• How to determine the Relative Value of services in your practice.

The Relative value unit Method (RVU)
For determining profitability in a “fee for service” practice a dentist can easily analyze what is their overhead, how much they receive for each treatment performed, and subsequently determine if there is a need for raising their fees.
Dentists practicing in capitated programs on the other hand need to determine profitability based on income received on a different basis and calculation of a "per hour" cost and revenue is one good way to do this.
The requirement for analyzing the per hour revenue is to determine which plans are reimbursing the dentist the best with an eye towards growing those plans and dropping the less profitable ones.
 
How do you implement such a system?
 
Step 1: SET UP AN RVU TABLE. Each procedure is given a certain relative value unit where one unit equals 15 minutes. For example, a 30-minute procedure is given a value of 2. For example, a crown preparation and cementation may be given a value of 6 (1 1/2 hours of chair time). Setting up this table of RVUs should be a relatively simple task on most computer systems.
 
Step 2: DETERMINE THE TOTAL NUMBER OF RVUs delivered to all patients for each plan you accept. You should be able to identify patients by the dental plan they belong to. For example, a computer system should allow you to access all patients your office treated in a particular month, and give you a total number of RVUs you delivered to any group of patients for each plan.
 
Step 3: DETERMINE TOTAL REVENUE. Your computer should also be able to determine how much total revenue you received from that particular group of patients in each plan you accept.
The formula is:
____________________________________________________________________________
Total Patient Copayments + Monthly Capitation Check + Optional treatment Revenue*
                                   DIVIDED BY
              Total RVUs delivered on that group of patients
                                     EQUALS
 
                      Revenue received per RVU
___________________________________________________________________________
Multiply this x 4 and this is = Revenue received per hour on this plan.
____________________________________________________________________________
Compare each plan and you will see which plans are most beneficial for your office.
 
 
*some dental offices operating this RVU system may or may not include optional treatment revenue in determining dental plan profitability.
modified 7/14/2001
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