There’s been several notices lately of changes in the dental insurance industry. This summer news came that WDS (Delta of Washington) instituted fee schedule decreases to dentists with little notice given. Last week Delta of Idaho announced similar decreases and Delta of California has frozen fees. Additionally, Delta of California has changed their policy so that a dentist can no longer sign up as a Premier Provider only, new providers must also accept the PPO plan with the corresponding lower fee schedule. Typically a Premier fee schedule is approximately 20% higher than a PPO fee schedule so the impact is alarming. The next question is how soon it will take for Delta to stop offering Premier policies to patients? When that happens, how will that affect dentists who are currently in-network only at the Premier level? While it may seem that these changes are affecting only dentists who accept Delta in a limited number of states, the reality is that these changes are likely to move across the country with Delta and are being watched closely by other insurance companies in the industry. If Delta can drop fees 5-15% it appears logical that other companies will follow suit, it’s just a matter of time. How does this affect a typical practice and what should dentists be taking into consideration right now in an attempt to be proactive to these changes? First, be sure your fee schedules are as high as you can get them and that you are not leaving any money on the table. Do this as soon as possible because if Delta proves that they can drop fees I expect fee schedule negotiations with other companies to be harder to come by. Just yesterday my partner, Lisa, was discussing a very low fee schedule one of our clients has with an insurance company rep, noting that it was substantially lower in this particular market than other companies. The rep’s response was “I know! We are still signing up doctors though so we don’t need to increase fees”. When we see fee schedules at 45-50%+ write-offs and dentists are still going in-network more than out-of-network means the leverage dentists had in a better economy is unfortunately gone. We have heard directly from the reps of another major insurance company that similar changes are following and will begin being instituted very shortly in various parts of the country. For newer dentists signing up for a plan for the first time it’s critical that you get the highest fee schedule available in the beginning, not the first offer. Any potential future increases (or decreases) will be based off your current fee schedule and if you start out taking a low ball offer you will never make it back up. Second, consider all ways you can diversify your patient base now before insurance companies force you to. Some practices that thrive on PPO involvement may not see the same need to shift their buiness model but the average solo practice dentist will – ask the dentists in Washington and you’ll get an earful. Currently about 50% of the population does not have dental insurance so creative ways to appeal to the non-insured I believe are worth addressing. I, along with many of my other consultant peers, recommend Quality Dental Plan that is owned by dentist Dan Marut as a turn key option for offering an in-office plan to those who are looking for help with their dental costs but don’t have a traditional insurance option. Let’s be honest, traditional insurance is a horrible deal anyway but a surprising number of potential patients still perceive they can’t afford to see a dentist without insurance so this is a nice alternative to offer. The beauty of this plan is that Dan has created all the marketing and implementation materials so it can be started quickly and easily. Another way to diversify is expanding the procedures you offer to services that are not tied to dental insurance. Elective procedures such as implants and short term ortho are the buzz right now as well as sleep apnea and Botox in some areas. This yet another reason to be involved in your state’s legislation if you are in a state that still forces you to charge PPO fees for non-covered or maxxed out services. Third is to be realistic about debt levels. While I’m not an alarmist I do think the next two years will be telling about how much the insurance companies will be able to cut fees before the economy hopefully begins to rebound and the pendulum shifts again. At that point however, traditional insurance benefits may not rebound and permanent changes in how dentists participate may have arrived. There will be some dentists who will expand and continue to grow regardless of the economy or changes in the insurance industry. I do believe that the vast majority will feel some degree of effects coming and that a degree of caution would be wise in terms of how much debt a practice adds on in the near future. The more financial freedom a dentist has the easier it will be to walk away from insurance downgrades. As evidenced by the unexpected nature of the WDS changes, it’s exceptionally difficult to make those changes when an entire state of dentists are given this kind of news all at once. Those not on the immediate west coast still have a degree of time to position themselves for these changes and it would be wise to do it sooner rather than later. Fourth is to educate your patients. Their employer’s human resources staff does not care what you think of their dental insurance contracts however they are there to listen to employee feedback. Patients need to realize that if they advocate with their employer for plans that allow them to see their choice of dentists with reasonable coverage that they will have more options down the road. The best time to do that is before fee schedule decreases happen. We’re working with several practices right now where dentists are 5-10 years away from retirement and want to know whether they should go in- network with more plans or fewer plans to not only fill chair time now but also to position themselves well for the sale of their practice upon retirement. For these dentists it’s important to make decisions that are good in the long term of retirement planning as well as the short term and can mean tough choices about associates, staff, overhead and capacity issues. I’d be curious about choices other offices are making to position themselves well in light of upcoming changes and any relevant information that WDS and Idaho dentists have in addition to the input on the current “Delta Detnal Lowering Reimbursement in Washington” thread on DentalTown that’s a must read.
