EP16: The Next Dollar Phenomenon

Podcast

There is a unicorn within our profession that leaves most providers seeking after a fee for service model. Listen in to Dr. John Meis and Wendy discuss how they get the most out of the next dollar, on this second episode in our 6 part series on major concerns that most dentists have. Get more profitable by being smart and understanding and providing exactly what your patients want!

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EP16: ‘The Next Dollar Phenomenon
‘ Transcript:

S1 00:00:00.000 [music] Welcome to the W Production podcast with the Team Training Institute, the one place designed for dentists and their staff who want to grow their practices by following in the footsteps of those that have done it, who are in the trenches, who know exactly what you’re going through. And now your leaders, the stars of the podcast, Dr. John Meis and Wendy Briggs.

S2 00:00:28.427 Welcome everybody to the W Production podcast. I’m Dr. John Meis, and I am here with Wendy Briggs, the great hygienist. Wendy, how you doing?

S3 00:00:37.589 Hello. Yes. Very good. Thanks, Dr. John. Glad to be here.

S2 00:00:40.676 So this is the second in our series. The series we’re discussing, the ADA survey of dentists’ biggest concerns. And so the number two concern that dentists have with our profession and their practices is third-party payer issues. And this is a biggie and a tough one. So I’m excited to dig into this one because I’ve seen what works, and I’ve seen what doesn’t. So Wendy, are you ready?

S3 00:01:11.597 Oh, absolutely. You know we always talk about the things that people most commonly have questions about. And this is, again, at the very top of that list. So I wasn’t surprised to hear it was one of the top challenges because we certainly hear frustrations every single day on this topic.

S2 00:01:27.093 And you will hear frustrations every day forever on this topic. It is really a tough one, and the environment is getting more tough every single day. So this is kind of one of those times, Wendy, where I like to talk about the fantasy and the reality. So the fantasy is that I have all the patients in the world coming to me, and they pay me whatever I decide to charge, and life is good. Right? That’s really not the reality, though. That is fantasy. The reality is that most patients who have dental benefits want to use them. And so they want to use them in a way that’s most effective, and so that means going to the providers that are listed with their PPO. And so we have a disconnect here between what patients want and what dentists want. So how do we go about trying to figure out the right strategy for this, Wendy?

S3 00:02:31.865 Well, there’s a lot of complicated things because we have what patients want and what dentists want here. But we also have the misconceptions of patients about what their insurance is. Right? In their minds, if it was necessary, insurance would cover it. And we know that that’s not true. And so we also have the other piece which is communicating with the patients about their benefits and how to help them understand that sometimes they have care that’s necessary that isn’t a covered benefit. So we have that piece, too. And that just adds to the frustration because we have dentists and teams reaching out saying, “My patients are so insurance-focused.” And when we really dive in, it’s really how we’ve trained them to be because of how we focus on what’s covered and what’s not with insurance. So there’s so many moving pieces to this topic. We really could take it in a variety of directions. But I think let’s begin at the beginning and talk about the reality of some of the things that we see.

S2 00:03:31.434 Yeah. So having analyzed, literally, hundreds of practices, I know that there is not a correlation between profitability and insurance plans that most people think. Most people think the practices that have the most fee-for-service are the most profitable. Not the case. And my numbers– and I’ve also talked to other executives in dental that have many, many practices, hundreds of practices, and what they’ve found is profitability is correlated best to the number of plans taken. Now that just shocks people when they hear that. But it’s true. And part of the reason is it makes patient attraction so much easier when you accept their plan because most people want to use their plan. So the idea that taking plans makes you less profitable is not accurate. That is a fallacy. So it’s really important to understand that first. So–

S3 00:04:39.957 Another fallacy, Dr. John, another fallacy is that there seems to be this holier-than-thou sentiment. And there are dentists who are clinging to the ship. Even though the ship may be going down, they will not compromise, and they will not accept insurance. And their feeling is that if they do give in and let the insurance companies win, that somehow they’re having to have a reduction in their quality. And so in some instances, I see dentists that are rigidly fee-for-service look down their noses at other practices that accept insurance because they assume that if they accept insurance, they must be providing lousy care. I see that a lot.

