PPOs (Preferred Provider Organizations) have taken control of dentistry and are here to stay. In exchange for participating in a PPO and agreeing to discounted fees, insurance carriers list the dentist as a provider on their directories and web sites and send patients to the dentist’s office.
While a steady volume of new patients is a great asset for any office, there is one underappreciated problem with the concept of PPOs. The fixed cost for dental procedures – labor and lab costs – are the same whether the dentist participates in the plan or not. Therefore, on a discounted plan, the main “discount” comes from the profit the dentist makes.
For this reason, many dentists look at non-PPO participation or a fee-for-service practice (FFS) as the holy grail. Our experience is that in an ideal situation, every dentist would like to have a FFS practice, but not all dentists are suited to running a FFS practice.
To make a better decision about PPO participation, compare the characteristics of a successful heavy PPO practice with those of a FFS practice.
Characteristics of a Heavy PPO Practice
Some of the heavy PPO dentists operate multiple offices, often taking on associates to deal with the high volume of patients, since they have not figured out how to make enough money from just one office. This commonly leads to high stress and the doctors running themselves ragged.
Dentists often eventually burns out. We also see higher staff turnover in these offices.
Characteristics of a FFS Practice
While this business model is something that all dentists desire, there are specific requirements that must be met to run this type of practice successfully. The Northeastern region presents particular difficulties as it is ravaged by managed care and has an unfavorable dentist/population ratio.
To succeed with a FFS office, the dentist must have four factors in place: excellent case presentation skills; staff with excellent communication skills; state-of-the-art equipment; and excellence in one or two advanced clinical areas, such as sedation dentistry, veneers, implants or orthodontics.
As noted, these two profiles represent the extremes. A dentist can become much more profitable between these extremes by accepting PPOs selectively and leaving those that are unprofitable for that particular office.
Article previously published here.
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Peter Gopal, PhD, together with his wife, Hema Gopal, M.B.A. and D.M.D., consults with dentists who are intent on building a more profitable practice. Whether you are leaving money on the table due to broken patient appointments, improper scheduling, poor case acceptance, low hygienist productivity, excessive overhead, or unnecessary reliance on PPOs, they can pinpoint your weaknesses and prescribe remedies. Receive a free, realistic assessment of the earning potential of your dental practice by going to: http://www.visionary-management.com/assessment.php
Read more articles written by Peter Gopal
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