On paper, higher volume looks like growth... but the real costs tell a different story. Jeff walks through the numbers that reveal how reduced fees and volume pressure quietly squeeze profit and increase burnout.
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Questions From This Episode
What does Jeff say is the real average patient loss from dropping a PPO plan?
Despite people commonly guessing they'd lose half their patients or more, Jeff says the actual average is closer to 30 percent. His example shows that keeping the remaining 70 percent at full fee can generate roughly the same or more revenue than keeping all the patients at a discounted in-network rate.
Why does Jeff say PPO crowns cost significantly more, as a percentage of revenue, than fee-for-service crowns?
In his example, two fee-for-service crowns and three PPO crowns produce nearly identical day-sheet revenue ($2,600 versus $2,640), but once assistant time, lab fees, and patient acquisition cost are factored in, the fee-for-service crowns cost about 36 percent of revenue while the PPO crowns cost roughly 53.5 percent, a gap that never shows up on a simple day sheet.
Why does Jeff say PPO participation no longer functions as a patient acquisition tool the way it used to?
PPO directories used to be how patients actually found a dentist, functioning like a marketing channel. Now, most in-network patients respond to marketing a practice already paid for and simply ask whether their plan is accepted, turning the discounted fee into more of an exclusion filter than a genuine source of new patients.
Why does Jeff say the classic "50 percent overhead" benchmark from the 1990s is still achievable today?
He explains that older software couldn't track separate fee schedules for every insurance plan, so practices operated off one fee with visible write-offs, and a 50 percent overhead was standard for a solo practitioner charging full fee. He says that benchmark is still realistic now, but only at full fee, and recommends recalculating what you'd have collected last month if every procedure had been billed at your private rate to see your true overhead percentage.
When does Jeff say is actually a good time to start dropping insurance plans?
Counterintuitively, when a practice is already completely booked with a backlog of inactive patients to draw from. In that situation, the worst case is staying about as busy while collecting the same amount at lower cost, and the best case is staying just as busy while collecting considerably more, since there's already enough patient flow to absorb the transition.
Episode Transcript
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We've touched on the profit formula a couple of times in past episodes, and it's genuinely simple, without getting into heavy accounting definitions: revenue minus costs equals profit. There's taxes on top of that, obviously, but that's the general idea. So if I wanted more profit, I could increase revenue without a matching increase in costs, reduce costs without lowering revenue, or do some combination of both.
If I'm a practice owner, what does that actually look like? To increase revenue, I could improve case acceptance, say a patient accepts all six crowns they need instead of just two. I could increase volume, bringing in more patients, assuming I can actually handle them without getting overloaded. I could add procedures I'm currently referring out, placing implants myself instead of sending them elsewhere. Or I could raise my fees.
To reduce costs, I could attack basic line items on my P&L, join a group purchasing organization for better supply or lab pricing, or negotiate with my lab if my volume supports it, assuming quality stays the same. I could eliminate waste, a non-productive marketing campaign or team member, and replace it with something productive. The key with cutting costs is not cutting something that's actively contributing to your productivity. If a marketing campaign costs $5,000 and brings in $5,000, cutting it costs you nothing you'll miss. If it costs $5,000 and brings in $25,000, cutting it hurts, you'd be cutting revenue right along with the expense.
In dentistry, and healthcare generally, we run into a specialized version of this problem specifically around increasing revenue: insurance companies. PPOs, fixed discounted fee plans, and so on mean you can't simply press the "raise my fees" button across the board. You can raise fees for out-of-network patients, but if you're the average practice with 70 to 80 percent of your patient base in network, you're only able to raise fees on the remaining 20 to 30 percent who are out of network or have no plan at all. You genuinely can't raise fees on the patients you're contracted with.
And if you're in network, I'd bet you'd rather not be. Nobody really wants to be in network. I understand some of you were advised to join as many plans as possible right out of dental school, or when you first bought a practice, or it simply didn't seem like there was another way. I get it. But in most cases, you probably wouldn't be in network if you genuinely felt you had a choice.
So facing a 40 to 50 percent haircut across your fee schedule, what do you do? You feel like you can't get out, so instead, most people reach for the volume solution, trying to make the reduced fees work by simply doing more. There has to be some way to make it work, right, since getting out doesn't feel possible?
