Home Practice ManagementInsurance JUSTIFY! Doctor, is it OK to Cut Back on PPO Participation?

JUSTIFY! Doctor, is it OK to Cut Back on PPO Participation?

by Bill Rossi

I was talking to a close friend of mine about my work with dentists and their PPO challenges, and he said, “Sounds to me like you’re helping dentists jack up fees on patients. Don’t you have any qualms about doing that?”

Now, I respect my friend, and therefore it was a bit of a shocker to hear him take it that way. But it made me think, “How do dentists justify leaving PPO participation and, how do I justify helping them?”

After all, when a Doctor dumps a PPO, the practice won’t be writing off 20%-50% of their normal treatment charges. Copays will be higher so it will indeed cost those patients more money. Since most dentists like their patients and are compassionate people, I can see that the worry about this can be an underlying cause for why so many dentists take so many discounts for so long.

So, let’s take a minute to get a perspective on what’s been happening with dentists and their fees over the last 10 years.

Fair reimbursements?

In our area, the Upper Midwest, the average fee for a dental crown in 2007 was $985. Nowadays, the average fee for a 2740 crown in our area is about $1,300. The allowed fee for a prominent PPO in our area is about $970. In effect, this means that the PPO is reimbursing this fee at the 2007 level. And many other PPOs are paying even less, as little as $680, which would take the fee back to the turn of the century!

Doctor, how many of your expenses have gone down by 25% in the last 10 years? Wages, rents, taxes, equipment, instruments and dental supplies sure haven’t! The general Consumer Price Index between 2007 and 2018 has increased over 20%. Meanwhile, Mean Dental Income (for G.P.s) has gone from about $210,000 in 2010 to $188,000 in 2016*.

Data from the Health Policy Institute of the ADA shows that adjusted for inflation, reimbursement rates from private dental insurance were down in all but four states. Nationwide, the average reduction was about 7% between 2010 and 2015. The trend certainly continues.

Now, what about the patients at your practice who don’t have insurance?

My experience is that it’s not uncommon to see practices with as low as 10% of patients uninsured, to as high as 60%. In the practices I work with I often see that about 35% of the patient base is uninsured.

These patients pay your full fee (unless you have a membership plan, which is a whole other story). You may give a senior’s discount or a bookkeeping savings but, in a sense, they are paying more for exactly the same level of services than patients who are subscribers to networks with whom you’ve entered into contracts, and therefore receive substantial discounts.

I know that dentists and their staff are hard wired to deliver the same level of quality to every patient, regardless of their insurance reimbursements.

It’s never been a successful strategy to try to use cheap labs or shorter hygiene appointment lengths when dealing with “discount” patients while delivering better services to better paying patients. It just isn’t something that Doctors are wired to do or will sleep well at night doing.

So, if quality isn’t a variable, should the price be?

Do you feel you are worth your fees? Really? Does your staff? Really?

A lot of dentists feel that PPO participation is the key element in how many patients they attract. Our experience has been that PPO participation is a factor, but it’s not the only factor or even the main factor. Your location, signage, customer service, hours, internet presence, staff training, range of services, and level of technology, are all factors that affect your new patient flow.

So Doctors, please be assured that most patients like you for more than your “Network Participation Status.” In fact, rephrase that question and ask your team and yourself: “How can we make sure that every day we are working to ensure that patients like us for more than our Network status?”

Start by building trust

Trust is the foundation of a private practice. Note I said practice, not “clinic.” It’s trust that will have patients want to stay in your practice even though you may not offer evening or weekend hours, deeply discounted services, free parking, or lots of PPO participation.

A patient will put up with inconvenience, cost, and all manner of other “imperfections” if they know you are keeping their best interests in mind and are treating them fairly. Most of your patients don’t really expect charity, and they don’t want to think that their dentist is so desperate that they have to work half the time for free to keep their chair full.

The conditions for trust are well known: Validity, empathy and authenticity. Of these, the most important is “empathy.”

A patient doesn’t sense empathy from you just because you accept a discounted fee schedule. A patient feels empathy from you when you truly listen to them. Other forms of social proof such as patient testimonials and, importantly, the full faith and trust of your team help build trust too.