As evidenced most recently by the significant fee decreases by Washington Dental (WDS Delta) on the west coast, insurance companies are continuing to charge higher premiums for fewer benefits and lower reimbursements. Keep in mind that 50% of the population does not have dental insurance. While most offices that are struggling for new patient flow begin to look at going in-network with PPOs as a solution, I recommend targeting the uninsured as another option. Trends clearly show that insurance benefits are much more likely to decrease than increase in the future. As dentists plan their long term goals consider ways that you can gradually decrease your dependence on insurance participation. While I’d like to assume the WDS cuts are an isolated incident I think it’s far more likely that it’s just the beginning. If your practice is heavily reliant on PPOs be sure to look beyond insurance to other alternatives to keep new patient flow up before you are faced with the hard choices the WDS dentists are dealing with now.
If you are a PPO provider and haven’t been following the situation in Washington about WDS dropping fees 15% then you should be. Even if you aren’t located in Washington state, this is a very important issue that is critical to keep an eye on as it will be a sign of things to come in other states. If you are a dentist and not actively involved on DentalTown I encourage you to create an account, sign on and stay up to date. DentalTown is the largest dental forum to share information and can have a huge impact on your practice. If you aren’t already a member visit www.towniecentral.com and visit the Today’s Active Topics on the Message Boards to catch the latest updates.
One dentist in Washington made public his resignation letter from WDS and gave permission to share it. I think it is so well written that I wanted to make it available to my readers. It is well worth the read:
Open letter to Washington Dental Service:
I hereby submit my resignation as a member dentist effective June 13, 2011.
Washington Dental Service was once the leader in dental prepayment promoting better dental health and relationships among patients, purchasers and dentists in a way that insured the best dental care could be offered to patients throughout the State of Washington. When WDS was created in 1954, it was the very first dental prepayment company anywhere. Who could have predicted the amazing access to care that this organization would have created for so many people over the next three or four decades.
That leadership role has been abdicated apparently in the desire for WDS to grow financially and to become a bigger player in the game or perhaps just to save its existence. It appears that WDS will sell any scheme to any purchaser in order to hang on to or grow its book of business and it is very apparent in our offices that the patients’ and purchasers’ premiums, however cheap or expensive they may be, buy them very little in the way of dental health. Annual maximums are so low that they go almost nowhere for the patient who needs significant dental care whether the need is brought on by accident, genetic predisposition, neglect or other cause. The plans we see from WDS continue to shock us in the ways they have been degraded from the standards we used to expect. They have become strikingly similar to competitors’ schemes that member dentists, WDS board members and staff have always viewed as shoddy and uncaring about whether better dental health resulted from their activities.
The original relationship between providers and WDS utilizing a filed fee 90
Two years ago WDS unilaterally broke this contract with its member providers intimating that the fee freeze they put in place would be temporary. The following year WDS again abrogated its agreement freezing fees for a second time.
