Tag Archives: Dental insurance PPO’s

PPOs & Practice Transitions

As published in The Profitable Dentist, Summer 2015

Delta PPO and Dental Practice TransitionsOne has to consider many factors when purchasing a practice and now PPO participation has to be taken into account. This becomes even more important when you’re dealing with practice mergers. It is increasingly common to see exiting practices not sold outright but sold to and blended with another practice. I have worked with many of my clients through this merger process and have described below some scenarios to illustrate the high stakes involved.

Example: A practice purchases another practice that’s participating in a large PPO that the purchasing practice isn’t. Does the buyer join that PPO for the sake of having a smoother transition?

Continuing with this example, let’s say you’re a Delta Premier provider. In many parts of the country, patients with Delta Dental insurance have the option of going to a Delta Premier provider and getting that level of benefits or going to a Delta PPO provider where they have the incentive of even further reduced co-payments.

If you are a Delta Premier Provider (the “Regular Delta” – not with Delta PPO) and you buy a practice that’s with Delta PPO, those patients will experience a transition as they blend into your practice. This has to be handled tactfully or the patients whom you are assuming the care of will bounce out of the practice. On the other hand, if you join Delta PPO and have a lot of regular Delta Premier patients, you will experience steeper discounts on patients you already have. This can be terrifically expensive, even more expensive than the actual practice purchase in some cases.

Even worse is going into the situation without knowing what PPOs in which each practice participates. Sometimes the owners of a practice don’t even know for which plans they are providers. This is particularly true with PPO networks like Dentemax, Connection, DHA and others that include multiple insurance companies. For example, you may be contracted directly with MetLife or you might be indirectly contracted through one of these PPO network groups.

If you’re purchasing a practice that has a lot more PPO participation than you do, you and your staff have to be ready to take these patients through transition (much as if you were leaving a PPO). However, this is more delicate because you don’t have patient loyalty working for you (yet). On the other hand, when you purchase another practice, you’re “topping off” yours, and it puts you in a better position to dump PPOs and take some patient loss. As you can see, all this can be quite complex.

Another scenario: The practice you’re purchasing participates with the same PPOs. Okay, but you want to compare both practices’ PPO fee schedules. PPOs do pay different doctors differently! The practice you’re purchasing might be getting better reimbursements on the same PPO than you are (or vice versa). Obviously, you would want to negotiate with the PPO (if you’re going to participate) to ensure that you get the better fee schedule of the two for continued participation, even if you are bringing the selling doctor over.

If you’re not doing a merger but an outright practice purchase, it’s very important to get a specific list of all the PPOs the selling doctor is participating with and the fee schedules. Of course, you want to look at all practice write-offs too. Some practices don’t do a good job of itemizing the write-offs so it’s hard to track how many are due to the various PPOs.

Before purchasing a practice, you may want to call the relevant PPOs and negotiate the fee schedules in advance. If you’ve gone ahead and purchased a practice, you have an opportunity very early in the credentialing process to negotiate. PPOs tend to be a bit more willing to negotiate before you sign up.

A practice purchase can be a great way to go. It offers a much quicker start or move in your career than building from a scratch. There is less risk and more predictability.

Practice mergers can be the best deal in dentistry. If the conditions are right, practice mergers are THE very best way to build your practice. This typically consists of absorbing an older doctor’s practice into yours with, perhaps, the older doctor working in your practice for a while through the transition phase.

In conclusion, If you are buying a practice (outright or in a merger), the right “PPO Plays” can make many, many thousands of dollars difference to your bottom line. No smart buyer will overlook the PPO situation.

Bill Rossi is president of Advanced Practice Management. He and his associates are actively involved in the ongoing management of over 250 Upper Midwest dental offices. You may contact Bill at 952-921-3360 or through www.AdvancedPracticeManagement.com.

Dental Insurance PPO Plays

Sometimes PPO participation is necessary, even desirable. However, a little strategizing can do a lot for your bottom line and your peace of mind.

Dental Insurance PPO Plays
Too often dentists join PPOs hastily, or leave PPOs recklessly. Bad decisions here can lead to thousands of lost dollars or hundreds of lost patients.