S2 00:05:22.053 Yeah. And obviously, that’s not true. The quality of care is not dependent on payer source; it’s dependent on the ethics and the abilities of the dentist. And so that’s a good one to point out. Now I want to say this. If you are fee-for-service, and you are hitting your financial goals, great. Good for you. And there are practices that do. There aren’t many, but there are practices that do. And if you’re in that spot, stay there. That’s a really good spot to be. But most practices, the number one concern of dentists is they’re not busy enough. So one way to get busy is to give patients more of what they want. And we know that patients want you to accept their insurance. So how do we make this work, Wendy? I mean how do we mitigate the damage done by lower fees?

S3 00:06:19.701 Well, I think a lot about what we talked about in the last episode. Really about giving patients more of what they want and [inaudible] dentistry is key. So we know in many instances, the insurance companies are counting on the fact that when a patient comes into hygiene, they’re going to have an exam, bitewings, and a prophy. And if that’s all we do, they win. Right? They win because our production per encounter stays low, and really, dental insurance companies don’t want patients to have a lot of care. That’s why they work so hard to decline a lot of the services that really dentists should be getting paid for. So we teach a principle called the Next Dollar Phenomenon. And really optimizing the potential in the practice is how we win when we accept reduced insurance plans or reduced fees.

S2 00:07:10.860 Now the Next Dollar Phenomenon, we’re actually going to have a downloadable report on the Next Dollar Phenomenon and a description of it. But I want to walk through it real quickly so people have a sense of it. In dentistry, we have a relatively large fixed overhead. But once that fixed overhead is covered by production and collections, the next dollar that you collect, after the fixed expenses are covered, is much more profitable than before that. Right? So the next dollar– what’s the expenses on the next dollar production if you don’t have more team, you don’t have more anything. It’s just the same team, and you’re just doing $1 more. Well, $1 more. Let’s see, we’ve got some expenses to take out of there. We’ve got supplies, right? A certain percentage of that is going to go to lab. We may have some team production-based compensation or team bonuses, so there’s maybe a little bit there. So you add all that up, maybe that’s 11 or 12 percent. Which means that next dollar is 88% profitable. Right? So we’ll have a diagram that you can download on the website that explains the Next Dollar Phenomenon more thoroughly, but just know that the next dollar is super, super profitable. So if you have spare time on your hands, the insurance company’s going to pay you 70% of your normal fee. You’re way ahead to take that 70%. Way ahead. So one of the ways that we mitigate the damage is we utilize downtime by taking care of patients. And ultimately, that’s the value that we bring to the marketplace is taking care of patients. So any way you can find to increase the flow of patients, you’re going to do better.

S3 00:09:07.528 Another thing, too, Dr. John, is it doesn’t even have to be downtime. Right? We find, in hygiene especially, we may have a 60-minute appointment time that we’re not utilizing very efficiently. So when we look at how to maximize opportunities, or optimize opportunity in hygiene, or harness the principal of the Next Dollar Phenomenon, in hygiene a lot of it is same-day preventative services. So as I said before, we have hygienists every day that are looking for opportunities. Especially when we’re looking at high-risk patients. They need fluoride for adults. It’s not a covered benefit, but when we work hard on presenting the value to the patient, patients do accept these services. We may have patients that need sealants and rather than scheduling them to come back another day, which is a very high failed appointment, historically– sealant appointments are failed at a very high level because there isn’t a level of urgency. If we can adjust our system to enable us to do more while the patient’s here, it’s tremendously profitable. It’s amazing what happens when we have that culture of looking for same-day opportunities even on the hygiene side. And so that same principle applies. It may not be utilizing downtime – that’s part of it – but it may be revising our current systems and our current service offering to enable us to do more today.

