Marc Ackerman

Ben Burris

We have discussed repeatedly our belief that the average fee for orthodontic treatment will trend lower. This prediction has been met with shock and horror from the majority of orthodontists who automatically assume a lower fee means lower “quality”, a terrible office space, the wrong kind of patients, less profitability and being overrun by “those people”. It’s funny how a different perspective can impact one’s vision of the future if you’re open to it. Far from doom and gloom, we foresee lower prices leading to much greater market penetration due to increased affordability and this leading to increased profitability and sustainability for the orthodontic enterprises who understand what is happening.

There is absolutely no basis for the average orthodontic fee. None. How did this fee come about? Way back when, orthodontists had open contracts which were essentially pay as you go for the consumer. There wasn’t much impetus for efficiency seeing that the longer you treated, the more you got paid. Once fixed contracts came into use, an average fee was set based on the earlier cases and that fee has escalated incrementally over the past 60 years. We’d also add that many consultants have been advising clients to raise fees annually since the 1980’s and we will admit that we were advocates for maintaining above average fees for many years.

In defense of our fees, we orthodontists tend to talk about how valuable our time is and how high our overhead is but if we were honest we would see that we have adopted this average fee as the way things are (we’d bet 85% of us are within 5500 +/- 1000 dollars) and we’ve set up our offices, staffing, schedule, overhead, and lifestyle expectations based on this “reality”. There is not a thing in the world wrong with this. As a business owner you can charge whatever you like for your services. We only bring this up to make it clear that we might need to revisit the fees we have traditionally charged rather than viewing them as sacrosanct. If we can get out of the mindset that anything lower than a “normal” fee is bad then that frees us to consider another way.

Instead of determining fees by looking at what other orthodontists are doing, we suggest setting a fee based on what consumers will find attractive and then modulating the service we offer to match the fee. This is a much better way to setup and run a business. And make no mistake, we orthodontists who own a practice are running a business – or we should be.

In the process of Burris setting up a new office in Central Florida and implementing all we have learned over the last couple decades, it’s been interesting to examine what is actually needed to run an owner/operator, single location orthodontic practice versus what we orthodontists traditionally think we need. If you really examine this difference, a 3000-dollar fee in a physical plant and business model set up for it can be more profitable than a 5500-dollar fee in a traditional setting! Burris plans on sharing his P&L here on OrthoPundit as the office progresses so we can all see whether or not our theories bear out.

Let’s go through a few examples of what we are talking about here (this is not an all-inclusive list):

• Bracket cost – Burris buys most of his appliances/supplies from SmileStreamSolutions.com and pays pennies while many orthodontists pay dollars per bracket. Same goes for wires, elastics and accessories. Why are you paying what you pay for your appliances? Does the consumer recognize an orthodontic brand name like they recognize a designer clothes brand? We think not.
• Invisalign utilization – Burris is going to charge even less for Invisalign than for braces but deliver Invisalign in a manner that is low stress on the practice while satisfying the wants and needs of clients. If a normal store can sell something and make an 80-100 percent profit with very little effort then they are well satisfied. What makes Invisalign different? Generally orthodontists don’t understand that consumers want and are generally very satisfied with straighter… And, as a bonus, since Invisalign offers 5 years of free aligners then you can contact these patients at year 4 and offer to retreat any relapse they have very affordably (and with zero lab cost) to the delight of the patient and the profitability of your practice.
• Marketing cost – At a 3000-dollar price point, orthodontics will sell itself. In this scenario, the doctor can stick to smart utilization of targeted, internet marketing to get plenty of new consumers while saving tons of money. These days many orthodontic enterprises are spending almost 5% of revenue on marketing expenses. At a 60% overhead how many consumers do you have to treat to net enough to cover your current marketing budget?
• Pandering to dentists – Again, at this price point the orthodontist will not suffer the shortage of new patients that a 5500-dollar practice often does and thus will not need to spend the time, effort and money traditionally expended on potential and existing referring general dentists. The savings of doctor time here could be even more valuable than the dollar savings.
• Giveaways, contests, patient appreciation parties and the like – None of this will be necessary in the 3000-dollar practice saving an incredible amount of money, time and effort. Swag does not contribute to margin in a positive way.
• Office square footage – The physical plant of the 3000-dollar office will be radically different. Though nice, warm and friendly, you’ll notice that there are no TC rooms in this office. With a 3000-dollar flat fee and one financing option there is no need for an hour-long TC driven sales process. People know what they want before they get to your office, the chairside assistants can easily explain and help the consumer fill out the paperwork and your conversion rate will be higher because of the affordability, transparency and simplicity. There really isn’t any basis for the TC driven sales process anyway (other than that’s what we have always done and that’s what consultants get paid to teach us) and other comparably priced, elective products or services don’t do sales that way. Think of going to a jewelry store to spend a few grand and being forced to go through a tour and an hour-long consultation… Depending on volume (and it should be high) the 3000-dollar office may want to keep a financial coordinator positon to assist the chairside assistants and do recall/observation but this position will look nothing like the traditional TC.
• TC salary – Many 5500-dollar offices have multiple TCs and financial coordinators. The need for these positions will be much reduced in the 3000-dollar office and that means a great deal of savings to the practice with no loss of efficiency.
• CBCT cost – Orthodontists don’t need an in office CBCT. Period. If you need a 3D scan for the occasional case then ask the oral surgeon you refer to for one. 150 grand is a lot of money to spend just to be cool. The average patient does not care one bit.
• Several things the 3000-dollar office will have to do well
  1. Treatment efficiency and case selection – the 3000-dollar office must run on time, have simple/effective mechanics, finish patients on time (no overtime patients) and avoid the 5% of cases that cause 98% of problems. Burris won’t be doing impacted canine cases that require exposure and ligation, he won’t’ be using Class II correctors and he won’t be extracting teeth to elicit A-P correction. He will refer these more difficult cases to local orthodontists telling these patients that they should expect to pay more because of their outlier status. Traditionally orthodontists have charged more for easier cases and less for harder cases to normalize pricing across the board but this custom will be less viable in the future. The 3000-dollar practice will be the living embodiment of the Straighter Philosophy and Burris will only treat cases that he can finish in 12 months. Compliant consumers will get a good deal of A-P correction using elastics over the course of treatment and Burris plans to do orthognathic cases as they are generally straightforward but non-compliant consumers will be asked to leave the practice and cases that will take more than a year of treatment will be referred instead of started. Of course experience is the essence of orthodontic efficiency and what an orthodontists can do in 12 months differs greatly based on experience and ability so each doctor will have to determine these limitations for themselves. As an example of what can be done even without the benefit of case selection, many of the cases Ackerman treats in a hospital setting for 4900 dollars are difficult outliers yet he does so efficiently and profitably. Given the right systems and clinical efficiency there is no reason any orthodontic enterprise should not be profitable as long as the new customer flow is not compromised by artificial barriers or high price.
  2. Patients per chair per day – The “industry standard” is 12-14 but in the 3000-dollar office the team will need to see 18-22 patients per chair per day in an 8+ chair office. This is easily accomplished if you do the math. This kind of efficiency is only possible with a well crafted schedule template but when done properly it greatly reduces the single most expensive part of running an orthodontic enterprise – staff cost. At speed the 3000-dollar orthodontic office can expect their staff cost to be under 15% and even approach 10% of gross collections.
  3. Same day starts – This is not an option but a way of life in the 3000-dollar office. Both arches will be bracketed at the same time. To do otherwise costs additional bond appointments that a high volume practice can ill afford.
  4. Long appointment intervals – 8 weeks at minimum. This is better for patients anyway given the technology we use, applying light forces over a long time and alleviating the inconvenience of having appointments more often.
  5. Same day debond – When a patient is ready to get the braces off then they come off. No need to schedule and burn up additional, long appointment slots.
  6. No steel ties – Steel ties are dumb, take too long to tie, patients hate them, it takes a great deal of effort to train staff members to use them, they are no better than elastic ligatures and a large lumen eyelet works far better when trying to de-rotate a tooth or bring an ectopic tooth into the arch.

