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Wednesday
May112011

« Dr. Rhonda Savage Explores Supplier and Patient Communication Options »

Our world is different and will never be the same. Faced with a 15 percent cut in reimbursement by WDS, many practices must make a choice: Accept the reduction in reimbursement or drop off as a contracted provider. Which will you choose?

Change is difficult
Good leaders, however, gather information, analyze the possibilities and then make the hard decision. The decision you make is personal; the factors that influence your decision are based upon your practice demographics, overhead and personal philosophy.

To answer the question, “Should I stay or should I go?”, you need accurate reports about your patients on the plan and the comparative fee schedule. What part of your income is derived from this patient population? You may need support from your software management company to obtain accurate information; then rank the plans from best to worst.

Look at the ramifications of eliminating plans. If you’re looking at elimination, consider eliminating the plan that affects the fewest number of patients and pays the poorest. Don’t be hasty — before elimination, you may need to consider ramping up your marketing efforts to replace these patients. Depending upon your practice style, most general dentists need 10-20 new patients/month to maintain their patient base. You will have patients leave based upon insurance reimbursement. If you would like to grow your practice, you’ll need at least 25-40 or more new patients/month per doctor. The need for new patients varies by specialty provider.

Why ramp up your marketing when a certain percentage of your new patients will come in with this plan? Let’s say your patient base is comprised of 25 percent WDS and Delta patients. You could make the assumption that approximately 25 percent of your new patients will belong to this plan. It’s the 75 percent that you’re truly looking to gain to offset those who may leave. The elephant in the room is truly the question: How many will leave because you no longer participate? Many dentists say, “My patients are loyal. They’d never leave us! We provide such great customer service and we have a relationship. They know us!”

Doctors Bill Hunt and Dawn Hunt, both general practitioners on the Eastern seaboard, believed their patients wouldn’t leave. Bill told me about this one family, however, that changed his views regarding patient loyalty. The family had been with them for years. Several years ago, the teenage daughter had her wisdom teeth removed on a Friday by an oral surgeon. Drs. Hunt and Hunt were out for a jog when Bill got a phone call. The father was on the phone; both parents were concerned the daughter was bleeding excessively. Bill said, “We’re out for a run and we’re just around the corner from your place. If you don’t mind that we’re all sweaty, we can stop by and take a look.” The parents were very appreciative.

Six months later, the father was in for his recare appointment. Before his exam, he looked Dr. Hunt in the eyes and said, “Bill, I need to let you know that we’re ok for this appointment, but I can see the writing on the wall. Our insurance coverage has changed. I have to pay now, and I’ve never had to pay before. The way times are, I’m certain we’ll have to change dentists in the near future. I feel bad, because we don’t want to go, but I wanted to let you know, we’ll probably need to switch.”

Bill said, “I do understand how you feel. If you do have to make this decision and find you’re not happy with your new office, all it will take is a phone call from you to come on back in. We will certainly miss your family!” And then he proceeded to do his exam. After a few minutes, he sat back a bit and said, “I’m just curious. How much do you have to pay now “out of pocket?” With all seriousness, the patient said, “$2.00.” At first, Bill was speechless. He told me he was sure the shock registered on his face. His mind churning, he thought: “All I’m worth is $2.00! That’s all I’m worth?” Dr. Hunt gave me permission to tell this unfortunately true story.

Don’t wear rose colored glasses: Ask your financial coordinator and/or insurance coordinator what patients say when they have to pay more “out of pocket.” Carefully plan for the future if you plan to stay or go. Here are some tips for your practice that are helpful to consider whether you choose either direction.

If you stay on as a provider, something has to give. When you look at the high cost of a discount, you need to look at the direct impact on your gross production AND you need to consider your overhead, including staff wages and benefits, supply costs and laboratory fees.

Supply costs:
You’ll need to expend the supplies to produce. Expect a higher overhead. What’s high? The typical solo practitioner has a range of overhead from 5-7 percent of collections. This national range does not include equipment repair, equipment purchase or implant/Cerec/E4D materials. Implant and Cerec/E4D supplies belong in the laboratory category. The 5-7 percent range is simply expendable supplies. With careful management, you can control your costs to 5 percent or less, but not unless you streamline and consider your resources.

Supplies:
• Streamlining: Employees should not rob or borrow supplies from the adjacent operatory. Supplies should be in a central location, maintained by a tag control system. This prevents last minute ordering, which adds to the bottom line.
• Consider shopping prices with different suppliers. You may feel your supplier holds you hostage by saying, “If you’re not ordering bulk from us, we won’t be timely in your repairs.” Yes, they will. They need the production also and hope to gain your business back. Look into buying groups that have purchasing power. One such group is Synergy.com. This is a conglomeration of dentists that have a purchasing agreement with Darby. You can get the products up to 18-24 percent less, depending on the size of your order. These are name brand products; you’re not limited to Darby products. Once you’ve compared rates, shipping costs and the time of your employees, consider negotiating with your current supplier if you’re happy with their services.
• Be careful with employee time spent ‘shopping’ catalogues. While it might seem like a savings, you need to consider the time she spends in the shopping process. Bulk ordering with one supplier can save you money.

Laboratory fees:
Lab fees vary depending on the lab you choose. Overseas labs have lower overhead costs. Concerned about the quality of materials? Choose a lab that has the highest European ISO rating and send the impressions out through an American lab. Your costs will drop significantly and you can still be assured of quality. Look at your current lab fees and current reimbursement. You should be able to 4-5 times the lab fee and know you’re making money on the procedure. Now compare to the pending reimbursement rates.