I don't mean to sound harsh about this. If this is you, I genuinely understand the position you're in, I see it constantly, and I know the idea of going out of network is frightening. You're making a living right now. What if you lose a ton of patients? This is your livelihood, I get it. So it's no surprise when a new client comes to us having already taken the volume route up until that point, packing the schedule as full as possible. After all, it's basic math, right? The problem is, while you absolutely can make a living this way, it leads to escalating stress, and that stress actually increases as you scale, along with your expenses. For a lot of doctors, it's simply not what they got into dentistry for, not what they pictured for themselves. If that's not currently you, I'd bet your colleagues are feeling it, talk to a few, or spend some time on the less filtered corners of the internet where dentists post honestly, and you'll see the stress, the burnout, the disillusionment.
So why doesn't this volume approach actually hold up long-term, and is there a better path to the same goals? That's what I want to cover this week. My name is Jeff Blumberg, and I'm your host.
Let's start by dispelling a common fear around PPOs specifically, and to be clear, I'm talking about PPOs here, not HMOs, which are a completely different situation. This may or may not motivate you to actually act, but here's the myth. Say you have one plan with 1,000 patients on it, and you decide to drop it. How many of those 1,000 patients do you think you'll actually lose? When I ask people this, the common guess is "everybody," or at least 50 percent. The real average is 30 percent. You'll lose about 300 of the 1,000. We'll walk through the math on why that actually works out in your favor, and then dig into the cost side of the volume approach and how it quietly hurts you long-term.
Let's say we have three patients, A, B, and C, each needing a crown. Your out-of-network, private fee for a crown is $1,300. Your in-network fee for these same patients is $880. If you go out of network, you'll lose patient C, that's your roughly 30 percent attrition. If I stay in network, I do crowns on A, B, and C. If I go out of network, C says, "Doc, I love you, but I need someone who takes my insurance," and leaves, so I keep A and B.
Here's the math. In network, three crowns at $880 each is $2,640. Out of network, two crowns at $1,300 each is $2,600. On the day sheet, these numbers barely look different, $2,600 versus $2,640. But that's exactly where the real story starts, because revenue and volume are easy to see on a day sheet or production report. Costs and margins, especially once you're lumping a lot of procedures into a given month, are much harder to see.
Let's dig into the three PPO crowns specifically. Say each crown prep appointment runs an hour, three hours total chair time, roughly 40 minutes of doctor time and 20 minutes of assistant time per appointment, so two hours of doctor time across all three preps. Delivery for each crown takes 40 minutes, two hours total chair time across three deliveries, with about 20 minutes of doctor time each, so one hour of doctor time total. That's five hours of chair time and three hours of doctor time for the three PPO crowns.
For the two fee-for-service crowns: prep is two hours of chair time total, an hour and 20 minutes of doctor time. Delivery is an hour and 20 minutes of chair time, 40 minutes of doctor time. So three hours and 20 minutes of chair time, two hours of doctor time, for the two fee-for-service crowns.
Now let's look at costs. For the three PPO crowns: six total hours of assistant time (three hours of prep, two hours of delivery, plus about ten minutes of room turnover per patient, roughly an hour total). At an average of $24 an hour for a dental assistant, including payroll tax, that's about $155 in assistant time for these three crowns. For the two fee-for-service crowns: about four total hours of assistant time (prep, delivery, and turnover), which comes to roughly $103.
Then lab costs. Say you're paying $120 a unit, a reasonably average figure, I've seen it lower and higher. Three PPO crowns cost $360 in lab fees. Two fee-for-service crowns cost $240.
So between assistant time and lab fees alone, not counting impression materials or scans: the two fee-for-service crowns cost $343 against $2,600 in revenue, about 13 percent. The three PPO crowns cost $515 against $2,640 in revenue, almost 20 percent. You can see where this is heading. Your actual cost is meaningfully higher on the PPO side, but you'd never see that just glancing at the day sheet, $2,600 versus $2,640 looks almost identical.
It's a similar dynamic to clear aligners, by the way. I'm not against clear aligners, if a patient needs them, you should do them, and honestly my opinion doesn't really matter here since I'm not a doctor. But people get excited about clear aligner revenue without factoring in the real cost structure behind it. If you're paying $1,800 a case and charging $5,500, that's about 32 percent in direct cost, and if you're charging less than $5,500, the percentage is even worse, it just looks great on the day sheet because the revenue number is big.
So we're at 13 percent cost for the fee-for-service patients and nearly 20 percent for the PPO patients, and that's before factoring in your scheduler's or receptionist's time to book and confirm these appointments, your general overhead, rent, utilities, debt service, subscriptions, insurance, and one more thing entirely: what it actually cost you to acquire each of these patients in the first place.
What's a reasonable average patient acquisition cost? This is part of why I push referrals so consistently with clients, because referrals directly lower your acquisition cost. If it costs $300 to acquire a patient through Google ads, Facebook, or postcards, and that patient refers their spouse, you've effectively cut your acquisition cost in half for both of them, $150 each. But let's use $300 as a reasonably comfortable average, I've seen it higher and lower depending on the channel.
