How to Significantly Increase Your Revenue Without Getting Off of PPOs

Episode #625 with Dr. Tom Orent

To drop or not drop PPOs — that is the question. If you're frustrated and don't know what to do, don't miss this episode! Kirk Behrendt brings back Dr. Tom Orent, CEO of Freedom Summit, to reveal what you can do to safely reduce your dependence on PPOs. If you do it right, you can increase your revenue while staying in! To learn how, when, and which PPOs you should drop, listen to Episode 625 of The Best Practices Show!

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Main Takeaways:

If you're not in PPOs yet, don't go there.

Know which PPOs to strategically drop first.

You will lose patients by sending “the PPO letter”.

Your goal doesn't need to be 100% fee-for-service.

The majority of your patients could afford dentistry.

Quotes:

“I wish I could say in my first year or two, but in my first 15 years of practice, I made the same mistake over and over, year after year. It's a mistake that's very common to a lot of dentists, and the mistake was I was under the assumption that if I focused on becoming the very, very best dentist, clinically, that I could be, that would be enough to build an amazing practice and a livelihood for my family and a future.” (2:16—2:39)

“I became a good dentist. It wasn't enough. Twenty-seven years ago, I found myself in the office of a bankruptcy attorney. Who sent me there? My divorce attorney sent me there because my wife was fed up with the fact that we had no money. I was never with the kids. We had two little kids. I get chills at how many people — how many dentists — can relate to this. I get chills at thinking about the fact that there are a lot of us still out there, a lot of our colleagues — maybe some of you guys listening. I'm sure a lot of you are past it and you're already really successful, financially, and that's awesome. I'm going to give you some stuff too. But for those of you who are struggling, or maybe you're just starting out, becoming a great clinical dentist is important, but it's not the answer to building a great practice.” (4:25—5:08)

“Dropping PPOs is the last thing I would recommend. Now, it's half tongue in cheek. Not 100%. The reason I say it's half tongue in cheek is it's true. But it is the last step that I would recommend. So, I'm not saying don't leave them. But if you start cutting the cord, if people just dropped all their PPOs, it would be a major financial risk for the practice. If it were that easy, if you could just drop them and everything would be fine, if we were all confident that that would work, PPOs could not and would not exist.” (9:45—10:22)

“If you're a solo doc, I would figure out a way to increase my revenue by $100,000, $150,000, $200,000. I'm not talking about production. I'm talking about revenue. What's the difference? For you listening, the difference is somewhere around 35%. Why? Well, because you're writing off somewhere around 30% to 35% of the PPOs. It's sad, but years ago, I thought I was losing my shirt writing 20% off. Today, there are dentists who would kill to be down at 20% loss. We have members in California who are writing off 40%, 45%, 48%. It’s just nuts. Almost 50% in parts of California, Texas, and a couple of areas. But 30% to 35% is pretty much the norm.” (11:01—11:49)

“One of the biggest mistakes I see dentists making today — and about half of us are doing it — is when a patient comes in and we perform a service, a crown, or whatever it is, we post not the full fee, but we post the fee that we know insurance will allow. So, we have those all loaded in. We think that's really cool that we already have all these numbers loaded in because it makes it really easy to do the math. Well, that's true. It makes it easy. But it's also killing you on two fronts. When you're posting, instead of putting in full fee, if you're putting in the PPO fee, the allowed fee by contract, it's costing you in two ways. Number one is you have absolutely no way to figure out what you're losing.” (12:01—12:41)

“So, Dr. Smith says to you, ‘I'm losing $400,000 a year, and I'm only a one-doc office. One doc, one hygienist, and I'm writing off $400,000.’ So, in the future, your answer will be, ‘That's not true. That's not what you're losing.’ You're losing close to half a million. Why? Because variable expenses to treat the $400,000 that you're giving away for free — you're not collecting on that $400,000. The variable expenses are somewhere between 12% and 15%. So, there's $60,000. I get the $60,000. It cost me to produce that. So, I'm at $460,000. What's the other $40,000? It’s the other team member who's doing all that insurance work that they wouldn’t need to do if you weren't in the PPOs. Almost every practice today has anywhere from a half-time to a full-time employee just dealing with the crap.” (13:33—14:26)

“For the listeners who are younger and maybe not in PPOs yet, maybe don't even have your practice yet, going to have a practice soon, I often hear them say, young docs and early-in-practice docs, ‘I'm going to add one or two PPOs just right now while I have some open chair time because wouldn't that make sense? I'm not losing anything. I'm actually gaining something because that chair time is open.’ Adding a couple of PPOs is like taking a malignant cancer cell and putting it in and saying it's only a few cells. It will grow until it kills you. So, if you're not there yet, don't go there. If you're not in PPOs, don't go there.” (17:42—18:18)

“Sometimes, dentists feel forced into cutting certain corners. I'll give you a simple one . . . A significant percentage of dentists choose not to offer certain services that they might have otherwise offered if it was full fee because they can't afford to based on a certain contract, or whatever. Patients don't know that. Patients think they're getting the deal of the century. ‘I have a PPO that gives me the best fees. This dentist is really good.’ Well, the dentist may be really good, but he or she is not always offering you the same thing they're offering a full-fee patient because they can't afford to.” (21:03—21:36)

