Dental Insurance Independence

Episode #569 with Dr. Mark Murphy

Is insurance getting in the way of you and your patients? Do you want to get rid of it altogether? Well, stop right there! To help you avoid a disastrous outcome, Kirk Behrendt brings back Dr. Mark Murphy, Chief Growth Officer from ProSomnus, to provide five steps for a smoother transition into insurance independence. Always look before you leap! To learn the smart way to move away from insurance, listen to Episode 569 of The Best Practices Show!

Episode Resources:

• Dr. Murphy’s email: mmurphy@prosomnus.com 
• Dr. Murphy’s email: markmurphy@funktionaltracker.com 
• Dr. Murphy’s social media: @mtmurphydds
• Funktional Sleep: www.funktionalsleep.com
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Main Takeaways:

Take time to do the math.

Identify your value proposition.

Share your value proposition with patients.

Write the dreaded letter and do it strategically.

Communicate your letter to each one of your patients.

Quotes:

“We are free to choose however we want to practice, wherever we want to practice, whenever we want to practice. This is still maybe the greatest profession ever invented. We get to do whatever it is we want to do, work on whom we want, build the team that we want, do the kind of dentistry we want, and accept the kind of reimbursement models that we want. And I don't care about the economy. I don't care about insurance reimbursement, or availability or no availability of good employee bases. It might take a little longer in some locations, no doubt. It might be harder out in the middle of nowhere land to go nonpar, to live in that kind of world. It might be harder to do comprehensive care. But I've seen practices still accomplish that. If they're willing to work that path, and chase that dream, and make that their vision, it'll become their reality. We are free to choose however we want to do dentistry, whoever we want to be, and what for. And you can't do that in too many other things. It is incredible.” (5:41—6:34)

“I'm from the Detroit metropolitan area. And so, my joke is, Frank Sinatra said it a ton, if we can do it here, we can do it anywhere. In the last decade, we were the only state to lose population. The city of Detroit itself lost 25% of its population. We’re as insurance-ridden as anybody else. We had the deepest, darkest economic woes of anybody. And yet, dentistry survived. And guess what? Guess who survived the best? Dentists who were extremely insurance dependent? I think not. In fact, it was dentists who were more insurance independent. The less that you were feeding from the hind teat that we might call insurance, the more you were dependent on that, the more you were dependent on whatever happened in the economy. And the less dependent you were on that, the freer you were to practice the way you wanted.” (7:50—8:37)

“Someone will say, ‘I can't [be insurance independent]. I have too much debt.’ I'd say, ‘Oh, wait a minute. I think what you said was you can't do that now. That's correct. You probably can't do that now.’ So, when you say, ‘I had this dream. I went to dental school. I had these visions of how I practice. And then, I got saddled with $300,000 and $400,000 worth of debt. I got out. I bought this practice. I inherited the staff that isn't very motivated. They're not alive. They can't see the future well.’ And you say to yourself, ‘I can't get to my dream.’ I would say, stop! There's a comma in that sentence. By the end of the year. Maybe by the end of next year. But guess what? If you start that sentence with, ‘In five years, my practice can be . . .’ then, it starts to become a believable path.” (9:01—9:39)

“Where I wouldn't start is to say, ‘I'm fed up with insurance. I don't like it anymore. I'm going to cut my ties. The umbilical cord is clipped, and I'm off on my own,’ without knowing what risk that carries, without knowing what financial barriers were in your way, without knowing how your team felt — because you can't get there by yourself — without knowing how your patients really felt about that, without knowing whether you've really built a conversation with them, that they understood the value difference of seeing you versus seeing a participating or PPO dentist. If you don't do that, man, the risk is high.” (10:43—11:14)

“The mistake that most of us have made is trying to leave insurance without the right kind of preparation, the right kind of steps in place, the right kind of risk analysis so that we can plan and mitigate appropriately. We don't do that because we didn't go to business school. And so, we don't think in terms of some of the skillsets that we need to make those kinds of decisions.” (11:14—11:33)

“Dentistry has given up 22% of their average income over the last 11 years. That's the ADA statistics, two percent per year over 11 years. You can see those graphs. Now, if you took away 22% from somebody tomorrow, they would throw open the sash and scream, ‘I'm mad as hell!’ But if you took two points a year every year for 10 to 12 years, it’s like putting a frog in warm water and bringing him up to a boil. They never jump out. That's what's been happening to us because reimbursements are going down, debt is going up, and the business model for dentistry is getting more and more challenging. And so, what we’re going to see is more people — that's why you said we’ve had such demand on it, more people saying, ‘How do I get rid of insurance? How do I move in that direction?’ So, the first thing I'd say is, don't jump out of the pot and into the fire.” (11:55—12:37)

