Dental Business Models and Patient Choices
Patients have the right to choose a dentist or dental care facility that meets their needs, desires and concept of patient care. If a dental practice shows they are primarily interested in how a patient is going to pay, this may be a red flag – especially to patients who are interested in finding out what you can do for them before the discussion of money enters the conversation. The dental team needs to define what business model they are most likely to fit into:
1. Third party payers/in-network providers, Medicaid, Medicare & other government programs
2. Fee for service/accept assignment of benefits from insurance/out-of-network providers
3. Fee for service/payment in full/patient files claim & receives insurance benefits
Strange as it may seem, dealing with who is going to pay for dental services outweighs the long-term benefits for health in the long run. No one wants to pay more than they think they should. Complicated issues arise when a third party, the government or an insurance company pays for services and the patient sees that role as defining their obligation to pay. Understand that Medicare, Medicaid and CHIPS are the government and PPO, HMO or Fee for Service are publicly or privately-owned business entities. Dentists and patients alike often equate insurance payment for services as acceptance and approval of services. It isn’t. It is simply what the employer has purchased. The more expensive the policy, the more benefits. In-network, the insurance company is being asked to pay for services that may or may not fit into the contract with the employer. If they don’t fit they don’t get paid, even if the patient and the dentist both agree that the treatment is in the best interest of the patient.
Many dental practices become absorbed in presenting treatment based on whether the patient’s policy will pay for the care or not. This is addressed to the patient during the visit as “we’ll check with your insurance to see if this is covered” before the patient inquires. But this sends a message that “if it isn’t covered, I shouldn’t need it”.
Medicaid will pay a deeply discounted fee schedule for minor dentistry for children who are eligible for care. Many dentists do not favor these Medicaid programs because it is difficult to create a fair profit for the practice. That is where larger dental organizations can survive by buying supplies in bulk and carefully managing costs.
Three Business Models
1. Third-party payer business models have changed the business models for dentistry. The system has its benefits; patients who cannot afford or who will not pay out of pocket for services end up getting some needed work, allowing the patient to be healthier and giving the dentist a steady supply of patients. Patients are more apt to continue to see an in-network care giver versus out-of-network.
Third-party payment also has its drawbacks in discounts of payment of services. Dentists who sign up for plans lose between 25-50% of income.
Patients often accept or deny treatment based solely on whether it is covered 100% by insurance, which translates to zero out of pocket costs to the patient. Insurance benefits were never designed to pay 100% for anything other than preventive and diagnostic care, with applicable frequency limitations. Yet patients are more inclined to have treatment performed when there is a higher payout like 100% versus 80% or 50%.
Corporate dentistry or corporate dental chain stores base their business model on the third-party payer system.
2. Fee for Service is a second business model. This model started when the first dental “insurance” policies came to be. It was necessary to establish how the patient was going to pay. Fee for service meant the patient had to pay cash, check or credit card at the time of service. If you accept assignment of benefits the patient must pay the remainder.
In the 1970s, the benefit was between $1000 and $1500 a year. Today, it is $1000 to $1500. Why? Insurance companies base their benefit allowance on claim total statistics, and most dentists don’t bill for services after the maximum has been reached.
Dental employees, trying to get information for patients, are often left on hold for hours at a time. Insurance companies lose claims, deny claims, and request information already provided. It takes a tremendous amount of time, energy and employees for dental offices to collect for the patient's benefit.
Every dentist must figure out which business model most reflects his/her practice. The business model has a lot to do with the type of patients they will encounter and what these patients are expecting from the practice.
Need more help with business models? Call McKenzie Management for information about consulting and training programs that will help you manage the systems in your practice.Forward this article to a friend
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