7 Steps To Boost Your Practice Profits While Reducing Managed Care (PPOs)
By Bill Rossi*
In last month’s article, Managed Care Update, we discussed strategies to minimize patient loss, and slow it down, when reducing managed care (PPO) participation. However, that’s not enough. Doctors need concrete plans to rebuild their practice in order to counteract the patient loss and add mightily to their bottom line. This requires developing a plan for seeing more patients (measured by total exams) and doing more for the patients you do see (measured by production per exam).
Seeing More Patients
An over-dependence on PPOs to keep your schedule full causes other parts of the practice to atrophy. It’s time to get your practice in shape!
While it isn’t easy to increase new patient numbers, it’s certainly possible with a little hard work. Here are the top strategies to make it happen, ranked in order of cost-effectiveness:
1. Increase Internal Marketing
Virtually every doctor recognizes that internal marketing is the most cost-effective way to build his practice. Yet fewer than 10% of doctors feel they do a “good job” in generating patient referrals. It’s time to get good at it! Doctors must become more comfortable in asking satisfied patients to refer their family members, friends, and colleagues to the practice. This should be done at appropriate times (when a new patient joins the practice, when a patient compliments you or your staff, and upon completion of major cases). To get comfortable, consider this simply as an invitation to join your practice. And, add: “Please don’t keep our practice a secret”!
Finally, the doctor should encourage staff members to refer new patients from their family, friends and colleagues. Be sure to establish a bonus program to reward their referrals.
2. Improve Practice Signage
One of the best ways to attract more new patients is through adding or increasing practice signage to improve visibility. Remember, signage is the silent salesperson, providing a 24/7 365 days a year image touting your practice. So, find out what legal restrictions (if any) your locality has on office signage and maximize your exposure with a well-lit sign.
I’ve seen patient numbers double simply through adding improved signage. So, get a sign up, so you don’t have to “sign up.”
3. Upgrade Your Practice Facility
Remodeling and/or implementing cosmetic upgrades to your office facility (new paint, carpet, wallpaper, etc.) is almost always a wise investment. Your practice will typically grow 10-15% through increased patient referrals, and improved case acceptance of upper-level procedures, providing a great return on investment.
That means a large, attractive internally-lit sign, along with an engaging “storefront.” Your visibility isn’t just a matter of the signage, it’s the whole presence of your office!
4. Improve Your Online Presence
Doctors should enhance their online presence by upgrading their practice website, adding video testimonials, and original photographs of actual cases. This will help improve search engine optimization (SEO) as well as attract new patients. Also, increase favorable patient reviews since our research indicates that having 10 or more favorable (five-star) Google reviews can add measurably to your new patient flow.
5. Practice Purchase/Merger
If dropping managed care reduces the practice to operating at 70% or less of capacity, the doctor should purchase a practice and merge it into his own. Through treating the additional patients in your existing space, the purchaser can often generate incremental profits of 60-70% on the added volume before debt service, since there are no additional fixed costs, and the incremental lab, supply and labor costs are usually minimal. Even after deducting debt service payments, most doctors can still generate a 50% profit margin on the added volume purchased, making this a “slam dunk” investment.
6. Boost Hygiene Department
Most of your patient flow comes from continuing care in the hygiene department. Many doctors feel they are already doing a good job with their continuing care system, but most aren’t. For best results, use a “continuing care checklist” in order to track these statistics on a monthly basis:
- How many hygiene patients confirm their next appointment while in the office? Your “appoint ahead” percentage should be 75%+.
- How many cards, texts, and emails went out to patients that are due and past due?
- How many past due recall patients were actually scheduled?
- Are the hygienists helping with calling and confirming patients?
For the typical general practice, it’s not hard to increase the number of hygiene recall visits by five or so per week; that’s 20 per month, which will represent a 10% or more increase in patient flow for the average practice. Call Bill Rossi at Advanced Practice Management (952.921.3360), for a complimentary 10-minute continuing care checkup.
7. Ramp Up External Marketing
Doctors heavily involved in managed care often boast they’re spending little, if any, money on marketing. They complain they can’t afford to, because of overhead concerns. In reality, these doctors are already spending tens of thousands of dollars on managed care fee adjustments monthly, which is actually just a “marketing expense.” These doctors are always better off spending more time, energy, effort, and money on marketing to boost their new patient flow, rather than simply standing by while managed care companies bite off a bigger part of their practice profits each year.
As a rough rule of thumb, it costs about $300 in marketing expenses for each new patient brought in. Direct-mail, pay-per-click, and online advertising do work, but doctors have to stay with them long enough to figure out what works best in their practice environment. $300 is cheap when you compare it to how much it costs for you to continue writing off 30%+ per year in PPO discounts. Too many general dentists end up working 2-3 months a year for free, due to PPO write-offs. It’s costing you big money, you’re just not writing a check for it!
Next month, we’ll discuss how doctors can increase production on the patients they already have, to offset patients lost when reducing managed care (PPO) participation.