Ep. 7: Dental Insurance Plans: Is it Really Possible to Not Participate?
It sure sounds nice to have a completely fee-for-service practice: you could receive your full fee for every procedure, make more profit, have a less hectic schedule… But is it really possible to drop insurance plans? Won’t you lose your patients and your production? Well, you may be surprised by how the numbers shake out.
Topics:
1:38 – Why more and more dentists are starting to ask, “Do I really need this plan?” recently.
3:58 – The true cost of participating in PPOs and HMOs
6:44 – How many patients will you lose if you drop an insurance plan?
8:21 – Crunching the numbers: How increased profitability can compensate for loss of patients
13:01 – How did dentists get into this mess with insurance plans in the first place?
Links:
Download the free Plan Analyzer Tool – www.raisemyfees.com
The MGE New Patient Workshop – www.newpatients.net
Learn more about MGE – www.mgeonline.com
Listen to full episode :
Questions From This Episode
What's the real cost of staying heavily in network with PPOs?
Every visit an in-network patient makes carries roughly the same acquisition cost the practice originally paid to bring them in the door, since the write-off effectively repeats on every single appointment. A practice collecting $100,000 a month at a 30 percent average write-off would be collecting closer to $145,000 a month at full fee, nearly $500,000 more a year.
How many patients actually leave when a practice drops a PPO?
Across clients who've gone through it, the typical drop-off rate runs 28 to 32 percent, roughly a third, with the lower end reflecting a well communicated transition and the higher end reflecting a poorly handled one where patients only found out when they showed up for an appointment and were turned away.
Does losing that many patients actually hurt collections?
Not necessarily, and often not at all. Running the numbers through MGE's Plan Analyzer consistently shows that losing around 30 percent of a plan's patients typically requires zero new patients to maintain the same collections, since the full fee collected from the patients who stay usually more than makes up for the ones who leave.
Why are doctors so afraid to actually drop a plan?
Mostly fear, the assumption that patients are only sticking around because of the insurance and will leave in droves the moment it's gone. In reality, most patients genuinely value their relationship with their dentist and the quality of care they're receiving, and leaving a trusted provider is a bigger decision for most people than doctors tend to assume.
How did so many dental practices end up this dependent on PPOs in the first place?
Not from a lack of business sense, but from never actually being trained to run a business in the first place, dental school teaches clinical skill, not staffing, marketing, or overhead management. Without that training, PPOs become the default answer to keeping the schedule full, even when the actual math doesn't support it.
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Would you spend 30 percent of your monthly collections on marketing, postcards, pay per click, things of that nature? If you collected $150,000 a month, would you spend $45,000 of that on marketing? I'm going to wager that's a big no. And the reason I bring that up is that if you're heavily in network with a lot of PPOs, that's essentially what you're doing. So in this week's episode of Dental Business Rx, we're going to talk about insurance plans, and specifically, is it actually possible to drop insurance plans. My name is Jeff Blumberg, I'm the Chief Operating Officer here at MGE, and I'm your host.
Let me clarify something before I get into this. What I want to talk about today is whether you can actually get out, what happens if you do, and what causes doctors to end up in these arrangements in the first place, since we've had quite a few clients go through it. I also want to clarify that when I say dropping insurance plans, I don't necessarily mean not accepting assignment, that's a completely separate, perfectly fine decision. We have clients who don't accept assignment, and clients who aren't in network at all but still file a patient's insurance for them as a courtesy. That's a personal call. I'm a big fan of getting compensated for what you're actually worth, genuinely running a fee for service practice.
On that subject, fee for service is an interesting thing. You've probably heard of the MGE New Patient Workshop, which we've offered for a long time, not a plug, though if you want to check it out, it's at newpatients.net. We used to market that course around the idea of having a fee for service practice, or getting more fee for service new patients, that was our tagline for years. Then in the mid 2000s, I noticed the response we were getting from that marketing had started to drop. So I started talking to dentists, not clients, just dentists at various events and on calls, and what I found was that when you told a doctor to have a fee for service practice, it sounded cool, but impossible. It's like telling someone, hey, would you like to fly? Sure, sounds great, but it's not actually going to happen. We were marketing into that gap where people assumed what we were offering simply wasn't realistic. So we adjusted our marketing and started getting a better response, and the whole fee for service framing sort of quieted down for a while.
