We all know about the drug addiction epidemic in the US—40.3 million people grappled with substance use disorders (SUDs) in 2020, but shockingly, only 6.5% got the help they needed.1 This isn’t just a problem for the individuals; it tears apart families and communities too.
Surprisingly, the dental industry faces a similar crisis with preferred provider organizations (PPOs). Much like an addiction, PPO dependence drains the lifeblood from dental practices, leaving them struggling to stay profitable, manage cash flow, and keep patients happy.
My battle with PPOs began while managing my dad’s dental lab. We constantly faced demands from practices saying, “This patient is on a really bad PPO plan. We can’t profit from the treatment unless you offer a discount.” It was maddening to see how PPOs dictated what treatments could be covered and at what cost. This endless cycle of frustration reminded me of how an addict’s poor choices affect their family and friends, causing widespread resentment. Dental insurance companies have turned the industry into PPO addicts.
The PPO epidemic: A scary scene
The current landscape of PPOs in the dental industry is dire. In 2023, 34% of dentists in the US reported a drop in their PPO reimbursement rates, many by 10% or more.2 PPOs force practices to offer deeper discounts and use AI algorithms to cut claim payouts, pushing practices further into financial ruin (figure 1). This is reminiscent of how addicts need more of a substance over time to achieve the same effect, draining their resources.
Legal battles against insurance companies for using AI to deny claims are surfacing,3 much like the legal troubles addicts often face. The costs of managing PPO patients have soared due to high denial rates and reduced reimbursements, piling financial strain onto practices. Many are spending more just to keep up with their PPO habit, often without realizing the full financial impact. Many dentists don’t realize the true cost of PPOs; the financial implications are staggering.
Patients expect practices to understand their PPO plans, and when issues arise, it’s the staff, not the PPO, that gets blamed. This is akin to families of addicts facing the consequences and often the blame for their loved one’s addiction. This certainly doesn’t help with the increasing staffing issues many practices face. Think about your staff acting as customer service reps for an insurance company. They didn’t sign up for that, and you’re not paying them for that.
The benefits of saying no to PPOs
Cutting ties with PPOs brings immediate benefits, such as increased profit margins, higher average revenue per patient, and improved cash flow. When you drop PPOs, it’s like flipping a switch that instantly boosts your revenue per patient. These financial improvements are similar to the positive changes seen when individuals overcome addiction—better health, improved relationships, and greater financial stability.
Beyond the financial perks, the peace of mind from focusing on patient care rather than PPO constraints is invaluable. It significantly boosts office culture and team morale, as managing PPOs can be a major burden for staff. This mirrors the enhanced quality of life and mental well-being that individuals experience when they overcome addiction.
One great example of a successful transition away from PPOs is Gary Takacs. He bought a dental practice with more than 30 PPO contracts and gradually eliminated them, transforming the practice into all out-of-network, fee-for-service. The results? Increased profit margins, happier patients, and better staff retention—clear signs of a healthier, more sustainable business.
How practices are dropping PPOs
Memberships: Membership plans are an effective way to reduce dependence on PPOs by providing patients with an affordable alternative to traditional insurance. These plans typically offer benefits like discounted services and preventive care for a monthly or annual fee, fostering patient loyalty and increasing practice revenue. Membership companies, such a BoomClouse, help practices create, manage, and grow their membership programs with customizable plans, automated billing, and patient support, enabling them to retain more revenue and offer better patient care.
PPO negotiation: Some companies offer expert services in PPO fee negotiation, contract optimization, and credentialing, empowering practices to boost earnings. Imagine negotiating better fees, tapping into umbrella networks for juicier pay schedules, and launching dental membership plans without the headache of direct insurance company dealings. Let them handle the nitty-gritty so you can focus on delivering stellar dentistry with financial peace of mind.
Cutting out PPO contracts: There are companies that offer specialized guidance on reducing dependence on PPO contracts. Through tailored strategies, dentists learn how to negotiate better terms, optimize their fee schedules, and transition away from PPOs. This coaching helps practices increase profitability and financial stability while maintaining high standards of patient care.
Marketing system: Want to develop cutting-edge digital marketing techniques? Think targeted ads, savvy SEO, and dynamic social media campaigns. These zero in on patients who prioritize quality care and don't mind paying out-of-pocket. This strategy cleverly cuts down the reliance on insurance-dependent clients. With a focus on boosting online presence and harnessing the power of data-driven tactics, you can transform your practice by attracting a richer and more diverse patient pool.
Dare to keep dentists off PPOs
The similarities between PPO dependency and drug addiction are striking and sobering. Both involve hidden costs, significant financial burdens, and adverse impacts on personal and professional relationships. These parallels highlight the urgent need for dental practices to break free from PPO dependency. It’s time for dentists to reclaim control over their practices, finances, and lives—much like addicts who turn away from drugs to rediscover their well-being and happiness.
Editor's note: This article originally appeared in DE Weekend, the newsletter that will elevate your Sunday mornings with practical and innovative practice management and clinical content from experts across the field. Subscribe here.
1. NIDA IC fact sheet. National Institute on Drug Abuse. March 13, 2023. https://nida.nih.gov/about-nida/legislative-activities/budget-information/fiscal-year-2024-budget-information-congressional-justification-national-institute-drug-abuse/ic-fact-sheet-2024
2. Crozier S. HPI poll: One-third of dentists report insurance reimbursement rates have decreased. American Dental Association News. September 14, 2023. https://adanews.ada.org/ada-news/2023/september/hpi-poll-one-third-of-dentists-report-insurance-reimbursement-rates-have-decreased
3. Ganski K. Dentists ask court to certify class action in lawsuit against Delta Dental. American Dental Association News. April 10, 2024. https://adanews.ada.org/ada-news/2024/april/dentists-ask-court-to-certify-class-action-in-lawsuit-against-delta-dental/
Free resources to learn more
The BoomCloud PPO Loss Calculator: The BoomCloud PPO Loss Calculator is a tool designed to help dental practices understand and quantify the financial impact of participating in PPO insurance plans. By inputting specific practice data, it calculates the potential revenue losses incurred through PPO contracts. This insight allows practices to make informed decisions about reducing their reliance on PPOs and exploring alternative revenue strategies like membership plans.
Dentistry Unmasked Podcast: Dentistry Unmasked is a podcast by Dental Economics that delves into the candid, unfiltered side of dentistry. Hosted by industry experts, it explores the real-life challenges and triumphs of dental professionals. Topics include practice management, clinical advancements, and personal stories that reveal the true essence of the dental profession. The podcast aims to provide listeners with practical advice, inspiration, and a deeper understanding of the dental industry’s complexities.
The Automatic Patient Podcast: Dive into the world of dental innovation with The Automatic Patient Podcast. Join Bentley Folkman and me as we uncover the secrets to streamlining dental practices through innovation. From savvy dental membership plans to cutting-edge practice management, prepare for a treasure trove of expert insights and actionable tips. Each episode is packed with advice from industry experts to turbocharge your practice's efficiency and profitability.
