Is Your Fee Structure Impacting Your Profitability?

December 19, 2023 | 3 min read

Payer fee negotiations are critical for dental revenue cycle management (RCM). A strategic approach to negotiating or renegotiating contracted fees can substantially impact your practice’s revenue and profitability.

“Having a process for negotiating (or renegotiating) contracted fees with your payers is crucial to creating long-term growth in your practice. Even minor fee adjustments can add up to major revenue increases as your business scales.” ~ Revenue Cycle Management (RCM) Best Practices for Enhanced Dental Practice Performance white paper.

Let’s explore why regular fee reevaluation is important and how to adopt a strategic, data-driven approach to position your practice favorably.

The Importance of Regulation Payer Fee Negotiation

Dental practices must stay current with regulatory changes (e.g., reimbursement policies, coding updates, and other industry shifts) and adjust their fees to reflect what they do to remain compliant and competitive. 

Additionally, you should adapt your fee structure to market trends and respond to competitors’ pricing strategies to enhance strategic positioning. Meanwhile, technological advances may require a fee realignment to reflect the costs and value of introducing new tools and providing innovative services.

Periodic fee adjustments are essential for helping you to stay relevant. Accounting for the changes in payer reimbursement can help maintain your profit margins and improve financial health.

Get the action plan to improve your payer fee negotiation process: The Revenue Cycle Management (RCM) Best Practices for Enhanced Dental Practice Performance white paper shows you how. Download now.

How To Develop a Strategic Approach To Payer Fee Negotiation

Consider various aspects when you negotiate payer fees. Here’s how to set the stage for success:

Establish Clear Goals

Define your financial objectives by setting measurable targets for revenue growth, profit margins, and other key financial metrics (e.g., cash flow, accounts receivable.) Also, ensure these goals align with your practice’s vision and mission to reinforce an overarching strategic approach. They should help you deliver quality patient care while maintaining financial sustainability.

Additionally, identify potential risks and uncertainties in the negotiation process and develop proactive mitigation strategies. These may include payer resistance, regulatory changes, and market trend shifts.

Analyze Current Fee Structures

Conduct a comprehensive fee audit to gain insights into your current pricing model's strengths and weaknesses and identify areas for improvement. Analyze the profitability of each service, procedure, or code to see which ones may require adjustments.

Adopt a data-driven approach by comparing the cost of delivering each procedure with the corresponding revenue. Then, identify services that may be underpriced or overpriced to implement a balanced and fair fee structure. 

A cloud-based dental practice management software (PMS) like tab32 shows real-time metrics from all practice locations. Our dental analytics module pulls data seamlessly from the platform and helps you perform detailed breakdowns, granular tracking, and in-depth analyses to gain accurate insights.

Research Payer Fee Trends

Conduct a thorough analysis of industry benchmarks to gauge your fee structure against regional and national averages to identify areas for improvement. Also, learn about payers’ priorities, reimbursement practices, and negotiation tactics to fine-tune your approach for each payer.

Moreover, stay informed about broader healthcare and dental trends, like changes in delivery and payment models, emerging technologies, and regulatory updates, to ensure your fee structure aligns with the shifting healthcare landscape.

Gathering information is the first step. But how do you make sense of all the data in your system? tab32’s Open Data Warehouse is the secret weapon dental practices and DSOs need to unlock the potential of their data, generate timely insights, and stay at the forefront of today’s data-driven business environment.

Assemble Your A-Team

Build a multi-disciplinary negotiation team with diverse expertise to support a comprehensive approach to fee negotiations. Include professionals from finance, healthcare administration, legal, and clinical backgrounds to bring a holistic perspective to the negotiation process.

Using tab32’s Open Data Warehouse and analytics capabilities, you can generate timely reports and distribute them to all team members to give them critical insights to navigate complex discussions. Also, provide training and development opportunities to help them sharpen their negotiation skills and enhance effective communication.

Adopt a Data-Driven Approach To Payer Fee Negotiation

Arm yourself with data and insights from your practice and the broader healthcare landscape to gain an advantage at the negotiation table. Request a demo to see how tab32 helps you connect the dots, turn insights into action, and strengthen your RCM with more effective payer fee negotiation.

Book a demo now!

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