Dr. Roger P. Levin brings you the most thought-provoking topics from the Dental Business Study Clubs, an organization focused on the business of successful dentistry. Each month, Dr. Levin will explore an aspect of the business of dentistry in detail.
Roger P. Levin, DDS, is the executive founder of the Dental Business Study Clubs.In the last few years, I have received many calls and emails asking for advice on what to do about dental insurance reimbursements. Either they are already very low, or they have been lowered and it's having a significant effect on practice profit margins. Unfortunately, when dealing directly with insurance companies, there's not much dentists can do.
Many dentists are looking for strategies to increase reimbursements. However, dentists have little to no leverage when dealing with insurance companies. Here are a few hit or miss solutions that dentists often try first to help improve insurance reimbursements.
Negotiate
Many doctors think there's some magic negotiation formula that can be unlocked with the right experts. However, this is one of those strategies that has inconsistent, and sometimes nonexistent, results. For example, several of the top dental insurance carriers do not negotiate reimbursements under any circumstances. They have a formula that is used for different practices and geographical regions and that formula doesn't change.
Drop out
It may make you feel good to tell an insurance carrier that you're leaving them, but it's a dangerous strategy that could result in a significant loss in practice profit. You may think that your patients love you so much that they will stay with you after you exit their plans. Love often isn't enough. Patients grow accustomed to their reimbursement levels and co-payments and aren't likely to give them up. In fact, we've found that approximately 50% of insured patients leave within the first two years and your patient base will continue to dwindle gradually from there. Prior to dropping out of any plan practices, perform a practice analysis that focuses on all financial metrics, scrutinizing essential data and creating trends and projections for what will happen in the future. The choice of exiting a plan has pros and cons, but the negatives often outweigh the positives.
Raise fees
Your practice should raise its fees regularly to keep them at the right levels. Practices often keep their fees low and then the insurance companies, through a valuation of those fees, keep the reimbursements lower as well. By raising fees and demonstrating to the insurance carriers that you have a higher fee profile than the practice did in the past, there is a greater opportunity for them to raise reimbursements. We see many practices that find success with this approach, but you must be certain that your contract doesn't state that you cannot charge the insurance carrier more than you're charging patients. Each insurance contract is different, so you must be aware of any limitations. In a recent survey by the Levin Group Data Center, it was found that more than 95% of dentists sign their insurance contracts but never read them.
Now what?
If those strategies haven't worked, you must take your practice to the next level. Here are three practice areas you must improve in order to combat low reimbursements.
Focus on efficiency
When efficiency rises, practice profit increases. When reimbursements are lower, you need to be more efficient to maintain the right level of profitability. The more efficient a practice, the more attractive it will be to new patients because it will be managing day-to-day operations and patient flow and closing treatment plans and collections. Many practices have room to improve in terms of efficiency. One study showed that most dental practices could work one less day a week and maintain the same revenue.
Increase volume
If a practice continues to treat patients who are covered by a plan with lower reimbursements, it must bring revenue up or improve them to increase patient volume. If patient volume doesn't increase, the practice will begin to decline in production and collections once insurance reimbursements decline.
Boost case acceptance
Case acceptance can help most practices better deal with flat or declining insurance reimbursements. About 80% of general dental appointments are single tooth treatment, according to the Levin Group Data Center. The data show that practices have strong opportunities to increase the average production per patient through improved case presentation. Though case presentation is a complex area with multiple factors, like developing a new patient experience, providing education, improving presentation skills, and offering financial options, it can pay off. The average production per patient can easily increase to up to 25% once these factors are implemented and streamlined. In the end, the increase will begin to elevate the average case size while simultaneously increasing practice production and profitability.
Reduced reimbursements an ongoing problem
During the past 10 years, many insurance plans have decreased reimbursements to the preferred provider organization (PPO) level or below. This has frustrated many in the industry and will continue to do so.
However, if you follow some of these suggestions, you may be able to get to where you want to be.
Roger P. Levin, DDS, is the executive founder of the Dental Business Study Clubs. To contact Dr. Levin or to join the 40,000 dental professionals who receive his Practice Production Tip of the Day, visit www.levingroup.com or email [email protected].
The comments and observations expressed herein do not necessarily reflect the opinions of DrBicuspid.com, nor should they be construed as an endorsement or admonishment of any particular idea, vendor, or organization.
