4.25.14 Issue #633 info@mckenziemgmt.com 1-877-777-6151 Forward This Newsletter

Nancy Caudill
Senior Consultant
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Are You Ready for a New Direction without PPOs?
By Nancy Caudill, Senior Consultant

I venture to say that we are all tired of hearing about the economy. For several years it was a good excuse, and often the reason why practices were suffering - but I would propose that we can’t use that excuse anymore. Now it’s time to evaluate your practice and determine why you aren’t getting the results that you deserve financially. 

Are you standing at the dental crossroads? You can continue to do what you do now and get the same results, or you can look for alternatives that will give you different results. Maybe you are simply tired of practicing the same way you have for years and are ready to “take a chance” and try a different direction. Since I am not a clinician, I am not relating change to your clinical approach to dentistry. I will leave that up to you. However, I will take this moment to encourage you to reach out and implement new services that you may not be offering, such as implants and orthodontic services.

This article is directed to those of you who are accepting one or more PPO plans and are ready to think differently. I am a proponent of “patients in the chair.” Something is better than nothing, especially for a younger practice. But what about those of you who have been practicing a while and have a strong patient base that continues to grow every year? Are you noticing that your incremental financial growth is minimal compared to the amount of hard work that you put into it?

PPOs – love them or leave them. As you know if you are a PPO provider, the fee increases, if any, have been minimal at best over the past several years. At the same time, your dental supplies continue to increase in cost, your lab fees continue to increase and let’s not even think about your wonderful team that works so very hard to keep you on schedule and keep patients in your chairs. They also want a larger piece of the collections pie. When working under the confines of a PPO fee schedule, the only way that you can increase your revenue per hour is to work faster. Let’s look at a simple math equation:

Your PPO plan allows $160 for a 2-surface posterior composite restoration. Your patient needs a DO on #14 and an MO on #15 to replace leaky margins around old silver fillings. It will take you an hour to complete this work. Your total billable amount is $320 to the insurance company. You cannot charge any more than this because of your contractual agreement with the insurance company. $320/6 = $53.66 for every 10 minutes that you work.

Let’s say that you are performing the exact same procedures on another patient without a PPO plan. Your office fee is $260 for a 2-surface posterior composite x2 = $520. Since it takes you the same amount of time, the materials cost the same and the rest of your overhead is the same, your hourly production for this patient is $520 and $86.67 every 10 minutes. This is an increase of $33.01 every 10 minutes! You would need to perform the PPO procedures in half the time to achieve the same return on your investment of time. I encourage you to apply the same math to other common procedures that you perform daily. You will be surprised at the difference in your 10-minute increments.

What does this mean to me? Maybe it’s time to take a step outside your comfort zone and consider peeling away the layers of PPO plans that you have in your practice in order to be more profitable. The first step is to take a good look at your practice and confirm that you are providing GREAT customer service for your patients. Your customer service is so good that your patients are willing to pay a little extra to continue to seek your services. They don’t really know the difference between good and not so good dentistry, but they do recognize great customer service such as:

-- Always being seated on time
-- Greeted with a smile and called by name
-- State of the art technology
-- Free Wi-Fi
-- Refreshment center for family members that bring them
-- A variety of services so they don’t have to go elsewhere
-- Financial options that would include interest free monthly payments

Before you make any changes with your PPO plans, confirm that you can say “yes” to the items above. Now you are ready to review your PPO contracts and start making changes. Choose one that has a low reimbursement AND does not comprise of a large number of your active patients. You will “practice” with this group to get your team accustomed to responding to patients’ questions and concerns. 

What I have found over years of consulting and assisting offices with making PPO changes is that if you have done your homework and prepared your practice and your team, the number of patients that you lose because you “don’t take their insurance anymore” is minimal. If you are at a crossroads, decide if it’s time to make a change. Contact McKenzie Management to help you become more profitable!

If you would like more information on how McKenzie's Consulting Coaching Programs can help you implement proven strategies, email info@mckenziemgmt.com

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