Ep. 81: Should You Stay in PPO Plans or Get Out Now?
Recently, many dentists have been reevaluating their insurance plan participation—and it’s easy to see why with rising costs for you but stagnant fee schedules from insurance companies. Dropping plans can be intimidating, though, especially with the prospect of losing patients during a time of economic uncertainty. So this week, Jeff discusses how to make the right decision for your practice and lays out a step-by-step plan for going out-of-network if that’s what you choose to do.
Topics:
:11 – Evaluating the true cost of participating & whether or not you can get out of plans
16:46 – Step-by-step plan for transitioning out of plans
Links:
Free Fees & Plans Analysis – https://www.mgeonline.com/fees-and-plans
The MGE New Patient Workshop - https://www.newpatients.net
Reactivation Program - https://www.mgeonline.com/mge-reactivation-program
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Questions From This Episode
What are the three pieces of good news that make dropping insurance plans far less risky than most doctors assume?
On average a practice only loses about 30 percent of a plan's patients when it drops that plan, not the majority most doctors fear. Because full fee revenue on the patients who stay usually more than offsets the ones who leave, replacing lost patients often requires few or even zero new patients. And most practices already have a large number of existing patients they simply aren't seeing regularly, so real reactivation effort alone can offset a meaningful share of any loss.
Why does the current economic environment make now a particularly good time to actually start dropping plans?
Inflation and a tight labor market have driven costs up across the board since late 2021, while some insurance carriers have simultaneously reduced reimbursement rather than raising it to keep pace. That combination means practices heavily dependent on managed care are being squeezed from both directions at once, with expenses calculated against full fee equivalent production while collections lag well behind it.
What has to be true before a doctor even starts the process of dropping plans?
A genuine, personal desire to actually do it, not just an idea that sounds appealing, since there will be real ups and downs along the way that require real dedication to push through. That desire is closely tied to deciding what kind of practice you actually want to run, since trying to be everything to everyone, both fee for service and price competitive, doesn't work.
What's the recommended homework before actually dropping a first plan?
List every plan the practice participates in, then pull the fee schedule for your five or six most common procedures under each plan and compare it against your full private fee, along with how many active patients and how much revenue each specific plan actually represents. This turns a vague sense of being in a lot of plans into concrete data that shows exactly which plan is the least painful place to start.
Why does Jeff recommend Delta Dental specifically be the last plan a practice drops?
Delta has a track record of communicating directly and aggressively with patients after a practice drops the plan, often in a way that implies the patient can no longer be seen there at all, even though that isn't true. One client handled this by sending her own postcard, styled in Delta's own color scheme, directly explaining to patients why she'd made the decision, and her practice has since tripled while remaining fully out of network.
Episode Transcript
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Are you an in-network or participating provider with any PPOs? Any HMOs? Involved in any other severely reduced fee discount plans? If you are, and you practice in the US, you're not unlike many of your dental colleagues, and you find yourself participating to whatever degree that might be.
How would you answer this question: if you could drop all of your plans, get paid your normal full fee for every service your practice provides, and take home the same or more income, would you do it? I'd imagine I'd get close to 100 percent yes on that one. Sure, there'd be a holdout or two, most likely because they didn't hear the entire question, but all in all, I think we'd agree that's a resounding yes for most, if not everyone.
So what if I told you that you could actually do this? It's absolutely possible. I see clients here at MGE doing it regularly. Depending on who's listening, I imagine that statement gets a range of reactions. Some people hear it and get genuinely excited, they want to know more, how do I do this? Others might think I'm being overly hopeful, maybe naive, or at worst, disingenuous. And some might hear it and think, sure Jeff, that sounds great, since managed care just feels like a permanent fact of life.
It's with that in mind that I say this: you absolutely can get out of every plan, go completely fee for service, and run a more profitable, more rewarding dental practice. I have no doubt it can be done, I've seen it done, this is genuinely real. But, and here's the caveat, there's always a but, while it isn't difficult, it does take two things: real work, and real dedication. That's what I want to talk about in this week's episode, the realistic steps involved in actually going out of network and building and maintaining a genuinely fee for service practice. My name is Jeff Blumberg, and I'm your host.
