The Everlane of Straight Teeth: Episode 1.

Introduction to The Everlane of Straight Teeth:

So here is the deal.  Medical & dental billing is annoying and confusing for everyone, including doctors and other healthcare professionals.  The American health care system is vast and complex.  Each state has its own rules and regulations, not to mention all of the different systems used in different countries.

I have become convinced that doctors and patients must talk about the pricing structure in a clear way, with transparency.  Why dental and orthodontic care is priced certain ways must be discussed.  What changes have taken place over the past few years? What changes haven’t taken place? Where we are right now so that we can understand the context that each perspective brings?

So, in an effort to start the conversation, the next few podcasts & blogs will discuss try to break down the costs in a way that is understandable into these sections:

1. How do orthodontists calculate the case prices that they offer?
2. How do insurances calculate the case prices and have providers code for orthodontic cases?
3. Why price variation between different orthodontists regardless of insurance with case examples
4. Tiers of healthcare emerging in America – what does Medicaid vs HMO vs PPO vs fee for service offer?

For so long orthodontics as an industry has “hidden the ball” – that is, kept the basis of pricing hidden from patients.  I am not saying this is wrong.  In fact, after having been in business over 5 years, I now understand why this has developed.  When I started the business, I tried to break everything out.  Even with breaking everything out, the way I had to buy supplies and account for time didn’t match how insurance companies do it.  So then there was confusion over how it should be broken down.  Then there was communication breakdown between insurance company.  Communication breakdown between our clinic and our patients.  Frustration on all our parts and our patient’s part developed, and unfortunately blame cast in all directions.  There is no way this will be the last communication on this topic, but it can be a start to better communication between providers and patients.

If you prefer to listen, this is the link to the podcast:

Transparent Pricing Series: Episode 1

What do orthodontists look at to sets their prices:

• Cost of Supplies

  • Supplies are bought in bulk.  There is an average amount that it costs per patient of each patient type.  But each patient actually uses a different amount of supplies depending on type of case, how many things get broken throughout treatment, etc.  Orthodontists simply have a ballpark average figure for what the case may cost.
  • Type of supply: Costs vary greatly.
    • Metal brackets from the same supplier cost less than clear brackets from the same supplier
    • Metal brackets can cost more than clear brackets from a different supplier
    • Invisalign has its own cost that varies greatly depending on the volume ordered in the last 6 months
    • Lingual brackets have a different cost and almost always require custom wires in addition to the bracket cost
    • Each appliance has a cost that is custom when the lab makes it based on the components and time for the lab
  • All vendors price the supplies differently based on the volume committed to or expected from the doctor(s)

• Preparation time

  • Time for the assistant or doctor to diagnose, sequence, communicate with lab, communicate with referring doctor, communicate with other specialists, prepare for appointments, fabricate appliances or other supplies needed for appointments are all estimated. But the patient doesn’t see so much of the time spent on their case.  This will vary from office to office, based on the doctor’s philosophy of communication, and based on the doctor’s treatment philosophy.
  • For example, custom treatment with an appliance or custom wires will require more doctor time and preparation, while offices that put every patient in the same set of metal braces while the patient is there without custom trays made in the lab ahead of time will require minimal patient preparation time.

• Labor costs at the dental chair

  • Some patients like to sit and talk. Some patients want to get in and out without conversation. For an assistant or a doctor to sit and talk to the patient costs money and some patients will take twice as long.  Talking to patients does great things – better communication is desirable, so I am not trying to detract from the other aspects of communication that have benefits.  As far as a dollar and cents view without taking into account the intangibles, it simply costs more money to sit and talk with your doctor and assistant for longer periods of time.
  • Assistant time & doctor time working in the patient’s mouth is what is commonly referred to as “Chair time” and is a calculation that most offices do, especially if they have an efficiency consultant look at their statistics.
  • This is the category that can really effect case price. For example, you may think a patient with 14 teeth should be priced at less cost because they have less teeth.  The issue is that without the other teeth, it is harder to get the desired tooth movement and it will take more appointments and other appliances to get the desired results.  Therefore, this case may actually be priced at a higher rate with less teeth.

• Fixed costs

  • Rent, taxes, insurance, utilities, equipment, IT costs – all the costs of having a physical location.
  • The volume of patients in a particular office affects how many people the fixed cost is spread across. This is much the same as comparing Wal-Mart to a local boutique to buy the same item.  Many times you can go to Wal-Mart, park in a lot after driving around for a few minutes to find a spot, wander around the store to find the correct section, grab the item with a “best price” yellow sticker once you find it – maybe seeing an employee to point you in the right direction or maybe not – then standing in line to buy the item and finally maneuvering your way out of the lot as there is a fight for your spot.  In contrast, you could go to your local store, park within feet of the front door, walk in to a familiar face as they chat and show you the item, you may ask them what to buy if there are multiple of the same type, you will check out and maybe pay a few dollars more, maybe it’s the same.  But you walk out to your car having had an interaction with a person and not having to deal with the masses.  Neither of these options is “wrong”.  It is a personal preference.  Medical and dental offices come in different sizes and personalities.  You get to pick where you go.
  • The more patients in one space with the same fixed costs, the less it technically costs for a patient to simply sit in a chair at the office.