Declare Independence From PPOs
Eight steps to reducing participation while optimizing patient retention and revenue
Brett Wells, DDS
Earlier this year, one of the largest preferred provider organization (PPO) networks in the country staggered our industry with a gut punch. Their decision to significantly reduce their reimbursement rates came at a time when our profession, like many others, was already facing higher supply costs, higher labor costs, labor shortages, and the mental, physical, and financial impacts of a global pandemic. Fears and frustrations aside, we do have options in this situation. Modern technology and innovation are paving a path forward to help dental professionals take back control of our businesses' bottom lines. And we can do this by selectively ending our participation in some PPO networks to reduce our practices' dependence on these plans.
Unfortunately, the harsh truth is that dropping a PPO plan will cost you some patients. But with time spent carefully analyzing and planning for these changes beforehand, you can minimize the loss of patients. You may even find that you can increase practice revenue by dropping low-reimbursing PPOs and retaining at least some of those patients outside of the network because your practice won't have to bear the hefty PPO write-off. Although all of this may seem overwhelming, the following 8 steps can help you make and act on informed, confident decisions regarding your practice's future with or without PPOs.
1. Collect Data
You can find much of the data that you need to make more informed decisions about your PPO participation within your practice's management software. Begin by organizing the data by plan in a spreadsheet using an individual sheet or tab for each plan that you want to examine more closely. Within those tabs, include key metrics for each individual PPO plan, including the following:
• Total annual revenue
• Total annual write-offs attributed
• Your office's 15 highest revenue-generating procedures and the reimbursement rates for those procedure codes
• Number of patients enrolled
• Percentage of your total patient base enrolled
• Average new patients per month enrolled
After collecting this data on the PPOs that you participate in, carefully review it and ask yourself the following questions:
• For each of the different PPO plans commonly used in my local area, what is the out-of-network coverage like?
• What is the average percentage of the top 15 paying codes that I'm writing off?
• Is my office close to capacity? If not, how close is it?
• How far into the future is my office currently booking new patients?
• Does my office have a dental membership plan? If so, is the participation high and the fee structuring appropriate? If not, what have been my hesitations around offering an in-house plan?
With the support of the data that you've collected and your answers to these reflection questions, you will have what you need to make informed decisions for your practice and patients.
Analyze the PPO data that you've collected with a focus on revenue percentages to decide which plan or plans to drop. To minimize the effect on patients and offer your practice time and financial leeway to test the waters, it's recommended to keep the impact of these decisions to under 15% of total practice revenue. You can use an online calculator (dentalhq.com/out-of-network) to determine the exact number of patients that you would need to retain from each insurance network to maintain the same profitability. Enter your costs, your fees, and the write-off, and you may be surprised at how few patients you need to keep. For example, for one carrier that was writing off 30%, I only needed to retain just over half of the patients to maintain the same cash flow and profitability.
4. Review Contracts
Review your contracts for each of the PPOs that you plan to drop. Oftentimes, PPO plans require written communication of your intention to end your participation. They may also stipulate a minimum time frame, such as requiring a 6-month notice. If a contract is unclear, contact your representative for more information about these requirements.
This is a good time to write out (but not send) the notification letter for each PPO whose plan you are terminating because you'll have the contact and termination requirements readily available. Having these letters ready ahead of time and knowing by when they need to be sent will facilitate a smoother implementation of your timeline and the mitigation plan that you'll begin outlining next.
Deciding to stop participating in PPOs is the easy part; the challenge is in how to reduce losses to your patient base and revenue as a result of that decision. By planning beforehand how you'll work with patients in these PPOs to keep them in your practice, you can lessen much of the potential fallout. One way to do this is to offer an in-house membership plan as a viable alternative, especially if your plan offers similar or better services at a comparable cost to the patient.
Your practice's mitigation strategy might also include adding new services, such as cosmetic dentistry, clear aligners, or sleep treatment. You may also want to better promote your in-house membership plan to attract new patients to replace some of those who leave. Another option is to expand your marketing efforts. You may want to consider email, direct mail, or social media campaigns to promote your in-house membership plan, advertise changes to your practice and services, reach new patients in your community, and further build upon relationships with existing patients.
6. Create a Timeline
Successfully declaring independence from PPOs is as much about when as it is how. With many steps to take and changes to make in your practice, planning the timeline in advance can further help you to mitigate any fallout. This timeline should include when you'll implement the different parts of your mitigation plan and when you'll send letters notifying the PPOs and your patients.
If your decision involves dropping more than one PPO, you should consider taking a staged approach in monthly or quarterly phases. Start with the PPOs that generate the least revenue for your practice and remain under the 15% threshold of impact to your annual practice revenue. This will help your practice avoid gaps in your appointment scheduling and revenue, and it offers an opportunity to gauge the response of your patient base and to test and fine-tune your operational and marketing strategies to better retain patients while attracting new ones.
7. Prepare to Notify Patients
Gather a list of the patients and their mailing and email addresses for each PPO plan that you intend to drop and draft a letter template to inform them of your decision. Whether sent by mail, email, or both, the notification letter should explain to your patients that you have decided to stop accepting their PPO plan, why you have decided to stop accepting their PPO plan, and most importantly, the alternatives that your practice can offer them, such as an in-house membership plan. Be sure to include an invitation to contact your office for more information and guidance about next steps. In addition to the initial patient notification letter, develop a phone script outlining key talking points to help your team address incoming calls regarding the PPO changes and explain the alternative options.
The "why" will be the most important part of your patient messaging. Utilize your letter and phone script to clearly explain that ending participation in these PPO plans will allow your office to provide better care by rerouting the money that was used to pay the PPO fees to invest in top-of-the-line team members and better equipment and supplies. Your mitigation plan will factor heavily into these patient communications.
8. Take Action
Send out your PPO termination requests, immediately followed by your patients' notification letters or emails. The timing for this step is critical to retaining some of these patients within your practice, and it's why we recommend that you write their notification letters and have a list of their mailing and email addresses ready before officially requesting termination of your contract from each PPO. Because many of these PPOs will send letters to your patients to inform them that your practice is dropping their coverage and encourage them to find another participating dentist, you need to control the narrative by acting quickly and contacting these patients first to notify them about other alternative options within your practice.
Once you've notified the PPOs and your patients of your decisions, you can begin to carry out your mitigation plan per your timeline. This is when you may launch that social media campaign about your new in-house membership plan, the "Team Member of the Month" email newsletter, or the postcard drop about your office's new cosmetic procedure. Having taken the time to plan these mitigation strategies beforehand will allow you to be more proactive about retaining patients and revenue.
Celebrate Your Freedom
You've taken a huge step in changing the way we as dentists operate our practices and care for our patients, so be sure to celebrate this momentous occasion. Taking time to celebrate big milestones with your entire team is important not only for morale but also to ensure that everyone is on the same page. And with newfound freedom in how you run your business, don't you deserve to celebrate?
About the Author
Brett Wells, DDS, maintains a private practice in Raleigh, North Carolina, and is the founder and Chief Dental Officer of DentalHQ.