“There are steps. There's a sequence. There's a planning system you can utilize to do that, and it’s very simple. When we look at it, we look at it in five steps. The first thing that's most important is you really have to do the math. It’s really simple. You have to do the math. And the math is, what percentage of your patients have what kind of insurance? What kind of write-offs are you taking? You put that into a pretty simple algorithm. Anyone can do this themselves. It’s not easy, but you can do it yourself. If half your patients were PPO and half your patients were fee-for-service and you're collecting your full fee, you might be making 30% off your cash patients and 10% off your PPO patients. So, your blended take, if you will — and that's the wrong way to look at a business. I understand that. We could go into a whole different discussion on that — is you're netting 20%. So, you have to figure out, is it Delta? Is it Blue Cross? Is it one of the Aetnas? Is it a Cigna PPO? There are so many different things. And so, you have to categorize each of those, look at how many patients, how many dollars, how much write-off. Do the analysis and figure out, what's my risk of leaving that group of patients behind? How many of those patients would have to come with me in the new world where I wasn't going to participate with that discounted fee schedule for me to come out whole?” (13:01—14:15)

“It’s never this simple. But in the simpler example I've just described, 30% return on my investment from half my population, 10% from the other, the blended result is I get to keep 20% of a $1 million practice. I'm making a couple bills a year. Life is great. The risk-weighted analysis is pretty simple in that case. If I took a look at that 10% population and I went to full-fee on them, I didn't participate in that fee schedule reduction, two-thirds of them could leave. Two-thirds of them could leave, and I'd be able to retain 30% on the diminished population. And what would my practice look like? Let me think. Same dollars in my pocket at the end of the year. Same net. I'd see fewer patients. I would do fewer procedures. I would work fewer hours. Who doesn't like that so far?” (14:17—15:02)

“We don't do the math and realize that in that, again, oversimplified version, we would only need to keep one-third of that population of patients. And I don't know too many dentists who have such a poor relationship with their patients that a third of them wouldn't stay. So, the first thing is you have to understand the math. Now, if it’s 90% you have to keep, the risk is higher. If it’s 33%, it’s lower. So, we really have to understand the risk of a population of patients. And it’s usually not one singularity, it’s a blend of Delta, Blue Cross, Cigna this, and PPO this. We have to put that together and understand so that maybe you decide you're going to leave these couple of PPOs first. Then, you're going to look at leaving these couple of PPOs. And if you haven't gotten hurt too bad there, then I'm going to go after Blue Cross and Delta. There's a way of mitigating that risk and managing that risk. But first, you have to do the math.” (15:03—15:51)

“I want to know your full production before you have any insurance write-offs or other kinds of write-offs. I want to know your full production, and then your insurance write-offs separated off from the total write-offs because I want to know how much are you really giving away to the insurance companies, and then how much do you choose to give away personally, or you lose in accounts receivable that you don't collect. We want to put those in different buckets. I want to see what the bucket is. So, if you have a $1 million practice and you're writing off $200,000 to the insurance companies, you have $1 million in production, and $750,000 in collection, and $700,000 of that is from the insurance, and the other $50,000 is from other, then I start to get a picture of how much you're writing off for insurance.” (16:14—16:52)

“I want to know how many patients have insurance that is being written off, and then, categorically, which ones. And if we've got a good dentist who can really dive into their data and dive into their software, I'd like you to take a look at those major procedures that you do and figure out what's the average percentage write-off for your Delta patients, for your Blue Cross patients, for your Cigna this, for your Aetna that, because you might have varying ones. And the risk-weighted analysis might lead us to say we should take a look at these couple of insurance relationships, PPOs, whatever they are first, and other ones later because these don't seem to be as bad. And so, we might parse them out in groups. That means it’s going to take me longer because you'll see that there's a six-month cycle to this kind of information flow. But I need to know how many patients, how many insurances.” (16:53—17:43)

“I also need to know what your P&L looks like because your P&L is going to tell me, overall, based on that production model and whatever the mix of insurances and collection is, how do you get to net out what you net out. And I don't want the P&L that says, ‘Here’s what I'm going to pay taxes on.’ I couldn’t care less about that. I want the P&L that says, ‘Here’s what I really make in total compensation.’ That's a different number. That's, how much do I pay myself, how much do I pay into my retirement plan, I've got my kids’ cell phones, an extra car, whatever else is going on in your life, all good by me. I'm sure you've got that all figured out with your accountant. But what is your real, total compensation on that practice revenue? Because that's what I'm going to use as the standard to say, ‘This mix of insurances gets us to this number. How does a different mix maybe get us there? How many patients do we need to keep?’” (17:43—18:28)

“Step number two is identifying a value proposition. It could be creating a value proposition for your practice. There are likely some things that you do in your practice with your team for your patients that are different, better, innovative, more comfortable, more convenient, or something than someone around you does. If there isn't, we’ve got to go find some of those and add them to your mix of services.” (19:52—20:17)

“We do a couple of business things called a KJ analysis or an RWW, a Real-Win-Worth analysis. We look through that list and you line them up to say, ‘Which ones carry the most value? Which ones are the easiest to talk about? Which ones have the best real value to us to explain to patients that they're in a different place?’ And we want to do that, why? Because down the road, we’re going to have a conversation with that patient about why they might want to stay in this practice instead of going to another practice when it costs them a little bit more money to stay here. And if they don't really understand that value proposition, then they're more likely to leave. So, I want to mitigate the risk by my second step, identifying the value propositions that we can incorporate into patient conversations on a daily basis.” (21:13—21:57)

