How do you set up your fees for a startup orthodontic practice?

It is always difficult to start something from scratch. You might be thinking that you have never set any fees in your associate job. How do you price your comprehensive case? How about limited treatments? Wait, what is even truly a limited treatment? Is it a short treatment or a single arch treatment? What if it is single arch but complicated? Oh man! How about my retainers or the whitening kits we give out? And more and more small but consequential questions which can give you a brain freeze.

Back in my corporate dentistry days, I learned a simple rule: "price 3 times the cost." I believe this rule is a good place to start but not accurate. For example, it may cost you less than $30 to make a set of clear retainers, but it is too low to price it at $90. It is often not customary to the current US market.

Now you might say, "I went to school for over 20 years and will set my fees solid in stone because I am a board-certified orthodontist and I do not want to sell myself cheap." Although I totally sympathize with this way of thinking, financial markets are not based on emotions and pride.

Now here is what I personally believe will eventually set our fees in case we are out of network with insurance: Supply and demand at the local level and macro-economics at a larger scale. Let me expand on each here:

Supply and demand at the local market: It does make a huge difference whether you practice in a rural area versus a metroplex. Additionally, it makes a difference if you practice in rural Alabama versus rural New York. The same goes for the metroplex Dallas versus San Antonio. In short, your local demographics make a difference. The fewer the orthodontists around, the higher you can set your fees, and vice versa. But there is an upper limit where you start pricing yourself out of the market. You may do well with a $7,000 comprehensive fee in rural NY but likely not in rural Alabama. Start by learning how much others are charging roughly around you and decide if you can differentiate yourself and charge more or else. I will dive deeper into differentiation in another article.

Macro-economics: This is what you cannot control. You cannot really control how bad the inflation is or how deep the following recession will be. You can, however, control your strategies in regard to the fluctuations of macro-economics. For example, many practices choose to run promotions with lower down payments to bring more clients during slow seasons. During peak summer seasons due to higher overall demand, you can be more firm with your fees. 2023 was not a great year overall in the orthodontic market. Many practices played around with their fees to adjust. Keep in mind that macroeconomics will affect your newbie start-up a lot harder than an established practice with internal referrals and reputation already built.

Another consequential factor is your insurance participation. If you choose to be In-network, your fees are contracted and determined by someone else. You still need to set your UCR (usual, customary and reasonable), but the difference between your UCRs and contracted rates will be passed down to your patients as an in-network discount.

In summary, I recommend for you to understand your market, make decisions about your fees based on the knowledge of the market and not pride. At WGO consulting, we help our clients understand the ins and outs of their UCRs for both the big and small procedure. We negotiate with insurance carriers to structure the most effective fee schedule for your practice.

Disclaimer: Dr. Kevin Baharvand is the founder and owner at WGO consulting.