Maybe this is something you've been thinking about for a while, or maybe it's a more recent thought, I'd like to, but I just can't. If this is something you've been seriously considering, I'd point out that there's never been a better time to actually do it than right now, for a few specific reasons.
We're in a genuinely unique economic moment. Between inflation, which started climbing back in September of 2021, and a tight labor market with a real shortage of available employees, those two factors together, inflation and rising labor costs, mean it's costing more to run a business today than it has in a long time. Meanwhile, on the other side of that, if you're participating in plans, more than one insurance company hasn't just held reimbursement flat, some have actually reduced it. I'm thinking of one particular carrier specifically that sold this to employers as a genuine win, doctors accepting less money, meaning the fee your employees are being charged for a given procedure went down too. So you're getting paid less, while everything else costs more.
This has been true of managed care all along, but it's considerably more pronounced now. Say I'm writing off 40 to 50 percent of what I'm actually producing, a crown I'd normally charge $1,400 for gets done for $800 instead. There's a reason your normal fee is what it is, it wasn't just an arbitrary number you picked one day, hopefully it's at least in line with fees in your area. Things cost what they cost so you can maintain adequate profitability, and profitability isn't just about what you personally take home, it's what lets you expand without taking on massive debt.
So say a practice is collecting $100,000 a month, but its production at full fee would actually be $150,000 to $200,000. This used to be something people tracked closely, I'd sit down with clients back in 2006, 2008, 2010, and see a real gap between their production statistic and their collection statistic because of write-offs, they were charging out that $1,400 crown and writing off $600 as uncollectible under the plan. That was normal to track back then. Now we just enter the plan fee schedule directly into the software, so we don't even see what we're writing off anymore.
But here's the basic problem: there's a reason things cost what they cost. If my practice, at full fee, would be producing $150,000 to $200,000, but I'm only collecting $100,000, my actual expense profile, labor, supplies, materials, lab fees, everything, is still built around running a $150,000 to $200,000 a month practice. Add inflation on top of that, and those expenses climb further, including labor costs, leaving even less profit at the end of the month. It simply isn't workable long term.
Sometimes it's easy to get stuck purely inside the day-to-day of running a dental practice without stepping back and looking at the general concepts of business itself. Because it is a business, healthcare, yes, but still a business. You're delivering a service, getting paid for it, you need new customers, and you need to manage the business. That applies to any business, a furniture store, a manufacturer, anything.
Say I manufacture toys. I have costs for materials, labor, space, administrative and executive staff, sales, marketing. If I sell those toys too cheaply, I either don't cover my expenses, or I just barely cover them with zero profit left over. The person most directly affected is the owner and any shareholders, since there's no real profit, but profit isn't just about owner compensation, it's what gives a business a cushion and genuine expansion potential. A business has to be profitable to be healthy at all.
The same basic concept applies here: you have to be able to sell your services at a price that covers your full expenses and leaves real profit, and that becomes very difficult long term when you're heavily participating in reduced fee plans. It's basic math, and it's only getting worse.
There's another issue too: the deeper you get into PPOs, and it seems appealing at first, more people walking in the door, everybody has insurance, the more trapped you become. If you feel uncomfortable dropping plans at 50 percent plan-based, how do you think you'll feel at 80 or 90 percent? At that point, dropping plans starts to feel like throwing away your entire practice, genuinely petrifying. And that fear breeds a kind of apathy, sure, I'd love to get paid what I'm worth, but it's just not possible.
Here's the good news, and I genuinely mean good news, because these are things you can actually influence. First: by our own tracking, when a practice drops a plan, the average patient loss is only about 30 percent, and this specifically applies to PPOs, not HMOs, which behave a bit differently. You might think that doesn't sound great, but it actually is, because the instinctive logic is, I need to go market for a wave of new non-plan patients to replace everyone leaving. If you've got 5,000 charts, how long would that take? It sounds like an impossible task. But you should actually retain roughly 70 percent of those patients, sometimes considerably more.
Second piece of good news: how many new patients do you actually need to replace the ones you lose, to keep revenue and profitability at the same level? Say you had a practice that was 100 percent PPO with 2,000 charts, you drop the plans, lose 30 percent, that's 600 charts, leaving you with 1,400. How many new patients do you need to replace what you lost? Usually next to none.