What the owner of a 3000-dollar office must give up:

• The pride of tackling difficult cases – The owner of a 3000-dollar office must avoid the 5% of cases that eat up an incredible amount of time and resources as their office is just not set up to handle them. We orthodontists tend to focus on the outliers but this is not possible in this office setting.
• Pride (again) – The owner must put the needs of the many above the needs of the few and put their pride aside to stick to the business model that will provide affordable orthodontics for the majority of Americans. This will be difficult as we orthodontists are like power lifters and we believe that the harder the cases we do the more awesome we are. This is not true but we believe it nonetheless.
• Prestige and peer recognition (pride a third time) – We orthodontists love nothing more than to be popular and beloved by our peers. This is a big part of the reason our profession is in the state we find ourselves… The owner of the 3000-dollar practice cannot afford such luxuries.

What the owner of a 3000-dollar office gains:

• A never ending supply of new patients.
• Security and sustainability for the practice.
• Schedule freedom – At this price point the orthodontist can take off some of the most popular times of the year (when our kids are out of school) and spend time with our families because consumers are coming for the price.
• Massive profitability – Not on a per patient basis but in treating more patients because of a more affordable and attractive fee.
• The satisfaction of knowing that you are making orthodontics affordable to the majority of Americans.
• Dealing with a clientele that appreciates you and what you do for them.

Our favorite customer is the single mom working her tail off to provide for her kids! This may sound like a random statement but who better encompasses the argument for enhanced access to care and who more deserves our services for her kids? There are millions of these moms in this country and they are generally very grateful for the opportunity to provide orthodontic care for their kids while not blowing the family budget. Of course we will treat any and all who want our services in the 3000-dollar office (except the outliers and the most difficult cases) but we can’t help having our favorites. The point of all this being that orthodontic care is currently available to such a small percentage of the population that we consider this the Golden Age of Orthodontics for owner/operators who can overcome our orthodontic groupthink and see the opportunity right in front of us. A lower fee doesn’t mean doom and gloom. To the contrary, it means massive growth and profitability for anyone willing to put in the work. Will you?

** The NUMBER ONE problem in the modern orthodontic enterprise is a lack of new customers and the biggest driver of this problem is price. IF your office has plenty of patients who are willing to pay the fees you are charging and if they feel they are getting value then, by all means, continue to charge what the market will support in your area. However, even if you find yourself in this situation today, please understand that unless you are a true boutique then you’ll likely be in the same boat as most orthodontists soon. Increasing efficiency and cutting costs will not hurt you no matter where you are in the market and that is what we are advocating here most of all.

**3000 dollars is the number we have chosen to represent the average fee in the future. As we have mentioned before it may be higher or lower in your market depending on where you live but 3000 is a highly educated guess. What is the right number for you? The number that elicits a WOW! from your customer base and causes the results we’ve described above.