We Reveal How I Found Half a Million in Hidden Write‑Offs
Are Your Insurance Contracts Costing You More Than You Realize?
In this episode, I take a closer look at how contractual write-offs, insurance mix, and network leasing can quietly eat away at practice revenue and owner income, often without being obvious.
You’ll learn the five numbers every practice owner should be watching:
- Insurance mix
- Write-off percentage by plan
- Net collections
- Effective hourly rate by payer
- Patient concentration by insurance plan
I’ll break down how to calculate your effective hourly rate and why a procedure that looks profitable on paper may actually be costing your practice money once insurance adjustments, collections, and chair time are factored in.
But this isn’t simply a conversation about dropping insurance plans.
We’ll explore practical options for improving your payer strategy, including renegotiating fees, optimizing an in-network practice, adopting a hybrid model, or strategically transitioning away from certain plans. You’ll also learn how to approach timing, patient communication, front-desk scripting, membership plans, recall, and case acceptance so you can make changes without disrupting the patient experience.
Most importantly, you’ll walk away with a clear, data-driven starting point. We’ll identify three reports you can pull right now to better understand where your practice is making money, where it may be losing money, and which insurance relationships deserve a closer look.
Key Takeaways
- Learn how to calculate write-off percentages by insurance carrier using 12 months of production data.
- Identify two common traps that can hide profitability problems: outdated fee schedules and network leasing.
- Understand the five key numbers that should guide your insurance strategy.
- Calculate effective hourly rate by payer and compare collections against your cost per chair hour.
- Discover alternatives to simply dropping an insurance plan, including renegotiation, optimizing your in-network model, and creating a hybrid approach.
- Learn how to strategically transition away from plans when necessary while maintaining clear communication with patients.
- Get three actionable steps to complete this week: analyze write-offs by plan, identify active patients by insurance, and calculate effective hourly rates for your top procedures.
Your insurance strategy shouldn't be based on assumptions. It should be based on your numbers.
If you are looking to get some guidance for your practice, let us know! The KLAS Solutions Coaching team is here to help! Check out our website: klasdentalcoaching.com or klashealthcarecoaching.com to learn more!
Transcript
Here's a question that decides more about your income, your stress and your future than almost any clinical decision you'll ever make.
Speaker A:Who's actually setting your fees?
Speaker A:Is it you?
Speaker A:Or is it an insurance company you signed a contract with years ago and have never looked at since?
Speaker A:For a lot of practices, the answer is that the payer you barely remember agreeing to is quietly controlling your production, their schedule and take home pay.
Speaker A:Not through anything dramatic, through a fee.
Speaker A:Sitting in a filing cabinet doing its work every day on every procedure without anyone in the building ever looking at it.
Speaker A:I sat across the table from an owner not long ago who had every reason to be doing well.
Speaker A:Full schedule, loyal patience, a team that had been with her for years.
Speaker A:And she was taking home less than she expected to when she bought the practice.
Speaker A:We looked at her overhead and staffing, the schedule, everything was reasonable.
Speaker A:Then we pulled her adjustments by carrier.
Speaker A:And there it was.
Speaker A:A plan she had joined in her first year when the chairs were empty and she needed anyone who would walk through that door.
Speaker A:Had grown to nearly a quarter of her patient base and it was paying her less per hour than it cost her to keep her chair running.
Speaker A:She had outgrown the reason she signed that contract, probably I would say about six years earlier.
Speaker A:The contract though, never noticed.
Speaker A:This is the final of our series and we're ending on a decision that shapes all the others.
Speaker A:Today I I'm going to show you how to run this analysis for your own practice.
Speaker A:The five numbers that make the decision for you and how to act on what you find without blowing up your schedule.
Speaker A:This is the dental business podcast brought to you by Class Solutions one team, five divisions aligned around your practice and I'm Phil Cole.
Speaker A:So eight episodes, eight things every practice needs help with and we close on the biggest strategic call.
