Transitioning to a Stronger More Profitable Practice
Chances are you, like most dentists, are writing off, e.g. not collecting, $10,000, $20,000 or more each month due to PPO write offs. These thousands of dollars are coming right off your bottom line and are likely to be your largest business “expense” after wages or maybe even greater than wages.
You probably think you have no choice.
Maybe you still have some open time now and then (almost every Doctor does) and you sure like keeping busy. Plus, every dentist, no matter how busy he or she is, hates losing even one patient.
I help many dentists assess their situation and decide if, when, and what PPOs they will drop, and help them through the transition process. If there is one thing I want you to know, it is, “You have more power than you think you do.” As Ann Landers often said, “No one can take advantage of you without your permission.”
In my previous articles, “Push Back on PPOs” and “You to the PPOs – Deal or No Deal!” I discussed tracking write offs, determining the number of patients on each PPO plan and how to set up an Insurance Allowance Spreadsheet. We also discussed negotiating with PPOs and balancing PPO participation.
Now is the time to ACT. Assert your power and take back the power the PPOs have taken from you.
Remember the courage it took when you first started in practice? You had to make a decision of where to work, or maybe you purchased a practice. Perhaps you’ve relocated or built a new facility or did a scratch start. Think of the optimism and courage that took.
We all know that hard work, integrity, and skills are important to your success (vs. being lazy, sleazy and unskilled!). Most dentists are very hard workers and like it that way. However, there is one other very important component of success: Courage. You and your team need to be confident enough in your practice and that patients like you more than your in-network status. Confident that you don’t need to rely only on the “suits” at the PPOs to fill your schedule.
Insurance participation is an important component of practice success. Practices that participate with no insurances, do indeed get fewer new patients. However, as I’ve stated before, practices deep into PPO participation do not get proportionally greater numbers of new patients. PPO participation is just one of many factors that determine how many new patients you attract, how many patients you keep and how busy you are. Your team’s skills, practice visibility, marketing presence, case presentation, systems and technology are all equally important. All these other things are well within your control.
Staff can be anxious about a PPO transition too. They are worried about losing hours or even job security. Most of all, they are worried about unpleasant confrontations with patients.
So, facing the challenge of PPO transition can be a good thing in that it forces you to take a hard look at how you are doing with your practice. It can create a practice “Renaissance” if you use the challenge constructively.
PREPARING FOR THE TRANSITION:
1. When possible, pick a smaller sized PPO for a “warm up.”
2. Research the relevant Out Of Network Benefits.
3. One of the advantages I have as a consultant is that I can see what is going on in different offices, how companies pay different offices differently, and how often the out of network benefits are surprisingly good. But, if you are practicing in isolation, it’s hard to know that.
Check with colleagues you trust about their experience in or out of network. It’s not illegal to ask your colleagues if they are out of network with XYZ insurance, how the benefits are. If doctors talked to each other more, it would help you to have more power with insurance companies.
4. Help the staff understand and “buy in” to the decision.
Do you and your staff think you are really worth your actual fees? Really? Do they think it’s fair that some patients, through their insurance companies get 40% or 50% discounts while patients who don’t even have the benefit of insurance, pay your full fee? Or, other, more reasonable insurance companies maybe “just” have a 15% or 20% discount. Does your staff understand the impact of reduced collections and because of that, you have less money to invest in equipment, Continuing Ed, advertising, maybe a new location and, of course, everyone’s pay?
It helps if they have a stake in the financial success of the practice. Incentives are a whole other topic but in these situations they can sure help.
5. Give notice to the insurance company and ask for written verification from them as to the transition date. This is important because sometimes those notices get “lost” which cause delay and confusion.
In the case of some of the larger networks (like DenteMax or Connection), it can take a while to disengage from all the plans and you need that proof to hold their feet to the fire if they are still reimbursing you at in-network level fees.
6. Decide how you are going to notify patients. In general, I do not recommend sending letters unless the insurance company is sending letters. There are other ways to inform the patients about the transition. By phone, by letter and phone, in small batches at a time, or all at once. We generally feel that it’s best to do things in small batches at a time because that way, you can adapt and hone your message. Remember that our goals are:
◼ To minimize any patient loss.
