Ep. 47: Arvind Philomin, DDS – Building a 100% Fee-for-Service Practice
Dr. Arvind Philomin is an MGE Power Program graduate and owns and operates one of the most productive dental practices in the U.S. Dr. Philomin started out almost completely reliant on low-reimbursement insurance plans, and since then has transitioned his practice to being completely fee-for-service—while seeing 3,000% revenue growth! We brought him on to share his experience and advice for dentists that want to get out of the managed care game.
Links:
Care to Share Program – https://www.mgeonline.com/care-enough-to-share-program/
The MGE New Patient Workshop - https://www.newpatients.net
The MGE Communication & Sales Seminars - https://www.mgeonline.com/abc
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Questions From This Episode
What first made Dr. Philomin realize insurance driven dentistry wasn't working?
Treating a 19 year old patient's mouth full of cavities using only the fillings his insurance plan would cover, then watching those same fillings fail and break within two years, leaving the patient without back teeth in his early twenties, a direct result of doing what the plan allowed rather than what the patient actually needed.
How did dropping the first plan actually affect revenue?
Collections went up, not down, almost immediately. He no longer had to perform three insurance reimbursed crowns just to match what one full fee crown paid, and suddenly had far more time to properly educate and treat each patient. That first plan represented roughly 40 percent of his patient base, and he still retained 10 to 15 percent of those patients even after dropping it.
How long did it take to go from almost entirely insurance based to fully fee for service?
About four years. Starting in 2011, he dropped the worst performing plans first and worked upward, finally dropping the last plan in 2015, one that actually paid his full fee already, mainly because the insurer kept dictating clinical treatment decisions he didn't agree with.
What kind of marketing kept new patients coming in during the transition?
Initially just a simple Care to Share referral card program and one dedicated staff member focused on keeping the office clean and asking existing patients for referrals, no paid external marketing at all from 2011 to 2015. Digital marketing, social media, and real SEO only came later, starting around 2016.
What does Dr. Philomin recommend to a dentist who wants to make this same transition?
Get real training in sales and business management first, since dental school teaches clinical skill but essentially nothing about running a business or getting patients to actually accept treatment. Building that foundation, treatment planning, sales, and basic management structure, makes the eventual shift away from insurance dependence dramatically easier and more sustainable.
Episode Transcript
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Jeff: If you've been a regular listener to the podcast, you know I'm not a big fan of managed care, PPOs, HMOs, or any reduced fee plan. You don't get paid what you're worth, it costs you your profitability, and when it gets bad enough, it can make you question whether you even want to own a practice. I've mentioned before how many MGE clients have dropped all of their plans to go completely fee for service, getting their full fee for every procedure, $1,400 for a crown instead of $800 or $850 under a plan. With that in mind, I'm genuinely excited about this week's episode. We're interviewing a special guest and MGE client, Dr. Arvind Philomin. Dr. Philomin owns Aesthetics Dental Spa in New York City and Washington Heights, and we're going to discuss exactly how he dropped all of his plans and grew his practice almost 30 times over. Yes, 30x. Dr. Philomin, are you all set up over there?
Dr. Philomin: Yes, I'm good.
Jeff: Welcome to the show.
Dr. Philomin: Thank you for having me.
Jeff: I figured, since I've talked before about MGE clients who've dropped managed care and you're one of them, I'd just ask questions and let you take it from there. People want to hear from you a lot more than they want to hear from me. So, you run one of the most productive offices in New York City, I'd say in the country, honestly.
Dr. Philomin: Thank you for saying that.
Jeff: Which is remarkable considering you don't participate in any insurance at all.
Dr. Philomin: That's right, we don't participate in any insurance anymore.
Jeff: And you don't even accept assignment.
Dr. Philomin: No, we just fill out the forms for patients, write the insurance company's address on an envelope, put a stamp on it, and hand it to them. They just drop it in the mailbox.
