By Bill Rossi, President of Advanced Practice Management

Sometimes dentists are at a crossroads when art capacity. They are as busy or busier than they want to be, it is hard to fit in new patients, and hygiene help is tough to come by, etc. At the same time, the doctor may be writing off 25%-45% of his/her monthly production. When one is maxed out, it does not make sense to see every third patient for free just to keep the chairs filled!

One solution is to drop one or more PPOs. Another is to hire an associate. There are good reasons to add associates besides profitability.  You have extra coverage, professional companionship, an eventual buy-out, and potential to offer a broader range of services. But for this analysis, let’s focus just for profitability. Which option earns the doctor more money? 

Drop Delta

Let’s assume that the doctor is producing $100,000/month and writing off $20,000/month for Delta Dental. Delta comprises 50% of patient base. With a perfect transition, the doctor would add $20,000/month to his/her income. However, no PPO/Delta transition is perfect. It’s safe to assume that if handled correctly, the doctor will lose 30% or fewer of the Delta patients. You are still welcoming new patients to the practice, and you are at capacity. Your schedule will replenish with other patients, even other Delta patients. (Going out of network with Delta does not mean you don’t get new Delta patients!).

Thiry percent fewer Delta patients in the practice means 15% fewer patients overall. If you have a healthy practice at capacity, you will replenish most of that 15%. So, we assume that if you lose 20% of your Delta patients on a net basis, you will produce (and now collect) $90,000/month…. Your collections will be up to $10,000/month.

Hire an Associate

If you hire an associate, assume that with the proper delegation and training, he/she can be producing at least $40,000/month. Assume you would collect 80% of that (because you are still with Delta). Also assume that you can net at least 25% on associate collections given a normal overhead profile (with no significant additional equipment or facility expenses). So, in this case, your net is increased by $8,000/month.

If you have enough patients to successfully bring on an associate, you have enough patients to weather a Delta drop. If you have $40,000 worth of treatment to keep an associate busy, you have $10,000’s of potential demand to replace lost Delta patients. If there is no other reason to add an associate other than “profitability” then you are better off dropping Delta. But, dropping Delta and adding an associate are not mutually exclusive, though it does slow down patient flow growth in most situations and makes adding an associate later less likely than otherwise. So, as a pure profitability play, drop Delta but make sure it’s well planned. You can’t just leave Delta. You have to be working toward something. Beef up your marketing, website, Google Reviews, case acceptance, all of that, to counteract not being in the Delta network. You can afford to invest in fortifying the practice with your own means. It can be very satisfying!