Your Most Expensive Marketing: In-Network PPO Contracts
What’s your most expensive marketing cost? SEO, add clicks, local magazines, a consultant? Not even close. It’s your contracted carriers. That is your most expensive cost to grow your patient base. Case in point. If you do 30 crowns a month with Delta PPO and receive $600/crown you’d earn $18,000/month in collections. However, if you decided to drop Delta what might happen. Let’s assume you lose 33% of your patients and now you only do 20 crowns, but you receive your full UCR of $1,300/crown. You’d earn $26,000. And you’d have more time outside the operatory. Here’s the kicker. Your overhead expenses shouldn’t change much. This is a key point. Your costs do NOT go down by being in network. In fact, because you’re doing fewer crowns, your labs and supplies actually decrease. In our example your profit is twice as much for doing less work. Therefore, the absolute only reason you’re in-network with the PPO’s is to get butts in the chair. And yep, that’s marketing.
I’m not saying it’s easy to get those butts when you’re not in network. I’m just saying it’s extremely expensive and can dramatically slow down your path toward financial independence. You need cash to pay down debt, fund retirement plans, build your emergency reserve, purchase your home, and make meaningful financial progress. But that cash isn’t abundant when you’re getting less than $600 a crown.
Every day I feel the pain of the GP. Decreasing reimbursement rates. Increasing pressures from Dental Corps. Where do they go? What do they do? After all, someone needs to pay the $400,000 of student loans. Here are a few strategies I’ve observed GPs using to fight back. Their “Game Plans” so to speak. I’ve included my corresponding comments:
And oh is it worth it! Dentists that are less reliant on the PPO work less, earn more, and reach financial independence faster. And the road there is more enjoyable.
So perhaps an 8% marketing budgets isn’t high. Perhaps taking leadership and communication classes would prove more valuable than another clinical CE. I recommend you learn how to convey the deep value that you provide to your patients. Be deliberate in developing a marketing plan and measuring the success of each marketing effort. Hold your team meetings, set goals, and motivate each team member to be excited to come to work each day. Help them succeed, and they will help you succeed. Walk into your office daily with energy and optimism. Take that step of faith, or as I tell my kids when I drop them off at school each morning, “Think it. Believe it, Achieve it. Because you can!”
And I’ve seen practices do it. And yes, they lose patients. But those that make that transition carefully and communicate the change effectively to their existing patients have seen improvement to their cash flows. But it’s not as simple as suddenly dropping the in-network status and crossing your fingers. You must have a plan.
In my next newsletter, I’ll discuss specific ways to determine how and when to drop your in-network status with the PPOs. In the meantime, be thinking about this subject and how it relates to your practice!
Wesley Read
CEO, CFO Advisor


- Make-more-profit-game-plan 1: Do more crowns!
- Make-more-profit-game-plan 2: Do specialty work.
- Make-more-profit-game-plan 3: Open Up Additional Offices
- Make-more-profit-game-plan 4: Bravely, but Carefully, Go Out of Contract with Your PPOs