Jeff: So, a highly productive practice, no assignment of benefits. Let's start at the beginning, since that's a long way from where you started. How did you get into this?
Dr. Philomin: Like everybody else, I suppose. I actually have nobody else in dentistry in my family, I'm the first dentist, though I do have other doctors in the family. I didn't have much direction starting out, so I went to a mentor, in this case the director of my residency program. I asked him what I should do next, and he told me, this is New York City, it's simple. Go buy a practice, maybe get a year or two of outside experience or an associateship first, then buy something, nothing too expensive, somewhere in the $300,000 to $500,000 range, and just accept every insurance plan you can. You'll be busy.
Jeff: And what year was this?
Dr. Philomin: 2002. I bought my first practice in 2004. I just followed his advice, since he'd done exactly that himself, retired, and became faculty and clinical director for my program. So that's who I listened to, and that's what I did, a year of residency, another year and a half working for someone else, and then I bought my first practice.
Jeff: How big was that first practice?
Dr. Philomin: Small, doing roughly $300,000 a year. About 70 percent Medicaid, another 20 to 25 percent union plans and other private insurance, and maybe 5 percent fee for service. That's how the whole thing started. I worked incredibly hard, I did exactly what I was told, took on more and more plans, and kept doing dentistry, but I never really saw the results from it. I worked that hard and there wasn't much to show for it financially. And honestly, I felt like I wasn't even helping patients the way I should have been.
Jeff: What do you mean by that?
Dr. Philomin: I remember a 19 year old who came in with a mouth full of cavities, so many cavities. There were better options clinically, but I knew his insurance only covered fillings, so that's what I did, three quadrants of fillings. He came back two years later, half of those fillings had broken, and now they needed to come out entirely. He was 21, and I was leaving him with no back teeth. That's not something I would have done if I'd been free to treat him the way I actually wanted to, rather than what the insurance would allow. That's when I knew something had to change.
Jeff: So how did MGE come into the picture?
Dr. Philomin: A good friend of mine had used MGE to learn management, and I always wondered how he was doing so well. So I asked him for help. He actually gave me two options. One, he'd buy my practice for a dollar and take 51 percent of it, and told me I'd probably end up making the same money by the end of the year, maybe more. Or two, go learn it myself through MGE, which he said would be better for me long term.
Jeff: That's funny. At that point, how many hours a week were you working?
Dr. Philomin: Six days a week, Monday through Saturday. Fridays were long days, and Saturday was a half day, nine to three.
Jeff: How many patients were you seeing a day?
Dr. Philomin: Fifteen to twenty, sometimes more, out of a small practice, just five of us total. Eventually I couldn't keep up alone, so I asked my wife to go to dental school. She's such a sweet person, she agreed.
Jeff: That's Dr. Divya, who joined your practice after she finished school?
Dr. Philomin: That's right, she came to help me afterward, that's how she started working with me.
Jeff: And even with the two of you, was it still not enough?
Dr. Philomin: Still not enough. I was seeing over 20 patients a day, probably producing close to $3,000 daily, but New York is expensive to live in, so it barely felt like enough. I wasn't making real money, and honestly, I wasn't happy with what I was doing either. I knew I needed to change, and that's when I came to MGE.
Jeff: What changed once you started?
Dr. Philomin: Some fairly basic things at first, from the early seminars, small adjustments to how the practice ran. I'll be honest, I probably only applied 10 to 20 percent of what I learned overall, but even that produced a real jump in income. Things got more organized, more comfortable, easier to manage. And that's when I walked into the office one day and thought, this insurance plan isn't doing any good for anyone, I'd rather not see these patients under it anymore.
Jeff: Was there a specific moment that pushed you toward actually dropping a plan, once your statistics and case acceptance were already improving through the sales seminars?
