For over 30 years, I’ve surveyed Upper Midwest dentists on the issues most important to them. Attracting patients, finding, training, and paying staff are always mentioned. However, the top issue for the last years, has been “PPOs & Insurance Write Offs.”
I also asked how many dentists in the past year have joined a PPO. Last year, about 9% had joined A PPO and 13% said they left one in the previous year. That’s the first time ever that there have been more Doctors saying they left a PPO than joined. Still, when I see collection percentages as low as 80%, 75%, even 55%, I am amazed that there aren’t more Doctors cutting back on PPO participation.
I’ve written over a dozen articles to help Dentists with this issue. Of course, the reason that more dentists don’t drop more PPOs, is fear of losing patients. It’s not just having lower numbers – there are patients that you know and like in any PPO and you hate the idea of losing them. They are more than a number to you.
In 20 years of helping dentist with these transitions, I say confidently that you have more power than you think. Most patients do like you for more than your “network status.” You do not have to keep riding your fee schedule down and down. You do not have to accept fees that were from 10 years ago (or even the turn of the century!). You do not have to have a situation where some patients pay full fee in your practice (patients without insurance) while others get a 50% discount. Where is the justice in that? So, if maybe, just maybe you are now seriously considering acting on this challenge – which is probably the greatest sap to your profitability and independence – this article will be a guide to help in that decision.
What are PPOs Costing YOU?
• Do you actually know how much you are writing off? With which PPOs?
• Are you writing off more than 20% of your production? More than 30%? Even more?
• Do you know for sure which PPOs you are in? Lots of times, doctors with Delta PPO don’t know they are on the PPO instead of regular Delta (Delta Premier). Networks like Dentemax, Connection, DHA, etc. can be terrifically confusing. You can have some patients in network with MetLife, some out of network. If you don’t really know what networks you are in, find out.
• Do a side-by-side comparison of fees (see, “You to PPOs… Deal or No Deal”, The Profitable Dentist, Summer 2018). Even though this will be an unweighted sample, it gives you an idea of which PPOs are paying the least. More importantly, seeing your fees side by side with the PPOs is sure to put a fire in your belly.
• Get an estimate of the presence of the various PPOs in your practice. Is MetLife more than 15% of your practice? What percentage of your practice’s patient have Delta?
• Some offices on Dentrix, Eaglesoft, and other software have adopted a procedure by which their software is charging out the insurance companies’ fees. In this way, the amount that the practice is actually producing and writing off is obscured. I’ve seen situations where doctors were writing off $70,000+ per month and didn’t even know it. I strongly advise you to charge out your normal fees and make a credit adjustment code for each insurance company so that you can clearly see how much each PPO costs you each month.
These expenses can be greater than staff wages and it is a mistake not to have a handle on them. Get a handle on them and then maybe you can start throwing them out!
• Are you netting less than 35% of your collections? If you have a mature practice netting under 35%, chances are, you either have: 1.) Staff salaries as a percentage of collections are too high due to under-performing staff or over-staffing. 2.) More likely it is due to the fact that you are writing off so much. It is simply impossible for most practitioners to “outrun” discounts that are more than 40% of your fees.
Are you in a good position to drop a PPO?
Check the boxes below that apply to your practice:
▢ On a scale of 1-10 for personal busyness, you rank yourself at an “8” or more.
▢ You are attracting at least 20 comprehensive exam new patients per month per full-time doctor.
▢ You are checking two or more hygienists per day (per Doctor).
▢ Your hygiene is booked out and it’s hard for new patients to get in.
▢ You do not want to add additional hygiene time because you do not want any more exam interruptions.
▢ You cannot add additional hygiene time because there is no more room in your facility.
▢ You will be cutting back on Doctor capacity (e.g., a Doctor retiring and not being replaced).
▢ You have a good team with low turnover.
▢ On a scale of 1-10, would you rank your administrative staff at a “7” or better.
