Why sell our services at a 30 percent discount?

Nov. 1, 1997
The September issue features an article by Robert Maccario encouraging us to "cast emotion aside" and fill the 10 percent void in our practices with PPO patients. His thinking is flawed and, therefore, so is his math.

The September issue features an article by Robert Maccario encouraging us to "cast emotion aside" and fill the 10 percent void in our practices with PPO patients. His thinking is flawed and, therefore, so is his math.

His most significant error is, "Be careful never to displace your full-fee patients with reduced-fee referrals. This is a scheduling issue that can be managed." It cannot be managed. Nor can it be contained once the door is opened. An oral surgeon recently told me that 50 percent of his practice now is managed care and is supported by the other 50 percent. "If I were 100 percent managed care, I would be out of business," he said. Another surgery group in our community now is doing hair transplants to supplement income. Look at what has happened to our colleagues in the medical profession. These dentists and physicians are not in managed care because they want to be. They have opened their doors and can`t get them closed.

Mr. Maccario`s example features a practice running at 90 percent capacity with an annual production of $420,000, a $315,000 overhead and $105,000 net profit. He suggests that by filling the 10 percent available time with PPO patients, the net will increase by $32,760. But, what happens when that same practice, now running at full capacity, becomes half managed care at 70 percent (his estimate) of the previous fees? Using the same $315,000 overhead with the now busier practice, the net income drops to $31,700, while the dental team is working 10 percent harder. This is the reality the oral surgeons and physicians already have seen.

The root of the problem is that there is a limited number of patients. If we fill our 10 percent void with PPO patients, where do they come from? They come from the other 90 percent of our, or our neighbor`s, practice. It`s like sand in an hourglass. It`s on one side or the other, but it`s all the same sand. Mr. Maccario notes: "Many well-respected companies such as Boeing, IBM and Disney are moving away from indemnity insurance plans. Their employees were yesterday`s fee-for-service patients, but they are today`s managed-care patients." That`s the problem, Mr. Maccario. The sand has moved to the other end of the hourglass and we are allowing this to happen. We, the dentists, have a monopoly on delivery of dental care. If we sell our services for 70 percent of what they`re worth, there will be no shortage of patients initially. But, the busyness problem is a supply-and-demand problem. If we continue in this direction, eventually there will be the same shortage of patients at 70 percent of today`s fees.

How do we avoid a future of dentistry managed by the insurance industry? Lecturers Drs. Gordon Christensen, Jim Pride, Roger Levin and others recommend broadening the scope of our capabilities, becoming better dentists and offering more services to our patients. Charge a fair fee and deliver excellence with a smile. Know your patients and encourage them to refer their friends. Our ADA leaders are working with state and local societies to set up direct reimbursement/ direct assignment programs. These plans need to be promoted in our communities. The demographics of dentist/patient ratios are shifting in our favor due to the closing of dental schools and reduced enrollment. Hopefully, our friends who have chosen managed care will be able to rejoin us in fee-for-service dentistry some day.

Alan D. Price, DMD, PA

Winter Park, FL

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