Here's why. Say three patients each need a crown, your plan fee is $800, your full fee is $1,400. Do all three under the plan, that's $2,400. Now say you drop the plan and lose one of those three patients, a third, higher than the 30 percent average. You're left with two patients, but now at full fee, $1,400 each, or $2,800 total, more revenue than the original $2,400, with lower material costs, lower labor costs, and a lower lab fee on top of it. I've mentioned this in other episodes: for diagnostic or preventive services specifically, you'll often see a 50 to 60 percent write-off, bitewings, a prophy, and a periodic exam might run $120 under a plan versus $250 to $260 at full fee. You could genuinely lose a meaningful number of patients and see zero change in income.
So: you only lose about 30 percent on average, and the number of new patients needed to replace that loss, if it stays in that range, is often minimal, sometimes none. I'm not telling you to stop getting new patients, but it isn't some desperate requirement for dropping plans to actually work.
The third piece of good news: you very likely have a lot of patients you simply aren't seeing. The average dental practice loses roughly three quarters of the patients it's seen within five years. A practice with 4,000 charts accumulated over five years might have only about 1,000 patients still actively on the schedule. This is something we test with doctors directly, and you can do it yourself easily. Ask, how many patients have you seen in the last year? Say the answer is 1,200. Good, now, of those 1,200, how many have a next appointment date after today? The average is about 60 percent. So of 1,200 patients seen, roughly 700 have a future appointment, and the remaining 500 don't.
Stretch that same math over five years, and you'll typically find 4,000 patients seen, with only about 1,000 holding a future appointment. If you sold your practice, a broker would call all 4,000 active patients, even though 500 of them, just from that one recent year alone, don't have their next appointment booked. The point is, yes, you may lose some patients when you start dropping plans, but if you put even modest effort into reactivation, getting your existing chart base to actually show up regularly, since there's usually zero active effort on this already, it wouldn't be nearly the problem it seems.
So: only 30 percent typically leave, you usually don't need a one-to-one patient replacement because of the fee increase, and a large share of your existing patient base isn't even being seen regularly in the first place. With all that in mind, what does actually getting out of plans look like?
Every practice is different, someone might be 20 percent plan-based, another 80, 90, or even 100 percent, so there isn't one universal blueprint. There are two things I'd recommend. First, if you want a genuinely customized plan for your specific situation, we offer a fees and plans analysis, you'll talk directly with a practice management specialist who reviews your unique situation and lays out a real path forward. Second, I want to walk through the basic sequence we'd follow with a client working through this themselves.
Step one: you actually have to want to get out of plans. This can't just be something that sounds like a cool idea, it has to be a genuine drive or desire, because there will be real ups and downs along the way, and dedication is what carries you through them. Without that, you'll start, hit a bump, and revert right back to where you started.
This connects to figuring out what kind of practice you actually want to run. One mistake I see often, especially with doctors in private practice, is trying to be everything to everybody, a family practice, a restorative practice, quadrant dentistry, affordable procedures, all of it at once. None of that is inherently undoable, but you have to decide what kind of practice you're building. If you genuinely don't care, you take whatever insurance covers and it doesn't bother you, you're probably going to struggle getting out of plans.
On fees specifically: you might assume every patient cares primarily about price. By survey, that isn't the top concern, genuine care, attentiveness, and addressing a patient's actual concerns rank higher, along with quality. There's certainly a segment of patients where price is the main driver, I remember seeing billboards in Las Vegas advertising $699 and $899 implants. If price is what motivates you and you don't mind who's placing an implant in your body, fine, go that route. But if you're building a high quality, fee for service practice with genuinely great customer service, you're probably not competing on $899 implants. You can't be everything to everybody, there will be pieces of business you simply don't get, and that's genuinely fine.
Our own MGE Power Program runs 78 days and 600 hours of training, and it's genuinely not for everyone. If someone asked to stretch it out over five years instead, it simply wouldn't work, the program has to run at that intensity. So no, we can't accommodate that, and that's fine too. You have to decide what kind of practice you're building, since that's what gives you the drive to actually push through dropping these plans.
So, homework first. You need to know exactly how each individual plan is actually affecting your practice. This is genuinely hours of work, it was probably easier to sign the original contract than it is to get out, but that's how it goes. Start with a spreadsheet or a document listing every plan you're actually in, you may not even know the full list off the top of your head.
