By Bill Rossi
Maybe you feel buried in PPOs, so many that it’s hard to keep track of them. When you’re in that deep, the discounts can run well over a third of your daily production. PPO write-offs are probably your biggest business “expense” – even bigger than wages. The good news is that being in-network with PPOs means you have lots of opportunities to shed the discounts and move more to your bottom line. Even dropping a small PPO can add handsomely to your net profits.
Let’s say that a certain PPO represents 10% of your practice production, and the practice produces $100,000 per month. The write-offs are 40%, which means you are collecting $6,000 on that production. You decide to drop this PPO, and with some preparation, you should be able to retain at least 60% of those patients. That would be a “break-even” situation. Every insurance patient retained is now “golden” in that they are paying your full fees. These patients are with you because of you and your team, not because of your insurance participation. That’s how you gradually grasp back control of your practice.
But breaking even isn’t the goal. You now have 4% unused capacity. If you have a full or backlogged hygiene schedule that will fill back in, then you’re in good shape. It will fill back with better-paying patients. You may not collect all of $4,000/month in replacement collections. But even if you collect 75% of your production, it will still amount to an additional $3,000 per month. That’s an extra $36,000 in annual collections — just from this “replacement” production — about equal to an additional month’s worth of net income. And that’s just from picking off one PPO. Once you have this PPO transition under your belt, you can move on to the next one. Gradually, you start adding to your income, which will continue for years to come, not to mention the peace of mind that comes with you being less controlled by insurance companies.
PPO participation creates the illusion of busyness while suppressing actual earnings. The schedule may seem full, but full at a 40% write-off is not the same as profitable. Dropping a low-paying PPO does carry risk, but in many cases, the financial risk is far smaller than the doctor assumes. The real opportunity is not just reducing write-offs, but creating room for higher-value care, stronger margins, and a healthier practice model.