February 2025 ISSUE
February 1, 2025
Source
Last month, we recommended tracking seven Key Performance Indicators (KPIs) to help ensure your practice’s success. However, tracking these KPIs and reviewing them monthly isn’t enough! You need to take actions that will translate into increased profitability.
When production levels are too low, most doctors’ knee-jerk reaction is to spend more time, money, and effort to generate new patient calls, but that’s not always the right move. Unless you’re converting 90% or more of those calls into actual new patient exams, you may be focusing on the wrong problem and thus wasting your increased marketing spend. Increasing your staff’s training to boost your conversion rate will likely prove a much more profitable investment.
However, beware – your profits can actually drop even if your new patient numbers increase. What? That’s right! Recently, one of our Tax and Business Planning clients called in excited that her new patient numbers had risen dramatically. While we were excited for her practice growth, unfortunately it wasn’t because she was the best dentist in town. Rather, it was because the other dentists in her town had dropped (gone out of network) with Delta and other PPOs, leaving her practice as the last one participating. So, while her practice was flooded with new PPO patients, her increased write-offs resulted in declining profits. She soon realized she was working harder to make less money! Fortunately, she understood her dilemma and was willing to attack her surging write-offs (PPO adjustments) that were her practice’s real problem. Taking our advice, she was able to reverse her declining profitability and get back on track.
Bill Rossi*, an excellent practice management expert, has performed more PPO “exorcisms” than any other firm nationally. His firm, Advanced Practice Management, handles a high volume of smaller scale PPO drops, including Delta PPO to Premier, MetLife, Aetna, Cigna, and cleaning out umbrellas (most practices should not be with more than one). However, Delta PPO drops are the big play, as it’s the one with the biggest risks and rewards, making all other transitions relatively easy. Based on his experience with our clients, Rossi relates that if a PPO represents 10% of your practice production and you can drop it while keeping 60% of your patients and replace the lost 40%, you can add about a month’s worth (8-9%) of profits to your practice each year. That represents a “slam dunk” return from a pretty small-scale drop.
His results for Delta Dental drops in 2024 demonstrate his success. On an aggregate basis, his clients’ monthly production declined about 12%, or $149,879, after dropping their Delta PPO. More importantly, however, these same practices reported a monthly increase in collections of $77,467 or 9%. This boosted their collection percentage (collections divided by total production at UCR) from 68% before the Delta drop to 84% afterwards, for a 16 percentage point increase. And all (100%) of those increased collections dropped to the bottom line as additional profit! Our clients used those increased profits to boost their savings, accelerating them toward reach their retirement goals years faster.
Will It Work For Your Practice?
Rossi can’t guarantee these results for every practice. Rather, your practice is an ideal candidate for a Delta PPO drop if:
- You’re collecting less than 75-80% of your practice’s gross production;
- You have several PPOs and therefore have several different potential PPO options; and
- Your practice is operating at 95% or more of optimal capacity (defined as being as busy as you want to be).
If your practice qualifies, it’s time to take action so you can earn more in 2025!
*For more information on his firm’s practice management services, including PPO drop consulting, contact Rossi at brossi.apm@gmail.com or by phone at 952-921-3360.