◼ To slow down any patient loss.
◼ Tactfully handle things so patients and staff are comfortable through the process.
In years past, we would just send letters to patients saying something to the effect of, “We’re going out of network because your insurance company doesn’t allow us to have high quality dentistry, etc., etc.” We found that those letters caused as much confusion as they cleared up. It can be cathartic to write the letters and get things off your chest, but it’s not really the best way to communicate with patients. Letters can come off as self-serving and haughty. Also, they mostly just confuse patients who might read one or two sentences and think, “Well, I guess I can’t go there anymore?”
That’s why we think a dialogue is so important. Then, as you talk to patients, if and when you decide to send letters (for people you couldn’t reach otherwise), you end up with a better letter.
You will lose patients through any transition. Of course there are many factors but, so you know, usually if these are handled right and the conditions are right, you’ll lose far fewer than you think. If your practice is otherwise healthy, and you were writing off $1,000s each month on the PPO before, you’re ahead financially, not to speak of psychologically, because you are more in control of your own practice!
Where else in life do you have a decision that costs no capital outlay and adds tens of thousands to your bottom line this year and for years to come? But let’s say that I am wrong about all of this and you go through a PPO transition and you just can’t stop the bleeding. It is ultimately reversible if it doesn’t work out the way you planned (you can always rejoin a PPO, although that is rare in my experience). You took far more of an irreversible risk when you bought your equipment or your new facility or practice, Doctor.
IMPORTANT STATISTICS TO WATCH:
Before and when you are going through transitions, it’s very important to watch:
◼ True Gross Production
◼ Total exams (Periodic, Limited and Recall)
I use exams because that’s a good way to measure patient flow. We keep our eyes on that number through these transitions, just like a pilot would keep an eye on the altimeter. In most of the transitions we do, the exams maintain or go up because the practice is strengthening its systems at the same time!
Most transition activity is in the first six months, but it takes about 1-½ years to go through the process. We’ve worked with a lot of dentists over a long period of time, so we are able to track what happens before, during and after. The advice I am giving you here is based on that experience. As the insurance companies make their plays, we’re always working on counter plays. You certainly can’t drop PPOs willy nilly and there might be some in your area that you simply have to stay with. But, if you haven’t looked into it, chances are you’re leaving thousands of dollars on the table or working too many days per year for free.
Once you’ve gone through one transition, you’ll do the second one better. In the last 15 years, most doctors have gotten pretty good at signing up with PPOs. It’s time to take it the other way! It’s a lot easier to sign up with them than leave them. But, as you learn how to deal with these PPOs, you have more confidence in doing so.
So, instead of trying to outrun the deeper and steeper discounts, take time to really assess your practice systems. Any qualified consultant can make sure that you’re doing the best with what you have. If you are personally treating patients most of the day, you can’t know how well the administrative systems are doing or what can be done to improve them. Administrative systems nowadays are pretty complex what with practice management software, digital communications, financial arrangements and insurance. If you haven’t had your systems checked, get them checked! It’s kind of like taking a physical before you run a race. We almost always can find at least $10,000 per month in additional revenues through a Systems Tune-Up. So can most consultants.
Don’t be cheap with your website and signage either. I’ve seen doctors who write off $30,000 per month balk at the idea of spending $4,000 to update their website. I’ve often said, “Get a good sign up so you don’t have to sign up.” In-Office Membership plans are a great way to increase the dentistry done and revenues from non-insurance patients, particularly Seniors. Plus, it’s as a matter of fairness, why not give these patients a way to a better deal?
When you are facing the significant risks and rewards in making a PPO transition, it tends to focus your efforts. You can’t just leave PPOs. You have to be working toward a better, more independent, profitable, future. Remember, you have more power than you think you do.
Bill Rossi has over 35 years in practice management. He is an ally for private and independent practices in a profession increasingly impinged on by corporate dentistry and PPOs. You may contact Bill at Bill@AdvancedPracticeManagement.com, 952-921-3360, or his website at AdvancedPracticeManagement.com.