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Is Your Practice Primed To Drop One Or More PPOs?

PPO write-offs are one of the biggest practice management issues dentists face.  Dropping PPOs can add tens of thousands of dollars to the bottom line.  In fact, the impact on net profits is magnified beyond the simple percentage increase in the fee reimbursement by going out-of-network.  For example, if overhead remains fixed at 60% of revenue, then a 10% increase in fee income translates into a 25% increase in the bottom line.  We asked Bill Rossi, a practice management consultant and PPO expert, for the practice attributes he looks for before recommending that his clients drop a PPO. Here is Bill’s response:

While the rewards can be great, you never want to go off half-cocked.  We want to make sure the practice is ready.  Here are the signs I look for:

  • On a scale of 1-10 for personal busyness, you rank yourself at a “8” or more. For example, are you attracting at least 20 comprehensive exam new patients per month per full-time doctor?  Are you checking two or more hygienists per day?  If you’re maxed out, why work at a discount?
  • Your hygiene is booked out and it’s hard for new patients to get in.
  • You do not want to add additional hygiene time because you do not want any more exam interruptions.
  • You cannot add additional hygiene time because there is no more room in the facility.
  • You will be cutting back on Doctor capacity (e.g. a Doctor retiring and not being replaced).
  • Do you have a good team? Low turnover?
  • On a scale of 1-10, would you rank your administrative staff at a “7” or better?
  • Do you have PPOs that are paying you less than 70% of your fees and are less than 20% of your practice?
  • Do you have up-to-date equipment and technology and décor?
  • Is your Active Patient Count 1,500 or more per Full Time Doctor? (The number of unique patients that have had a visit in the last two years)

It’s a lot easier to join a PPO than to drop it.  But, if you’re collecting less than 80% of your gross production, you should seriously look into your options.

In an upcoming Newsletter, Bill will explain how to fortify your practice before and during the PPO transition process.

Bill Rossi, President of APM can be reached at www.AdvancedPracticeManagement.com or (952) 921-3360.