Now WDS is no longer satisfied with breaking the system and it now wants to lower all providers’ fees approximately 15%. No longer is there relationship between WDS and its providers that can in any sense be referred to as “Premier” or any other term of excellence. The PPO fee discount system WDS fell for a decade ago where members could opt in or out is no longer optional. It is now the norm. WDS no longer has anything better than this fee discount system that enables it to scramble for premiums from purchasers but does little to promote in any positive way, good dental service delivery or better dental outcomes for the end beneficiaries, the patients. While it promises lower premiums to the
purchaser and more patients to dentists who are WDS members, it certainly will not work for member dentists anymore because it creates a competition amongst all of them for the limited patient pool. Only some can win in this scheme. If almost all Washington State dentists are members (and they are), WDS cannot deliver on the promise that by agreeing to a 15% fee discount, members will all get a larger share of the patient flow and can somehow make up losses by delivering more services. It is an empty promise and will result in closure of dental offices and lowering of quality of services.
I believe that for the past ten to fifteen years dental prepayment is becoming increasingly less relevant. The benefits have continued to be watered down with such schemes as annual maximums, “duplication of benefit” limitations and other methods of reducing the coverage for services that the plans would appear to cover to the average patient reading the benefits booklets. WDS now promotes a system of plans that tend to create an expectation of coverage for the patient that is unrealistic. At time of service and sometimes not until time of denial of payment by WDS, the patient and the provider learn that the plan does not pay for the expectation of coverage created in the plan booklet. One of the insidious side effects of this practice of selling plans that do not deliver what they seem to promise is that the dentist can easily be portrayed as the bad guy, charging too much for services. WDS in the past offered few enough different plans to sell to purchasers and they were well enough known amongst members that it was not difficult to educate patients about coverages and limitations of their policies. Additionally, WDS plans were consistently higher quality, more transparent plans that delivered what was promised. Now it seems every policy is different and some are so poor that denials and limitations spring up like weeds.
In the current economic environment with costs of doing business increasing and destabilizing, it is totally illogical to believe that dental offices can continue to thrive or for many to even stay in business as members of WDS. It is a foregone conclusion that the quality of application pools at dental colleges would suffer under the terms WDS is offering and the best candidates will have strong incentives to look to other career paths.
While it saddens me to realize that WDS, a business and a concept that I supported heavily in the past has lost its way, we know that companies like WDS only have power over us if we let them. WDS was conceived of and created by dentists but it is no longer a company that many dentists would want to feel a part of. If most or all of the dentists were to resign their memberships, then WDS would have no power over any of them. It is an encouraging thought that if WDS wants to behave like just another dental “insurance” company, they can be treated like those other companies and no one has to remain a member. Count me out from now on.
John Barrett, DDS
Member Board of Trustees 1979-1995
Member Board of Directors 1983-1993
WDS Board Chairman 1985-1987
One of my very favorite dental resources to pass on is DentalTown. If you are in the dental field and haven’t signed on, you are missing out on all kinds of continuing education, message boards, case presentation and advice from colleagues. Founder Howard Farran designed DentalTown with the goal that no dentist would ever practice alone and he has created an environment where solo dentists can get feedback and interact with other dentists. Whether you are a new grad or an experienced dentist, Dentaltown offers a peer group that can give input on various stages of dentistry including financial management, marketing, practice purchases, clinical expertise, new products, staff concerns and much more. And, did I mention that it’s Free? Whether you like to participate or just observe, this is a great place to find consolidated information and opinions about everything dental!
I received some great information yesterday about an upcoming continuing education class in Costa Rica on extractions You may have seen the “I Want to Extract Teeth” thread on DentalTown which has over 100,000 views and here is your chance to learn from the experts. The class is July 4-8, 2011 in beautiful Costa Rica and is being taught by Dr. Tommy Murph and Dr. Gayle Fletcher. Dr. Dan Quevedo will be available for hands on instruction as well. Dan has been to the area before and will be our tour director and activities adviser. Attendees will get 14 hours of CE.
I’m helping promote this class because they have added a special component that I love which is the class participants will be doing extractions at the local free clinic, about 5 miles from the hotel and patients will be available for you to practice the knowledge you have learned. It is not required of you to participate in the hand on in order to get the 14 hours CE. This optional activity will be voluntary with Dr’s. Murph, Fletcher, and Quevedo present to give advice and/or assistance as needed. Some additional information from Dr Quevedo about the area and helping the locals:
You sign up by contacting
The course will located at the
This 4 star resort is located on the Ocean and offers a wide variety of water activities from snorkeling, scuba, kayak, white water rafting, deep sea fishing, etc. You are not far from the active Arenal Volcano which will be an excellent excursion as well as the rain forest.
