To PPO or Not To PPO? That Is The Question!

If you’ve ever participated with an insurance plan or are simply considering the option, it has crossed your mind before… Are you really making money by participating with XYZ plan, or are you losing your shirt?

First, let’s acknowledge that no one wants to be paid less than “the going rate” for their services. Also, we have to address the myth of the write-off. There has been a thought process in the dental industry that write-off equals money you have lost. This would be 100% true if you were choosing whether or not to do something for your full fee in room one or for a reduced fee in room two.

The main reason the “write-off equals money you have lost” logic is faulty is that most practices don’t have an endless supply of patients lined up to do the services at the full fee.

With the shift in our economy over the last several years, insurance plan participation is playing a more significant role. Knowing how to tell if you are making money on a plan is a skill that is paramount to your practice profitability.

Are You Making Money?

First, determine how much income each plan contributes to the practice. In order to do this, start with an individual participatory plan. We’ll refer to this plan as XYZ. Next, find out how much money XYZ benefit plan brought into your practice over the past 12 months. This figure will include not only direct payments to the practice by XYZ benefit plan, but also paid to the practice by the patients who have XYZ benefit plan.

Once you have this combined total, divide it by the total practice collections to determine what percent of your practice income came from XYZ benefit plan. For example, if XYZ benefits plan paid $100,000 to your practice and patients of XYZ benefit plan paid $200,000 out of pocket, the total value from participating in XYZ plan is $300,000. If the practice income is $1,000,000, then XYZ benefit plan and its customers, your patients, make up 30% of the practice income.

The next step is to determine how much appointment time went to the patients with XYZ participatory plan. This can be done through a random manual audit or through your practice management software. Contact your vendor and let them know what you are looking for. If XYZ plan occupied 25% of your chair time, but brought you 30% of your income, as in the prior computation, you are making money on the plan. If XYZ plan patients occupied 40% of your chair time and only brought in 30% of your revenue, there is an issue that needs to be addressed.

Are the participatory plans killing your schedule or do you need to schedule smarter? While we know that the day-to-day and hour-to-hour schedule can be rather fluid, the appropriate templating and managing of the appointment book can make or break practice profitability.

Too often we see practices who schedule every restorative procedure for an hour or who schedule by gross production rather than by net production (the net production is what is actually collectible).

Schedule each day to have an intentional and appropriate mix of procedures.

What Else Can You Do?

In addition, each and every team member needs to continuously improve their skills and be flexible by welcoming as many patients as possible to stay today and have treatment completed if it can be done given the current day’s schedule.

Track your new patient calls. If a patient asks if you participate with their plan, and you don’t, document the plans that are being requested. Also, be sure to notate whether the patient scheduled and also if they kept their appointment. Many practices are spending upwards of 5% of collections on marketing, yet aren’t able to convert the prospective new patients into an actual appointment.

Last but not least, talk with your patients. Choose a few patients who you feel you have a good relationship with, who participate in XYZ plan, and ask them how great of an impact plan participation is in them choosing to see you and staying with your practice.

Monitoring your practice profitability is becoming more and more important as patients’ dollars are squeezed and patients must be savvy by maximizing their plan benefits in the present economy. The dental practices that continue to provide a high level of quality and service while learning to be flexible and effectively utilize their chair time will continue to grow and experience success.

What do you think?