Bulletin, May, 2006
Exclusively to Clients and Friends
of Advanced Practice Management
The Dental Dow Jones: First Quarter 2006:
Our sample of mature area practices* showed for the first quarter of the year, practice production is up 4.4% and collections are up 3.1% over 2005 averages. Comparing the first quarter of this year to the first quarter of last year practice production is up 3% and collections are up .3%. The first quarter is the best quarter of the year for most dental practices because of the “Insurance effect.”
* That is, well-established practices not undergoing any significant change such as the addition of an associate, expansion to a new facility, or a change in Delta participation.
Dental Staffing, Want Ad Counts:
Want ads are indicators of staff availability and a secondary indicator of the Dental Economy. High want ad counts mean it’s more likely to be difficult to locate new team members or replacements and a brisk dental economy. Low want ad counts indicate less difficulty in attracting dental employees and a slower dental economy.
Average Sunday Want Ad Counts
Number of Advertised Openings
Well, if you want to replace a bad employee this is a good time to do it, but otherwise this doesn’t present a very encouraging economic picture does it? Yet, many practices continue to flourish and you can too.
The Lifetime of a Patient:
Some years ago I worked with Dr. Frank Martin, a statistics professor from the University of Minnesota, to come up with a way of measuring the lifetime of a patient in a practice. My study indicated that the average “lifetime” of a patient in a practice was about 8.3 years with a range being from 3 years to 16 years.
Each month we monitor statistics from over 200 clients. Our 2005 data shows the average production per active patient is about $520 per year. So that makes the average lifetime production value of a patient about $4,300.
We can help you calculate your average patient retention. You already know that patients are valuable but this gives you an idea of how valuable, which can be useful in making decisions about advertising or insurance participation.
Delta Update: Delta Maximums:
As some of you have heard, until very recently when Delta subscriber patients exceeded their maximums, you didn’t need to submit to Delta (and their write-offs). That was true for all plans last year (except for Delta USA). With their new contract which was released this winter, that is discontinued. So, you must submit all treatment for patients with delta coverage even after they’ve exceeded their maximum.
Our perspective, estimates and opinions on the developing marketplace: Delta has the great majority of the dental insurance market in the Metro Area and is the dominant insurance company in the region.
Our fall 2005 survey indicated that 83% of Minnesota dentists are in the Delta Premier network. 40% of dentists surveyed said they are in the “Delta Preferred” network. Delta Premier is the “original” Delta and Delta Preferred is a PPO within Delta. Delta Preferred is now officially called “Delta PPO?” Premier discounts run the typical practitioner about 15%. Delta PPO discounts are about 20%-30%. So if you’re with Delta Premier and join the PPO network, many of your “normal” Delta patients will get deeper discounts because they have the Delta PPO option. That can be an expensive surprise.
According to some people we talked to at Delta, over 90% of new plans sold have the “Delta PPO” option. Ouch.
This can mean that Doctors who are not with Delta PPO will get fewer new patients as more patients are driven to the Delta PPO providers. Plus, Delta PPO Providers will experience more discounts, even on patients they already have (as their contracts renew, existing Premier patients get the PPO option and therefore lower copays).
What To Do? Any way you slice it, any Doctor who is participating with Delta in any way is experiencing deeper discounts. You can either “outrun” or “outgun” the discounts. That is, if you’re discounting 20% and can deliver 20% more dentistry per day (through more efficiency) you can outrun the discounts. Some Doctors can do this more easily than others. If you deliver comprehensive services under one roof (e.g., endo, perio, cosmetics) you can “outgun” the discounts by making up for them with larger case sizes and the related efficiencies and profitability thereof.
If you are in the Delta PPO Network, you can drop out and stay in the main (Premier) network. Almost all your Delta PPO patients will then have normal Delta Benefits. You will lose patients, but you will keep many too and significantly reduce your discounts. Its not a move to take lightly, but its not as big a deal as leaving Delta altogether. If you are thinking about any network change I strongly recommend you talk to us
If you’re not participating with Delta, the market is increasingly tough to deal with. In our surveys we see that the average non-par solo practitioner attracts about four fewer new patients per month than those participating with Delta. These offices have to seriously consider more aggressive advertising in order to keep vital. Still, our latest poll (the “2005 Current Dental Practices and Procedures Survey”) indicated that of the 17% of area dentists who are non-par, 94% of them were glad they were only 6% were not so sure.
Delta Audits: These are still happening and Delta is asking for money back. I plan to have more news on this for you in our next bulletin.
Delta is Still Being Delta: The items in this article are based on our surveys plus our many conversations and interactions with clients in the field and other people knowledgeable about the local dental scene. They are our opinions and estimates. I contacted Delta about the above but they declined to comment.
Watch for the Current Practices & Procedures Survey
It’ll be coming soon and your participation is appreciated. Help us help you have a clear perspective on our Dental marketplace.