Insurance Free or Friendly –

What’s the Best Strategy for Your Dental Practice?

By Shelley DeGroff, Founder of PPO Advisors

A growing number of dental practice owners are asking if it’s worth it to join PPOs versus going insurance free. Given recent actions by insurers to pressure providers into lowering fee schedules, the question is understandable.

Unfortunately, the answer isn’t going to be the same for everyone. While some dental providers are better positioned to weather the transition of cutting ties with insurers, for others it would be catastrophic. To determine what’s best for your practice, let’s do a deeper dive into the overall role PPOs play in your business.

A Maximum Benefit That’s Never Changed

When dental insurance became available in the 1950s, the maximum annual benefit was $1,000 – $1,500, which is roughly the same as it is today, 70 years later. Had the maximum benefit kept up with inflation, dental insurance would cover about $9,000 of dental care per person. That alone tells you a lot about the degree of control the major carriers have.

Here are a few other insurance stats worth knowing:

  • 155.3 million Americans get benefits through an employer.
  • 73% of patients utilized some type of third-party payor.
  • Patients pay an average of $360 per year or between $15-50 per month for dental insurance.
  • Most plans come with a max benefit between $1K-$2K.
  • Only 2-4% of patients will exhaust their max benefit annually.

Insurance Incentivizes Patients

We know that Americans with dental benefits are more likely to go to the dentist and take their kids to the dentist. Having dental coverage is a great incentive to make preventative appointments that often lead to treatment appointments. It all translates into more patients and higher productivity. It’s also interesting to see that while only a tiny percentage of patients exhaust their benefits, they still strongly prefer to stay in-network. For example, I know of patients who were willing to travel over 90 miles to see an in-network provider.

PPOs Bring Risks & Rewards

If insurance is driving patients to your practice, it’s going to be difficult to eliminate it entirely, especially true if you’re trying to build a patient base. This is where participating in PPO plans offer a real advantage. At the same time, if you find yourself reviewing a patient’s coverage before you offer them treatment options, that’s an unhealthy sign of an insurance-driven practice.

Striking a Healthy Balance

The good news is that it doesn’t have to be an all-or-nothing decision. You have the option of eliminating some PPOs while keeping those that are most beneficial to your practice. A good way to sort them out is to use your practice data to answer the following questions:

  • What are your patient demographics?
  • Who are the big employers in your area?
  • How many new patients do you have each month?
  • How far out is your hygienist booked?

With this information you can start to determine which PPOs actually work for your practice. From there, you can take steps to reduce dependency on the networks that are not serving you well. Altogether, it puts you in a good position to grow your practice with a healthy balance between fee-for-service and insurance.

Providers Must Negotiate and Avoid Over-Dependence

A crucial step in this strategy is to negotiate a fair fee schedule with the insurers you opt to work with. Currently, the national average for write offs in dental practices is 45%, while the average cost for overhead is 67%. Those numbers are not sustainable.

Dentists also can’t afford to become overly dependent on insurance to drive growth in their practice. Young dentists in particular need to be savvy about their PPO contracts and avoid terms that can be extremely costly down the road.

Get Help When You Need It

If you have trouble understanding your PPO contract, you’re not alone. Insurers make the entire process overly complicated. If you have questions about how to balance insurance-pay with fee-for-service, contact our team at PPO Advisors. We can help you identify which PPOs are most beneficial to your practice and help negotiate fair fee schedules. It’s all part of our mission is to help dental providers work smarter, not harder.

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