This brings up an interesting point about PPOs specifically, since you might think, "Jeff, the reason I'm in network is to get patients from the plan itself." And historically, you'd have been right. PPO directories used to function as a genuine patient acquisition tool, people would look up in-network doctors in a printed book or on a website, so you could reasonably think of that discounted fee as a marketing cost. PPOs also used to reimburse a higher percentage of full fee, which helped too. So the model wasn't nearly as bad originally.
Here's how it usually works now instead: a patient responds to marketing you're already paying for, calls your office, and asks, "Do you take XYZ plan?" What used to function as a patient acquisition tool has become more of an exclusion filter, "no, we don't take that plan," and they go elsewhere. You're still spending the marketing dollars to attract that person, you're just also taking the fee haircut once they show up, since they were likely in-network with you anyway, not specifically because of your marketing.
So let's roll acquisition cost into our math. Say all five of our patients, the two fee-for-service and three PPO, came from paid marketing at $300 each. For the two fee-for-service patients: $600 in acquisition cost plus $343 in assistant and lab costs, $943 total against $2,600 in revenue, that's 36 percent. For the three PPO patients: $900 in acquisition cost plus $515 in assistant and lab costs, $1,415 total against $2,640 in revenue, that's roughly 53.5 percent, spending $1,415 to make $2,640.
And it gets worse from there, because you're effectively paying a version of that acquisition cost every single time you see that PPO patient again. Instead of collecting a normal $315 for a periodic exam, bitewings, and a cleaning, you might be collecting $138. Instead of your normal molar endo fee, you might be collecting $750. You're absorbing that discount on every single visit going forward, not just the first one. And on top of all this, remember the doctor time difference, two hours for the fee-for-service crowns versus three hours for the PPO crowns. One extra hour doesn't sound like much in isolation, but multiply that across a full week or month of procedures, and you start to see the real picture.
As a side note, quadrant dentistry, I'm not sure that term gets used as much as it did 20 years ago, but the concept still applies: doing multiple procedures for a patient in one appointment instead of spreading them across separate visits lowers both your time and costs, no re-numbing, no repeated room turnover. That's a genuinely good way to lower costs, but it depends on the patient actually accepting that larger single appointment, which is really a case acceptance and sales question, a separate topic entirely.
What I see on my end is that this whole volume-driven approach to chasing profit or just surviving tends to show up in a very specific way when we meet a new client: overhead in the 70 to 80 percent range, because these costs genuinely compound. And I haven't even factored in things like the extra scheduler time needed to book and confirm more patients.
Why is this such a big deal right now? We're seeing overhead this high more often than I ever have before. I've mentioned this on the podcast before, but if you'd asked any well-regarded voice in dentistry back in the '90s what a solo practitioner's overhead should be, the answer you'd have heard, pretty uniformly, was 50 percent. Producing and collecting $60,000 a month, you should be netting around $30,000. That was the standard answer, maybe a bit lower if you were servicing debt on a newer practice, but 50 percent was the benchmark.
Here's the interesting part: that 50 percent overhead figure is actually still achievable, if you were charging full fee across the board. Back in the '90s and into the early 2000s, most practice management software genuinely couldn't track multiple separate fee schedules, you just had one fee schedule, period. So if your crown fee was $900 and an insurance company only paid $550, the patient covered the difference up to what insurance didn't pay, and you'd write off the remaining $350 as an adjustment, sometimes entered immediately, sometimes after insurance actually paid. Back then, we'd see clients producing $100,000 on paper but only collecting $65,000 to $70,000, which used to trigger real concern, is this embezzlement, or just bad collections, until you dug in and realized it was mostly write-offs. There was actually a silver lining there: clients could clearly see, in black and white, "I'm writing off $20,000 to $30,000 a month."
Now it doesn't work that way. Software tracks a separate fee schedule for every single plan you participate in, so everyone effectively pays a different price for the same procedure. If you really think about it, that's a fairly unusual way to run a business. Imagine any other kind of business, a department store, a gas station, a restaurant, where 100 people walk in and there are 20 or 30 different price lists depending on which plan each person happens to carry. The sheer administrative burden of tracking that would be overwhelming, which is exactly why a lot of practices end up outsourcing parts of it, and that outsourcing costs money too.
