Episode #258: Actual Data from a Dental Practice that Has Successfully Dropped PPO Plans
We have all been sold something through sales pitches. But it doesn’t necessarily mean that all sales pitches work or influence us to purchase. Salespeople approach dentists, and out of all the sales pitches, there’s an absolutely crazy one. Dentists would never fall for this pitch, but with a bit of sugarcoating, there’s a probability of them falling for it. Want to know what it is and avoid falling for it? Listen to this episode now!
Naren: hello everyone. Welcome to the 151st episode of the less insurance dependence podcast, the official podcast of the reducing insurance dependence academy R-I-D dot academy. This is Naren, your co-host. I’m sure many of you have been sold things, I sure have, and sometimes, I end up buying things that I later regret, but then there are other times there’s no way I’m going to buy what I’m being sold there’s no way you know never, never, never, never. So, today’s topic is the crazy sales pitch no dentist would ever fall for. So, what Gary’s doing is he is bringing this back to dentistry, and he’s going to talk about a situation where it’s so crazy if you really think about it for a moment, you will never ever fall for, so Gary, let’s jump in.
Gary: Yeah, this is going to be a fun one. I’m going to set it up this way, you know, first of all, one of the things you know in pre-covid times much of my work life was spent physically in dental offices around the country. I’ve actually physically been in over 2200 practices, and I’d observe, and we’d often have team meetings and training, but much of my time would be spent observing offices and working on the things that we could continually improve upon to further develop their practice into a thriving practice and one of the common things that I would observe Naren, is that a salesperson would come calling on the dental office, you know without an appointment, and I would just have a chance to observe it because for the most part that was going to end in a train wreck, for the salesperson because they could never get past the guard at the gate and the guard at the gate is the office manager or the administrative team at, at, the front desk that simply isn’t going to let an unscheduled salesperson take away the precious time with their dentist, can you imagine that Naren?
Gary: the dentist is very, very, busy and they know that they want to stay on time during the day and they certainly aren’t going to let an unscheduled salesperson you know sneak past the guard at the gate to schedule precious, precious, time with the dentist and I’d see this happen all the time and and sometimes I’d actually feel very bad for the salesperson because, it was they were it was an exercise in futility, but now imagine that somehow a salesperson could get past the guard at the gate, just imagine that, not likely but for the purpose of this episode just imagine that that happened and imagine that somehow the salesperson is back in your private office and the salesperson says something like this Naren, doctor have I got the deal for you we are going to supply you with new patients in your practice a regular flow of new patients in your practice and all you have to do is pay us forty four percent of every dollar worth of dentistry you do on that patient for the rest of their life. That’s it. Forty-four people, you have to pay us up front; all you have to do is pay us 44 percent of every dollar of dentistry you do on that patient. Now there isn’t a dentist on the planet that would sign up for that deal. No, they’re literally it’s, it’s, not in your opening. I like what you said; you know hey, we’re all consumers, I’ve been a consumer and, and, there have been times where I’ve been on the receiving, you know the end of a sales pitch where it’s like no no and no way, it’s not even maybe it’s an absolute no, and in that pitch that I just described you know it’s, it’s, the crazy sales pitch that no dentist would ever fall for, no one’s going to say yes but, but, Naren, but here’s the thing more than 95 percent of all dentists in the united states had actually signed up for that sales pitch when they became PPO providers with the insurance companies because that’s exactly what you’ve done. You’ve agreed to hand over 44 by the way that 44 is the average adjustment today from the PPO plan, sometimes more than that. Naren, I recently did an analysis for, for, a client of ours and discovered that his adjustments the difference between his usual fees and his contracted fees was 58 percent, 58 percent.
Naren: absolutely, absolutely, Gary.
Naren: absurd I was going to say it just reminds me of, of, something that you shared with me when you purchased your life smiles practice right, this was back in 2007, and you realized in some patients you are losing money like it’s almost like every time the patient comes in, you’re taking a hundred-dollar bill and burning it, in other words, you’re spending a lot more than what you’re making from that patient where you better you’re better off not seeing that patient.
Gary: that particular example, in our case, the worst offender for us was MetLife. MetLife had the lowest fee schedule. Now that may or may not be true for you because it varies by state, but for us, MetLife was the lowest contracted fee, and I’m pretty good at cost accounting, and I can figure out those things with some information, and I did some cost accounting and discovered that every time our practice did a crown on a MetLife patient, it cost doctor Paul and me 138 dollars.
