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THE EDITOR'S CORNER

The cost of living and the cost of conducting an orthodontic practice are constantly rising. Prices, salaries, rent, services, and taxes are all increasing and at a rate that is accelerating. The orthodontist who does not raise his fees annually in this kind of economy must, himself, inevitably suffer a decline in his standard of living.

In addition, orthodontics is in one financial strait that is peculiar to it and to other medium-term lending institutions. We extend credit for two or more years. Our contracts are made today. Payment for them may extend for the next several years. The cost of living and practicing is rising at better than 5% a year. The dollar that we contract for now will be worth less than ninety-five cents when paid next year. It will be worth less than ninety cents in the second year.

It does no good to argue that, since treatment extends over a period of time, it is only right that payment extend over that period of time. That is true, but irrelevant. Everyone, especially ourselves; must recognize that we contract for a fee for future treatment and that fee has to have some way of rising each year in response to rising costs merely for the orthodontist to maintain his relative economic level.

The first orthodontist to feel the pinch is the solo practitioner who has reached a plateau. He is either fully occupied now or his practice has leveled off so that he starts approximately the same number of cases each year. He does not contemplate taking on an associate in the first instance and he has no ready source of additional new patients in the second. These two types are living on a relatively fixed income in the face of rising costs. Without increasing their fees, their take-home income must decline. Their standard of living must also decline.

The rest of the orthodontists mask the problem by increasing their gross income. They treat more patients each year by virtue of a growing solo practice, or by hiring professional and non-professional assistants to make their time more productive. Those orthodontists should not delude themselves. Without an increase in fees, the unit income must decline. And, it is the unit income that orthodontists should be paying attention to--the income per case or treatment sequence.

It is simply logical that, in addition to needing a rational basis for establishing a fee to start with, orthodontists need a rational basis for preserving that fee against the inroads of rising costs. There does not seem to be a perfect way of doing this. Each of us can find some system which satisfies him. One method could be to raise fees each year on some basis that you believe in such as the general rise in the cost of living. Let us suppose that your present fee for a certain course of treatment is $1000. You check your records and find that on the average your fee is paid over a three-year period. If the cost of living is rising at a rate better than 5% a year, you would have to add more than 15% to account for the rises over that period of time. The fee that you present now becomes at least $1150. It must be paid within a three-year period. You may establish an incentive discount. For example, if the entire fee is paid in advance, you might allow a 10% discount. If it is all paid in the first year, a 5% discount. Now, next year, provided that the economy does inflate its 5% during the current year, your base fee is $1050 plus 15% and so on.

If you do not set up some system like this, you are not only letting the inflating economy reduce your net income, but you are encouraging people to delay their payment even longer and in fact then borrow money from you at no interest. Worse. When they finally do pay you, they will be paying with even smaller dollars.

DR. EUGENE L. GOTTLIEB DDS

DR. EUGENE L.  GOTTLIEB DDS

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