Over the years I’ve worked with many practices deep into PPO participation, others with no insurance participation at all, and many somewhere in between. It’s important to know what to think about when deciding to sign up for a PPO, what you need to do to operate successfully with PPO participation, and how to best leave PPO participation so you’ll lose the discounts but not the patients. Each circumstance is different. Below I offer various observations and thoughts for you to consider:

  1. Some of the most financially successful dentists I’ve worked with have been deep into PPO participation. Despite the fact that theoretically they should be making a quarter of the profit with a 30% discount (assuming a normal 40% net, a 30% discount would only leave you a quarter of the profits). These Doctors have defied the logic and netted well. So no smart practitioner should out-of-hand reject the idea of PPO participation.
  2. Some Doctors with PPO participation are very busy but they are not profiting well. They are on a treadmill. Ironically, the Doctors who are deepest into PPO participation are the ones who are in the best situation to leave but emotionally less likely to want to leave.
  3. It’s not uncommon for Doctors to not know which PPOs they are signed up with, especially PPOs within Delta.
  4. Doctors will balk at spending $3,000 per month in paid advertising while at the same time writing off $10,000 per month in PPO discounts. Somehow not receiving $10,000 is less painful than writing a check out for $3,000.
  5. Practices that drop a PPO, don’t prepare their staff and send letters can do serious damage to their practices.
  6. PPOs are not going to go away. You need to learn how to deal with them wisely based on your specific practice situation and resources. It is dangerous for me or any consultant to make blanket statements about anyone participating or not. There are too many individual factors involved and variations between marketplaces.

Are You Considering Joining A PPO?

What if a new PPO is coming to town and they claim to have signed up a couple of large local employers? Usually they are also working on signing up dentists in the area. It’s sort of a chicken and egg problem for them. Do they get the business first or do they get the provider network first? Anyway, for this example let’s assume they have already signed up businesses in your area. Naturally, you’ll be tempted to sign up to avoid a loss of patients. In most cases it’s not best to sign up with a PPO for defensive reasons. Why not wait and see? Chances are the PPO has out-of-network benefits and if that’s the case, many of your patients are likely to stay with you. Through one of your patients or by contacting the employer directly, get your hands on a benefit booklet. Often you’ll find the out-of-network benefit set is not significantly different. It’s just a matter of whether or not the patient goes to an office that’s agreed to a lower PPO fee schedule.

You see, one of the things you’re supposed to get with PPO participation is more new patients. That’s your quid pro quo. “I’ll take the discounts if they’ll send more new patients over here to help me fill my chair.” However, if you sign up for a PPO plan and simply convert patients you already have to discount patients…ouch! You just lose income! So rather than take a certain loss of income because you might lose patients by waiting and seeing you’ll be able to know if you are really losing them. Then make the judgment if the loss rate is too high to sit on the sidelines. You can join the PPO then. They’ll be glad to have you on board. There is no need to rush to sign up.

Usually PPOs at this point will offer a fairly good fee schedule. Keep in mind that what they offer at first may not be their top offer. You can negotiate with them if they need providers badly enough.

If a PPO in your area made a big splash by setting up a couple of major employers who you do not have a lot of patients with, then you can adapt the strategy of joining the PPO when they first are signing up the big company because at that point, many patients might be making decisions about their insurance and you might pick up new patients who you might not have otherwise received. Your strategy here can be to bringthese patients into the practice and if the discounts become insufferable two or three years later, drop the plan and you’ll still keep a lot of the patients. Of course, it’s important to check to see if the plan does have out-of-network benefits, if you can drop at any time of the year or just specific times during the year, and you have to look at your own situation; how much in full chair time do you really have? How well are you doing at retaining patients?

With any PPO decision, joining or leaving, it’s sort of like a person going on a new drug or exercise regimen. The person’s physical condition has to be known. So all the basics of practice management apply. Whatever your PPO participation or not, the stronger your practice is organizationally and otherwise, the better you’re able to deal with any decision. Again, many doctors will take tens or even hundreds of thousands of dollars in discounts every year but faint at the idea of spending $10,000 on management advice or staff training to fortify their practice.

If You Are Already Participating In PPOs

PPO discounts often run 15%, 20%, even 30%. To be successful you can either outrun or outgun the discounts. By outrunning the discounts I mean this: If you can produce twice as much as the average dentist per hour you can overcome a 30% discount. This means you really have to pay attention to the factors of capacity such as: scheduling, staffing, delegation and teamwork. Also, leveraging your practice time and talents with technology, rooms and equipment. Many dentists participate in PPOs but they don’t really change gears. They just sign up for the discounts and hope to “keep busy” and let the chips fall.

