In this episode of the Less Insurance Dependence podcast, host Lester De Alwis sits down with Laura Phillips, Enrolled Agent and Co-Founder of the Phillips Group, a tax and accounting firm that has worked exclusively with dentists and physicians for over 15 years across more than 20 states. Laura has appeared on stage at the Thriving Dentist Expert Panel and the Dental Transition Summit, and her focus is singular: helping dental practice owners understand their real financial picture before they make their biggest business decisions.
The conversation centers on a problem Laura sees constantly in her work with dental practices: a practice can be fully booked, every chair filled, every hygiene slot occupied, and still have no money in the bank. That paradox is almost always an insurance problem. Post-COVID inflation has pushed practice costs up by at least 25% over five years, while insurance reimbursement rates have barely moved. The result is a growing gap between how busy a practice feels and how profitable it actually is. Laura’s message is direct: a busy practice does not mean a profitable practice.
Laura walks Lester through the two most common financial mistakes she sees going into a PPO exit, the specific numbers a practice needs to have in place before making the move, and why most dentists have become so comfortable with insurance write-offs that they have stopped seeing them as the revenue loss they actually are. The episode closes with a practical first step, one that mirrors what a dentist does before any clinical decision: take the X-ray first. Get the data. Know exactly where you stand financially before you make the transition.
Key Takeaways
- A busy practice is not the same as a profitable practice. Full chairs and a packed schedule can mask a serious profitability problem. If costs have risen 25% since COVID and insurance fees have not kept pace, the gap between production and actual profit is widening every month, whether or not the practice notices it.
- The two most common pre-exit financial mistakes are missing financial statements and sole reliance on production numbers. Production does not equal collections. Collections do not equal profit. Without an accurate profit and loss statement, a balance sheet, and a clear view of adjustments, a practice is making the biggest financial decision of its life without the full picture.
- Cash flow and team stability are the two non-negotiables before a PPO exit. The transition period creates a temporary dip in cash coming in. Practices that survive it have money in the bank and a stable payroll before they start. Practices that don’t have both in place before they exit are the ones that struggle.
- The first financial move is the same as the first clinical move: take the X-ray. Before any PPO exit, compile the full financial picture: production, adjustments, collections, expenses, net profit, and cash in the bank. That data is the starting point. Without it, the transition is a guess.
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Episode Timestamps
- 00:00:05 – Introduction & Guest Overview
- Lester De Alwis introduces Laura Phillips, Enrolled Agent and Co-Founder of the Phillips Group, a tax and accounting firm specializing exclusively in healthcare and primarily dentistry, operating across more than 20 states for over 15 years.
- Laura has been featured on stage at the Thriving Dentist Expert Panel and the Dental Transition Summit. Today’s episode focuses on the financial timing, cash flow reality, and blind spots that determine whether a PPO exit succeeds or falls apart.
View Transcript
Lester De Alwis: Welcome to the Less Insurance Dependence Podcast. I’m your host, Lester De Alwis, and this show is dedicated to helping dental professionals build stronger, more profitable practices with less reliance on insurance. Today I’m honored to welcome Laura Phillips, Enrolled Agent, Co-Founder of the Phillips Group, and one of the sharpest dental financial minds in the country. Her firm has worked exclusively with dentists and physicians for over 15 years, across more than 20 states, and Laura has been on stages at the Thriving Dentist Expert Panel and the Dental Transition Summit because when it comes to the financial side of practice growth, she’s the person in the room who actually knows the numbers. Today’s episode is titled The Numbers Don’t Lie: Are You Actually Ready to Drop PPOs? Laura, welcome to the show.
Laura Phillips: Thank you for having me. I appreciate it.
- 00:01:14 – When Laura Realized the Financial Side of PPO Exits Was Being Completely Ignored
- Laura identified the gap through direct client conversations: dentists would describe a thriving, fully booked practice, then mention they had no cashflow and no profit. Every chair filled, no money in the bank.
- The root cause is almost always insurance. Post-COVID inflation has pushed practice costs up at least 25% over five years. Insurance reimbursement rates have not followed. That widening gap is the financial reality most PPO exit conversations skip entirely.