S2 00:10:26.679 Yep. That’s so true. So true. All right. So now that we know if we have open time, accepting insurance is probably something that’s probably going to be more profitable, and we can take care of more patients. So that’s super. We can make the time that we have more productive. So that’s another strategy to mitigate the damage. And that’s what you were talking about, particularly with hygiene. And the same thing goes on the restorative side. We can do same-day dentistry. Again, we’re taking the time and we’re making it more productive. All right? So what happens if we’re full, if we don’t have enough time to treat all the patients that we have? So what’s the strategy then?

S3 00:11:12.349 Well, there’s a couple different options, right? I mean and I would say this is not a one=size-fits-all answer. It really depends on the bigger vision of the doctor. Where do they want to go? Do they want to ultimately have additional locations? Are they wanting to have a bigger impact in their community? Are they wanting just to have their one practice and just run that incredibly well? Those are some questions that the doctors really need to identify because the answers are going to be different depending on what their vision is.

S2 00:11:39.220 Yep. For sure. So at that point, there really is a fork in the road, and you have to decide one way or the other, don’t you? So one way is to build more capacity so as you can take care of more patients, provide more value to the marketplace, so you’re going to do better. The other way is to start reducing the number of plans. Take that very worst plan and drop it. And do that slowly and carefully. Don’t do them all at the same time. Do one; see how it goes. Do another; see how it goes. Because you are going to lose the patients. You’re going to lose probably 80, 90 percent of the patients even though they love you. Every survey has shown that on the medical side, patients will leave for $5. I mean that was the survey that was done by the AMA. So I don’t think dentistry’s that much different. It may be $10. But it’s not going to be that much different. So do that slowly.

S3 00:12:35.171 Our listeners probably know that, Dr. John. Yeah. Our listeners probably know that because we hear from doctors, “Oh, my gosh, I served this patient’s family for 50 years, and they left because they have a $15 co-pay. And they go to the guy down the street.” Now granted, if our patient experience is good, hopefully, they ultimately come back because there’s such a difference in service. But we hear it in dentistry, too. We know.

S2 00:12:58.234 Yep. It’s the same difference. All right. Very good. So what other strategies do we have to kind of mitigate some of these third-party payer misbehaviors?

S3 00:13:11.715 Well, we hear all the time about insurance companies are becoming even more bold, right? And so they’re denying services. That’s creating a huge headache, especially on the hygiene side. We’re seeing insurance companies really tighten up– and really, frankly, this could be a whole other discussion, but I think what they’re doing is very, very wrong. If your patient has a benefit for perio therapy, and we provide the care, they’re finding every reason they can to deny that care. And so that’s become a huge challenge and a frustration with dealing with third-party. And I think that’s part of why people are so anxious to drop these plans. You know we looked at– you said, okay, what happens if you’re so full? What’s the decision you make? And you mentioned that you can start dropping a few of the worst plans. And that’s great, and I’m glad you mentioned how practices need to do that carefully because we’ve seen some that will just send a letter to everybody, and then it’s this mass exodus in the practice. So you certainly have to be careful there. We see other practices, once they become full – like you said, there is a fork in the road – and they’re deciding to expand capacity in their location. We mentioned in the very last podcast that we did about expanding hours, the weekend hours. So some are adding capacity that way. But really, it is a conversation about where you want to go and who you want to be. Dr. John, I think what’s interesting, too, is when you mentioned earlier about the number of plans the practice accepts directly tracks to their profitability. And we’re seeing some of our members actually use that. Right? They’ll harness that. And they may be full at their one location, but they’re deciding to open another practice or acquire another practice five to eight miles away. And before they know it, they’ve got three, or four, or five, or six locations. I met with a doctor just last week that had grown to 15 locations in his community. And that’s another way to expand capacity without dropping the insurance plans, right? You’re just opening more availability, using that leverage of the third-party payers and what insurance companies supposedly bring to the table is more patients wanting care. And so I think that’s another thing that we really need to look at is you don’t have to start dropping the lower plans. You can choose to add another location and continue your forward growth.