Speaker A:An owner makes insurance or fee for service and how to build the practice you actually want.
Speaker A:Let me be clear and let me be clear eyed and not, you know, ideological about this because this topic attracts more heat than almost anything in dentistry.
Speaker A:In network, insurance is not evil.
Speaker A:Going fully fee for service is not the right answer for every practice and the owners who tell you otherwise, well, I think are usually describing their own market and their own patient base and their own abilities of mental abilities on surrounding that with insurances and they're not yours.
Speaker A:This is a math and a strategy decision.
Speaker A:It's not for you to take lightly or make it some type of a belief, but you cannot make it well if you never actually run the numbers and most owners never have.
Speaker A:So let's start with a PPO contract.
Speaker A:And it's stripped of everything else.
Speaker A:You agree to accept a reduced fee in exchange for being on that plan's list and getting patient flow from it.
Speaker A:This is the whole trade.
Speaker A:Access for price.
Speaker A:The difference between your full fee and the contracted fee is the write off.
Speaker A:Here is why that write off is so easy to ignore.
Speaker A:It never arrives as a bill.
Speaker A:Nobody invoices you for it.
Speaker A:At the end of the month, it shows up on your ledger as a contractual adjustment.
Speaker A:One line among hundreds, and then it disappears into the past.
Speaker A:It is not money you spent.
Speaker A:It is production you never got to keep.
Speaker A:And because it never feels like an expense, most owners have never added it up.
Speaker A:So add it up.
Speaker A:This is the first assignment of the episode.
Speaker A:And you can do that.
Speaker A:You can do this.
Speaker A:This week, pull a production report for the last 12 months, broken out by insurance carrier.
Speaker A:You want three columns for every payer.
Speaker A:Gross production at your full fee.
Speaker A:Contractual adjustments, Net Productions.
Speaker A:After the adjustment, your write off percentage for that plan is the adjustment divided by the gross production.
Speaker A:Let me show you how fast this compounds.
Speaker A:Say your practice produces $2 million a year at full fee.
Speaker A:The 65% of that production comes from patients on plans you're in network with.
Speaker A:If your average write off across those plans is 35%, that is $450,000 a year in Contractual Adjustments.
Speaker A:Nearly half a million dollars of dentistry delivered, documented and never paid for over five years.
Speaker A:That is more than $2.2 million.
Speaker A:And notice that this practice is collecting around 2 million and a half.
Speaker A:That is a typical picture, and in the practice that size.
Speaker A:The annual write off is frequently a six figure number.
Speaker A:It is often one of the largest single numbers in the entire practice.
Speaker A:Larger than the rent, sometimes larger than the payroll of the whole hygiene department.
Speaker A:And it's been invisible the whole time.
Speaker A:Now, before you run that report, there are two traps you need to know about.
Speaker A:Because they change when what the number means.
Speaker A:Now, the first trap is a stale fee schedule.
Speaker A:Your write off percentage is measured against your full fee.
Speaker A:If you have not raised your full fees in three or four years, which is not uncommon, your write off percentage looks flattering and it is lying to you.
Speaker A:The gap looks smaller because your own numbers stop moving, not because the plan got more generous.
Speaker A:Here is what that looks like.
Speaker A:Say your crown fee has sat at $1,300 for four years, while comparable offices in your area moved it to $1,500.
Speaker A: A plan paying you: Speaker A:It is.
Speaker A:It is 30%.
Speaker A:The plan didn't change, your ruler did.
Speaker A:Your full fee should be reviewed every year and set at a defensible percentage of your market based on real regional fee data, not on what feels comfortable to change.
Speaker A:Your full fee is the ceiling on everything else in this conversation.
Speaker A:And if the ceiling is low, everything under it is going to be low.
Speaker A:Now the second trap catches almost everybody and it is network leasing.
Speaker A:You are very likely in network with plans you never signed a contract with one signature on one agreement can grant access to the fee schedule to a whole stack of other payers through leasing and shared network arrangements.
