Page 71 - The Dental Entrepreneur

The Dental Entrepreneur

A PPO plan requires you to reduce your usual and customary fee a mere 20% to participate in
their plan. On the surface ,this doesn’t sound too terribly painful and you feel as if you can
make it up with the number of new patients. In the first example, a 20% fee reduction
translates to a 66% reduction in profit. What gets tricky is when that write off creeps up ever so
slightly. The effect to your bottom line is a disaster.

Usual Fee $200 PPO Write off 20% $160

Overhead @ 70& - $140 Overhead @ 70& -$140

Profit $60 Profit $20

Usual fee $200 PPO Write off 30% $140

Overhead @ 70& -$140 Overhead @ 70% -$140

Profit $60 Profit 0

But I Have No Choice But To Sign Up For Every Plan

I know the desperation that most young dentists feel when they are presented with the
avalanche of plans to sign up for. Let me make this super clear. I am not advocating not
participating in plans. You have to; selectively. But you need a strategy to evaluate plans and
reduce “participation “as much as possible. Consider the following:

IF Money spent on marketing is a patient acquisition expense

AND Participation in various insurance plans ( write off ) are patient acquisition expenses

THEN insurance participation (write offs) are the equivalent of a marketing expense!

Please take a few minutes to digest that statement. What I am saying is that by doing reduce
fee dentistry you are using this as a patient acquisition technique. You sign up, the patients
come. That is a form of marketing. Why not allocate some marketing dollars to find a better
value based patient? That’s the simple answer. This may be the most important section of
the entire book. You must become familiar with the VALUE proposition and how it
relates to your business and career.

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