When an activity or factor has a direct and positive impact on the income of a business, it’s known as a revenue driver. For dental practices in particular, such drivers can include the following:
- Volume of patients
- Fees and reimbursement rates
- Case acceptance rates
- Service delivery efficiency
But out of all of these, insurance provider reimbursement rates are of particular significance for dentists, because for a large portion of the services they provide, these determine the amount earned. For every procedure performed by a dental professional in a practice, the financial return can be amplified by maximizing these rates, making the negotiation of reimbursement rates, a powerful revenue driver.
While signing up for accounting services for dental practices can help you truly get to grips with leveraging reimbursement rates as a dentist, here is a short guide to help you in the meantime:
Insurance reimbursement rates as a major driver of revenue
For the majority of dental practices, a large portion of the fees owed by patients, come from insurance reimbursements. This means that reimbursement rates can have a direct impact on the earnings dentists are able to make per procedure, and can be an important factor in determining revenue overall.
When rates of reimbursement are low, no matter how many patients you’re able to treat, you’ll still find it hard to meet your financial goals.
If you can negotiate higher rates of reimbursement, you’ll have more money coming into your practice without having to put in any additional effort. Naturally, this can have a direct impact on a practice’s profitability.
How to optimize revenue by strategically negotiating with insurers
Let’s say that your practice is popular for certain procedures, such as root canals or crowns, for example. If the rate of reimbursement for those procedures is low, then this can have a disproportionate impact on your revenue. However, by entering into negotiations with your insurance provider, you can secure a fairer rate of compensation for such procedures, helping to unlock your practice’s potential for revenue.
When costs rise, revenue drivers need to rise with them
The costs associated with running a dental practice will inevitably rise, and when they do, your revenue drivers need to be able to keep up with them. By making adjustments to the rates of reimbursement periodically, you can avoid patient revenue decreasing, and remain profitable.
Why reimbursement rate negotiations are worth it
Not every dentist enjoys negotiating with insurance providers, mainly because the process can be longwinded and somewhat frustrating, but here’s why it’s worth the effort:
- It’s scalable – because reimbursement rates apply across all of your patients, you can increase revenue in a scalable manner without having to invest in more marketing.
- It can improve margins – as well as increasing revenue, rate negotiations can enhance your profit margins by making the return for services already provided, improved.
By working closely with expert dental practice accountants, you can optimize the impact of reimbursement rates from insurance providers by analyzing your fee schedule, making insurers aware of your value, using data from your practice to drive negotiations, and monitoring and adjusting reimbursement rates on an annual basis.
It pays to see rates of reimbursement from insurers as more than mere numbers on a computer screen, and instead, to treat them as the vital revenue drivers for your practice, that they have the potential to be. When strategic negotiations are successful, such reimbursements can help form the basis of your practice’s overall financial health, and keep you in the black for longer.