▢ You are buying a retiring doctor’s practice to merge with your own. This is a great way to top off your practice but you have to be strategic in how you deal with the PPO profile of your practice (the host practice) and the merging one. There is a lot at stake (see “PPOs and Practice Transitions”, The Profitable Dentist, Summer 2015).
▢ You have PPOs that are paying you less than 70% of your fees and are less than 20% of your practice.
▢ You have up-to-date equipment technology and décor.
▢ Your Active Patient Count is 1,500 or more per FullTime Doctor. (The number of unique patients that visited in the last two years.)
Doctor, if you’re maxed out, why work at a discount?
Pulling the Trigger: If you’ve checked a majority of the boxes above and are ready to roll, it’s a matter of picking the right PPO to drop. You don’t necessarily drop the PPO with the lowest fee schedule first although obviously, that is a consideration. There are many others, such as: The PPO’s size in your practice; Out-of-Network Benefits; How smoothly (or not) the PPO processes claims; The sources of your new patients. Deciding which PPOs to drop and in which order, is an important part of our job in advising Dentists.
Fight the Fear!
It’s a lot easier to join a PPO than to leave one. Almost always in these transitions, there is going to be some trepidation on the part of your team. Patients aren’t just numbers to them either. They are worried about job security – if the practice loses too many patients, will they lose hours? They are mostly worried though about unpleasant confrontations with patients. This won’t be an issue if things are handled correctly because the staff will be well prepared and trained. Doctor, if there is ever a time for strategic planning and staff training, it is through a PPO transition.
The Other Side of the Curtain: I am often working with doctors, some who are in and some out of network with a given insurance company. The doctors who left PPOs are doing just fine but the doctors contemplating going out of network are fearful about doing so. The transition is the scary part. Once you are on the other side, it’s not as big a deal.
Doctor, unless you are signed up with every single PPO you can be, chances are you are already out of network with many of your patients. If you really believe that patients only choose their dentist by which dentists are on their provider list, technically you shouldn’t have any patients that you see out of network. We’ve found out time and time again that a network provider status is a factor but not the only factor or even the main factor in how patients choose a dentist or choose to remain with a dentist.
As I alluded to above, I know you hate to even lose one patient, Doctor, but you have to recognize this is a form of pricing. Now your fees are set, in effect, by how many PPOs you join and how deep their discounts are. It’s unlikely that in the past when you did have control over your fees, you set them at the lowest in your area, so you would not ever have to risk losing a patient that wanted the cheapest price. If you bend over backwards to please everyone and to outrun the insurance discounts, you may eventually be creating the sort of environment that appeals only to people that want discounts!
When is PPO Participation a Good Thing? It’s About Balance.
There is no question that because of dental insurance, millions of Americans get better care and thousands of dental practices thrive. Insurance companies have their own economic pressures as they compete to get customers. Much of my writing and work has been about leaving PPOs, but that’s only because things have become so out of balance. And balance is the key word. I rarely recommend that someone go completely out of network with all insurances. And believe it or not, sometimes I recommend they join.
If you are participating in a PPO, it’s important to do so wisely. Yes, sometimes you can negotiate, but you will be more effective in negotiating if you know that you can drop. I’ve had clients who were offered significant increases when they sent in their drop notice (even by PPOs that said “They don’t negotiate”). Some took the “raise;” some chose to drop anyway. Sometimes you can increase your reimbursements from insurance companies by how you line your agreements with them… whether you negotiate with them directly, or through groups like Connection and Dentemax. In some cases, you’ll get a better fee schedule directly, in other cases you’ll get a better fee schedule through the network.
I feel it’s best to work with insurance companies that give decent allowed fees and processes claims expeditiously. Reward those that treat you well with your participation.
With an efficient practice, to a degree you can outrun the discounts. You can also maintain or add to practice revenue by adding services such as implants and aligner orthodontics and adding to your skills so you can keep more endo and oral surgery in house.
In conclusion: With the correct balance of PPO participation and good management, you can have a more secure, profitable practice without running yourself ragged. Don’t Get Mad, Get Smart!