View Transcript
Laura Phillips: I really saw this when I would speak to a client or speak to a dentist and they would tell me how busy their schedule is, how thriving in their own mind their practice is, but then there’s a comment about their lack of cashflow or their lack of profit. They’re seeing the patients, every chair is booked, but there’s no money in the bank. And that is where there is a pretty immediate problem. I always say a busy practice does not mean a profitable practice. Insurance can really be the deciding factor of whether or not the profit is actually there. Post-COVID it got dramatically worse. Inflation has been 5% every single year for the past five years, things are costing 25% more at a minimum from what they were pre-COVID. But insurance fees have not gone up 25% in that same time period.
- 00:02:42 – The Two Most Common Financial Mistakes Going Into a PPO Exit
- Mistake one: not having accurate financial statements. This means a complete profit and loss statement and a balance sheet. Laura notes the balance sheet is frequently overlooked, but it is just as important as the P&L and equally essential before making a major financial decision.
- Mistake two: sole reliance on production numbers. Production is an important metric, but production does not equal collections, especially in a PPO-heavy practice. And collections does not equal profit. Practices that are only watching their daily production goal are missing the full picture entirely.
View Transcript
Laura Phillips: There are probably two mistakes we see most often. One is just not having an accurate benchmark of how their practice is doing, actually having those financial statements, the whole package: an accurate profit and loss and a balance sheet, which a lot of people don’t realize is absolutely just as important. That’s probably mistake number one. The second issue is being solely reliant on production. Production is an important number, but production does not equal collections, especially when we’re dealing with insurances. And collections doesn’t equal profit. So we need to make sure we’re looking at the full picture. If you’re solely focused on hitting the production goal for the day, that does not mean you’re profitable. You have to have the metrics and the financial statements, make sure those are accurate, and look at the full picture.
- 00:04:01 – What the Numbers Actually Need to Look Like Before a Practice Is Ready to Drop a PPO
- Two non-negotiables before any PPO exit: cashflow and team stability. A practice needs money in the bank to support the transition period where revenue temporarily shifts. And payroll, the single largest cost in most practices, must be sustainable through that period.
- Beyond cashflow and staffing, the practice needs to know exactly how much of its revenue is PPO-dependent. What percentage is insurance-based? Which plans are being considered for exit? What is the financial impact of each one? Those answers, calculated in advance, are what set a practice up for a successful transition rather than a stressful one.
View Transcript
Laura Phillips: The first thing I’d always want to make sure is the practice can support some extra cashflow, there’s money in the bank in order to have this transition. Another item is staff: making sure what you’re spending on payroll is sustainable to get through this, and that the team is set up in advance. Those are for me the two biggest things: cashflow and staff. In addition to that, you want to drill down on how much of your practice is PPO-based. Is it 5%? Is it 35%? Which ones are you thinking about leaving? What’s the impact? Get those metrics in advance, analyze them, see the change, and that’s going to set you up for success.
- 00:05:41 – Sponsor: Ekwa Marketing
- Lester pauses to recognize this episode’s sponsor, Ekwa Marketing, and ties the message directly to the episode theme: when the financial picture of a practice shifts, the marketing strategy has to shift with it.
- Ekwa Marketing is offering a complimentary marketing strategy meeting for Less Insurance Dependence listeners. Book at lessinsurancedependence.com/msm.
View Transcript
Lester De Alwis: I’d like to take a pause and give a shout out to Ekwa Marketing who is sponsoring this episode. The moment your finances shift, your marketing has to shift with it, they’re going off a completely different approach. Ekwa Marketing is offering a complimentary marketing strategy meeting to help practices make exactly this move. You can book that meeting at lessinsurancedependence.com/msm. You can also book a complimentary Coaching Strategy Meeting with Gary Takacs at lessinsurancedependence.com/csm.
- 00:06:26 – How Insurance Write-Offs Distort the Real Picture of Profitability
- Dentists who have been in PPO contracts for 10, 15, or 20 years have often stopped registering write-offs as a problem. They’ve become normalized part of the routine. Laura’s approach is to make the invisible visible: put the production number, the adjustment number, the collections number, and all expenses on one page, and look at them together.