Speaker A:Those least assessed points frequently pay at the lowest schedule in the stack.
Speaker A:So the practice ends up being paid at its worst rate by carriers the owners have never heard of for patients the owners assumed were out of network entirely.
Speaker A:So here's what to do about it.
Speaker A:Write to every carrier you are directly contracted with and request in writing a complete list of every network leasing arrangement and third party administrator that has access to your contracted fee schedule along with the fee schedule attached to each one.
Speaker A:You are entitled to know who is using your rates when that list comes back.
Speaker A:Compared against the carriers showing up in your production report, most owners find at least one surprise.
Speaker A:And sometimes that surprise is the worst pain relationship in the practice.
Speaker A:Now one more thing about the contract because the fee is not the only term that matters.
Speaker A:Your agreement also carries the rules that decide how the fee gets applied.
Speaker A:Downgrade provisions where the composite on a posterior tooth gets paid at the amalgam rate.
Speaker A:Bundling where two procedures you performed and documented separately get paid as just 1.
Speaker A:1.
Speaker A:Frequency limitations on exams, radiographs and periodontal maintenance.
Speaker A:Missing tooth clauses.
Speaker A:Least expensive alternative treatment language.
Speaker A:Every one of those is a second discount layered on top of the fee schedule discount and every one of them lands on a specific part of your production.
Speaker A:Two plans with an identical write off percentage can perform completely differently once these provisions hit your actual procedure mix so you have your write off percentage.
Speaker A:That alone does not make the decision.
Speaker A:And I want to be very careful here because this is where owners get emotional and make an expensive move for the wrong reason.
Speaker A:A plan that pays less but fills your schedule with patience you would not otherwise have can still be worth keeping.
Speaker A:Empty chair time is worth zero.
Speaker A:A discounted procedure in a chair that would otherwise sit idle is real money.
Speaker A:So the question is never does this plan discount my fees?
Speaker A:Well of course it does.
Speaker A:That is the entire point of the contract itself.
Speaker A:The Question is, what is this plan earning me for the time and the capacity it consumes?
Speaker A:There are five numbers that answer that and I'm going to walk through it all five right now.
Speaker A:Get these five and the decision stops being a debate and starts being arithmetic.
Speaker A:Number one.
Speaker A:Your insurance to fee for service mix of everything you collected last year.
Speaker A:What share came from patients covered by plans you're in network with and what share came from everybody else?
Speaker A:Most owners, I will tell you, always guess at this and most guesses are wrong.
Speaker A:And when I say wrong by wide margin, you need the actual figure because it tells you how much of your practice is being priced by somebody other than yourself.
Speaker A:Now, one detail that matters when you sort it a patient with insurance from a plan you're not contracted with belongs to in the fee for service bucket, not the insurance bucket.
Speaker A:You set the fee.
Speaker A:Cash patients out of network patients and membership plan patients all go on the same side of the line.
Speaker A:The question is not whether the patient has insurance.
Speaker A:The question is who sets the fee.
Speaker A:Number two, write off percentage by plan.
Speaker A:We just covered it 12 months plan by plan.
Speaker A:Contractual adjustment divided by gross production at your full fee.
Speaker A:Number three, net collections by plan.
Speaker A:This is the one almost nobody runs.
Speaker A:It is where the quiet losses hide.
Speaker A:After you have already accepted the write off of the amount you were actually entitled to collect, how much did you really get?
Speaker A:Take your collections from that payer and divide them by gross production minus the contractual adjustments.
Speaker A:That percentage is your net collection rate for that plan.
Speaker A:Now here's why that matters.
Speaker A:Dentists downgrades requests for documentation and the patient portion nobody ever chased.
Speaker A:All live in that gap.
Speaker A:A plan that writes off 32% and then collects only 91% of what remains is not a 32% haircut.
Speaker A:It is close to a 38% haircut.
Speaker A:And now two plans that looked identical on the fee schedule are separated by six points of real money.
