Do you have a proper Fee Schedule? Do you find it difficult to calculate unusual or limited (non-Full or non-Ph-I or Ph-II) fees? If so, maybe this pearl can help you with an accurate method of calculating them.
Other than helping my clients choose ideal team members, one of the most frequent requests I receive is how to determine a treatment fee for a limited, unusual Ph-I or combination Ph-I/Ph-II treatment. Usually I go through the process of calculating these fees with them on the phone, which resolves the situation until it happens again. It recently occurred to me that by just going through that calculation with the TC isn’t sufficient for them to remember what we did. I use a specific method for calculating fee schedules, which I will now share with my clients TC’s and with the thousands of practices that view my monthly Management Pearls.
A helpful first step is to refer back to the financial arrangements management pearl, which had an Excel attachment for Creating a Fee Schedule with built in financial agreements. Go to: (www.thebio-engineeringco.com/index.php?option=com_k2&view=item&id=206:negotiating-financial-agreements&Itemid=766)
Or you can just see the attached, updated Fee-Schedule-Creator Excel file.
The Basis for Accurate Fee Calculations:
The basis for the calculation of any fee is the total minutes of chair/room-time required to effectively treat the case and the practice’s $-Fee-Multiplier per minute.
If you use the Fee-Schedule-Creator Excel file all you need to do is determine the number of minutes to treat the usual 24-month Child Braces treatment. In the past, before the more efficient Exams-Records-Tx Consults (see last month’s management pearl), the new bracket systems and heat-activated archwires, it use to take between 1,150 and 1,350 total minutes to treat a 24-month braces case. Today, it only takes about 750 to 950 minutes to treat the same case. You can calculate your own total minutes by adding up your minutes for: Exam/Records/Consults, starting appointments, active treatment appointments and Braces Removal + Retention appointments. Or you can use about 850 minutes as an average. If you are wondering how this applies to a 24-month plastic aligner full treatment, which usually takes about 450 to 650 minutes, the $-Fee-Multiplier is the same. The high plastic aligner lab cost divided by the $-Fee-Multipliere increases the average 550 min to about 850 minutes.
So now that you know to calculate (or guess at) your total minutes of treatment time, you can move on to calculating your $-Fee-Multiplier. It’s very simple, just take your typical 24-month Tx Fee and divide it by your total Tx minutes for that fee. For example, a $6,380, 24-month CHILD Tx fee at 850 minutes equals $7.50 per minute. Another example, a $6,880, 24-month ADULT Tx fee at 850 minutes equals $8.00 per minute. Or you can use the Fee-Schedule-Creator Excel file and insert that number of minutes as illustrated and your 24-month Tx fee to obtain your $-Fee-Multipliere.
Accurate Fee Calculations:
Using the Fee-Schedule-Creator Excel file with the total 24-month braces minutes and fee, you can automatically create your fee schedule for your full treatments, but you need to determine the number of Tx minutes plus lab costs for your usual Ph-I & Limited treatments. If you do Combination Ph-I/Ph-II Tx (RPE/Full Tx or Herbst/Full Tx, etc.), you will also need to calculate them individually and add them to your fee schedule using the calculations below.
The calculation of any BRACES fee, based on minutes of Tx, $-Fee-Multiplier and Lab Fees can be determined using the following formula:
Braces Tx FEE = (Exam/Record min___ + All Tx min___ + All Retention min___) X ($-FEE-Multiplier) + $_____ All Lab Fees
For example: A 12-month Ph-I Tx fee = (105 + 185 + 70) X $7.75 + $120 = 360 X $7.75 + $120 = $2,790 + $120 = $2,930.
Similarly the calculation of any PLASTIC ALIGNER fee, based on minutes of Tx and $-Fee-Multiplier and Lab Fees can be determined using the same formula:
Aligner Tx FEE = (Exam/Record min___ + All Tx min___ + All Retention min___) X ($-FEE-Multiplier) + $_____ All Lab Fees
An example of a 12-month Plastic Aligner Tx fee = (125 + 105 + 70) X $8.00 + $1,200 = 300 X $8.00 + $1,200 = $2,400 + $1,200 = $3,630.
When a patient transfers into the practice for a limited Tx, this formula is quite handy and straight forward when used to calculate that limited Tx fee, as noted above.
Also, when a patient transfers out of the practice, this formula can also be used to calculate the adjustment to their Tx fee.
An example of a patient has 6 months of Tx left of a full braces Tx is:
Tx FEE ADJ = (All undone Tx min___ + All undone Retention min___) X ($-FEE-Multiplier) + $_____ Retainer Lab Fees
For example: The transfer-out fee adjustment = (80 + 70) X $7.75 + $120 = 150 X $7.75 + $120 = $1,160 + $120 = $1,280 adjustment on their account balance.
As you can see, you can calculate any unusual Tx Fee or adjustment by just adding up the total minutes of Tx time and multiply it by the $-Fee-Multiplier, and then add in the Lab fees. Enjoy!