This should be a great vacation in which to relax and learn about removing teeth.
We will have plenty of free time to enjoy all the amenities.
The classes will be early morning and early in the week leaving the later days free for touring and sightseeing.
We will cover the basics of all extractions, and then get into the more advanced technique’s.
The small class size will allow you to ask questions not only in class, but out on the beach or beside the pool.
The early bird registration is $2500
After March 1st it is $2750
After May 1st it is $3000
I was recently participating in a discussion about how to survive in a PPO world and the discussion came around to customer service. What does that mean? Sometimes dentists assume customer service means how well the patient’s dentistry turns out. If the veneers are beautiful and the shots are painless that must mean you are providing good customer service right? While dental care itself is obviously important, people often define customer service as a broad mix of services that extend far beyond clinical results. Who are you trying to reach and are you appealing to them? Elderly patients may be looking for a senior discount, convenient parking or a handicap accessible ramp. Moms may be seeking an office where the entire family can be seen, after school or Saturday hours and may want to know if parents are allowed in the operatory during treatment. Some patients will want to know if you offer a payment plan, if you have appointments over the lunch hour, if you see emergency visits the same day, if you accept American Express, if you participate with their insurance. Some patients will return simply because you are nicer and more helpful than any other office they have ever been to. What patients are looking is so broad that it’s important to recognize we can’t be all things to all people. Insurance is one customer service issue. Some patients will not come to your office if you are not on their list, others will look beyond the list if you meet their customer service needs in other areas that are more important to them. Be sure your marketing dollars are focused on the type of patient you are trying to attract and will be a good fit with your practice philosophy. Hire great staff and train them to answer the question “do you take my insurance?” correctly. Whether your office takes PPOs or not, do not let insurance dictate new patient conversations. Remember estimates show that anywhere between 33-50% of the population does not even have dental insurance and those that do are often unaware of how their benefits work in detail. Be sure your staff understands how to discuss the realities of insurance within the context of everything else you offer!
When I work with dentists on insurance analysis, we not only look at how to reduce PPO dependence, we also look at what it will take to keep current patients happy and how to keep new patient flow strong. One way to keep current patients happy is to be personal and genuine in thanking them for their business. When going out-of-network with an insurance company, some patients will have a downgrade with their benefits. If your office recognizes that and gives a token of appreciation for sticking with you it can go a long way in how the patient perceives your office. This doesn’t mean giving away free services all over the place. It means investigating which patients have been loyal to you and demonstrating that it matters to you. There are some inexpensive ways to show appreciation to your patients such as free fluoride with their child’s next cleaning if it’s an uncovered benefit, a free tube of bleaching gel for their trays or a complimentary electric toothbrush like the Vitality which runs about $10.
The front desk staff typically knows exactly who your best patients are. Not just the patients who spend money with you but the patients who follow through with recommended treatment, are careful to keep their appointments and who pay their bills on time. Sometimes when a patient has a gripe about insurance they won’t complain to the dentist but they will say something to the front desk. Giving your front desk staff some discretion to satisfy these patients with an appropriate goody is one easy way to keep patient retention high. In working with patients who have unscheduled treatment, don’t let the conversation be driven by insurance limitations. Insurance is only one piece of the puzzle. While it’s important your office maximize the insurance benefits your patients have, you should recognize that there are other reasons patients have chosen your practice. Strategically expand on the other positives you have to offer as well!