Speaker A:Run this and you will find that some payers are expensive not because of the fee, but because of the friction that's going on.
Speaker A:Number four.
Speaker A:Effective hourly rate by payer.
Speaker A:This is a number that makes the decision for you.
Speaker A:Here's the calculation for a given payer.
Speaker A:Take what you actually collected and divide it by the chair hours it took to produce it.
Speaker A:That is what an hour of your capacity is worth to that payer.
Speaker A:Now let me put real numbers on it so that you can see what this does.
Speaker A:So take a crown.
Speaker A:Your full fee is $1,500.
Speaker A: Plan A has you contracted at: Speaker A:Plan B has you contracted at 825.
Speaker A:A 45% write off.
Speaker A:Same tooth, same materials, same lamb bill, same share time.
Speaker A:Call it a 75 minute prep.
Speaker A:Sorry, 17.
Speaker A:75 Minute prep and a 30 minute seat.
Speaker A:So one hour and 45 minutes of doctor time across the two visits at your full fee.
Speaker A:That crown earns $857 per hour on plan A, $600 per hour on plan B.
Speaker A:Excuse me, $471.
Speaker A:Same work, same day, same stress, and almost $400 an hour of difference between the top and the bottom.
Speaker A:Now hold that against what an hour of doctor chair time can cost you to operate, because that's the comparison that really matters.
Speaker A:Take your total overhead, exclude doctor compensation and divide it by the clinical hours the doctor actually works in a year.
Speaker A:This is once again the break even point that we talk about.
Speaker A:A practice collecting a million dollars and a half at 62% overhead is spending about $930,000 a year to be open.
Speaker A: Now spread that across: Speaker A:Now look at what that does to our crown.
Speaker A:Plan B at $471 an hour loses money on every single one.
Speaker A:You're not underpaid on that crown.
Speaker A:You are subsidizing it.
Speaker A:And I think that's important to understand.
Speaker A:Plan A at 6 at 600 is roughly break even.
Speaker A:Which means the doctor did the crown for free.
Speaker A:Your fee for Service patient at 857 funds the practice and pays the owner.
Speaker A:That's the whole episode in one example.
Speaker A:And notice that nothing about the clinical work changed.
Speaker A:The only variable was who was paying.
Speaker A:A word on where the chair hours come from, because this is where people fudge the math.
Speaker A:Do not use the appointment lengths sitting in your scheduling template.
Speaker A:Those were set years ago and they were usually optimistic.
Speaker A:Have your team actually time your most common procedures for two weeks, start to finish, including the numbing, the impressions, scans and the seat.
Speaker A:Honest time gives you an honest rates.
Speaker A:Flattering time gives you a flattering rate.
Speaker A:And you'll keep a plan that you should have dropped.
Speaker A:One more refinement before you run this yourself.
Speaker A:Do not run it on a single code.
Speaker A:Plans do not discount evenly.
Speaker A:This is so important.
Speaker A:Many schedules set relatively close to full fee on hygiene and preventative, Then take the deepest cuts on crowns, endo surgery, everything else carrying a lab bill or a real doctor time.
Speaker A:A plan can look reasonable on a diagnostic code and be brutal on the work that actually pays your practice.
Speaker A:So make sure you run your effective hourly rate across your top 20 or top 25 codes, weighted by how often you actually perform them.
Speaker A:For each plan, that gives you the truth about the practice instead of a headline.
Speaker A:Number five, Patient based concentration by plan.
Speaker A:For every plan, how many active patients do you have on it?
Speaker A:Meaning that the patients seen in the last 18 months, you can go to 24 months.
Speaker A:And what percentage of your total active base is that?
Speaker A:This number does not tell you whether a plan is good, but it tells you how exposed you are and it governs every decision you make.
Speaker A:Next, put those five numbers on one page, plan by plan, one row per carrier, one column per number, and the strategy stops being a philosophical argument you have with yourself at 11 or at 12 o' clock at night, you can see which plans are carrying the practice and which ones are keeping you busy for free or subsidizing.