- When a practice that did a million dollars in production sees a clear, tangible figure showing $200,000 in write-offs for the year, the conversation changes. That number, the money worked for but never paid, is what motivates action. Seeing it month by month makes it impossible to ignore.
View Transcript
Laura Phillips: It’s a huge distortion. They’ve gotten used to fees that are really not acceptable. For financial statements our office puts together, we have the production number, the adjustment number, the collections number, and then all the expenses on one page, because they should be looked at together. When I’m talking to a doctor about the potential of leaving, maybe they did a million dollars in production but after write-offs it’s $700,000 if they’re a heavy PPO office. When they have that tangible number in front of them. Hey, I worked for $200,000 that I wasn’t paid for this year, that’s eye-opening. Doctors might have been practicing this way for 10, 15, 20 years where they’re saying, well, this is just what we got paid. But there’s just too much money left on the table.
- 00:08:03 – The Very First Financial Move Before Dropping a PPO
- Laura’s analogy: before a dentist treats a patient, they take an x-ray. The same principle applies here. Before making the decision to exit a PPO plan, take the financial x-ray first. Compile the full data set.
- That data set includes: production, adjustments, collections, expenses, net profit, cash in the bank, and outstanding debt. How much money is coming in? How much is going out? Can the practice support the transition period? That complete picture is the starting point, and without it, the move is a guess rather than a decision.
View Transcript
Laura Phillips: I’m going to compare that to: if you go to the dentist, what’s the very first thing they have you do? Take an x-ray. So it’s getting that data. The very first thing to do is compile the financial numbers of where your practice is at: the accurate financial statement, the full package. We need to see the production, the adjustments, the collections, the expenses, the net profit. How much money are you getting? And then the cashflow side, how much money is in the bank? Can we support this? How much debt do you have? Because as you’re going through this transition, there are bills that still need to be paid. The very first thing is: what’s the health of your practice financially? Where are you at? Where can you get to? How can you be successful? That is absolutely the starting point.
- 00:09:08 – How to Reach Laura Phillips and the Phillips Group
- Website: phillipsgrouptax.com, the best starting point to learn about the firm, its services, and how the Phillips Group can help a dental practice owner navigate the financial side of insurance independence.
- Phone: (714) 667-2311, the team is happy to get on a call, learn about your practice, and discuss how they can help. Tax laws are always changing, and the Phillips Group moves with its clients.
- Note from Lester: all contact details and resources from this episode are available in the show notes.
View Transcript
Laura Phillips: Like you said, we’re a tax and accounting firm that specializes solely in healthcare, primarily in dentistry. I’ve been working in this industry for 20 years. I own the company with my husband Andrew, and together we’re extremely passionate about helping dentists. The best piece of information is to go to our website and learn about our firm, learn about our services, see how we can help. That website is phillipsgrouptax.com. You can also give us a call, our phone number is (714) 667-2311. We’re happy to get on the phone, learn about your practice, and see how we can help. Tax laws are always changing, things are always changing, we want to move with our clients.
Lester De Alwis: For anyone listening in, you can find all those resources in the show notes of this episode and reach out to Laura and the Phillips Group directly..
Patients really do not care about what the cost is if they receive a tremendous value — because the value you receive is more important than the money you spend. People don’t want to just buy something. What they want is a relationship.
Mike Sonick
Leadership is what holds everything together. If there’s no leadership, everything crumbles down.
Lester De Alwis
Resources
One of Gary's most significant achievements as a dental practice management coach is transforming his own practice, LifeSmiles, from one that was infected with PPO plans, no effective marketing strategy, and an overhead of 80% to a very successful dental practice that is currently one of the top-performing practices in the US.
As CEO of Ekwa Marketing, Naren has over a decade of experience working with dental practices and helping them attract the ideal type of patients to their practices. It is his goal to help dentists do more of the type of dentistry they love with the help and support of effective digital marketing.