Naren: now you’re losing the money you’re losing 138 dollars
Gary: losing, it’s as if we reached into our pocket and pulled out 138 dollars, did the crown on the patient, and they handed them 138 dollars. Now here’s, here’s, why, I believe that the doctors have inadvertently signed up for that crazy sales pitch because they don’t know what they’re writing off
Gary: when you don’t have information, you can make very abstract decisions without information when you don’t have the information and let me unpack that a little bit for listeners. There are two ways to enter your fees into your practice management software, and this goes for all the software, whether it’s Dentrix eagle soft open dental whatever it is that you have. One way is to enter your cup your UCR feeds your usual fees, and then once you get the EOB, you enter in an adjustment the amount that you’re required to write off, and then you have your adjusted production, only 10 percent of the dentists in the country enter their fees in that way. The other 90 percent do it the other way, which is to enter your contracted fees into your practice management software and, and, by the way, all of the major software dental software companies encourage you to enter your contracted fees because it makes tracking your collection so much easier, but when you do it that way you never know what you’re writing off. Ninety percent of dentists have no idea what they’re writing off because of that detail about how they enter the contracted, their fees in. The ten percent that does can run the report and, and, can run a report of insurance adjustments and they can see the hundreds and hundreds and hundreds and hundreds of thousands of dollars that they’re writing off and when they see that, it creates a much more profound feeling because it actually becomes tangible, but it’s like so many dentists are, are, literally driving a very expensive sports car blindfolded and the sports car is their practice. They’re driving their practice blindly because they have no idea, and they keep my overhead keeps going up, and I don’t understand it’s really not that your overhead, yes, we need to keep an eye on expenses, yes, but the real culprit is you’re given away 44 percent off the top and again come back to that crazy sales pitch, there’s not a dentist on the planet that would sign that agreement with the salesman. There’s no way you, you, could any I mean you know even, even, a, a, doctor one day in practice would, would, say no, no, I can’t afford to do that there’s no way I would never do that.
Naren: and Gary, you are the kind of person who not only talks about a problem, but you talk about a solution. Can you explain to me the journey that you and doctor Paul took and how you changed the math in your favor, especially all the way from what the peers said, hey you know it can’t be done I just want our listeners to hear that because I think because you know I bet the reason many, many, dentists take this crazy deal that not a single rational person would take is that perhaps they don’t think there’s an alternative, perhaps they don’t have the numbers; I think one is they don’t have the numbers they don’t have the data second one is they just feel they’re stuck because everybody else is stuck
Gary: Well, the best way to begin to understand this is to start to look at your insurance adjustments as a marketing expense because literally when you look at that way, you can take the emotion out of it, and you look at what you’re paying the insurance company as a marketing expense because you are paying the insurance company to send you patients, but you’re paying dearly for that you’re paying you to know an absurd amount of money. So, one of the ways for the 90 percent of our listeners is because our listeners represent a wide cross-section of dentistry; ninety percent of our listeners don’t know what they’re writing off. The first step for that would be to understand what they’re writing off, and Naren, you, and I developed a, it’s custom excel spreadsheet that, with a little bit of information, will allow the spreadsheet to tell any of our listeners exactly what they’re writing off and, and, if you don’t know that number it would be very, very, very, important for, for, you to know that because then you know information is the power you can now make good decisions with the proper information. So, let’s put a link in the show notes. It’s our insurance write-off calculator. It’s, it’s, a custom excel spreadsheet. You can find that, by the way, at less insurance dependence dot com. Just go to the podcast episode and scroll down, and you’ll see the link. We’ll put that in the notes. Just click that link, and with very simple information, our team will do the heavy lifting to do the calculations and send back to you what you’re writing off relative to your PPO contracts, and all this is confidential, will never be shared. We just want you to have the information; you can’t make good decisions without information. It’s kind of like imagine a patient with a lot of dental needs presenting in your office and not allowing you to take x-rays. You can’t provide any diagnosis to that patient without the information. So, we’re going to start there once you see what that number is; depending on the size of your, it will be hundreds of thousands of dollars a year depending on the size of your practice, hundreds of thousands of dollars a year. Once you see that number, I want you to immediately categorize that in your mind as a market that’s how much you’ve spent, so let’s say it’s 500 000 a year, and by the way, Naren, that is not an extreme example.
Naren: yes, that’s very common
Gary: And, and, I want to so let’s say you know you’re writing off 500 000 a year, and we annual if we make that as a monthly expense that’s 41 666 a month 41, so I want you to think about in your head that you’re spending 41 666 a month to the insurance company to provide you, patients. Now, as soon as you start to look at it that way, I think you could quickly understand that you could spend a small fraction of that and on marketing on replacing that flow of new patients that comes from the PPO plan you could replace that with another source of new patients that would cost you a tiny fraction of that, a tiny fraction, you know recently one of our clients. He was spending 42 percent a year on marketing; it was about 42 percent of his revenue, and once he learned there was another way, he’s spending about 2.5 percent a year. So
Gary: partners, play along with me for a minute. Would you rather spend 42 percent or 2.5 percent? It’s not a tricky question. It’s a legitimate question. Which would you rather spend? I don’t really need to think about that. I’m going for 2.5.
Gary: then, if I can get very granular, very specific, follow my lead, do what we did. We replaced the PPO plans with a comprehensive digital marketing plan that we do now with you, Naren, with EKWA your, your marketing firm provides that for us, and we get 90 new patients a month, not only the volume of new patients that we need every month but we get the right kind of new patients because they’re choosing us for reasons other than we’re on their plan.