Speaker A:You will usually find one or two that are generally costing you money to participate in.
Speaker A:And that is being generous, in my opinion.
Speaker A:Those are your candidates.
Speaker A:I just want to stop real quick just to say that this episode is brought to you by Class Solutions.
Speaker A:From your first practice to your final transition.
Speaker A:Five divisions under one roof carrying you the whole way.
Speaker A:So let's get back to it.
Speaker A:So the math tells you a plan is hurting you.
Speaker A:Now comes the part where most owners stop.
Speaker A:The fear is always the same.
Speaker A:Drop the plan, lose a wall of patience overnight, watch the schedule go dark and spend a year regretting it.
Speaker A:I just don't want to do that.
Speaker A:Well, let's deal with that honestly.
Speaker A:Because that fear is exactly why owners sit on numbers they already know are bad.
Speaker A:Sometimes this happens.
Speaker A:I shouldn't say sometimes, it just.
Speaker A:It happens more often.
Speaker A:For years they sit on this.
Speaker A:Start with the number that sizes the risk, which each patient which is patient concentration.
Speaker A:A plan that represents 3% of your active patients is a completely different decision from one that represents 30%.
Speaker A:At 3%, you can act this quarter with every little at stake.
Speaker A:Get rid of it.
Speaker A:At 30%, you're looking at a phase plan over 18, maybe 24 months with several things built.
Speaker A:First, same analysis, completely different execution.
Speaker A:Know which one you are before you touch anything.
Speaker A:The math that removes the fear.
Speaker A:Here's the signal.
Speaker A:Most useful piece of math in this episode, and I want you to write it down.
Speaker A:When you drop a plan, you do not have to keep every patient to come out ahead.
Speaker A:You only have to keep enough of the revenue to cover what the plan was paying you in your network and.
Speaker A:And you already know that figure because it is the inverse of your write off.
Speaker A:So if a plan writes off 40%, you are keeping 60% on every dollar of production you deliver for it.
Speaker A:Out of network, those same patients pay your full fee.
Speaker A:So you're break even at 60% retention of that revenue.
Speaker A:Keep 60% and you are exactly where you were.
Speaker A:The fewer patients, I should say, with fewer patients and more open chair time.
Speaker A:Keep 75% and you're now well ahead.
Speaker A:And you got capacity back on top of it.
Speaker A:Everything above the line where your write off used to sit is now becoming a gain.
Speaker A:Put dollars on it.
Speaker A:Say a plan accounts for $200,000 a year of production at your full fee and it writes off 40%, you're collecting 120,000 from it.
Speaker A:Now you go out of network.
Speaker A:If the patients representing 60% of that production stay, they produce 120,000 at your full fee.
Speaker A:Same money, but roughly 40% of the chair time that plan was consuming is now open.
Speaker A:Fill even half of it with patients paying full fee and you're ahead by tens of thousands of dollars a year.
Speaker A:Notice that I said retention of revenue, not retention of patients.
Speaker A:Those are different numbers.
Speaker A:The patients who leave first are often the ones who only care and came because you had free cleans twice a year.
Speaker A:Or it was because of the insurance.
Speaker A:Strictly, the ones who stay tend to be the ones with real treatment needs and real trust in you.
Speaker A:So you can lose 30% of the heads of a plan and keep well over 70% of the dollars.
Speaker A:Now, two facts sit next to that math and you need to plan for both of these.
Speaker A:In my opinion, out of network, patients pay a much larger share directly to you.
Speaker A:So your ability to present fees, collect at time of service and set up financing has to be strong before you do this.
Speaker A:And some of the patients who leave were sending you referrals.
Speaker A:So build a cushion into your target rather than aiming at the break even line.
Speaker A:Exactly how do you execute that?
Speaker A:Well, first sequence set.
Speaker A:This is almost never one dramatic move.
Speaker A:At least it shouldn't be.