Then 2020 happened. A lot of practices were shut down entirely, depending on where you were listening from or where your practice is located. In Florida, doctors were shut down for a bit over a month, only handling emergencies. In New York City, I believe it was close to two and a half or three months, from late March or early April through July. A lot of doctors ended up sitting at home, or in an empty office with no patients, even though they could never actually get out of the managed care plans they were locked into, they had to keep them regardless. And suddenly they were realizing that these plans they thought they absolutely couldn't live without, well, they weren't seeing any patients through them anyway during that stretch, so maybe they actually could live without them. It was interesting, we had a number of clients who were still in a few plans at that point start divesting from them once they realized they'd already proven to themselves they could survive without that revenue for a month or two.
Which brings us back to the core problem with PPOs, and HMOs too, though let's stick to PPOs for today, and what actually happens when you drop them. Let's start with the numbers. When you market for new patients, there's a term called acquisition cost, how many dollars you have to spend to get one new patient sitting in the chair for their initial exam. The average acquisition cost for postcard marketing runs around $350 per new patient. You can improve that, if your receptionist has strong phone skills, or if you ask for referrals. Say you spent $350 to get me in as a new patient, and then you ask me for a referral, and I refer my wife, you've just cut your effective acquisition cost to $175 for each of us. Google pay per click runs higher, around $422 per new patient, and that number can be brought down too with smarter targeting, I've seen practices running pay per click ads for cosmetic dentistry four towns away at three in the morning on a Sunday, which obviously isn't helping their numbers.
So say I'm that new patient, you spent $350 on a postcard to bring me in, you present whatever treatment I need, and I accept it. If I don't have a PPO, if I'm on a regular insurance plan or paying cash, you spent that $350 once to acquire me, and as long as you work to retain me, which is its own separate topic worth a future episode, that's a solid one-time investment. But with a PPO patient, you're effectively paying that acquisition cost again every single time that patient comes in. Think about it: say the average PPO write-off is 30 percent, and your prophy fee is around $150. Thirty percent of that is $45 you're writing off every single time that patient comes in for a cleaning, and the same math applies to every composite or other procedure you do for them. You're paying that acquisition cost over and over, visit after visit. If your entire practice ran on PPOs with a 30 percent average write-off, and you're currently collecting $100,000 a month, you'd be collecting closer to $145,000 a month at full fee. That's almost $500,000 a year in difference.
So the question becomes, how do you actually get out? We know how people end up in these plans in the first place, wanting their name listed on the insurer's website for visibility, but a lot of doctors are simply scared to leave. They're afraid patients will leave in droves, convinced those patients are only there because of the insurance. I can tell you that fear is about as far from the truth as it gets. We ran a study across our own client base, and keep in mind, our clients tend to have things fairly well organized already, they market well, they communicate well, they're generally well run practices. We looked specifically at what happens when clients drop a PPO, to find the average patient drop-off rate. What we found was a range of roughly 28 to 32 percent. The lower end reflected practices that handled the transition well and communicated clearly in advance, the higher end reflected situations handled poorly, where a doctor just decided on a whim to drop a plan and a patient found out only when they showed up for their appointment and were told the practice no longer accepted their insurance, understandably leaving that patient frustrated. There's a right way and a wrong way to do this, but the overall range was 28 to 32 percent, roughly less than a third.
So if you have a thousand patients on a particular plan, Delta, Aetna, MetLife, whatever it happens to be, and you drop that plan, you can reasonably expect to lose around 300 of them, sometimes considerably fewer in practice. That might sound alarming, losing 30 percent of your patient base on that plan sounds like a serious hit. But walk through some basic math with me. Say I have three patients on a given plan who all need crowns, and the negotiated crown fee under that plan is $800, while my actual full fee for a crown is $1,400. If I do all three crowns while still in the plan, that's $800 times three, or $2,400 total. Now say I drop the plan, and of those same three patients, one leaves the practice and two decide to stay, that's actually a 33 percent loss, slightly above our average. I'm now doing two crowns at full fee instead of three at the discounted fee, two times $1,400 is $2,800. So it's three crowns at $800 each, or two crowns at $1,400 each, and the math actually favors dropping the plan.
I don't want this to devolve purely into dollar figures, because that's not really the point, but it's worth looking at the basics here. When you do a crown for a patient at a discounted $800 fee, your lab doesn't give you a discount on that crown. Your dental assistant doesn't write off 30 percent of their hourly wage. Your landlord doesn't discount your rent by 30 percent because you happen to be treating PPO patients that month. Ultimately, the person absorbing that discount is you, the doctor, the business owner. So from a straightforward business standpoint, it makes real sense: you lower your effective labor costs, you lower your material costs relative to revenue, and you stop running yourself ragged trying to see enough patients just to cover your monthly overhead.
