Taking Control of Dental Practice Fees...

Independent dental practices often navigate the complex world of dental insurance reimbursement on their own. Often, an independent practice is on an island alone when managing business tasks and have systems and processes that are only as good as the key Office Manager charged with the insurance responsibilities in the practice.

As laws and insurance rules change constantly, it takes quite an effort for an office to stay current and ensure they are as efficient as possible when managing insurance relationships. Understanding how to navigate practice fees and the impact of PPO’s is critically important today, choices you make now may be difficult to change down the road.

I’ve had numerous conversations with dentist owners that wring their hands over which direction they take in the road – contracting with multiple PPO’s and balancing the volume of patient treatment or remaining fee-for -service and implement correct marketing strategies to support that. It’s often said that PPO write-off’s can be viewed as marketing investment/cost, trading revenue for PPO patients selecting you.

There are a few strategies you can take now to help you make the PPO relationships you have as good as they can be and address practice fees in a predictable, routine manner. The health of the independent dentist depends on it.

            Last week I spoke on the phone with a long-time industry friend, Teresa Duncan and Odyssey Management. If you don’t know Teresa, you might recognize her since she speaks a darn near all the good dental conventions and is an expert on dental office insurance, among other things. If you research Teresa, you’ll find her current road show workshops on dental/medical billing with Christine Taxin – a symposium one-two punch! With the onset of new technology in the dental practice like CBCT and CAD/CAM, there is more attention paid to integrating new fees & procedures than ever.

            PPO dental plans come in a variety of flavors and colors.  Dental PPO (Preferred Provider Organization) plans offer a network feature and usually offer a balance between lower costs and dentist choice. PPO dentists participate in the network and agree to accept contracted fees as payment in full rather than their usual fee for patients with the PPO.

Many dentist owners’ contract with the PPO and stick it in the drawer, failing to evaluate and review it annually. Many third-party companies are popping up in the dental industry to help dentists analyze and navigate PPO’s. Integrative Dental Solutions and Shelly DeGroff and Unlock with PPO with Sandy Hudson are just a few. These companies have emerged as experts in analyzing PPO’s and communicating/negotiating contracted fees higher in many cases.

Their success lies partly in the number of additional dental offices that are contracted in your region. If it’s saturated, the PPO is less likely to want to consider a fee change. Success also lies in their relationship with the PPO people and their understanding of the insurance process. For a fee of $5,000 or less, I’ve seen fee increase return on investment 10-fold or higher. Remember additional revenue has no expense attached so it hits the bottom line instantly.

            Dental practice fee experts like Charles Blair or the (NDAS) National Dental Advisory Service offer powerful tools to analyze and balance fees. Clearing houses aggregate the collective fees in each zip code and can offer a dental office the change to compare their fees – across all codes – to the percentile in their region. Dental supply companies caught on to this as they began to offer enhanced business services to dental offices. 

I was helping docs with fees a decade ago with Henry Schein – what a powerful practice builder. If you are a fee for service practice and haven’t raised fees in 5 years or so, it’s likely out of your fear that patients will flee on sight. You might research the “Kodak Study” regarding pricing and customer retention. In the 1980’s, kodak had a monopoly on film. We all remember them as the only game in town for decades.

Japanese companies like Fuji entered the film market and began to erode Kodak margins. We dental supply reps remember moving DF-58 Kodak film by the twelve-pack. Kodak decided to evaluate what impact increasing prices would have on customer retention.

One example of the results metric is that a 5% increase in pricing could allow the company gross profit to remain the same with 83% of revenue - bear the loss of 17% of top line sales! How many patients are likely to run from your practice if prices are fair and increased accordingly to accommodate your business cost increases in supplies and support, etc.

The truth is some, but not many, if they value your treatment, trust your team and understand the nature of quality care. Please be attentive to practice fees in the dental office and review contracted PPO’s on a regular basis. Understand you are not powerless to initiate change as an independent dental practice owner; however, you don’t have to do it alone. Surround yourself with dental industry experts you trust that support the independent dentist.