Gary: it made all the difference in the world. We should also put a link if you’re okay with it, Naren, in the notes for scheduling a marketing strategy meeting with EKWA. We’ve worked with your firm now for five years, a little bit over five years, and I’m absolutely thrilled with the results. We get a little bit over a hundred potential new patient calls a month through our digital marketing, a little bit over a 100 sometimes a 101, 102, 105, something like that, and on average, we convert 90 of those calls to a kept new patient appointment, where they actually show up which then they become a patient for life and if any of our listeners would like to learn about that they can schedule a marketing strategy meeting they meet with Lila Stone. Lila will go over all their google analytics go over what they’re doing, what could be improved upon, and how they can get the same results as we do, and I’d strongly recommend that, but let’s bring this back you know to the headline, you know the crazy sales pitch no dentist would ever fall for. I hope you start looking at it this way. There are two shifts I want you to make in your mindset. Think about that salesperson in your office and think how you don’t even need you to know you don’t have to give it a second thought it would be no and, and, I want you to start thinking about all those PPO plans as being that crazy sales pitch because that’s exactly what they are and secondly, I want you to know the amount that you’re writing off and from this moment forward think of it as a marketing expense because you’re literally paying the insurance company to provide you patients, and it’s not a one-time fee it’s a recurring fee that goes along on as long as that patient’s in your practice and it’s, it’s, you know you’ve heard that saying you know sometimes we talk about the gift that keeps giving well this is the pain you keep receiving, and I think when you look at it that way it really puts it in perspective, and you know the last message I have is that you can do this now, now, how can I say that so confidently? We’ve helped dentists in every location environment; Urban, suburban, large town, medium-sized town, small-town rural, remote corporate town you know, cities like Houston, Texas, Pittsburgh, Pennsylvania, Cleveland, Ohio, Chicago, Illinois Seattle. Seattle may be the most obvious example of a corporate town; there are many employers in Seattle.
Naren: like I have mutually; I have experiences myself Gary where you know some of our mutual clients you know I see two, two, things happening one is they actually end up driving more revenues some practices up 20 30 percent compared to their best year ever. Second, now they’re not writing off like you said 42 percent in certain insurance plans. So now they can keep all that money and invest it in technology or work less because they don’t have to see as many patients anymore, you know because you know they have more money and more time therefore to do things. They can pay their people better, so I think it’s almost transformational. It’s like they, they, take this deal that sounds so crazy that no rational person would ever take if somebody came and pitched it the way you pitched it. Of course, insurance companies don’t pitch it the way you pitched it, so that’s why they don’t realize it.
Gary: they’re in; you know their dental insurance companies are in the game of tricking you
Gary: they manipulate you, they trick you, you, know it’s just it’s absolutely ridiculous what they do you know if you think about a very core level who needs who. Does the dental insurance company need the dentist, or does a dentist need the insurance company? At a core level, the insurance company needs you because if they don’t have dentists. They have nothing to sell
Gary: they have nothing to sell, but they’ve manipulated you over all these years into thinking you need them and you just don’t
Naren: it’s like not only do you need them that you can’t live without them. It’s almost like one of those you know somebody continues to be in a really toxic relationship because they think that’s the only option.
Gary: the only option and there and, and, you know you know what would be useful as well Naren is sometimes we need to have it proven to us that it can be done
Gary: we have some episodes on the thriving dentist show three in particular and thriving, then a show of dentists that have started fee for service practices from scratch and massively succeeded with those, and we’ll put those three thriving dentists show links in the notes and then we did one that I want to point out one less insurance dependence podcast, it was episode 100 of one of our clients who successfully reduced insurance dependence. So, she was in-network, and she got out of network. This is a little bit different than those other three; the other three started fee-for-service prices from scratch are thriving. This one doctor Tracy Hughes was in-network, and then she went out of the net. We’ll put all four of those links. So, if you need some inspiration, then it can be done, kind of like when Roger Bannister broke that four-minute mile barrier in 1954; now you’re going to hear from others that have done it well. Hey, on that note and Naren, let’s, let’s, bring a close to this episode. I hope you enjoyed the crazy sales pitch no dentist would ever fall for, and I want to start looking at things from a different light. You know, when you change the way you look at things, the way you look at things change. Wayne dyer said that. Hey, on that note, I want to thank each and every one of our listeners; we appreciate you if you have a colleague that you think might appreciate our content share the less insurance dependence podcast episode, the less insurance dependence podcast with them so that you can have maybe a partner a colleague as you’re working through this, it’s always fun to have some company as you’re working through this, and as, as, one more announcement we have our summit RIDA, RIDA is an association that Naren and I started. It is the very first virtual association. Rida is both a play on words we’re going to help you get rid of insurance. Now I know that’s not grammatically correct, but I do like the sound. It will help you get rid of the insurance, and it’s also an acronym, rid reducing insurance dependence dot academy. We’re doing our first-ever virtual summit coming up on November 12th. It’s a Saturday from noon to 6 pm. Excuse me, it’s a Friday, November 12th, from noon to 6 pm eastern time, and we are gifting your attendance to that summit. If you’d like more information about that to sign up for them to register and be part of that summit, you can go to www.rid.com academy forward-slash summit, and we look forward to seeing you there.