Cliff's Notes

The Business of Dentistry

Watch Out For Falling Fee Schedules!

Cliff’s Notes for July 26, 2015

Cliff Marsh, Henry Schein ……Cell: 201-321-7494……Fax: 201-262-2210



The reason we do what we do, is so that we can to do what we want to do, when we want to do it!

It’s a tongue twister, but working as a team and making informed decisions, will get us there.


The competitive landscape faced by most dental practices has become increasingly more difficult as health insurers have begun to have a major impact on the business of dentistry.

More and more employers are feeling the pinch of a changing economy, increased government requirements, and rising healthcare premiums – and, as a result, have greatly increased their utilization of Preferred Provider Organizations (PPOs) to reduce the cost of providing dental benefits to their employees.

The increase in the number of patients utilizing PPO plans has caused many dentists who, in the past, may not have participated with PPOs to reconsider that decision. For many start-up practices, not participating with the various PPO plans is not even an option they can financially consider.

As a result of this changing environment, it has never been more important for the owner of a dental practice to have a well-thought-out plan for managing and controlling the impact PPOs will have on their business.

Developing an effective plan to manage PPO contracts requires the dental practice to fully understand the nature of the relationship they have with the PPO companies. While PPO plans provide some level of benefit to the dental community, it is extremely important that dental providers understand that PPO companies are competitive businesses that are focused on generating profit. PPO companies are simply an intermediary between patients and the dentist and, as such, are solely focused on increasing their profits through reducing the amounts paid in reimbursement for service. The PPO companies assume that the dental service providers understand that it is the responsibility of the practice owner to protect the profitability of the practice.

Dentists must be vigilant not to let the PPO companies dictate the fees the practice will charge. It is critically important for any business to maintain control over what it charges for goods and services, and a dental practice is no different. Dentists cannot allow the PPO to run their practice. Successfully managing the relationship between the practice and the preferred provider organizations requires a practice owner to carefully consider three key things:

The practice must determine an acceptable discount that the practice can sustain based on overhead costs and the unique marketplace of the practice. It is important to understand the effects PPO discounts will have on practice profitability. If a practice has overhead that represents 70%, then a PPO discount of 20% will result in a 66% decrease in the fee the provider receives for performing the procedure. Practices that elect to participate in PPO plans must fully understand their costs and determine a target level of revenue that will allow the practice to provide high-quality patient care and keep the practice healthy and sustainable.

The dental practice must understand the various relationships that exist between the different PPO companies. Most dentists are unaware that various provisions in many PPO contracts allow the PPO companies to share or lease their contracted dental provider panel. These provisions can result in the dental service provider participating in many more plans than they may realize or have accounted for when determining the acceptable discount. While these relationships make processing claims and evaluating reimbursements much more complicated, they also provide an opportunity for the dental practice to optimize how they participate with the various PPO companies. However, if contracts are managed incorrectly, provider panel sharing and leasing agreements can result in the practice being reimbursed at levels much lower than anticipated.

It is critical that the practice understands the participation contract and all of the contract provisions. The practice must be prepared to ensure that both parties – the practice and the insurance company – fully comply with all contract provisions. The provider should not expect that the PPOs will automatically comply with all payment provisions or that the PPOs will meet the expectations of the provider in terms of payment. In fact, the practice should expect that the PPO will seek every opportunity to reduce or delay payments. Dental practice staff must stay on top of EOB (explanation of benefits) statements to ensure that fees are being reimbursed at contracted amounts and practice owners are responsible to make sure their staff is trained to challenge and question the insurance company any time reimbursements do not meet expectations.

It is imperative that dental practices stop suffering in silence and start communicating with the PPO companies about reimbursement schedules which are not economically sustainable. Practices cannot continue to accept discounts that will not provide for proper patient care and future investment in the practice allowing for high-quality care to continue.

For many practices, especially single-provider practices, dealing with PPOs can be too overwhelming and time-consuming to handle effectively on their own, so outsourcing the responsibility to professional representation – like Unitas Dental – can be an effective solution.

Whether dental providers choose to handle the responsibilities on their own or turn to professional representation, it is critical to the dental provider community that the impact of PPOs is simply not ignored.

Unitas Dental is a PPO-management company actively managing PPO contracts for over 1,200 dentists across the country. For more information please feel free to contact me at any time. 

Total Health

July 26, 2015 - Posted by | Uncategorized

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