Dr. Philomin: It was really that same memory, the 21 year old with the broken fillings. I'd done those fillings back in 2009, started at MGE in 2011, and kept picturing that broken mouth and thinking, something has to change. That plan genuinely wasn't helping me at all. Just to give you an idea, they paid $43 total for an exam, x-rays, and a cleaning, while I was paying my hygienist $47 an hour. I don't know how that ever worked financially. But I knew something had to give, so I gave 30 days notice and we stopped taking that plan. That's how it started, with the very first one.
Jeff: Was that a union plan?
Dr. Philomin: Actually a Medicaid administered plan, called the New York Presbyterian Plan, run through Columbia, I believe, though I'm not entirely sure. It's funny how they pay too, they're required to match what Medicaid pays, but by the time it passes through several layers of middlemen, you end up with roughly a third of what Medicaid alone would have paid.
Jeff: So worse than Medicaid itself.
Dr. Philomin: Absolutely, from a reimbursement standpoint. And this plan represented almost 40 percent of my entire patient base. I decided to shut it down anyway. The moment I dropped it, I had far more time to actually spend with patients and give them the education they needed. They started accepting treatment, they were happy, I was happy with the work I was doing, and I started making more money too.
Jeff: So less overall volume, but better results.
Dr. Philomin: Exactly.
Jeff: What percentage of those patients did you actually lose when you dropped that plan?
Dr. Philomin: A meaningful chunk, since a lot of them genuinely couldn't afford anything else, being on Medicaid. But I kept 10 to 15 percent of them, which was still worthwhile. Before the change I was averaging about 90 new patients a month, afterward it dropped to somewhere around 50 to 60.
Jeff: Was that drop specifically from that plan, or overall new patients?
Dr. Philomin: Overall. But I was still getting new patients from other sources, other union plans, other private insurance I hadn't dropped yet.
Jeff: So between 2009 and 2011, the only thing you'd actually dropped was that one Medicaid plan, which was 40 percent of the office.
Dr. Philomin: That's right.
Jeff: What was your team's reaction when you told them you were dropping it?
Dr. Philomin: They were genuinely shocked, worried we'd have no patients left. I told them, let's just help the people we can and see what happens. Within a month or two, they saw the difference themselves. It did feel uncomfortable telling people we no longer took their insurance, but the patients who genuinely wanted real care and wanted to stay with us, stayed. It was a small percentage, 10 to 15 percent, but it was absolutely worth it.
Jeff: So it was made clear, we don't take your specific plan anymore, but you're still welcome here.
Dr. Philomin: Exactly, we just don't accept that fee structure or reimbursement. Some people stayed, many left specifically because of the Medicaid piece, but it didn't matter, because I realized I could do the exact same thing with other plans. So as soon as I found another plan that clearly wasn't benefiting the practice and was causing problems, I dropped that one too.
Jeff: Let's talk about the next one you dropped, a union plan. I don't know how common union plans are outside a city like New York or Chicago, somewhere like Kansas City might not have as many, though PPOs and HMOs would still be common there.
Dr. Philomin: True, of course.
Jeff: But these union plans tend to have very low reimbursement. Just so people can get a sense of your fee structure, what did that union plan pay for a root canal on a molar?
Dr. Philomin: $300.
Jeff: And your full fee?
Dr. Philomin: $1,100.
Jeff: And for a crown?
Dr. Philomin: $450 under the plan, $1,200 full fee.
Jeff: That's over a 60 percent write-off. So you dropped that union plan next. When you actually drop a plan, is there a specific process, or do you just stop taking it?
Dr. Philomin: We'd send a letter to every patient on that plan, and we'd also notify the insurance company directly, in writing, usually certified mail. They typically give you 60 days, and then you're formally out.
Jeff: So the first time you did this, you had no real idea how it would turn out, and it worked out fine. How did dropping that first Medicaid plan actually affect your revenue?
Dr. Philomin: You'd think dropping a plan would lower revenue, but the opposite happened, my income actually went up significantly, purely because I could finally spend real time with each patient.