S2 00:15:31.480 Yep. One of the things that I think is helpful when we look at the frustrations that we have with third-party payers is to know that we need to control the things that we can change. We know they’re going to do some bad behavior. We hope that the ADA, AGD, the dental groups are fighting the battle on the legal and regulatory front. And I know that they are. So I know that there is fight going on there, and it’s good reason to belong to organizations and to pay dues is because they use a portion of that money to fight these things that affect us all. But the thing I want to mention is that really it’s very, very helpful to focus on the things you can change because you can’t, in your office, change what insurance companies are going to do. They’re going to do what they’re going to do. They’re big. They’re powerful. They’re getting bigger and powerful. They’re merging. And so the environment is not getting better anytime soon. But we can control the things that we can control. We can control the fact that we have very clean claims. So a clean claims means the documentation matches what’s being charged, that the radiographs, the necessary radiographs, are included in the claim, the perio charting is included in the claim, any intra-oral camera photographs are included with the claim, so that they’re getting all the information that they need to pay it. And when all the information is there, the payment often becomes more automatic. But if the information isn’t there, that’s when we have lots and lots of trouble. So making sure that clean claims are going out. And I was in a practice recently that was having real problems with insurance AR. Their insurance AR or accounts receivable was going up, and up, and up. As it turns out, they really had not been doing a good job with clean claims. And so the claims were stuck at the clearinghouse, or electronic clearinghouse, that your practice management software sends those claims to. So they were stuck there, and nobody was checking. And there was tens of thousands of dollar of claims that weren’t clean that were just sitting there. All they had to do was fix the claim and send it in, and they would have gotten paid. So making sure that you focus on performing at a super high level on the things that you can control. That’s another way to mitigate the third-party payer misbehaviors.

S3 00:18:12.773 I totally agree. And narratives, all of these little things– we talk in our periodontal continuum about how to get the perio claim slip paid, claims paid more consistently. And everything that you mentioned is part of that. We even like to see with the probing, insert that probe into the bloody pocket and take a picture of the probe inserted. And include that with your probe test. If you provide really great documentation, you have a higher chance of getting paid on some of these claims. So it is incredibly frustrating, but as we’ve said, you can also ride that wave of insurance– patients with insurance will actually often accept more care. So there’s tremendous opportunities for that. One other thing, Dr. John, that I wanted to mention, is a lot of our members are having tremendous success offering in-house benefit plans or savers plans to patients that don’t have insurance. And there’s a tremendous amount of success with having that anyway. So when they’re eliminating the junkiest plans, they’re giving their patients an alternative to participate in the savers plan instead. And they’re converting some of those patients that may have had to leave their office into a benefit plan, or a discount plan, or a savers plan that makes sense for both the practice and the patient. In fact, that’s such a hot topic right now, I think we actually have invited a guest on for a future podcast that’s going to talk about those benefit plans and the value there. So I’m really excited about that podcast that’s upcoming because I think there’s a lot of exciting things happening in this area to help combat the frustrations that some of the third-party payers are bringing to the table.

S2 00:20:02.114 Yep. For sure. And those payment plans, or those discount plans, or in-house plans are extremely helpful in patient retention. And patient retention is very, very well correlated with profitability. So you hit a lot of– you get a lot of leverage with having a plan like that. All right.

S3 00:20:29.200 Absolutely And if they’re set up the right way, the patients really do appreciate that. So it hits two points, right? It helps with the third-party payer frustrations, and it also helps with giving patients what they want. So a lot of benefits there.

S2 00:20:40.333 Yep. That’s for sure. All right, Wendy. Well, thanks for joining me on our W Production podcast. And excited to be working through this six-part series of the major concerns that dentists have. So with that, I think it’s time to call it a day, Wendy.

S3 00:21:00.873 Awesome. Thanks so much, Dr. John. Always great information.

Resources:

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