For anyone sitting on the fence about actually making a change here, because a lot of people genuinely want to get out of network, want control over their own fees, but keep pushing it off, "I'll deal with it next month," "next year," and another year quietly goes by, here's something you can do with essentially zero downside: confront what's actually happening in your own numbers. Pull your production report for last month, for example, if this episode airs in February 2026, pull January 2026's production, and take every procedure you did and multiply it by your normal, private fee schedule, assuming that fee schedule is reasonably current. If it hasn't been updated in years, that's honestly a separate conversation worth having too. See what you would have produced, and therefore collected, if every single patient had been billed at full fee.
Then compare that hypothetical number to two real ones: your actual production for that month, which tells you your real write-off amount, and your actual expenses from that month's P&L, whether from QuickBooks or your accountant, to see what your overhead percentage genuinely is relative to what you'd be producing at full fee. I've run this exercise with a lot of people, and you'll often find someone producing $100,000 and collecting $75,000, a 75 percent overhead on paper. But extrapolate those same procedures to full fee, and they'd actually be producing closer to $150,000, without adding one dollar of additional overhead. Against that real production potential, their actual overhead is closer to 50 percent.
Here's the real problem with this setup: if what you're actually doing amounts to $150,000 worth of dentistry, you need the staff of a $150,000 practice, the expenses of a $150,000 practice, the workload and the hours of a $150,000 practice, but you're only collecting $100,000, because nobody else along the way is giving you a break. Your lab isn't discounting because you're in-network. Your supplier isn't. Your staff certainly shouldn't be expected to. Your landlord isn't lowering your rent because you accept a bunch of insurance plans. You're the only one absorbing that discount, which is exactly why all of that extra expense piles up, it genuinely costs that much to run a practice doing that volume of real dentistry, full stop.
If you're in a position where you want to change this but feel scared or unsure how, that's exactly why we're pushing this hard with clients right now: the current model is fundamentally broken in a lot of cases. Inflation has continued climbing while, in plenty of instances, insurance reimbursement has actually gone down. I don't personally expect insurance companies to suddenly have a change of heart about how they've been squeezing the profession, maybe I'm wrong, but I don't see it happening, and if anything, I see it getting worse with increasingly complex umbrella plan arrangements.
If you want to look seriously at what getting out would actually involve, my first recommendation is something we call a fees and plans analysis, free, where one of our practice management specialists walks through your real numbers and maps out what it would actually take to get you out of network. I'll put a link on the episode webpage.
Beyond that, here's something worth knowing: if you're a typical practice, unless you're brand new, you almost certainly have a meaningful number of inactive patients you're not currently seeing. And if you're already completely slammed, say a patient needing three crowns can't get in for three weeks, that's actually a great time to start pulling back on network participation. You already have real patient flow. With a bit of reactivation effort to bring some of those inactive patients back in, worst case, you end up slightly less busy while collecting roughly the same amount at lower cost, and best case, you stay just as busy while collecting considerably more. It really depends on how busy you currently are.
When we run this kind of analysis with newer clients considering dropping a specific plan, one of the numbers we calculate is how many new patients you'd need, at your new full fees, to offset the roughly 30 percent worst-case patient loss. In a lot of cases, because the in-network fees are so poor to begin with, that number actually comes out negative, meaning simply keeping 70 percent of that plan's patients at your normal fee would generate more revenue than keeping 100 percent of them at the discounted rate. It genuinely depends on your specific numbers, which is exactly why I'd recommend the fees and plans analysis rather than trying to guess. There's really nothing to lose, worst case, you have a helpful conversation with someone on our team, best case, you walk away with an actual roadmap out of network.
Of course, you could also do nothing and keep going the way you are. People do make a living this way, I'm not denying that, but it takes running yourself ragged to do it, and it gets more stressful as you scale, not less. Wouldn't it be better to be paid fairly for the work you actually do, without an insurance company inserted into the relationship between you and your patient?
Ultimately, this is your career and your decision, what you want your practice to look like over the next five or ten years. I may be getting ahead of myself saying this, but it's genuinely worth serious consideration. What's really the worst outcome? If it turns out badly, you could always go back in network. I'll tell you honestly, I have yet to see a client actually choose to do that once they've made the switch. My point is simply that a real way out exists. It may not be quite as hard, or quite as easy, as you're picturing, but it's there, and wouldn't it be a relief to run a fee-for-service, genuinely patient-focused practice where you're not stuck on roller skates just to make ends meet? I see clients build exactly that kind of practice regularly, and I can tell you honestly, from talking with them directly, it's well worth it.
So, don't try to solve this problem with volume. Solve it by doing what's genuinely best for you, your patients, and your practice. I hope this helps. That link to the fees and plans analysis will be on the episode webpage, don't forget to click it if you're ready to get serious about this. If you want to find out more about MGE, you can find us online at mgeonline.com, or call us at (800) 640-1140. Folks, have a great week, and we'll see you at the next episode.