1. Lab fees also vary if you have an in-house milling unit, like Cerec or E4D. If you’re considering the purchase of E4D or Cerec, look at your productivity in the crown and bridge department. If you don’t have case acceptance currently or aren’t diagnosing the dentistry, don’t expect Cerec or E4D to change your current status. You’ll simply be adding to your overhead. Also, you’ll need to consider your willingness to train and delegate if you’re thinking about one of these units.

2. With the use of E4D or Cerec, dentists often say: “I save so much on lab costs with every unit!” Yet they often do the work themselves and lose chair time, or stay after hours to create and mill the unit.

3. If you are utilizing your assistant, congratulations! Look at the finances, however: dentists often don’t consider the staff time as ‘laboratory time’ to get a true sense of whether or not you’re making money with the milling unit. It’s not simply about the number of units you produce: What are the true costs of the production, including employee time? You’ll need to figure this into the cost/benefit ratio.

Staff overhead:
Often, staff costs go up with PPO participation. You have to staff for the gross production, which often requires an increase in staffing. Because of lower reimbursement, staff wages can be high causing a burden on the practice. At times, on the opposite side of the pendulum, staff wages are too low because there’s no room for increases. Staff burn out, systems collapse and the practice suffers high turnover. Constant turnover in a practice signals a serious concern.

With PPO participation, something has to give. This is truly the issue that sticks in many dentists’ craw: If you continue doing things the same way, you’ll have higher overhead and less net. It’s time to change.

The first change is to delegate, delegate, delegate. With participation, you need to be more efficient than before, which means analyzing your systems, plus involving and training your team within the letter of the law. Regardless of state law, there are two things your team member can do for you: they can talk and they can write.

Are you writing up your own chart entries, seating or dismissing your patients and/or doing all the talking? If a doctor talks five minutes more per patient than necessary and sees 30 patients a day, that’s 150 minutes of lost doctor production. Some dentists want to hang onto all the talking. What will need to change in your practice to meet these changing times? Pre- and post-treatment explanations, answers to commonly asked questions, and the advantages/disadvantages for a procedure are something the team can do for the doctor. Team members can also have a direct involvement with case presentation, as delegated by the doctor.

Many dentists are perfectionists and resist delegation because they want to do the work themselves. Delegation requires training, supervision, and continual reinforcement to ensure quality. Micro-management, however, can drive morale down. When morale goes down, production goes down. Staff will give up, saying, “Why do I bother? She’ll do it over anyway.” Some doctors prefer to ‘do it all.’ They chart, post the codes, work on the schedule, and complete the lab work: This is fine, but it depends upon your desire for the future of your practice. If reimbursement goes down and overhead goes up, something needs to change for the income of the practice to stay the same or grow.

Ask your staff this question: “If this were your practice, what would you do to increase our production and decrease our overhead?” Listen and make a sincere effort to change anything you do that wastes their time or the time of the patient. Read What Got You Here Won’t Get You There by Marshall Goldsmith. It’s written for successful people, analyzes the habits that we all have — the ones that hold us back from reaching the next level of success. Are you willing to change in these changing times?

Consequences of participation can mean shorter appointments, a busier schedule, and trying to fit in dentistry on a daily basis to make ends meet. Staff and doctor burnout can result, especially if the practice continually runs into lunch or late at the end of the day. The patient population can change; there often is less perceived value for the dentistry by the patient.

If you decide to opt out of participation, consider the team’s verbal skills when they get the call that says, “Do you take my insurance?” Or, “Are you in network with my insurance?” Or: “Are you a preferred provider for my insurance?”

Train your team to say, “We do have many patients here with your insurance; could I have your name please?”

Phone skills are crucial in this instance. Ask the front office team to use the patient’s name throughout the conversation. A friendly tone of voice, enthusiastically talking the practice and the doctor up does matter. Build value, show empathy and concern, and ask about the patient’s needs. Find out how they heard about your practice.

Then let them know, “We’re not a contracted provider for your particular plan, but the patients come here because our doctor is amazing! He is so kind and caring. He decided early on that he wants all of his patients to receive the same high quality of care. He’ll spend time talking with you about your choices; he’s great at giving patients options and making the dentistry fit their time and budget.”

A tough decision
You’re faced with a difficult decision; one that needs to be weighed carefully, based upon your practice needs. Should you stay or should you go? Use the checklist below to aid in your decision-making process, and remember; there is no single solution — all practices are unique.

A checklist to help you streamline

What can you do, whether you stay or go?
1. Make certain you have great business systems in place.
2. Carefully track your adjustments and be involved in reviewing the reports within your practice.
3. Have your team actively work recare and also reactivate old patients that you’ve not seen for awhile.
4. Consider block scheduling, clear financial policies and make certain you are charging for the dentistry that you do.
5. Be careful of courtesies that can affect your bottom line. Invest in marketing to build your patient base.
6. Don’t be ‘doom and gloom’ with your staff; inform but don’t overwhelm the team. How you are in the morning will set the tone for the day.
7. Look into laboratory and supply options.
8. Evaluate your current marketing methods.
9. Train your team to speak for you. Be prepared with verbal skills to effectively communicate your message.
10. If you decide to not participate, get there first with your patients by educating them about the changes in their benefit plan. Acknowledge their financial concerns, which are an emotionally driven concern. Use the ‘feel-felt-found’ method: You understand how they feel, some patients have felt the same way, but what they found is that their benefit plan has severe limitations. “We’re thankful that you have coverage; many patients come to us without dental coverage. With your plan, the doctor made a decision that he wants to treat all patients with the same high quality of care. We couldn’t use the same high quality lab, train our team or provide the current technology to give you the care you deserve.”

-Rhonda R. Savage, DDS
Fox Island, WA