Jeff: So collections actually increased after dropping that first plan.
Dr. Philomin: Right. I'd have to do three crowns under the plan just to collect what one full fee crown paid. Why go through all that extra work and still not be able to give the patient a genuinely good result, since insurance plans also restrict what materials you can use, all metal crowns only, no porcelain fused to high noble gold, among other limitations back then. Once I dropped it, I could tell patients exactly what I was actually going to give them, they left happy, I was happy with the work, they paid for it, and I saw real income growth.
Jeff: One thing worth mentioning to listeners, we generally don't share specific collection numbers on a public podcast the way we might in a trade publication that goes directly to dentists, we usually speak in percentages instead. Which is why when I say you grew 30x, that's actually a 3,000 percent increase, which frankly sounds even more dramatic than 300 percent.
Dr. Philomin: It really is.
Jeff: So after that union plan, was there a specific moment where you decided to just drop everything, or did it stay gradual?
Dr. Philomin: It stayed gradual, I never dropped every plan at once and left myself with no patients. Every few months I'd identify whichever plan was performing worst for the practice and drop that one. All told, it took about four years to get to the very last plan.
Jeff: And that last plan actually matched your full fee already?
Dr. Philomin: It did. I still dropped it, honestly, because the representative just frustrated me. He kept insisting I had to work within their rules, telling me what I could and couldn't do clinically. At that point I told him I wasn't working for an insurance company, and that was that.
Jeff: So from 2011 to 2015, you went from being 95 percent dependent on plans, only 5 percent fee for service, to completely fee for service across the board. That's actually consistent with what we tell clients, that this can take a few years depending on where you're starting from. Were you doing much marketing during that stretch, from 2011 to 2015?
Dr. Philomin: Very simple marketing, nothing elaborate. I kept the office clean, we sent out Care to Share referral cards, and asked existing patients for referrals. I actually had one full-time staff member whose entire job was exactly that, keeping the place presentable and handing out those referral cards.
Jeff: For anyone who doesn't know, Care to Share is something we teach at the New Patient Workshop, a referral card program designed to get existing patients to send in friends and family. We'll link the Communication and Sales Seminars and the Care to Share program on the episode webpage, including how to build and use the card yourself.
Dr. Philomin: That's basically all we did through 2015. No external marketing during that stretch. Once I'd dropped everything, I knew I needed new patients from elsewhere, so I started doing external marketing, direct mail and so on. From 2016 to 2020, I added digital marketing too, Facebook, Instagram. I'd always had some kind of website, I think I paid someone around a thousand dollars for the original version years ago, but I've significantly improved it since, and I do real SEO on it now. I think the digital side really matters today, people need to find you instantly, you don't want to be buried on page four of Google, you want the top spot.
Jeff: If you had to break down where your new patients come from today, what percentage would you attribute to digital marketing specifically?
Dr. Philomin: Honestly, hard to say precisely. I can usually tell when a patient is a direct referral, but I can't always tell whether someone came from a mailer or a digital ad specifically. What I mostly go by is comparing gross income against total marketing spend, and as long as those track together reasonably well, I'm satisfied.
Jeff: So you have a rough sense of the return you expect, and you watch for it.
Dr. Philomin: Exactly.
Jeff: It's interesting, people often assume dropping insurance plans requires some complicated strategy, but for you it was really just, start with the worst performing plans first and work your way up, until you got to the one that already matched your full fee.
Dr. Philomin: That's right. And we had five staff members total back then. Today we're at 38 people, including eight doctors and three hygienists.
Jeff: That's exactly what I wanted to ask next, since you started with five staff and brought Dr. Divya on board. How is the team structured now?
Dr. Philomin: Eight doctors total, four of them specialists, three hygienists, and the rest of the 31 remaining staff cover everything else. I have a dedicated team handling new patients, another for recall, a strong clinical team running our scanning, and I even have an in-house dental lab now.
