Balancing PPO Participation
By Bill RossiFor many practices, PPO participation is their biggest expense after staff wages (or even greater than staff wages in some cases). Historically, dental practice collection percentages had been 95%+ (of gross production). Now it’s not uncommon to see collection percentages at 70-80%…and sometimes less.Most dentists join a PPO in the hopes of gaining or retaining patients. No dentist likes to lose patients, and when you do lose a patient because you’re not in the network, it can be a powerful inducement to sign up for a PPO.Once you’re participating in a PPO, it’s easy to feel there’s no other choice. However, you don’t have to take everything the PPOs dish out.In many areas, the PPOs will have the majority of the providers in the area but no PPO has 100% of the providers. Therefore, it is possible to survive and thrive outside the participation of any one PPO. For most doctors, it’s a matter of having the right balance.As a general rule of thumb, if you’re collecting less than 90% of your gross production, this should be reviewed. If you’re collecting less than 80%, chances are very high that you would benefit by cutting back on PPO participation. It is possible to cut the PPOs and keep the patients!For example, take a look at your own practice. You probably have patients that are already seeing you out of network.When deciding where to cut back on PPO participation, look first for plans that are 15% or less of your patient base and have fee allowances with greater than a 30% discount.Providers have more options in a marketplace that has a greater variety of PPOs. You don’t have to be chained to any one PPO.The worst case scenario is to be in an area where 90% of the insurance is through just one company. That makes it tough! Fortunately, that’s not the case everywhere. Cut back one at a time.You may be participating with group plans that include multiple PPOs. There can be “PPO creep” on these plans where you can sign up for several plans and then find out several more had been added despite the fact that you didn’t directly contract with them.Sometimes you’re better off directly participating in the PPO network and sometimes you’re better off just dropping the network altogether. And to add to the complexity, sometimes the PPO network pays better out of network than it does in network.If you are netting less than 35% of your collections and gross staff wages are in line(<27%) and you don’t have extraordinary equipment/facility expenses, then the PPO’s are the likely culprit.PPOs are sort of like the casinos in Las Vegas. The “House” has all the odds in its favor. However, as a player, you can play smart, and sometimes you don’t have to play at all! You have more power than you think.For most practices, two to four plans are the right mix. You can adjust the participation in plans just like you’re adjusting ballast in a hot air balloon. Cut back the plans one by one until you have the right mix of profitability and busyness. Every year negotiate fees for the plans with which you have contracts (a topic beyond the scope of this article).It’s been my experience that most doctors join a plan too impulsively or leave a plan too irrationally. This is a serious issue and deserves serious analysis. A good look at your PPO situation can do more for your bottom line than almost everything else. You can add $1,000’s and even $10,000’s to your annual profits.We all know that hard work, integrity and skill make a difference in your success, but don’t forget the other component, courage. Serious consideration and a bit of courage can save you a lot of sweat and stress.Bill Rossi and his team at Advanced Practice Management are actively involved in the ongoing management of over 220 dental offices in the Upper Midwest and monitor over $30,000,000 per month in Dental activity. They are nationally recognized experts in dealing with PPO issues.