Why Dentists Should Not Be Afraid to Drop Bad PPOs
Every insurance-based dental practice expresses a strong desire to move away from PPOs, but most take no action. Why is that? To get to the answer, let’s start at the beginning.
Dental insurance swallowed the dental market
Dental insurance was introduced to the market in 1954 by the International Longshoremen’s and Warehousemen’s Union and the Pacific Maritime Association (ILWU-PMA) as a job benefit for their members. Insurance plans grew in popularity in the 1960s and 1970s as more and more employers added them to their benefits packages. Today, about two-thirds of Americans (164.2 million people) have private dental coverage meaning most dental practices have a significant amount of their patient base enrolled in a PPO. With a pool of patients that large, it’s understandable that you don’t want to put off your existing PPO patients or deter potential new patients from joining your practice because you do not accept their insurance carrier.
Dental insurance is obsolete
Unfortunately, dental insurance has been broken for years. Insurers came to control everything about dental care including patient access, practice payments, treatment pricing and treatment prescription. They have created expensive and overly complicated dental plans that work for them, but not for you or your patients. As a result, only 60% of payments made to insurers are used for oral care. The remainder is lost in the insurance machine.
While you and your team want to provide the best possible care to your patients, the hassles and limitations of insurance get in the way. You have to deal with low reimbursements, annual limits, claims denials and massive amounts of paperwork that severely impact production and profitability. Dental insurance is also a challenge for patients who deal with high premiums, deductibles, co-pays, pre-approvals and annual maximums.
The COVID-19 crisis has taken dental insurance from broken to obsolete. Patient distancing has forced your practice to serve lower patient volumes and decreased production, while the cost of PPE and infection control further misaligns practice costs and PPO reimbursement. According to the American Dental Association (ADA), maximum dental practice production is down 20-25% from pre-COVID levels due to patient distancing, while costs are up 5-10% due to personal protective equipment (PPE) and infection control. Can your practice be profitable on your existing PPO fee schedules with a 20-25% decline in production and a 5-10% increase in costs? What happens when PPOs lower your fees next year and subsequent years?
Face your fears
It’s easy to understand why dental professionals unilaterally voice frustrations with insurance and a desire to transition PPOs out of their practices, but most do nothing about it. You may worry that dropping PPOs will have a significant negative impact on your patients, production and profitability. Maybe it’s because most practices in your area accept the plans. Or perhaps, you feel tied to a plan because a large local employer offers it. Or, maybe some of your favorite patients are on a particular plan. You ask, “Won’t a lot of patients leave my practice?” “Won’t my production decline?” “Won’t my profitability take a significant hit?” Although your questions are valid, the answers remain unknown, and no change occurs, unless you face your fears by committing to better understanding how each PPO affects your practice and model the impact dropping PPOs will have on your results.
The good news is that the margin of error when dropping a PPO is much larger than you may realize. Insurance-based practices collect just 60% of their UCR once insurance discounts and claim denials are factored in. Fee-for-service practices collect 100%. This provides a 40% margin of error when you drop a PPO. In other words, if you drop an insurance plan and 40% of the patients leave your practice it will actually be a positive move--your collections will remain the same, but you will work 40% less. You can then direct that extra time to serve patients better, find new patients or just take some time off. That’s up to you. It puts you in control and frees you to create the practice you want, not the practice insurance companies want.
Where do I start?
Dropping PPOs can be a nerve-racking idea; however, it can be done successfully with proper planning and execution. You need to systematically analyze the PPOs you accept and determine which ones work for your practice and which ones do not. Kleer’s 7 Steps to Drop Your Bad PPOs Playbook outlines everything needed to make the transition. The playbook walks you through how each PPO affects your bottom line and gives you an understanding of the impact dropping each PPO will have on your practice. In the end, you will be left with the confidence to chart your own path and reduce your reliance on insurance. Download the eBook today.
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