“One of my colleagues, many years ago, told a funny story. I'm sure he was joking, but he said, ‘I'll go into hygiene, and I'll do a check. I'll see that they need composite, whatever it is. Sometimes, you can't afford to do that. What I'll do is I'll write the patient a check for $100, and I'll say, here. I don't want to do that for you. I want you to go down the street and pay somebody else to do it because I can't afford to do that.’ Of course, he was joking. He never wrote the check. But that was the point.” (21:38—22:04)

“[When I turned my dad’s practice around], did I make it 100% fee-for-service? No, I did not. Here's why. I removed 13 of the 15 plans . . . The two that Elizabeth and I decided to keep, we kept because the fees were actually really good. They were close enough to my dad's fees and our fees that we didn't want to rock that boat. They were pretty good, a small write-off. The other thing was, they were decent. They were respectful with my team. They didn't put them on hold for 30 minutes, and then hang up on them and say, ‘I'm sorry. I didn't realize I got you disconnected.’ They didn't deny stuff by an algorithm. Doctors think that these denials are happening by a $15-an-hour clerk. They are not. The first denial is by an algorithm that denies a certain percentage. This is the truth, guys. The first downgrades in denials are not done by a cheap clerk. They're done by an algorithm that removes about 30% to 32% of all claims by just rejecting them.” (22:07—23:08)

“Did you know that only 35% of claims that are denied are ever appealed? They are depending on that, that you will not appeal anything.” (23:09—23:21)

“Sending a letter and saying, ‘We're getting out of Delta,’ or Blue Cross, or Cigna, or whatever your plan is — there are all sorts of plans. I'm not choosing anyone. If you send a letter to those patients, you will lose most of those patients.” (23:47—24:00)

“If you send a letter instead [of talking to your patients], if you try to shortcut this, Mrs. Jones gets home at 5:00 after work and the full day. The kids are back from school. She's back. Everybody's running in. They know dad's coming home in about a half hour. She tries to put something together because he wants a hot meal. Doesn't realize she just worked the whole day. Or maybe he realizes but doesn't care. Whatever. He wants a hot meal. And so, she's fussing to make that meal. The kids are scurrying around. She gets them at the table. He comes in. Everybody sits down, and they're looking at some mail. He says to her, ‘What's that from Dr. Smith?’ She says, ‘I don't know. I didn't open it.’ He says, ‘Open it up. Find out what it is. Is it a bill? What is it?’ She glances through it. She says, ‘Oh, no. He's dropping our insurance. We need to find another provider.’ That's all they're going to do, especially if she had a bad day, or he had a bad day, or the kids are screaming. They're not going to say, ‘Kids, quiet down for a second. Bill, I know you had a hard day, and I'm making a hot meal, but I just want to address this for a minute. He's one of the finest dentists, finest human beings we've ever met. He never compromises on our —’ they don't care. They get the letter. They're just going to switch providers.” (25:04—26:15)

“Do not send a letter saying, ‘We're leaving.’ Now, what does that mean? That means the timing of telling a PPO that you are leaving should be six months after you make the decision, and you begin speaking with your patients. Because I don't want to allow any of those PPOs to send that poisoned letter that they will. Within 24 hours of your telling them that you're leaving, they will auto-generate a terrible letter talking about how you are no longer considered a preferred provider. What does that mean? All that means is that you've dumped their contract. But what it sounds like to the patient is you did something wrong. And then, they give a list of ten other competitors who are within two blocks of you, or whatever the distance might be.” (26:15—27:03)

“Once you're up a couple hundred thousand dollars, let's say $150,000, $200,000, let's say you have eight plans, and your smallest plan is $150,000 a year. So, if you went up $150,000 and you drop a plan that's $150,000, even if you lost half, three-quarters — you won't if you do it right. But even if you did, you're still in a nice financial position. So, which one would I drop? A lot of docs drop the one that they hate the worst, whichever one that is. And they hate it because it has the worst write-off. So, let's say, on average, I'm writing off about 30% to 32%, which is typical. But let's say my worst one is 38% or 40%. I'm getting torn apart by that plan. The emotional decision is to drop that plan first. Do not do that. You want to drop the smallest plan first, the one where you have the fewest patients. Maybe it's not a big write-off. I don't care. Let's say the plan with the worst write-offs is 20% or 30% of your patient base. That's scary. Let's say a plan with a reasonable write-off is only eight percent of your patient base. That's a good test case scenario for you where it's pretty much a no-lose situation.” (27:10—28:27)