Jeff: That's remarkable. I know you're also finishing out new space across the street that'll be a surgical suite in the next week or two, since finding adjoining space in Manhattan is genuinely difficult. How big was your original office?
Dr. Philomin: 900 square feet. I started with four operatories, then expanded to six.
Jeff: Six operatories in 900 square feet, no room left for anything else, which is why you took over the apartment upstairs.
Dr. Philomin: That's right, that space was originally more of an office for staff meetings, and then over time I realized we needed an in-house lab, so part of that space went to the lab instead, which meant the office space got tight again. That's when I knew I needed to expand further and find a new location. Luckily, the business across the street shut down, it used to be a medical office, a bit worn down, but I took over that space and I'm renovating it now. It's a little bigger than my original space, around 1,200 square feet, and I'm adding four more operatories there, bringing the whole practice to ten operatories total. Hopefully it expands further from here, we'll see.
Jeff: That's incredible. So you've gone from five staff, 900 square feet, four operatories, to an upstairs lab space, to another 1,200 square feet across the street with ten operatories total.
Dr. Philomin: That's right.
Jeff: People are usually pretty stunned when you tell them six operatories fit in 900 square feet.
Dr. Philomin: They always are. Whenever someone wants to come observe what we're doing in the office, I have no problem with it, but I genuinely wonder where they'd even stand, there's so much careful maneuvering involved already, my staff know exactly how to make it work, but adding a third person watching would be nearly impossible.
Jeff: A standard parking space is technically about 125 square feet, so your original office was roughly seven and a half parking spaces worth of space. Your practice is genuinely thriving. Any last thoughts for listeners? This doesn't sound like some enormously complex process, more like dedication and actually knowing what you're doing.
Dr. Philomin: Before anyone drops a plan, I'd recommend getting some real understanding of how to actually run a business first. Dentistry gives you plenty of continuing education, courses on all-on-four, sleep apnea, Botox, fillers, all of that, but almost nothing on how to actually manage a dental office. There should be some real path to learning how to run a business and how to sell, though you don't have to call it sales, you can call it treatment planning. No business functions without some form of sales. You need to learn how to build a proper treatment plan, get patients to actually accept it, and then deliver it well. The clinical delivery piece you get from continuing education. But the sales and treatment planning side, along with marketing and management, that's something you need real training for. That's what MGE gave me, and if I'd never gotten that, I'd probably still be in that same place, making the same money, dreading getting up every morning, doing the same thing over and over. I would never have actually enjoyed dentistry. It's such a genuinely rewarding profession when it's done properly, the potential is enormous.
Jeff: That's great. So what would you recommend someone start with, sales training first?
Dr. Philomin: Yes, start with sales training, then move into some basic management training, nothing complicated, just enough real structure. Once you're comfortable, you'll be able to talk to patients far more confidently, and instead of a patient accepting just one crown, they might accept three or four. That completely changes how you experience dentistry. I'm confident anyone who does this will genuinely enjoy practicing far more than simply doing whatever an insurance company tells them to do.
Jeff: That's fantastic. Thank you so much for your time, I wanted to do this in person rather than over Zoom, I really don't love that format.
Dr. Philomin: Neither do I, that awkward delay.
Jeff: Dr. Philomin still practices in New York, and he's actually one of our MGE seminar speakers now, he delivers part of our sales seminars himself, so you can meet him directly if you attend one. I'll link the Communication and Sales Seminars and the Care to Share referral program on the episode webpage. Dr. Philomin, thank you again so much for being here, we'd love to have you back, there's plenty more we could dig into.
Dr. Philomin: Absolutely, thank you so much.
Jeff: Alright folks, that's all for this week. I really hope this helped. The links are on the episode webpage. If you have questions about MGE, you can email me directly at jeffb@mgeonline.com, visit mgeonline.com and fill out our contact form, or call us at (800) 640-1140. Have a great week, and we'll see you at the next episode.