THE EDITOR'S CORNER
We seem to be on the verge again of some kind of restrictive control of increases in health care fees, including orthodontic fees. Following the end of Phase IV of the Economic Stabilization Act, which placed special restrictions on health care fees, there has been an explicit threat that, unless doctors exercise voluntary restraint and keep fee increases voluntarily within the guidelines that were removed when Phase IV was permitted to lapse, new legislation no less restrictive than Phase IV will be necessary.
At the same time, it has been shown that, for the 12-month period ending March 31, 1974, dental fees rose 5% while the cost of living rose over 10%. Was the restraint voluntary? Probably not. It probably was for the most part supply and demand at work in the classical economic sense. The concept of voluntary restraint on the part of individuals in a capitalist society defies the laws of economics and of human nature.
If dental fee increases were to continue to be one-half of the increase in the cost of living, it would be open to question whether dental fees still would require restrictive regulation. However, unless dental fees rise to make up for increases in the cost of living, increased productivity must take up the slack, or the dentist's standard of living must go down.
Many orthodontists have paid a great deal of attention to technical and administrative expedients to increase productivity. In some cases this has included a conscious attempt to hold the line on fees or even to decrease fees. Keeping fees level and increasing productivity should ordinarily result in an increase in gross income. Decreasing fees with increased productivity can permit the income level to be maintained. No matter what the economic climate, no matter what the economic restrictions, you will do better with increased productivity, with one exception.
The only people who ever defeated this axiom of productivity were the British in their National Health Scheme and they did it in a simple way--one that we would do well to avoid. The way the British made increased productivity work against you was to maintain the total outlay of money for the scheme the same, while encouraging increased productivity. The result was more units of work being divided into the same amount of money and the value per unit declined. If everyone increased his productivity to the same extent, everyone would make the same amount of money while working harder and harder for it. This is a treadmill to financial oblivion. Increases in productivity work when the economic system is open-ended. Then, even if the price per unit goes down, there is still the possibility that, with increased productivity, everyone could increase his income.
As rising health costs become less and less popular and as we approach closer and closer to a national health plan of our own, productivity is going to become increasingly important to orthodontists. Productivity is the ability to produce goods and/or services. From the Phase 2 legislation we also learned another important phrase and that was profit margin. What we are really aiming for its profitable increased productivity.
One difficulty with the concept of profitable increased productivity is that it implies an open-ended source of patients, which could be true in a national health plan. However, unless or until you have an open-ended source of new patients, it would be foolhardy to blindly institute those procedures that would permit an increased productivity, except to provide you with more free time which is not in itself an undesirable goal.
If the number of new patients in a practice is level or declining, there are only three ways to increase the profitability of that practice. One is to raise fees. Another is to decrease overhead. Since neither of these is likely to result in an improvement in the health of that practice, the only viable alternative is to seek ways to stimulate new patients in the practice.
If, on the other hand, the practice has a waiting list and could take on additional patients if productivity were increased, then for that practice the principles of profitable increased productivity are important. Expansion is probably the answer for that practice. More office space, more treatment chairs, more auxiliary personnel. Taking on more cases, finishing more cases, using more efficient treatment techniques, making better use of time, space and people. A useful administrative tool to consider is the downgrading of tasks. Without impairing the quality and by creating specialization in the office tasks, to assign each task to the lowest economic level in the practice that can handle it effectively. This particularly applies to the orthodontist himself who is the highest priced employee. More productivity gains and profit margin gains will be made by paying attention to the use of the orthodontist's time than in any other single way.