Speaker A:Start with the plan that has the worst effective hourly rate and the smallest share of your active patients.
Speaker A:This is you, your learning move.
Speaker A:You get to run your entire process.
Speaker A:The letters, the phone calls, the front desk, scripting out of network, claim filing on a small population where a mistake costs you very little, then you take what you learn to the bigger one.
Speaker A:Second, respect the calendar.
Speaker A:Go read the termination provision in your agreement because it will specify a written notice period, commonly 60 to 90 days, and it'll tell you how patients in active treatment get handled.
Speaker A:Many contracts require you to finish treatment already in progress and at the contracted rate.
Speaker A:So know that before you set the date and do not be surprised, I guess, by it afterward.
Speaker A:Then choose your date deliberately.
Speaker A:Do not go out and network heading into your slowest stretch of the year.
Speaker A:And do not do it the month before you take on a long vacation.
Speaker A:But give yourself six months of Runway between the decision and the effective date.
Speaker A:That Runway is where the work happens.
Speaker A:Third, and this is where the whole season comes together.
Speaker A:Make sure the practice is ready to catch these patients.
Speaker A:So here's the honest checklist.
Speaker A:Your recall system has to be working.
Speaker A:You cannot afford to lose patients passively at the same time that you're losing them actively.
Speaker A:Your case acceptance conversation has to be trained out of network.
Speaker A:Patients ask better questions and expect a real answer about value.
Speaker A:Your front desk has to file an out of network claim cleanly and explain the benefits estimate without flinching.
Speaker A:You need a membership plan in place for patients with no benefits and for the ones who decide.
Speaker A:The plan was never worth much anything, much of a plan anyway.
Speaker A:And you need a source of new patients who are not coming from that plans from any of those plans directly.
Speaker A:This is why the order of this series matters.
Speaker A:You earn the right to make this move by first building a practice that patients do not want to leave.
Speaker A:A practice with weak recall, untrained case presentation and no new patient engine should not be dropping anything.
Speaker A:You have to fix that first, then come back to this plan.
Speaker A:The communication like a clinical protocol, how you leave a plan determines how many patients leave with it.
Speaker A:Patients who get a cold from I'm sorry, get a cold letter from you with 60 days notice behave very differently from patients who've been told, personally told early and been given options.
Speaker A:Here's a sequence that works.
Speaker A:90 Days out, the doctor personally calls the highest value and longest tenured patients on that plan.
Speaker A:Not the front desk, but you.
Speaker A:It takes a few evenings and it protects the relationship that matters most.
Speaker A:60 Days out, a letter goes to everybody else and it does three things.
Speaker A:It says plainly that the practice is leaving the contract, not leaving the patients.
Speaker A:It explains exactly what changes that you will still file, the claim that most plans still carry out of network benefits and what a typical estimate will look like going forward.
Speaker A:And it gives a reason to stay that has nothing to do with price, which it is about the care and the team that they already know and trust.
Speaker A:Then 30 days out, your team Raises it at every appointment, warmly, with no apology in their voice.
Speaker A:That last part is not a small detail.
Speaker A:If your team is going to be apologetic about this decision, your patients will be too brief.
Speaker A:The whole team.
Speaker A:Give them the words.
Speaker A:Let them ask their question in private long before the first patient ever hears about it.
Speaker A:And make sure every person in that building can explain the change in two calm sentences.
Speaker A:Something like this.
Speaker A:We've decided to leave that plans contract so we can keep giving you the time and the care you are used to here.
Speaker A:You still have out of network benefits.
Speaker A:We will still file your claims for you and we'll always give you an estimate before any treatment.
Speaker A:And here's what realistically happens.
Speaker A:After the effective date, there is a dip, usually in the first three to six months.
Speaker A:So don't panic.
Speaker A:Hygiene holds better than restorative because the relationship there is strongest.
Speaker A:And the dollars per visit, well, of course they're the smallest, so you'll lose some patience.
