Like most dentists, I joined the profession because I love to help people improve their oral health. We are dentists because we love dentistry. Still, I think many of us have questioned our decision during the past couple of years. If I had realized that part of my journey would include navigating through a global pandemic, supply chain headaches, and severe labor shortages, would I have chosen the same path? For many, the answer is no—solo practitioners are selling their practices at an increasingly growing rate. But for those of us who are still working hard to do what we love, another curveball recently hit.
With everything being thrown at us these days, I was absolutely shocked to see one of the largest dental PPO networks send letters to a large swath of providers to let us know they are significantly cutting their reimbursement rates. Supply costs up, labor costs up, and now this? Stagnant or declining reimbursement rates is a recipe for profit margins going even further down the tubes. Faaaantastic.
While I share your frustrations, I want you to know that we have the ability to take back control of our business’s bottom lines. How? By dropping network participation and reducing dependence on these PPO plans. I know, it isn’t a simple decision, and I wish it were. But it doesn’t have to be an impossible one either. I’ll share four steps that can help.
Step 1: Evaluate your practice
First things first. You need to understand where you fall in terms of your patient base and participation in your various PPO plans. “Every practice should continually analyze each plan and eliminate plans that reimburse poorly,” advises Dr. Roger Levin, a leading practice management expert. “They should continually focus on building the fee-for-service side of their practice. It is important to do this gradually and using real data.”
Begin to organize the data by plan in a spreadsheet that lists a few key metrics:
- Top 15 procedures by revenue in your office (for that plan)
- Your reimbursement rate for each of these codes (for that plan)
- Number of patients in the plan
- Percentage of your patient base in the plan
- Total new patients per month that you average from this plan
- Total annual revenue generated from the plan
- Total annual write-offs attributed to this plan
In addition to compiling these essential details, ask yourself:
- How close to capacity is my office? How far out am I booked for new patients?
- What is the mix of PPO plan participation among the top employers in my area?
- What are the out-of-network coverages for the different plans?
- Do I have a dental membership plan?
Using these metrics and questions, you will be able to paint a picture of where you should start in terms of parting ways with your PPOs.
Step 2: Decide on the plan(s) to drop
Understand that when you drop a PPO plan, you’re going to lose some patients from that plan. Anyone who tells you otherwise does not understand the commoditization of dentistry. But that’s OK. Approach this with the intent to minimize patient loss rather than eliminate it. With a smart strategy you can actually increase practice revenue.
It is important to remember that when you drop a low-reimbursing PPO, you don’t need to keep all of your patients to generate the same net profit you achieved while participating. The write-offs from the PPOs resulted in far less profit per patient, so you need fewer fee-for-service patients to make up the difference. You can find a calculator to determine the exact number based on your unique situation at dentalhq.com/out-of-network.
I recommend a staged approach here. Initially, my advice is to keep the effect of this decision to 15% or less of your practice revenue. Perhaps this is one, two, or three PPOs. It depends on your situation. But a staged approach will give you a chance to test the waters and give your patient base a chance to rebuild as you lose some patients.
Step 3: Drop ’em!
“All dental insurance will ultimately drop reimbursements to a PPO level or below,” Dr. Levin says “This will lower practice production, which is the most important factor in practice success.”
Now that you’ve evaluated your practice and determined which PPO plans you’re ready to drop, it’s time to create a plan and execute your decision. Typically, PPO plans require written communication of your desire to drop your participation and a six-month notice. Review your contracts or contact your rep to see what is required. Request the termination date of your contract in writing.
Here’s where your plan comes into play. Many of the PPOs send out letters to your patients informing them that you are dropping participation and encouraging them to find a new participating dentist. It’s important that you lead this narrative, so you need to act fast. This step is critical and dramatically affects retention. At a minimum, write a letter, or send an email and write a physical letter, to participating patients explaining the reason for your exit. Even better, have someone from your office, maybe even you, call them. Doing this in small batches will reduce the effect of patient attrition and the operational impacts to your practice.
Step 4: Mitigate the damage
Congratulations, you’ve dropped the plans and made your patients aware of your decision. But the work doesn’t stop here. There are several ways to further mitigate the potential patient loss to your practice:
- Implement an in-house membership plan. A membership plan is a great way to attract and retain more uninsured patients. If you already have one, make sure it is well-managed and marketed inside your practice. If you don’t have one, read "Subscription-based dentistry: The solution dentistry desperately needs" to learn how to create one.
- Increase your marketing to bring in new patients who can fill the space of the ones you lost.
- Consider adding new services, such as dental implants, sleep treatment, or orthodontics.
- Focus on relationships. We all know relationships are what drive sales, and they’re always what drive patient retention. Get to know your patients and train your team to provide all-star customer service.
Right now, one could argue that dentistry is changing more than it ever has before. In many ways, this is for the better. We’ve got amazing new technologies coming every day. But of course, change is hard. Dental insurance has been a dilemma for dentists for as long as it has existed, but it is certainly getting worse.
The good news? You can wrestle back control of your practice from the dental insurance companies, creating a better work life and more profitable practice.
As Bill Rossi, a leading advisor in strategically dropping PPOs, said upon reading this article, “Dentists have much more power than they think, and patients like them for more than just their network status. If you follow the steps outlined in this article, you will fare well. Remember, you’ve made bigger decisions than this in your career!”
So, get educated and get going!
Editor's note: This article appeared in the February print edition of Dental Economics.
