The Calm Way to Drop Unprofitable PPO Plans

The Calm Way to Drop Unprofitable PPO Plans

The backbone of a great dental practice is a full hygiene schedule and getting paid at a fee for service rate.  I’ve spoken with many dentists who accept bad paying PPOs.  These dentists do prophies themselves because a hygienist costs $70 per hour but the PPO only pays $50.  The dentist is now chained to an unending prophy hamster wheel, the consequences of which are:

·         The opportunity cost of not making the best use of the dentist’s time.

·         Costs of operating the practice continue to increase, in particular dental supplies, lab fees and staff salaries.

·         Administrative costs of processing unprofitable claims.

·         The dentist and staff suffer burn out because of the volume of patients they see.

·         Profit leakage the practice suffers which is the difference between the dentist’s fee for service rate and the PPO reimbursement.

I want to cover the calm way to drop unprofitable PPO plans, so that you can get your practice back to profitability, run a more efficient practice, and get back to enjoying dentistry.

Do The Math!

Before you do anything, do a plan-by-plan snapshot:

·         Identify the active patients tied to the plan.

·         Collections by plan.

·         Write-offs and adjustments by each plan.

·         Hygiene demand versus your hygiene capacity.

·         New patient sources (PPO versus referrals versus Google).

If a PPO represents 20% of your patient base but only 5% of your profit, that is not a profit center, that’s a burden on the practice.  The best way to turn that patient base into a profit center is to convert as much of that 20% patient base into fee for service patients.  Getting new patients takes tremendous effort, so holding onto existing patience and converting them to fee for service is a massive win!

Drop The Worst First!

At this point most dentists do two things; they keep grinding away or drop everything at once, creating chaos.  Make it simple and drop the worst plan first.  This is usually the plan with:

·         The lowest reimbursement rate.

·         The highest write-offs.

·         Biggest administrative burden.

·         Most price-sensitive patients.

·         Most cancellations and no shows.

This is a clean, simple and straightforward approach with results you can measure.

Communicate, Communicate, Communicate!

It’s important that you communicate with patients that you are changing but not why you are changing.  The message is simple:

·         The practice is no longer in network with the plan.

·         The patient can absolutely keep coming to the practice.

·         All claims will be submitted and all benefits maximized.

·         It will be a seamless transition.

What you should not do:

·         Apologize for dropping the PPO.

·         Sound uncertain.

·         Complain about PPOs.

Patients don’t leave because you are out of network.  They leave when the process is confusing and unorganized.

Build a Soft Landing So Patients Stay

It’s costly and time consuming to acquire new patients.  In dropping plans, your goal is to convert those patients into fee for service patients. 

·         Adopt a membership plan for patients with a slight discount (keep the plan simple).

·         Have a clear financial policy.

o   Give a written estimate upfront.

o   Collections are due the day treatment is completed.

o   As a courtesy, you will file claims.

o   Explain payment options (HSA, FSA or financing).

o   State your cancellation policy and no-show rules (state them calmly but enforce consistently).

·         Front desk scripting is where most dental practices lose the patient.

o   Explain that the practice is no longer in network with the PPO, but the claim will still be submitted.

o   The final cost will depend on the plan’s out-of-network benefits.

o   If adopting a membership plan, review the benefits of the plan and the straightforward fee structure to address any fee concerns.

o   Do not say that insurance doesn’t pay, the PPO is cheap or be apologetic.

Patients Will Leave – That’s Part of the Process

No doubt, some patients will leave.  These are patients that were with you because you are cheap, and not because they were loyal. Getting rid of low profit patients creates opportunity for:

·         Better care.

·         Better case acceptance.

·         Greater team morale.

·         More time with the patient.

·         Higher profit per hour.

The goal is not to be busy, but to have a more profitable and saner schedule.

If You Can’t Measure It, You Can’t Manage It!

Once you’ve gone through this process, you have to track your results.  Track monthly:

·         New patients.

·         Hygiene reappointment rates.

·         Write-offs.

·         Collection percentage.

·         Accounts receivable days outstanding.

·         Profit per hour for the dentist and hygienist.

·         Opening rate.

If you can’t measure it, you can’t manage it, and you are counting on hope, and hope doesn’t pay the bills. 

Bottom Line

Dropping PPOs isn’t just about going fee for service.  It’s about building a profitable and sane practice so you can provide the greatest standard of care to the patients you want to work with.  It’s not the quantity of patients but he quality of patients you have the care you provide that matters.

From your New Jersey Dental CPAs, New York CPAs, and America’s Dental CPAs.