The whole thrust of what I’m saying is, you’ll do so much better if you realize the ramifications of your decision and the realities of your situation so you make the right moves. You can’t do the Pankey/Dawson new patient intake format on deeply discounted patients. You probably won’t want to refuse to sign up for any insurance or PPO participation and work Monday through Thursday from 8:00-4:00 in an invisible location with no other marketing efforts and expect to fill your chairs.

You can “out gun” the discounts by offering discretionary  patient services that don’t come under the PPO fee restrictions such as Invisalign, Veneers, Implants and Bleaching. Profitability in those areas offsets the deep discounts in the others. Sometimes by just negotiating with the PPOs you can greatly increase your reimbursements. We’ve helped clients gain many thousands of dollar for their bottom line through correct negotiations with their PPO. Don’t overlook the fact that you can ask for annual increases.

Sometimes when you ask, you’ll get a bump…but when you don’t they’re not going to go out of their way to give you more.

If You Decide To Leave A PPO

Let’s say a certain PPO is 30% of your practice base. If you drop that PPO you could potentially lose that entire 30% but it is unlikely that you will 50% of those if you have decent out-of-network benefits. So for the purpose of this example, let us say that you have “at risk” 15% of your patient base.

You have two goals in mind:

  1. To minimize any loss of patients.
  2. To slow down any loss of patients.

If it takes two years for you to experience the full effect of the attrition and you lose 7% of your patients per year, chances are if you are working to otherwise fortify the practice (see below) you will be able to overcome that 7% loss per year.

If it takes two years for you to experience the full effect of the attrition and you lose 7% of your patients per year, chances are if you are working to otherwise fortify the practice (see below) you will be able to overcome that 7% loss per year.

If you send letters to patients announcing the PPO departure, you will intensify and accelerate any loss you will experience. These letters are not always read. They can confuse or irritate people. They usually sound self-serving. I feel that a lot of times doctors and staff send the letter out of fear of confrontation with a patient. Letters once sent, can’t be “unsent.” That’s why I feel it’s so much better to talk to patients face to face. In this way, you’ll see almost every PPO patient you have at lease one more time. You can refine and hone your message. If and when you decide to give up and just send letters, you’ll write a better letter. Even then I suggest sending them out in small batches at a time.

Here’s where training your staff is so important in explaining to patients that you’ve changed your status:

“Mrs. Smith, since the last time you were in we’ve changed our status to an out-of-network provider for XYZ Insurance Company.”

“What does that mean?”

“While we’ll still process the insurance for you, you might see some change in benefits. However, we have many patients on this plan and other plans that we’re seeing on an out-of-network basis and things work out just fine.”

Believe it or not, most patients will simply shrug and kind of see what happens. There is more involved here than I can include in this article but over the years I’ve found that basically the less said, the better. Sometimes it is better to be reactive than proactive. Keep in mind that you and your staff are already seeing patients out-of-network through a variety of insurance companies and the patients are OK with it and you are OK with it. Yes, some families will change Dentists to maximize their benefits. However, unless you are signed up with every plan in your area and have the lowest fee schedule in your area, there is always going to be a better deal somewhere else for the patient financially. You invite patients in and do your best to do your best and work to make sure they feel value in their visits and in their relationship with you.

If the PPO you are dropping has little or no out-of-network benefits, it may make sense to send a letter. This is the exception and not the rule.

Make sure that you have a plan to fortify your practice:

If you’re having a loss of capacity (cutting back in hours or a partner leaving), then you may not need to otherwise fortify your practice. However, assuming you want to continue growing then you’ll want to be working on other aspects of the practice to beef things up. There is always plenty to work with.

Chances are you haven’t really tucked in all the corners of your practice to get the best possible attraction and retention of patients. Plus, in every practice there is a gap between what you can do for patients and what they choose to have done. Closing that gap is a lifelong professional challenge.

Working with your team on clinical calibration and co-diagnosis can yield great results. Many doctors overlook the fact that the amount of services offered and accepted per patient is usually a greater factor in a practice’s production than the number of patients seen per se. Maybe you won’t have the largest patient base in the world but you can have the best care for patients. This does not have to be a matter of high pressure sales techniques or violating your core values. Indeed, done correctly, it’s a matter of putting your core values into action in your everyday work. Experienced management help will guide you through realistic alternatives to increase patient flow, profitability and practice security.

In Conclusion:

Recognize that you cannot wish PPOs away. Take time to manage your particular situation with the right strategies and training. Then, you’ll keep solvent and secure.

