I like to say that dentists fear two things: malpractice lawsuits and open chair time. The first concern is worthy of our worries while the second may not actually be so bad.
As a solo practice owner, I recently made the decision to drop a PPO and risk decreasing my active patient volume. You see, I had been operating above capacity for more than a year. I had extended hours of operation and days of practice as much as reasonably possible. I had hired an associate to help meet the additional demand. But coming back to work after the pandemic, I decided to take more definitive action and go out of network with my lowest-paying PPO, which I estimated to represent about 7% of my active patients.
Multipractice owners and dental service organizations are arguably more focused on growth than their solo practice counterparts. Expanding a portfolio of practices requires a healthy supply of patients. Accepting numerous PPOs helps fuel that engine of growth as a reasonable way of attracting new patients. However, there is a breaking point for profitability. I wrote about calculating gross profit margin for dental procedures in Dental Economics as one means of discovering how third-party payers can turn highly profitable services into ones that barely break even. I discovered that I was actually losing money providing removable dentures on one plan. Sometimes it’s actually better to leave the chair empty.
If one of your locations is having capacity issues like I was, then perhaps you should consider dropping a low-paying PPO as a first strategy, not as a last resort. In the short term, you will create room in your schedule for longer appointments, patient emergencies, and team training. In the long term, you’ll get back to having a busy schedule, but your practice will be generating significantly more revenue for the same services.
If you want to hear more about how I dropped a PPO, join me for a pop-up event using this link on Tuesday, September 22, at 8 pm EST. I’m gathering a group of interested dentists and managers to have a candid discussion on cutting PPO ties. There’s also still time to register for The Profit Summit, the Dental Economics conference on October 2 that will cover PPO strategies, overhead management, and practice cash flow.
Chris Salierno, DDS, is the chief editor of Dental Economics and the editorial director of the Principles of Practice Management and Group Practice and DSO Digest e-newsletters. He is also a contributing author for DentistryIQ and Perio-Implant Advisory. He lectures and writes about practice management and clinical dentistry. Additional content is available on his blog for dentists at thecuriousdentist.com. Dr. Salierno maintains a private general practice in Melville, New York. You may contact him by e-mail at [email protected].