What I’m leading to is this…

When I see Doctors who are willing to work for just 65%, 60%, even 50% of their normal fees, I can’t help but think that they don’t hold themselves in as much esteem as their patients likely do, and they don’t realize that patients aren’t coming to them primarily for their insurance status.

If they developed trust with patients, many patients will happily see them out of network. As discussed in my previous articles, you probably are already seeing some patients out of network.

What if you sat down with your patients and asked them, “Would you go to another dentist if you could save money?”

Almost every dentist I know would hate to ask that question because they would be afraid of the answer! Yet, I think you’d be surprised at how many patients would say, “No, I like it here.”

In fact, we recently surveyed 100 adults, ages 18 to 68, and asked them just that: 83% of respondents said they trusted their dentist. Of those who trusted their dentists, only 8% said they would leave to save money. 66% said they would not leave and 25% said “maybe” they’d leave. Of the 16% who said they just “sort of” trusted their dentist, 44% said they would leave to save money and 31% said maybe they would leave.

So Doctor, ask yourself, ask your team: Are we working as hard to gain patients’ trust as we are working to outrun the discounts?

It’s also important that you walk the talk.

If you are cutting back on PPO participation, it’s not enough to just leave. You have to be working toward something. The additional revenues from gaining some control over your fees should go back into equipment, continuing education, and a happy, well-compensated team. Manage your practice better so you don’t have to rely on the suits at the PPOs to fill your schedule.

If you’re cutting back on PPO participation, you can be a bit more conservative in what you charge, because you are actually getting what you charge. That benefits all your patients and is philosophically congruent. In other words, if you can look patients in the eye and know that they are getting a fair deal, and if their insurance company is paying greatly less than that and you know that you are charging a very competitive fee (or reasonable fee), it helps you and your staff to hold your ground.

Balancing capacity and demand is an important part of ensuring a healthy independent practice. I’ve often talked with Doctors who are booked out for 1 or 2 months, with a hygiene department booked out even further, that are collecting less than 75% of their gross production. Doctor, if you are maxed out, why are you working at a discount?

The other day I was working with a Doctor who is 40 years old and working at a very fast clip. His schedule is booked out 2 months and he has finally gotten to the point where he doesn’t feel he can go any faster. It started to affect his energy level and his quality of life. He is writing off over 35% of his total production every month, collecting just 65¢ on the dollar.

I told him, “How about if we fix it so that you are not working the first 3 hours of each day for free, but maybe just the first 2 hours!” For this Doctor, that increase would add over $120,000 per year to his bottom line. This means that one day, the Doctor will be able to move into a new facility from his current cramped and dated office.

By accepting the PPO plans, you may be displacing other desirable patients, so you run yourself and your staff ragged which, sooner or later, will impinge on the kind of quality experience you want your patients to have in your practice. If you’re not careful, you can end up having patients love you only for your in-network status – not the kind of dynamic you want. So, the “busyness” can give you a misplaced sense of security when it’s doing the opposite.

Independent private practice

I believe that independent private practice is the best way to deliver dentistry. It’s best for the patients and the people who care for them. The people who make treatment decisions are directly in contact with the patients. The Doctor can adapt to the patients’ needs, adding the technology and services they feel will best help their patients.

I sleep well at night knowing that I help dentists extract themselves from agreements that pay them fees lower than those of 10 years ago. These agreements are unfair not only to them but to other patients who don’t get the discounts (e.g. patients who don’t have insurance or have insurance coverage that pays you better). I also advise my clients to not get all “elitist,” either. It’s a matter of balancing PPO participation.

Although I’ve written and spoken on many subjects, I’ve written more articles about PPOs than anything else. Why? Well, most of my work is helping over 250 Dentists prosper. PPO discounts have gotten so drastic that just talking about pushing supply costs down by a point, accounts receivable control and recall systems, etc., would seem like arranging deck chairs on the Titanic. Doctors, you simply have to start pushing back now or eventually the Independent Dentist is going to be a barely sustainable model.

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