Once you have that list, pull the general fee structure for each. I wouldn't try to map every single CDT code, you'll lose your mind. Take your five or six most common procedures instead, a prophy, bitewings, maybe a molar endo or a three surface composite, a crown, an implant if that's relevant, spread across preventive, basic, and major categories. Compare the dollar figure for each of those procedures under each plan against your full private fee.
This exercise alone tends to be genuinely revealing. As a business owner, it forces you to confront what's actually happening. I've seen doctors participating in a plan with no idea what that plan actually reimburses for a given procedure. Meanwhile, they're wondering why there's no money left over, or why they're struggling to stay competitive on wages, this is exactly why. You're running a business, you have to know these numbers.
Step two, once you know your plans and have a general sense of the fee structure, figure out how much business each plan actually represents, how many active patients are enrolled in it, and roughly how much revenue it's generating. The patient count is usually easy to pull from your software, revenue by plan can be trickier, but there are ways to set your system up to report it, and it matters, since it factors directly into deciding which plan to drop first and in what order.
Step three: decide which plan to actually drop first. This comes down largely to your own comfort level, not purely the numbers. Say you're in 27 plans covering 4,000 patients, and your worst reimbursing plan happens to have heavy participation, 1,200 of those 4,000 patients. Dropping that one first might feel genuinely nerve-wracking. Instead, you might look at your second-worst reimbursing plan, and if that one only covers 300 patients, start there instead, as a genuine trial run. You'll learn a lot along the way, especially the first time you actually have to tell patients you're no longer participating, and that's a far easier conversation with 300 people than 1,200.
I had a client once who did the opposite, dropped every single plan in one month, despite being roughly 90 percent plan-based, including several HMOs. He was a genuinely talented marketer and applied everything he'd learned from the MGE New Patient Workshop, I'll put a link on the episode webpage, and started bringing in 150 new patients a month, entirely fee for service. That was an aggressive approach, and I told him so at the time, it genuinely surprised me. You don't have to go that route, starting with your smallest, least painful plan and working outward is completely fine.
Once you've picked your first plan, review the contract, since every plan has its own specific requirements for how you're supposed to actually stop participating, have your attorney review it if needed, and send out whatever notifications are required.
From there, while that first plan is being dropped, you might also consider fee renegotiation for some of your remaining plans in the meantime. There are websites that show the average PPO fee for a given procedure in your area, and if you're being paid below that average, you may be able to get bumped up to it, still not a great fee, but better than what you're currently getting. There are fee renegotiation companies that can help with this while you're working through your broader plan-dropping sequence.
So you've dropped your first plan. What do you actually tell patients? I've seen this handled a lot of different ways. Early on, we'd have clients send a formal letter, out of concern that patients might assume they could no longer be seen at all. But I've also had clients skip the letter entirely, and when confirming appointments, simply mention they're no longer participating with that specific plan as part of the normal call, not framed as you can't come here anymore, just a quick, by the way, we're no longer with that plan. Depending on assignment of benefits, the patient either pays and gets reimbursed directly by the insurer, or you're simply letting them know the visit will cost a bit more going forward.
One client's receptionist handled it exactly that way, mentioning it during confirmation calls, and if a patient genuinely pushed back, the doctor would occasionally honor the old plan fee for that one visit as a gesture. Another client told me a story, and I'm not necessarily recommending this, but it's worth hearing: his normal crown fee was $1,400, and he'd been getting around $800 under a plan he dropped. A patient came in, surprised at the new price, remembering paying $800 last time. The doctor explained he was no longer in that plan, and asked the patient directly what they thought was fair. The patient offered $1,200 to $1,250, and the doctor accepted. Still considerably more than the $800 he'd been collecting under the plan, and the patient paid it right there. Again, not a strategy I'm specifically recommending, but it illustrates the kind of real flexibility you gain once you're no longer locked into a contracted fee.
Whether you notify patients by phone or letter, do what genuinely feels right for your practice. One more note: if you participate with Delta Dental, I'd make that the last plan you drop, regardless of your participation level there. We're not a dental practice ourselves, we don't have a stake in this beyond observing it across a lot of clients, but what I've consistently seen is that dropping most plans is fairly uneventful, you drop it, maybe they offer more money to keep you, you talk to patients, some stay, some go, and that's the end of it. Delta tends to get more aggressive, communicating directly with your patients in a way that implies, whether intentionally or not, that they can no longer be seen at your practice at all, which isn't true, they simply won't receive the same financial benefit.