For a quick, easy and affordable card designed specifically for this purpose, visit Lisa Weber at Production Finder. She will design a card with your logo and colors and send it to you as a computer file which you can print as needed. Her charge of $40 makes it so affordable that it’s a waste to have your front desk person spend a couple of hours trying to design one for you. Pop over to her site here to take a look at: https://www.productionfinder.com/index.php/practice-resources/
I am often asked for ways to increase production outside of insurance. I received this information today regarding an upcoming class where Dr. Tommy Murph is partnering with Rick DePaul’s Powerprox 6 month braces 101. A great way to get information in expanding dental services all in one shot. For anyone who can make it to the Charlotte area in November, here’s the information:
Famous Exodontist Dr. Tommy Murph to Speak at Powerprox Six Month Braces 101 Course
I was recently participating in an online discussion where someone was considering buying their first practice. They asked if buying a practice that is 80% insurance participation would be a good decision. There are several questions to ask yourself before making this large investment:
1. Even if this pracice is profitable currently, what debt would you, as a new owner, have that the current owner does not. If the selling dentist is retiring, chances are they are relatively debt free and sometimes own the real estate on top of the practice making for lower rent. Because they have no student loans and/or practice debt, they may be able to create a profitable practice at a realistic pace due to low or non-existent debt. Be sure that your anticipated profits can do more than just pay your added debt levels and can also sustain profit needed for everyday living expenses. The insurance participation levels can have different consequenses for different owners of the exact same practice based strictly on the impact of debt level differences.
2. What expenses has the selling dentist been generous with that you may have to target for elimination? This typically means staff expenses. It’s not unusual for a retiring dentist to have a long term staff who is paid generously with top notch benefits. After practicing for 30 years, many dentists find that it’s well worth extra salaries to make their lives easier at the office and after 30 years they can afford it. A new owner, however, can rarely do the same and often finds themselves in a situation of unsustainable salary levels yet unable to make changes for fear of a mass exodus of staff or poor attitudes. Recommendations vary but the typical range of compensation benefits (including salaries and all benefits combined) is from 20-28%. If you determine you are unable to sustain the salaries of the selling dentist, be sure to tie necessary changes to the retiring dentist upon the sale of the practice (so they are the bad guy instead of you).
3. Analyze how the patient flow is working with 80% insurance participation. It is very possible to have a profitable, successful practice with high levels of insurance participation and provide quality service but you must make sure that the pieces making it work for the selling dentists are ways you want to work also. Are you willing to delegate to staff? Do you want to see one patient at a time or overlapping patients with higher volume? Do you like to find ways to multi-task and create systems that are constantly improving on efficiency? Are you good at managing both yourself and staff? Recognize the steps the selling dentist has taken to make the practice profitable and be honest with yourself about if it’s a good fit for your personality, practice philosophy and long term goals.
4. Take a look at the selling dentists insurance fee schedules. I tell dentists that I consistently see about 30 fee codes make up 90% of a practice’s revenues. The 30 fee codes vary from practice to practice, but it’s still a mix of 30 that determines the vast majority of revenues. Make sure that you know what your 30 are and then compare fee schedules of the selling dentists to see where you might have some negotiation room with the insurance companies. Remember it’s far better to get better fees on the codes that matter instead of a flat 3% increase the insurance company is more likely to offer. Call us if you want help with this process.
5. It is not unusual for a dentist to recognize they need insurance participation to fill chairs in the early years of practice ownership with a goal of dropping plans as the practice grows and becomes busier. For this reason an 80% insurance practice would not be a deterrent for many first time practice owners. It is important to be realistic in what your long term goal is in regards to insurance so that you do not pay for a practice that can’t be molded to the type you eventually want to have. Few buyers find a practice to buy that is perfect but the closer it matches your long term goals of practice style, the more likely you will see higher profits earlier in ownership.
One of the best tools to use in managing insurance participation is to be sure you have entered the insurance fee schedules in your practice management software. This allows your software to track write-offs according to each insurance company and gives your office the ability to crunch numbers quickly and efficiently. Many offices do not have individual fee schedules entered, or if they do, they are outdated. It’s time consuming to enter each fee schedule but once the work is done you can make much better decisions about continued insurance participation. Regardless of which dental software you use, a quick call to customer service should provide guidance on how to get them entered. Knowing the gap between each fee schedule and your full fee is the biggest step in knowing where your production dollars are going!