Practices

The list of issues facing dental practices is far and wide ranging, from payer problems to those created by technology.

There are obviously far more issues facing dental practices than can be covered in a brief article such as this, but most practice leaders agree the following issues can be disruptive.

This list is not comprehensive, but it touches on some common obstacles dentists face every day:

 

  • Patient accumulation and attrition
  • Growing practice revenue in an ever-increasingly competitive environment
  • Technology advancements including equipment that requires monitoring and updating

By keeping on top of the following, your practice can head these challenges off before they become obstacles to success.

New patients

Perhaps the most important challenge facing practices is acquiring new patients. This surpasses the common thought that new patients lead to a growth in business, which, ultimately, is a good thing. Deep and strong business growth is only a fraction of this issue. What’s really at stake here is acquiring new patients within an overwhelmingly competitive market. The level of competition is high for all practices, whether they’re single dentists or group practices.

According to a recent Citizens Bank report, more than a quarter of practices think competition will have a negative impact on their businesses throughout the next five years. Despite the realities, many practice leaders believe finding and procuring new patients is something they can easily do with little effort. Unfortunately, this can be one of the most frustrating and difficult tasks of growing a practice, especially a new one.

Raising revenue

Maximizing revenue is another key challenge for dental practices. In 2016, most viewed their revenue as a top priority, coupled with acquiring new patients. Finding new patients and growing practice revenue go hand-in-hand, so it’s fair to say that in the world of revenue cycle management, patients—who bring the money—are at the top of the pyramid.

While acquiring more patients can help the revenue side of the margin equation, many dentists fear this may also lead to less face time with their patients. Forty percent of practice leaders agree that to stay competitive, they face a growing emphasis on high volume and low margins, which is leading to rushed appointments and fewer treatment options. That said, attracting new patients is not the only way to create additional revenue for the practice. According to the report, and also based on my own experience working with dental practices over the past several years, operational efficiency is one of the best ways to grow profits and improve margins. However, such margins are not so easily gained. Two-thirds of practice leaders feel pressure regarding their profit margins, as they struggle to keep their practices competitive while also providing attractive compensation to staff.

Dental equipment and IT systems and technologies

Another key dental practice priority is dental equipment and maintaining upgrades. Nearly a quarter of practitioners surveyed indicate that updating dental equipment is a top priority. New equipment is needed to serve an increasingly diverse patient pool, including those seeking more expanded services.

In line with dental practice technologies, IT and software updates are a top priority for one in four practices (and something that likely could be an issue for practices every year). According to a recent Citizens Bank report, pressure to upgrade comes from several directions at once, including: regulations and mandates (such as providing secure exchange of information for security compliance like HIPAA) to patient necessity. Practices need to be able to exchange patient and claim information, including records and attachments, as well as allow for appointment confirmation at the tap of a phone screen. And, of course, they need to enable patients to engage directly with the practice. Practices also seek technology that allows for greater automation and reduces administrative burdens like appointment scheduling. And as different parts of a practice become increasingly digital, practice management software has become essential for putting it all together.

Starting from the top

Despite these issues, fewer than half of practices are expected to implement new technology this year without assistance, which means more revenue and financial growth of the practice. This brings us back to the beginning, to adding new patients and all of the responsibilities required to meet the needs of the practice while growing it and serving those who have come to trust your abilities and your care. 

Every business requires hands-on management and leadership; dental practices are no different. The hurdles here are faced in other sectors. Despite the factors discussed here, these hurdles are nothing that can’t be overcome.

While technology and equipment investments are somewhat of a constant concern, slow and steady investment in new software and technologies can easily help keep a practice ahead of the competition.   Even the ever-rising threat of new competition can be a relatively small issue when patients, above all else, are the reason for the practice and at the center of care. Nothing—not the best technology, location or even marketing campaign—outweighs the importance of providing a high quality patient experience.

However, even with the positive business environment, there’s one opportunity that dentists seem to overlook: submitting electronic claims and electronic claims attachments. While dental providers continue to file more insurance claims electronically and submit claims electronically, adoption of electronic clinical processes by dental providers remains low, even though eliminating costly manual transactions represents huge potential cost savings, according to the 2015 CAQH Index.

By exchanging claims and claims attachments electronically, dental practices are able to securely exchange health information while gaining productivity via the electronic capture and submission of documentation for electronic claims. They also can more effectively manage the revenue cycle. With an electronic claims attachment technology, dental practices can transmit x-rays, perio charts, EOBs, narratives or any other documentation required by a payer to assist with the adjudication of a dental claim.

From a business perspective, such solutions help practices reduce the cost of postage, admin and fax charges previously associated with managing claims attachments; streamline follow-up processes on mailed claims; improve revenue cycle management; submit all necessary attachments reliably and securely; eliminate lost attachments that delay reimbursement; and decrease administration time spent tracking claims and reimbursement on denied claims.

Electronic solutions like these are important because when it comes time for providers to get paid, the use of simple electronic image files can securely change the way providers receive reimbursements and grow their businesses. However, adoption of fully electronic transactions as reported by dental plans lags significantly from the medical space, by as much as 30 percent, according to the CAQH Index. Because of this, dental providers are missing a huge opportunity to easily grow their business by electronically participating in an already required business practice—submitting claims and claims attachments.  

Practices that adopt electronic attachments for their documentation exchange can reduce their claim processing time and improve their revenue cycle. Electronic claim attachment solutions require minimal time and training to implement and offer integrated services with payers and practice management system vendors, which means the improved revenue takes little effort for the initial investment.

An evidence of savings realized can be easily seen, according to the American Medical Association’s electronic claims submission toolkit. For example, the cost to submit manual claims is $6.63 x 6,200 (6,200 is based on an average of claims submitted for a single provider), which equals $41,106 per year. Compare that to the cost to submit electronic claims, which is $2.90 per claim x 6,200 = $17,980. Thus, the average annual savings per physician from automating claims submission: ≈$23,126.

Industry data from the dental sector shows the average paper attachment processed per claim costs ≈$10.81 versus an electronic claim attachment cost of ≈$.84. This factors in an annual claims load of nearly 5,000 for a dental practice where 50 percent of all claims require supporting documentation for adjudication. These financial numbers speak nothing of the lost time required to locate, pack and ship paper forms versus simply clicking and sending electronic claims attachments.

While providing a way for practices to save money is a great upside, it may not be the most important benefit of an electronic claim attachment solution. The money saved may not mean as much as the efficiencies created or the comfort and reliability of being able to track, monitor and follow claims and attachments throughout the adjudication process. Additionally, security and the safe transfer of information to payers is a priority for all practices, and is possible with an electronic claim attachment solution.

Ultimately things are looking quite good in dental care. Technology is improving in all areas of the practice, and people continue to invest in their care. In 2015 the U.S. dental industry saw revenues reaching $119 billion and most practices expect growth to continue over the next five years, but practice leaders must remain diligent and continue mulling the details of their organizations. The list of issues facing dental practices ranges far and wide, but, in my experience, patience, time and the proper attention will go a long way toward helping you continue to build a thriving, patient-filled, technologically-advanced practice.

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