Speaker A:You were sure would stay and you will keep some you were sure would go.
Speaker A:The gap closes two ways.
Speaker A:Through the higher value of the work you are still doing and through the chair time that just came back to you, which you now will fill with patients who pay a rate that funds your practice.
Speaker A:Now, before you go terminate anything, understand that dropping a plan is one door and for a lot of practices it is not the right one.
Speaker A:There are three others.
Speaker A:Most owners never even try.
Speaker A:But before any of them there is a foundation that every one of them stands for.
Speaker A:The foundation is your full fee.
Speaker A:I said earlier that your full fee is the ceiling on everything and I want to close that loop.
Speaker A:It sets the patient portion on services the plan does not cover.
Speaker A:It sets your position the day you go out of network.
Speaker A:It determines what your write off percentage actually means.
Speaker A:Review it every year against real regional fee data.
Speaker A:Adjust it deliberately and stop treating a fee increase as something that you have to apologize for.
Speaker A:No door on this list works well with a stale fee behind it.
Speaker A:Door 1 Renegotiate.
Speaker A:This is the most underused option in dentistry.
Speaker A:Most owners have never once asked for a fee schedule review.
Speaker A:They assume the rate is the rate and it's not.
Speaker A:Write to your provider relations contact, request a review in writing and make the case for specifics.
Speaker A:The geography you cover and the access you provide in it.
Speaker A:The procedures you keep in house rather than referring out which saves that plan money.
Speaker A:Your volume on the plan, your claims history, the number of years you have been contracted without a rate change.
Speaker A:Timing matters here.
Speaker A:Ask well ahead of your contract anniversary.
Speaker A:Don't do it, which we see a lot after it and expect the first answer to be no.
Speaker A:Plenty of owners here know I would say once and they automatically conclude see, I told you this is pointless.
Speaker A:And they never ask again.
Speaker A:The owners who get increases usually ask a second time, a third time with better data each time, and they ask every 18 to 24 months as a matter of routine.
Speaker A:You will not always get a yes, that's for sure.
Speaker A:You will sometimes get a small increase.
Speaker A:A small increase applied across every procedure for every patient on that plan for the next several years is real money though, in exchange for one letter and one phone call.
Speaker A:And if you are sitting inside a leased network arrangement, there is more surgical version.
Speaker A:There's a more surgical version of this.
Speaker A:Get that list of every access point using your fee schedule.
Speaker A:Find the ones paying your leased and terminate that single access point while keeping the direct contract that actually feeds you.
Speaker A:Most owners have no idea that it is even available to them.
Speaker A:Door number two Stay in network and run the practice so well.
Speaker A:The the plan starts to work for you now.
Speaker A:This is legitimate strategy and it is the right answer for plenty of practices, particularly in markets where the patient base is heavily insured and going out of network means going out of business.
Speaker A:If you're in network, your margin comes from throughput and mix rather than from price.
Speaker A:That means recall that runs itself a hygiene department with strong reappointment, no shows near zero, larger and more complete case sizes, clean claims that get paid the first time and collections that do not leak.
Speaker A:Everything we covered this season a well run in network practice out earns a sloppy fee for service practice every day of the week and it's not close and we've talked about that.
Speaker A:Door three Just go hybrid.
Speaker A:This is where most practices should land.
Speaker A:You're not all in, you're not all out.
Speaker A:You stay on the two or three plans that genuinely feed you and pay above your cost per chair hour and you exit the ones that do not.
Speaker A:That keeps patient flow where the flow is worth having and it takes back the capacity that was being consumed at a loss.
Speaker A:Picture practice in a midsize market in network with seven plans and running about 80% insurance.
Speaker A:After running the five numbers they keep the two large employer plans in their area where which pay reasonable and keep hygiene full.
Speaker A:They exit the other five over two years one at a time.
Speaker A:Starting with the smallest, they launch a membership plan for uninsured patients along the way.
