Understanding the impact PPO plans have on a dental practice is essential. While they bring you new patients, they also periodically take away a chunk of your savings. However, there are ways to mitigate this situation and turn it around.
What is a PPO Write-Off?
The difference between the actual cost of a treatment or procedure and the cost that the insurance company will cover is known as a PPO write-off.
For instance, suppose your UCR (Usual, Customary, and Reasonable) fee for a given service is $1000, and the insurance company pays you $500;
Your PPO write-off is $1,000–$500= $500
Remember that many doctors are prevented from charging their UCR fees as the PPO plan will also control the maximum fee you are allowed to charge.
What is the Average PPO Write-Off?
Based on conversations with practice owners across the country, we now see an average write-off of 45% – 55%.
For example, a practice collecting $1,000,000 annually and is PPO dependent has approximately 80% of PPO patients typically write off $600,000 annually.
If the practice collects $2,000,000 per year, it will write off $1,200,000.
Remember that your annual PPO write-off will depend on your average write-off percentage and what percentage of your patients are PPO Patients.
Find Your PPO Write-Off
The Reducing Insurance Dependence Academy (www.rid.academy) developed a PPO calculator just for this purpose!
To find your PPO write-off, answer these three questions:
- Your total collections per year
- Average insurance write-off percentage
- Percentage of collections coming from PPO patients
You can estimate a value even if you have not yet determined the exact figure. The calculator has been optimized to provide accurate results within 1 to 2 percentage points.
Once you know your annual PPO write-off, you can devise plans to reduce it over time. Knowing your numbers will help you make better business decisions.
PPO Calculator
*This calculator is confidential; none of your details will be collected or shared. Instead, they will send the results privately to you.
Bonus Tip: For a limited time, you can join the Reducing Insurance Dependance Academy, which has 1,000-plus members on a journey of reducing your dependence on PPO plans for FREE. Membership to the Academy is our gift to you.
Click here to get your free membership
Your PPO Write Off is a Marketing Expense
You get new patients from your PPO.
In return for that patient’s life, the PPO plan pays you a fraction of your UCR fees. That difference, the PPO adjustment, is a marketing fee.
Why? You get new patients in exchange for giving up that PPO adjustment for that patient’s life.
Do you have to spend 45 to 55% of what you collect as a ‘Marketing Fee’ paid to PPO Plans? Or is there a better way?
Yes, the PPO adjustment is a marketing fee.
And yes, there is a better way.
Practices that master and dominate Organic Marketing, specifically Google SEO & Google Maps, spend less than 1.5% of collections versus the PPO practices that spend 45 to 55%.
Depending on the size of the practice, some practices even spend less than 0.5% on marketing.
Organic Marketing is everything you can do to get free new patients from Google.
You want to do that in order to replace PPO Patients with “Google” Patients.
How do you know if you’re doing well with Google Organic Search?
You will know if you are doing well with Google Organic (Free) Search if all of these are true.
- You get enough and more new patient calls from Google every month.
- You are ranking for 100s of search terms on the first page (top 10 results) of Google every month.
- You are seen on Google for free 10s of 1000s of times, possibly 100,000 times in a 30-day period.
Do you want to know how you are doing with Google or How to Dominate Google?
To dominate Google, you need to get an A+ in 6 categories. Google cares about NAP consistency, LightHouse Score, Original Content, Google EAT, Quality Backlinks, and Frequent Love Letter Reviews.
If you don’t get an A in all 6 areas, your chances of dominating Google are almost zero.
Check out this podcast episode to learn How to Dominate Google SEO in Your Local Area.
About the Author
Dr. Eric Block DMD, CAGS, FICOI, FICD, FAADS
Dr. Eric Block is a full-time practicing dentist in Acton, Massachusetts, husband, and father of two kids. He is known as The Stress-Free Dentist and hosts the Stress-Free Dentist Podcast.