Written by Michael Dolby, DDS, FAGD Saturday, 30 November 2002 19:00
The catch phrase for dental practices in the new millennium is to become an "insurance free" practice. The idea of completely removing yourself from the frustrations insurance companies create for you and your team is very appealing. The trend today for most dental consultants and seemingly "successful" dental offices is to eliminate the processing of dental insurance claims altogether, leaving this burden for the patient to handle, after all, "it's their insurance plan!"
With the introduction of dental insurance in the 1950s a lot has changed. For example, in the 1950s the average maximum allowable benefit was $1,000 and the average cost of a single crown was around $435. The benefit compared with the cost of dental services made dental insurance extremely valuable and beneficial for both the patient and the doctor. Today however, we have a much different situation. Average maximum allowable benefits for most insurance companies range from the original $1,000 to some exceptional plans exceeding $1,500. If we compare this with today's average single-crown fee of $800 and add paper work, supporting documentation, and delays that accompany dental claim submission, it's easy to see why there is so much frustration with dental insurance or lack thereof.
Today we see three principal relationships among dental offices: (1) the insurance dependent practice, (2) the insurance hybrid practice, and (3) the insurance independent practice.
THE INSURANCE DEPENDENT PRACTICE
In this environment the success of the practice is solely dependent on its relationship with the insurance companies. In other words, the practice does not receive compensation from the patient; it simply relies on submitting claims to the insurance company as its primary source of income. There may be an effort on the part of the office to collect from the patient what the insurance company will not pay for; however, the bulk of the practice income is directly tied to the insurance reimbursement.
The main advantage of operating in this environment is a constant influx of new patients to the practice. These patients come to you because your name is on either a "preferred provider" list or you are referred to as a "prime dentist."
The disadvantages in this practice environment are many. Overhead is generally inflated, and treatment is limited to basic restorative procedures because of the high volume of patients seen, with an "if it doesn't hurt don't fix it" mentality. The insurance company instructs you on what you can charge for your dental procedures, what procedures are approved for you to perform, and if you are allowed to ask the patient to pay for any part of their bill that is not covered by their particular plan. This environment provides the closest relationship you can have with the dental insurance companies.
THE INSURANCE HYBRID PRACTICE
In this environment the success of the practice is a blend of dependency and some independence with the dental insurance companies. Often, patients are billed at a later date for their dental treatment while the office submits the patient's insurance benefit and waits for the insurance company to reimburse them. Once the reimbursement has been received, the patient is billed by the practice for fees not covered by their insurance plan. This type of practice receives new patients from both internal referrals and external referrals as a benefit from having their name listed as a "member dentist" of one or several insurance plans.
Getting new patients to the practice is again one of the main advantages because the insurance company is assisting in sending new patients through the door. Existing patients do refer; however the majority of new patients are coming to you because of your involvement with their insurance plan rather than for the services you perform. Usually a full-time insurance billing coordinator is demanded in this type of practice because of the incredible volume of insurance claims that require submitting. Overhead is always a concern because of inflated accounts receivable from the large amount of patient billing that takes place. This environment provides some insurance independence, although a close relationship with the insurance companies is necessary for survival.
THE INSURANCE INDEPENDENT PRACTICE
In this environment the success of the practice is independent from the outside influences of the insurance companies. This type of practice requires the patient, not the insurance company, to be responsible for fees incurred from treatment rendered by the practice, and patients are expected to clear their balance at the time their treatment is performed. All insurance claims are submitted for the patient by the dental office team as part of their five-star customer service. Insurance benefits are then mailed directly to the patient, not to the dental office. Insurance companies have shown a stronger motivation to process these claims in a timely manner because they are dealing directly with their customer and not with a third-party dental office. It is not uncommon to see a 1- to 2-week turnaround for the patient to receive their reimbursement, while many dental offices can expect to wait 3 to 4 weeks before any reimbursement is seen.
The advantages in this business model are many. Lower overhead, increased acceptance of elective dentistry, and increased profits are but a few. With the elimination of patient billing there is extra time for your team to concentrate on providing outstanding five-star customer service, which is essential in this environment.
The biggest hurdle to face in this environment is educating patients on their role in the insurance/doctor/patient triad. The insurance companies have an incredible head start on dentists in this arena. They have been marketing to and educating our patients since the early 1950s on the benefits of dental insurance, even misleading the public to believe their dental insurance card is the equivalent of a free dental ticket redeemable at any and all participating dental offices. Once patients have the opportunity to experience working with their insurance company, they quickly see how little benefit they receive from their plan. They soon become an ally for your office versus seeing your office as the only dentist that has fees above the "usual and customary" amount, as the insurance company would like to suggest.
Outstanding customer service and a consistent marketing program are a must if you are to be successful in the insurance independent environment. Many offices I visit feel they are already delivering five-star service. However, after deeper investigation I usually find out that customer service is ranking in the two- to three-star rating, and is consistently provided only by some of the staff! It takes an incredible team with impeccable organization and a dentist leader to fully achieve this five-star rating along with succeeding for the long term in the insurance independent arena. I will discuss in a future article a step-by-step approach to achieving this level of customer care in your office.
As you can clearly see with these three insurance environments, all have some type of relationship with the processing of dental insurance claims. The idea of establishing an insurance free practice and eliminating insurance processing simply cannot exist within a practice that is striving to achieve long-term success. I have seen many doctors return home after a seminar promoting insurance freedom, and without any long-term plan in place they quickly and completely remove themselves from any relationship with their patients' insurance. They soon find themselves dealing with a harsh negative response from their patients, along with experiencing deep financial challenges.
However, striving for a practice that operates in an insurance independent environment is very achievable. A strategic 3- to 5-year plan must be established, along with putting together an outstanding team that believes and supports this new practice environment. Without the full commitment from your team, this business environment cannot move forward.
The dental profession is unique compared with the medical profession. To date, you as a dentist still have the opportunity to choose what type of relationship you would like to have with your patient's insurance company. Essentially you are choosing where your compensation and new patients come from. Whether it is with the insurance companies' assistance, internal patient referrals, or a combination of both, it is still your choice. As described in this article, all three environments have their advantages and disadvantages. Regardless of your current practice environment, you must acknowledge as a healthcare provider your relationship with the insurance industry. Whether you have a dependent, independent, or hybrid practice, all have an insurance relationship that is crucial to the success of their business. To completely remove yourself from the insurance/doctor/patient triad would be business suicide.
In a follow-up article I will provide a step-by-step plan on becoming an insurance independent practice as I have operated successfully for over 4 years.
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