“The knee to knee, eye to eye, toe to toe conversation, one at a time, it's either done by one of the GPs in your office, or by the hygienist, or both, depending on who has the patient first. You only have to do it one time. And, by the way, at the end of six months, you will not have seen everybody because not everybody comes in. What do you do now? What you do now is you pull a computer report of the ones that you never saw in the last six months. Maybe that's 50 people, eight, whatever. The doctor and the hygienist split those people up, and you call them, and you have the same conversation. Now, the phone is not as good as knee to knee, eye to eye, toe to toe. But the phone is way better than sending them a letter that they're not going to read. They're just going to, ‘You know what? This has been a terrible day. Just add that to the pile, and we'll find another provider tomorrow.’ So, you make calls to the ones you couldn't see physically. If you do this right, you're going to keep a lot of patients. I retained a high percentage of my patients in both practices. But you should always, like Harvey McKay said, dig your well before you're thirsty. You should always add that revenue before you need it.” (28:36—29:49)

“If you're in practice and you're getting crushed by overhead, in addition to working with the PPOs and getting them out of the way, one of the things I'd be doing is figuring out any way I can to increase revenue with my fixed costs as they are without adding more staff or more equipment.” (36:04—36:17)

“I would urge everybody to get out [of PPOs] if you can. Which, you can if you choose to. It's a choice. It's not an “if”.” (37:17—37:23)

“It is my understanding that there is a law that they cannot use the words preferred provider organization, PPO, unless they are willing to allow the patient to go to any provider and still pay. And again, that's not something I would just take, ‘Oh, Tom or Kirk said it.’ No. Check with your attorney. Read the contracts. Check with your state and federal law on it. But having said that, I am quite certain that that is accurate. Now, that means the good news is when you leave a PPO, you can say to Mrs. Jones, ‘The great thing is that we can still not only send in the information and take care of the claims and all that so you don't have to do a thing — it's all done for you — but the better news is, we can not only continue to see you and take care of the claims, but we can also continue to get you benefit from the PPO,’ because that PPO, they won't tell you this, but they allow you to go to anybody you want. That's the good news. The bad news — and a lot of dentists already know the bad news. The bad news is the percentage will be different for an in-network versus an out-of-network provider. So, OON, which is out-of-network, versus in-network. But you know what? If you do it right, if you speak to the patients right — I'm sure you guys have great relationships with your patients. That's why they're going to you. They're going to stay if you do it right.” (37:37—38:53)

“Front end targeted marketing is the first thing I would be doing if I wanted to get out of PPOs. Why? Because targeted marketing means you are only targeting a specific demographic and or service, and specifically the treatment or service, and you're only going to target stuff that you want to do more of. And if you're really sharp, you're only going to target things that aren't covered by insurance.” (39:48—40:14)

“Ninety-five percent of the patients in a general practice are asymptomatic. So, even if that patient just moved to your area, and even if they do have some work to do, you have two bars you have to hit in order to get them to say yes to your treatment when it's asymptomatic. The first part is easy. The first part is that they recognize, appreciate, and agree that there is a problem. That's an easy bar. We've got so much technology today. Every dentist listening to this has the technology and the verbal skills to make it pretty clear that there's a problem. They're still not going to schedule. They won't schedule. That's only bar number one. Bar number two is way harder. And it's not something that I can teach in any situation quickly because it's something that we take a year to teach. But the second bar, I can tell you what it is so you can focus on it, because you can still do it yourself. There's a do-it-yourself component to this . . . Patients, even if they, ‘Yeah, I guess that is an issue. I didn't realize it. My last dentist didn't tell me about it,’ or, ‘It doesn't hurt,’ or whatever, to get them to appreciate that they have a problem, that's easy. But they still won't schedule unless they sense an immediate or urgent need to schedule and do the treatment.” (41:04—42:31)

“Patients will not schedule unless they sense an immediate or urgent need to do that treatment, with the exception of elective care like esthetics. So, we're not talking about a smile makeover. We're talking about, they need a root canal, a crown, an onlay, an implant — all these other things — extraction, phase one perio. Whatever it is, the moment they sense that there's an immediate and urgent need, you're going to see something disappear which you have been hoping and hoping would disappear forever. And that is patients telling you, ‘I just can't afford that right now.’” (42:33—43:05)

[Patients will] give you these sob stories about money. It's not the money. Write these five words out. It's not about the money. They'll tell you it's about the money 99% of the time. Now, this doesn't make any sense. Tom is saying that it's not about the money, but they tell us it’s about the money every time. Why? The reason is because it's way more comfortable for a patient to say, ‘Oh, the twins just started school. I'm going to need to think about that. We'll put that off for a bit. We’ll definitely get that done, but not right now. Now is not a good time, financially.’ I said that in 10 seconds, and it was comfortable. What's not comfortable is for me to say to you, ‘I don't really think that I need to get that done right now,’ because you're basically conflicting with the dentist who just gave his professional opinion or her professional opinion that this is very necessary, and you should do this. So, they don't want to argue with you. They'll just tell you it's the money. You can't argue with the money. If they tell you, ‘Our family cannot afford this right now,’ you can't argue with that.” (43:17—44:29)

“Five percent of the time, it is the money. [Patients are] living hand-to-mouth, literally, and they don't have any money. Those patients typically don't go in on any regular basis to a general practice. They'll go...