The following is an updated version of an article I wrote and had published in 2007. Please note that the fears and concerns that existed in 2007 – before our economic downturn and during a time when orthodontists were doing very well – still exist today in virtually identical form.
We were working with a new client recently whose profitability was quite weak in spite of strong new patient flow and reasonably good case acceptance. The problem was simple – his fees were unusually low. We reviewed his fee structure and found that all the fees he charged, from simple space maintainers to complex adult treatment, were 20% to 30% less than appropriate considering the quality of his practice, the quality of his patients, and the economic stability of his community. He was resistant to our recommendations for fee increases and earnestly tried to convince us that his fees had to be so low in order to compete with the other doctors in his community who “undercut me every chance they get.”
It turns out that one of the practices that he mentioned as being a major “competitor” was also client of ours whose fees were, across the board, 20% (on full starts) to 40% (on Limited and other partial starts) more than this new client’s fees! The most interesting fact was that the higher fee doctor has significantly better case acceptance!
In February, I completed my 34th year consulting with orthodontists and have seen this belief system (that fees have to be low to gain case acceptance and to fight the competition) over and over again. Yet in all those years I have never, not even once, seen a practice that lost any appreciable case acceptance because of his/her fee structure. More importantly, I have never seen any doctor that gained case acceptance by lowering fees (although I have some spectacular examples of doctors who lowered their fees, only to see even lower case acceptance). More case starts are lost every single month by being late, by poor verbal skills, poor patient flow procedures, poor scheduling policies, poor telephone skills, inappropriate financial policies, etc., than are lost in an entire year due to higher fees!
It is interesting that most orthodontists in Asia, Australia, South and Central America, and Europe do not seem to have this high degree of concern about their competition. Relative to the average income of their respective populations, their case fees are dramatically greater (often double and triple!) than those of most American orthodontists. Even in the urban areas of these countries where there are often plenty of other orthodontists, the fees remain high with little significant concern about the competition.
We at Zuelke & Associates have always taken the position that there is more business (more patients) available than the limited number of orthodontists will ever be able to serve. When you compare our country’s population growth to the orthodontic retirement rate, to the orthodontic graduate rate, and to the graduate gender, that position is becoming more solid every single year!
I am amused, yet at the same time concerned, with the efforts some young doctors go through to find a location in which to practice. Their efforts are almost always focused on locating a community “with little or no competition.” If I were a young orthodontist looking to start a first practice, I would open up in any rapidly growing, vibrant, community, but only if that community had a solid number of other orthodontists already practicing! What happens in such a community is that the collective marketing of the existing orthodontists has raised the community’s awareness of the value and availability of orthodontics. The “pie” (potential orthodontic patients) that so many orthodontists believe is of a limited size, simply gets bigger, and the outstanding orthodontist with a terrific team, with a strong patient care ethic, and with a progressive attitude toward patient flow (can you always get your new patient into braces within 14 days of the new patient exam date?) will always rise to the top of the heap, even with the highest fees in town.
My best example is demonstrated by one of our very favorite, long-term, clients. Within a 10-15 minute drive from his office, there are more than a dozen other orthodontists! This doctor’s fees are above almost all of those other doctors and some of his fees (12-month Phase I is $3,980 to $4,180) are dramatically higher than his “competition.” Nevertheless, his new patient flow is very strong (mostly referred from other patients) and his 10-year case acceptance average is among the top 10% of all our clients. This practice does not worry about, nor live in fear of, the competition.
In summary, other orthodontists are not your competition! You do not lose any appreciable number of case starts to the competition because the other doctor is less expensive. Orthodontists lose starts because they and their team did not create the perception in the patients/parent’s mind that the quality of service and the quality of experience that they would receive during their time in the practice would be worth the cost. A different point of view? Perhaps! But a point of view that serves the doctor/team that lives that point of view very well.