By Bill Rossi


No matter how well you prepare in any PPO transition there will be a loss of patients. So, what happens after that?

Let’s say a practice is producing $100,000 of which $10,000 is with XYZ PPO. At that $10,000 per month, the practice is collecting just $6,000 because there is a 40% PPO write-off. Let’s assume they lost a fairly pessimistic 40% of the patients due to the PPO transition, so that practice would still be collecting $6,000 per month. However, they now have opened some unused capacity. Let’s say that fills in and they bring back another $4,000 per month in production – and this might be other PPO patients as well so let’s assume there’s a 40% discount on the replacement production (just like the PPO they dropped) – even so, the practice ends up $28,000 a year ahead. Of course, if the practice is not saturated with PPOs, the “replacement collections” will be better than 50%. If we assume 80%, this practice will be over $38,000 ahead, the equivalent of about another month of income right to the bottom line (with no more work on the doctor and staff’s part).

Generally, we do not recommend the practice drop a PPO unless there is good replacement potential and/or they are at or beyond capacity.

Of course, the goal is to minimize the loss of patients, but this points out there is another very important tactical point – slowing down the loss. This gives the practice time to “heal up” or replace lost patients.

That’ is why when dropping PPO/Delta we do not recommend sending letters unless the PPO is sending letters. No matter how well written the letter, letters can cause disruption to the practice, can accelerate the loss, and can overload the administrative team.


“Drop Letters”

However, most administrative teams and doctors want to send letters. It’s often thought that it makes it less likely the patients would be upset or confused. The problem is that the letter is often not read, often is misunderstood, and once you send them you cannot unsend them. Moreover, it is a big mistake to think the letter will handle your PPO transition. There is no such thing as a magic letter! At best, the letter is transitory. The real success of a transition takes place daily on the phone or face-to-face conversations with patients. It is a months long process. In fact, as you go out of network, it’s a process that lasts the rest of your career.

In a previous newsletter, there was an example of a good “Dropping Delta” letter. However, in talking to the office administrator, I feel the success of their transition wasn’t due to the letter. It was due to the excellent team, good preparation, and top-notch leadership from the office manager. Over and over again, that is what I’ve seen makes the difference in successful PPO transitions.

If your practice has good momentum, you can drop PPOs that are 20% or less than your practice production and usually heal-up quite quickly over that loss as illustrated above. You can’t just leave PPO participation; you have to be working toward something. These transitions can be a great time to create a sort of “Practice Renaissance” where you rejuvenate your practice mission, business systems and messaging.