And here's the truth: most patients genuinely appreciate high quality care, and leaving a dentist they trust is actually a significant decision for most people, not something they do lightly. Most patients will stick with a practice they value. One resource I'd recommend is a website we put together called raisemyfees.com, all one word. There's a short video from me explaining how it works, along with a downloadable tool called the Plan Analyzer. You take any single plan you currently participate in and work out how much you're actually collecting from that plan and how many patients are on it, along with a few other inputs. What it outputs is genuinely eye opening: it tells you how many new patients you'd actually need to bring in if you lost a given percentage of that plan's patients. If you lost 75 percent, here's how many new patients you'd need. If you lost 50 percent, here's that number. If you lost 30 percent, here's that number.
Here's what's genuinely surprising when you run these numbers: when you compare a plan's discounted fees against your regular full fees, it consistently shows that if you lost 30 percent of a given plan's patients, you would need zero new patients to maintain your current level of collections. I'll say that again, zero new patients. In some cases, you can actually lose a meaningful chunk of a plan's patients and still collect the same amount of money overall, purely from the fee difference on the patients who remain.
Now let's talk about profitability for a second. If you're collecting roughly the same amount overall, but your labor costs have dropped and your material costs have dropped, since you're doing somewhat less overall volume for the same collections, you end up considerably more profitable. You're working less, making more, and spending your time with patients who genuinely appreciate the care you're providing. That's honestly a pretty good outcome.
If you're seriously considering dropping some of your PPOs, I'd recommend going to raisemyfees.com and running your numbers through the Plan Analyzer. You're welcome to call us as well, we can help walk you through it to see whether this genuinely makes sense for your specific situation, since it is admittedly a significant decision. You'll also want to make sure you have a solid, consistent flow of new patients coming into the practice regardless, since losing any patients at all can feel unsettling if your new patient pipeline isn't healthy to begin with. But it can absolutely be done.
So let's look at how dentists typically end up in this position in the first place, often in a considerably worse spot than they realize. It's tempting to describe it as a lack of business acumen, but I'd actually push back on that framing. You went through an education to become a healthcare provider, and that education, which includes hands-on clinical experience alongside classroom learning, prepared you well for that. But you were never actually trained on how to run a business, which is essentially what a dental practice is. There's an idealized picture of what practice ownership looks like while you're still in dental school, and then you graduate and suddenly you're dealing with staffing problems, wondering how to control overhead, wondering how to market effectively, wondering why patients don't simply do what you tell them to do.
So when it comes to new patients, there's this instinct that it's better to have someone in the chair than an empty chair, and that's not always actually true. You join a stack of PPOs, your schedule isn't built efficiently, you struggle to find and keep the right staff, so you're running inefficiently, your labor costs creep out of control, and you don't have a real handle on marketing. That combination is exactly what puts doctors in this position, and instead of feeling like you're in control of the situation, you end up feeling like a victim of it.
I generally try to keep this podcast focused on something genuinely actionable, and in this case, the concrete thing I'd recommend is going through that Plan Analyzer and seeing whether it applies to your specific practice, that's something you can start on today. Beyond that, I'd also recommend looking into the MGE New Patient Workshop, which teaches you how to actually bring in more fee for service new patients, something I know may sound unrealistic given everything I explained earlier, but it genuinely makes a substantial difference. I've seen a great many doctors go through this exact transition, you probably know people who have too. It also comes with a full money back guarantee, if you don't get what you're looking for out of it, you can request a refund for up to six months after completing the course.
If you're not entirely sure what's happening in your own practice or have questions about the Plan Analyzer, we're happy to do a free consultation. You can reach us at (800) 640-1140, or visit us online at mgeonline.com.
Alright folks, that's all I have for you this week. This was a fun one, I hope you enjoyed it as much as I did. I think this is genuinely something a lot of people are reevaluating right now, how important it really is to keep participating in these plans. And honestly, I like where this conversation is headed, since MGE has always been about helping doctors maintain a genuinely independent private practice, and for a long time things seemed to be moving in the wrong direction on this front. It feels like that's starting to turn around now. I hope this helped, and we'll see you at the next episode.