The message to drop dental insurance seems to consume every dental channel. Facebook groups discuss it frequently. I’ve even seen booths pass out stickers to promote this at conventions. As the cost of living increases, dental insurance reimbursements certainly do not cover the costs of dental procedures. With more and more dental offices frustrated with insurance, it’s no wonder why everyone is talking about it.
The Risks of Dropping Insurance
Some areas in the United States can support high percentages of fee for service patients. However, if you’re like us, over 70% of our patients use dental insurance. Many patients prefer using insurance because they feel like they’re getting a discount. This trend doesn’t seem to be changing any time soon.
Furthermore, dental insurance motivates patients to schedule regular cleanings. As much as insurance frustrates us, it increases job security by getting more patients in your office. When a dentist drops insurance, they almost always lose the patients associated with the dropped dental insurance plan. I’ve heard countless stories of dental offices dropping insurance companies and losing hundreds of patients. Those stories are rarely reported on in dental publications.
Why Dentists Drop Insurance
Ultimately, dentists drop dental insurance in hopes to increase revenue. Insurance reimbursement rates simply don’t cover the high-quality dentistry our patients deserve. Like any other business, insurance companies determine their fees based on profit and loss. If the premiums paid were higher, insurance reimbursement rates would reflect that. However, as things stand, most reimbursements reflect the least expensive way to complete the procedure.
In this situation, dental offices are forced to either write off thousands of dollars every month or use cheaper materials, or both. In both of these scenarios the dental office or the patient loses. Instead of asking why dentists are dropping dental insurance, we should be asking how we can be more profitable with PPO patients.
Negotiating Fee Schedules
Many offices invest time and money to negotiate fee schedules. These negotiations can lead to increases on several codes, which benefit the practice’s profitability. However, when you see an increase on one code, there’s likely a decrease somewhere else.
Negotiating fee schedules can increase revenue, however, the impact is relatively small. Most offices are still losing money on every procedure. Even with the negotiated fees, the rates simply don’t cover the cost of dentistry.
Production vs Profitability
Many consultants teach offices to cram the schedule to increase production. While this can improve numbers, Its impact on net revenue is minimal, and it can lead to a decline in patient care and employee satisfaction. This leads us back to the real question: How can we increase profitability with PPO patients?
Measuring production can help your office understand efficiency, but it’s actually a poor indicator of your practice’s financial health. To understand this, let’s consider an all-porcelain crown procedure.
The average office in Utah receives $675 from insurance for this procedure. Assuming the procedure takes less than 2 hours, it costs the office roughly $950 to cover overhead costs. This means you’re losing $150 on this procedure, and that doesn’t even include the cost of the materials. If you’re using a high-end lab that offers custom shading, you’re losing even more money. It’s no wonder offices resort to ordering off-shore crowns or cramming the schedule. In the above example, hygiene has to be running to even come close to breaking even.
The Solution
Profitability comes when offices understand how much it actually costs them to be in business. Fees shouldn’t be determined by insurance reimbursements, because they’ll rarely cover the cost. Furthermore, insurance shouldn’t dictate the quality our patients receive.
The majority of patients don’t know the difference between an off-shore and high-end lab crown unless we educate them, or they get to physically see the difference between the two. However, insurance pays the same whether you offer low-end crowns or high-end crowns from a quality lab. We’ve discovered that increased knowledge paired with choice increases profitability.
Educate your patient, and let them decide the quality of materials they want to receive. Premium products come at a cost, and most patients are willing to pay the difference because they value it. Offering choice to your patients is a simple way to improve the quality of dentistry you provide and get paid fairly for it. At My Practice My Business, we help dental offices increase profitability with their FFS and PPO contracted patients: ethically, legally, and morally. Before you drop dental insurance, reach out to us to learn more about how to increase profitability without the risk of dropping insurance plans.