This article was originally published in The Profitable Dentist magazine. Bill Rossi is president of Advanced Practice Management. He and his associates are actively involved in the ongoing management of over 250 Upper Midwest dental offices. You may contact Bill at (952) 921-3360 or apm@advancedpracticemanagement.com.


Do Not Be Proactive With Dental PPOs

You Can Blow Thousands Of Dollars By Acting Too Quickly

Be careful not to waste money on dental insurance pposHere is a fairly common scenario: A new PPO is coming to town and they sent you a letter saying they signed up local businesses in your area and would you like you to be a provider. Fearing that patients you already have may leave you because you would be out-of-network, you sign up.

Pretty soon you are experiencing significant discounts on patients you already have, and if there’s been an uptick in new patients because you joined the plan, it has not been very significant. How much did this cost you? Let’s say the plan requires a 20% reduction In your fees and that you have about 100 patients working for those businesses.

As a rough rule of thumb, the average production per patient per year is approximately $600. So, a 20% discount of $600 is $120. 100 patients x $120/year write-off = $12,000 “write off” of your bottom line! For real.

Moreover, this is not just a one-year expense. PPOs usually offer a better fee initially than they will over the long run…they are not likely to keep up with your routine fee increases so the gap will grow. Now, do not get me wrong. For most practices, some Insurance participation Is inevitable. Even desirable. But you never want to make a decision to join or leave a PPO out of fear or anger.

Look at It this way. PPOs are the ”House.” Like the casinos, they know the statistics and have most of the advantages. But you do not have to play dumb. Sometimes you don’t have to play at all! You are not completely without power.

So how should this sort of decision be approached? Please keep these points in mind.

  • You never have to hurry Into anything! Although dentistry Is 200 “clicks” per year to you and your team. To the average patient, it is only one or two clicks per year.
  • Do not make a multi-thousand dollar decision because you lose a family or two. At the loss of one family, if you go running for the PPOs, well, you will end up signing up for almost anything!
  • Do some research. What are the out-of-network benefits on this one PPO? Do the patients have insurance alternatives or are there plans that you are already with that reimburse better? How many patients do you already have with the employers involved?

At the same time the insurance companies are lining up their provider network, they are also lining up their business customers. It’s sort of a chicken and the egg problem for them. To get business customers, they have to prove they have a network. To get providers, they have to prove they have business customers. This is a time when PPOs are most likely to deal.

Keep in mind that at every insurance company/PPO there is a “Network Manager.” This is a person who is either recognized or rewarded for building a provider network and keeping that provider network happy. If you look at it a certain way, they see the providers as streams of income to them. The insurance company makes more money if it has a large provider network. Every provider on that plan represents a stream of income to them even if they have to pay a little more by “allowing” you more.

If you are going to sign up, you want to negotiate first. Ask, “This looks like a 20% discount. I feel my fees are pretty fair already. Can you do any better?” Sometimes they will bring their fees up. You do not know if you don’t ask.

Again like a casino, the odds are generally not in your favor but you do not have to play stupid (and you can even sometimes win). Every “win” can add or save thousands of dollars to your bottom line this year and for years to come. It’s high-stakes poker!

I have seen situations where a new PPO comes to town and doctors have prematurely signed up. Then, we worked with the practices to take them off the PPO. They lost the discounts and kept most of the patients. Yes, there is always some risk, but you have to keep in mind two points:

  1. If you don’t join now, the PPO will probably be glad to have you join later. You don’t need to rush into it. Don’t take discounts now for sure because of possible loss of patients later.
  2. We all know that hard work, integrity and skill is important to your success. But don’t forget another virtue is courage.

Remember the courage it took for you to first start out in practice? When you bought or started your first practice or built your new building? Don’t lose that courage when you’re dealing with insurance decisions.

Obviously, if you’re out of network, your staff needs to be good at dealing with patients and putting things in a positive light. They should not be defensive or bureaucratic. Whether you’re getting on PPOs or getting off of them, a little thought can go a long may. I see too many dentists working their butts off trying to outrun the discounts. PPOs are a fact of life and very few practices will be able to remain entirely out of network. Always take your time In making these decisions. Sometimes it is better to be reactive than proactive.


This article was originally published in The Profitable Dentist magazine. Bill Rossi is president of Advanced Practice Management. He and his associates are actively involved in the ongoing management of over 250 Upper Midwest dental offices. You may contact Bill at (952) 921-3360 or apm@advancedpracticemanagement.com.