Speaker A:Two years later the mix is closer to 55 and 45 and the doctor is doing fewer Procedures at a higher rate and the schedule never went dark.
Speaker A:This is not a dramatic story.
Speaker A:This is a planned one that you should be looking at.
Speaker A:A decision that is behind the decision to choose between those doors.
Speaker A:You need one more thing, and that is not a number.
Speaker A:It's a decision about what you want this practice or your practice to be.
Speaker A:So decide it in writing with a date on it three years from now.
Speaker A:What do you want the mix to be?
Speaker A:60% Insurance and 40% fee for service.
Speaker A:90 And 10 in the other direction.
Speaker A:A membership plan carrying a meaningful share of your base.
Speaker A:There is no universal correct answer and I need you to understand that there is only the answer that fits your market, your patient base, your capacity and the life that you want on the other side of your practice.
Speaker A:Write the target down, then work backwards.
Speaker A:Which plan comes off first, in which quarter and what has to be built before it does.
Speaker A:This is a strategy.
Speaker A:Everything short of that is just frustration that you're going to carry around with you for a long, long time.
Speaker A:And that closes our season.
Speaker A:Eight episodes.
Speaker A:Eight things every practice needs to help with the numbers that tell you the truth.
Speaker A:The schedule, the recall, case acceptance, Hygiene, Imperial we talked about collections, the team, and now your payer strategy.
Speaker A:Notice that these were never eight separate problems.
Speaker A:They were one connected system.
Speaker A:I cannot emphasize that enough and this episode is the proof of it.
Speaker A:You cannot make a smart insurance decision without knowing your overhead per hour, which was an episode, which was episode one.
Speaker A:You cannot survive dropping a plan without recall and case acceptance, which was episodes three and four.
Speaker A:You cannot go out of network with a front desk that cannot collect, which was episode six.
Speaker A:And a team that is non aligned, which was episode seven.
Speaker A:The payer decision comes last in this series because it is the one you earn the right to make.
Speaker A:So here's your assignment for this week and it's three numbers.
Speaker A:One, your write off percentage by plan for the last 12 months measured against the current full fee.
Speaker A:Two, your active patient by plan as a percentage of your active base.
Speaker A:Three, your effective hourly rate on your top three plans.
Speaker A:Run across your top 20 or 25 codes that held against your cost per chair hour.
Speaker A:Pull those three, put them on one page and you will know more about the economics of your practice than you will have known in years.
Speaker A:You may find everything is fine and your contracts are working.
Speaker A:You may find one plan that has been quietly costing you money for a decade.
Speaker A:Either way, you'll be making this decision instead of inheriting it.
Speaker A:Because that is really the question this whole episode has been asking.
Speaker A:Not whether insurance is good or bad.
Speaker A:Whether you are the one deciding a contract you signed years ago and never looked at is still making decisions for you every single day.
Speaker A:So go look at it.
Speaker A:That is the show and that is the season.
Speaker A:If this helped you share it with other owners and your friends, find us on Spotify, Apple, wherever.
Speaker A:Do want to let you know check out our YouTube page and we are going to be starting a community on Circle.
Speaker A:So please check us out there where we're going to be able to have live Q and A and really start to be able to hand out resources to you and go in some more depth of some of these podcasts.
Speaker A:Also, just wanted to let you know that the next season is coming up.
Speaker A:The next season is going to be Know youw Numbers.
Speaker A:It is not going to be Know youw Numbers as far as in the numbers of the practice that we went through in this season.
Speaker A:Instead, the next season is going to be Know youw Numbers of youf Business.
Speaker A:So we are going to be heavily interview related in this next season.
Speaker A:We're going to be bringing be bringing in financial planners, CPAs, bankers, a whole list of people and professionals to make sure that you know your numbers from once again buying to selling and everything in between while running your practice.
Speaker A:So we look forward to that.
Speaker A:Thanks for listening and remember your practice is a business worth building.
Speaker A:Well, we'll see you next season.
Speaker A:Sam.