One client handled this in a genuinely clever way. After dropping Delta, and Delta sent their usual patient letters, she sent her own postcard, styled in Delta's own color scheme, directly explaining why she'd made the decision, essentially framing it as choosing between providing quality dentistry or continuing to operate at that fee structure. It worked out well for her, her practice has roughly tripled since, and she remains entirely out of network. Because Delta specifically requires a bit more careful handling, if you're heavily involved with them, that's exactly the kind of situation worth walking through with our insurance plan analysis directly.
As you're working through dropping plans, there are two other things worth actively focusing on. First, since a lot of your existing patient base likely isn't being seen regularly, start real reactivation efforts. I'll put a link on the episode webpage to the MGE Reactivation Program, a series of concrete steps for getting these patients back in. One easy way to gauge your own inactive patient count, look at how many patients you've seen over the last five years, then how many of those have a future appointment on the books, the difference is your inactive number. Depending on the size of that number, it might justify bringing on someone full-time specifically to work it.
Second, make sure you have a genuinely healthy new patient flow. The MGE New Patient Workshop is worth checking out here too, I'll link it as well, clients going through it see an average 42 percent increase in new patients. Both of these efforts, reactivation and new patient flow, directly support your plan-dropping process, since you will lose some patients, and these help replace that roster.
So you've dropped your first plan, let things settle for a bit, maybe two or three weeks, maybe two or three months, however long it takes to feel genuinely comfortable. While that's happening, you're reviewing the rest of your plan list, say you had 27 total, now you're deciding on plan number two and three, pulling contracts and data the same way, and repeating the sequence.
One question I get often, especially given the current economic backdrop, inflation, banking concerns, and everything else, is whether now is genuinely a good time to drop plans. Absolutely, and here's why: you provide a genuinely valuable service, and you have to be able to control your own fees, that's basic business. I can't imagine running a business where I couldn't set my own prices, only you actually know what it takes to operate yours. Do this in a way you're genuinely comfortable with, and remember, people do recognize value. There will always be a segment of patients whose primary concern is price, and that's fine, if that isn't the kind of practice you want to run, those simply aren't your patients.
Ultimately, running a business means being able to handle every part of it, not just delivering the clinical service, but managing it, marketing it, and selling it. Otherwise, you end up dependent on insurance companies. Think about why PPOs gained a foothold in dentistry in the first place, they put you on a list patients call from, and it feels like free marketing. But if you knew exactly how to generate 50 new patients on your own next month, would you still need that plan? Probably not. So the real question becomes, why stay in it at all, beyond needing the volume and needing the schedule full.
I've mentioned this before, and it's worth repeating: when you market, one of the key figures you track is acquisition cost, what it actually costs to bring in one new patient. Say a postcard campaign costs you $350 per new patient acquired, that's a reasonable average. You pay that cost once, the next time that patient comes back for treatment, you're not paying it again. With a PPO, you're effectively paying that same acquisition cost every single visit, through the write-off, a $1,400 crown becomes $800, a $300 composite becomes $150, over and over. Wouldn't it make more sense to learn how to generate patients on your own instead?
I'm simply a big believer in controlling your own destiny, and I hope you are too. You went to school to become a doctor and help people, business probably wasn't the focus, but if you own a practice, it's something you genuinely have to learn, otherwise you're not the one in the driver's seat. Learning to run your business well is exactly what creates the time and focus to do what you actually love, helping people, and it makes the whole career considerably more rewarding.
That's everything I have for you this week. I hope this helps, those are the basic steps for getting out of PPOs. I could dress it up to sound more complicated than it is, but that's genuinely all there is to it, that's what our clients actually do. It's easy to write a series of steps down on paper, and admittedly harder to actually execute, but that really is the whole process.
If you'd like help with this, you can request that free insurance plan analysis I mentioned, I'll put a link on the episode webpage, along with links to the New Patient Workshop and the free reactivation program. If you'd like to learn more about MGE, you can find us online at mgeonline.com or call us at (800) 640-1140. Folks, have a great week, I wish you the best, and I'll see you at the next episode.