“If we have patients that are there for the wrong reasons, it’s challenging to elevate the value proposition in their mind. But if we have patients of record that have come to know, love, and trust us, and understand who and what we are, then the identification or the ownership of the value proposition is strong. Now, step three takes us to sharing that with the patients. It doesn't matter if I've got this stuff. I've got it on the shelf. Maybe I make exquisite provisionals and I polish them up in such a way that the gum doesn't stick to them. I leave proximal contacts. I let tissue heal for three or four weeks before we take an impression. I mount cases in our articulator and show that to patients. I polish composites and put anatomy in them. But if I don't explain to the patient that, ‘Take a look at this restoration,’ and they go, ‘Oh, man. It looks just like a tooth. I can't even see it,’ well, honestly, I'd humble brag and say, ‘If you'd come in to see me five, six, seven years ago, I probably would've done one like you have on this tooth over here. But what we have found is if we spend a few more minutes polishing and reshaping these like this, two really cool things happen. Number one, they last longer. Number two, those little nooks and crannies I put in there so that it looks like a tooth, they help the tooth chew like a tooth. They're supposed to be in there, those little nooks and crannies. And if I leave it like this one over here, it doesn't work as well.’ That's a value proposition conversation I just had with a patient to help them understand why my filling is a little bit better than the average or someone else’s filling. So, when I ask them to pay a little bit more, they're more likely. Guaranteed? Nope. More likely. Why not guaranteed? People are still people. They're just more likely. I want to keep more of those patients. I want to move the needle a little bit in my favor for retention of that body of patients. And so, it’s not just having a value proposition and identifying it — I've got to share it.” (25:47—27:26)

“Your value proposition might not be doing better dentistry. Your value proposition might be, ‘We have a more harmonious team.’ You care more about people. You give back to your community. They could all be behavioral things. There's probably going to be a mix of some clinical things and a mix of some behavioral things, some environmental things. And that's your mix of who and what you are as a value proposition. Communicating it to them is what's critical.” (29:52—30:17)

“I'm so embarrassed. I've got to tell you one of the worst things I've ever done. I graduated in 1981, and we had a lot of General Motors, Ford, and Chrysler patients out here, and OEMs. Great insurance. Ninety percent, $1,200 or $1,500 for the coverage per year. Back then, my crown fee was $300. So, the worst thing I've ever done for dentistry is, those patients who’d come in and I'd say, ‘You need this crown, this crown, this crown, this crown, and this crown,’ and they'd say, ‘Does my insurance cover it?’ And I'd say, ‘Hell yes. Knock yourself out.’ And some doctors would waive that 10% copay. We didn't do that, but some did. But when $1,200 or $1,500 allowed you to do four or five crowns, we taught those patients to become insurance dependent. We taught them to think like it was an entitlement and like it was a third party evaluating the necessity of this treatment plan. Fast-forward to today and it’s, for me, 35 years later, they pay the same amount. We forgot to adjust that puppy for inflation. We made a lot of mistakes, and it still covers $1,200 and $1,500. And now, that covers one crown and two cleanings a year, and not too well.” (34:57—36:00)

“We’ve created this own world for ourselves. That's actually good news, if you're sitting in my skin. I say that's great news. If we've created this, we could create something else. That means we’ve got to spend some time, effort, and energy unlearning for people about this entitlement program and what insurance is and what it isn't. Now, the trouble is, the ADA is not going to do that for us. Your local state dental society isn't going to do this for us. No manufacturer is going to put on a multi-million-dollar ad campaign. We have to do that mano a mano, womano a womano, one person to one person conversations, face to face, and that's how we’re going to win.” (36:02—36:33)

“Moving away from insurance is not mechanical. You can do the math, but it’s behavioral. You and your team — not you. You and your team. In fact, your team, then you, if you can help it — have to own the value proposition that you're going to share with the patient. If you think that's a good idea, and you sit in your upper echelon and look down on your team and tell them what they're going to do, they will nod and they will smile for two or three days of the first week, an hour-and-a-half for two of the second week. But they will wear you down, and they will win. They will win the day. It’s about engaging your team with good leadership skills, about painting a picture of a preferred future that they might want to enjoy along with you. It’s about sharing that pie when it grows. Because if we end up with fewer patients but we end up making more money doing more of the dentistry that fulfills us, and helping more of our patients have healthy mouths, we should all win. It isn't for me to make more money. We should all win. Patients should win, my team should win, and I should win.” (36:45—37:44)

“When I went nonpar in 1991, it took me forever to get there. When I consult with people now and I talk to them about doing it, it took me forever to get there. Why? Well, because I knew I wanted to go there right away. I was scared. I knew I wanted to go there, but my team wasn't ready. And I...