I own an HMO (health maintenance organization), public aid, and PPO (preferred provider organization) office with zero fee-for-service (FFS) patients.
Allow me to explain what that means. As I do, please also understand that there are many rules and regulations spanning pages of signed contracts that I am unable to recall for the sake of this article.
Types of Payment
A PPO is a plan that allows a patient to go to an “in-network” dentist in exchange for a discount on the service fee and also for greater coverage of that service. If a full fee for D2740 porcelain or ceramic substrate crown in a particular zip code is $1,200, a PPO fee may be $700 covered at 60%. The patient will pay $280, and the insurance company will pay the remaining $420.
The in-network dentist cannot charge the patient for the difference between $1,200 and $700. That difference of $500 is called a “write-off” and is not to be collected. That $500 discount is the advantage of seeing an in-network provider.
An HMO is a plan that allows a patient to choose only one dentist from a list of providers in a given zip code. The list of in-network HMO providers in any zip code is usually fairly narrow. If a patient is assigned to office A, he or she will not have any coverage from a dentist in office B, C, or D.
The dentist receives a capitation per patient per month and agrees to see that patient for any necessary service. The capitation can be $2 per patient assigned to the office, each month. Depending on the number of patients assigned to the office, the value of the capitation check can be as low as $600 or as high as $6,000. Regardless of how many patients are seen at the office during the month, that capitation check is steady income for the practice.
Within this plan, prophys, bitewings, periapical x-rays, complete exams, recall exams, limited evaluation exams, and panoramic X-rays are all inclusive of the capitation, and the dentist cannot charge for any such service. (The list of “free services” is much longer than I have space to include.)
If an HMO patient presents to a networked office, a D0150 comprehensive oral evaluation or a D1110 adult prophylaxis won’t cost the patient anything. But neither the dentist nor the hygienist gets paid for those services either. A typical D2740 crown may cost an average of $450, which is the patient’s responsibility. Most of the time, the dentist does not receive any additional supplement for that service. So a typical write-off on a crown in an HMO network is $750, and it cannot be collected.
Each state has its own version of a public aid or Medicaid plan. In Illinois where I practice, there is variety of plans. Some are assigned to patients below the poverty level. Some are purchased by patients through the Affordable Care Act network. An average surgical extraction is paid at $58.05, and an average crown is paid at $235. The patient cannot be charged for the difference on any covered service.
I need to maneuver in this landscape, succeeding in making my practice profitable.
What the Consultants Say
When I’ve had discussions with consultants, the conversation usually begins with “I’ll get you to drop the HMO and public aid within xnumber of months.” I usually then take a deep breath and, once again, explain in detail why I do not want to change the population that I treat. What I get in return is a “deer in the headlights” look. It’s a combination of confusion and disbelief at why someone would choose to and want to continue practicing the way I do.
What I have noticed is that many consultants, coaches, and advisors are in the business of trying to teach us to become FFS offices. (I’m not picking on consultants, but I am bringing it up since it has become a significant trend.) “Wow your crowd,” they say. FFS is the Mount Everest of accomplishments, as things stand.
But the kicker is that only about 5% to 10% of all dental offices in dentistry are FFS. And I’d gather that more offices hope to become an FFS office than there may be space for them to exist in the current state of dentistry. So, can all of those offices working toward becoming FFS offices actually achieve their goal? After examining the ADA statistics, it would appear that there is an upward trend in establishing DSOs and a downturn in offices turning fully FFS. So, again, how much room is up there?
Long ago, I decided to take myself out of that equation. Strangely so, many advisors and even colleagues have had a hard time conceptualizing my “why.” Everyone wonders why I don’t want to be an FFS office. Why wouldn’t I even make an attempt? Why do I work for less? Why would anyone choose to work for less?
How Much Less Is Less?
When I evaluate some of my key performance indicators and convert my production fees (my collection is above 98%) into FFS fees, meaning I add back my calculated write-offs, I come to find that I work for about $0.25 to $0.33 on the dollar. Some days I see 30 patients, and I have an average of more than3,500 appointments per year with 34 patient treatment hours per week.
If an FFS dentist next door averages $1,200 for a crown, I get $450 deposited into my bank account for the same service code. But it doesn’t end there. I actually do have to dispense four times the dentistry of my FFS counterpart to make ends meet. And, get this, I’m okay with that. I’m not bitter, or angry, or envious.
I get a lot of pushback from other dentists, claiming that if it wasn’t for dentists like me accepting such low fees, overall reimbursement for procedures all across the board would be higher. I get told that I devalue dentistry. I get told that I create a lack of respect for what we do as professionals, giving away treatment for next to nothing.
Those words are a tough pill to swallow, because I neither encourage nor seek out other dentists to join me. I also don’t make longstanding statements about my practice, nor do I have an opinion about the value of FFS dentistry. I keep my mouth shut and do what I was born to do.
What Is My “Why?”
If I say that it comes from the heart, it might sound pretentious. If I say that I don’t think my dentistry is worth more than a quarter of the fee, that might sound like I’m self-deprecating. The true answer is that, with what I do, I’ve gotten good enough to make it profitable, with the cherry on top being that I serve an underserved population. More so, when my region experiences a recession or hardship, I am much less affected by that change.
Now, not all of my patients are public aid patients. Some of them are PPO patients. Some are HMO. Luckily or predictably, my fees somehow balance themselves out over time, making my business model one that can afford me a good life.
A certain number of patients exists. The number of patients who cannot afford a $1,200 crown is rising. It’s not that they’re trying to save the money to put toward a new phone instead. It’s that they simply cannot afford to pay that kind of fee.
A much smaller percentage of patients can afford a $1,200 crown, but they don’t see the value in it. They think a crown is a crown. Whether it’s done by an old dude with a bunch of letters behind his name or a new grad advertising on Groupon, the final result will basically be the same. This, of course, isn’t the whole truth.
And yet every dentist, or maybe most dentists, are chasing that patient who will pay $1,200 for the crown, knowing that there are fewer and fewer of them out there. Is it starting to be crowded up there on the top? I wouldn’t know.
So this is part of my why. I simply have no one to compete with. There aren’t HMO and public aid offices sending out mailers or advertising on Facebook fighting over patients. In the area where I practice, it’s basically just me and maybe a couple of other knuckleheads who choose to work for those pennies.
The most important part of my why is my own private opinion about access to care. I don’t spread it. I don’t infect others with it. I don’t advertise it. I have no judgement against someone who may disagree. It lies within my heart to provide dentistry to everyone, not just to the people who have the disposable income to pay for it.
Whether patients work for a Fortune 500 company or whether they’re janitors in a nearby middle school, they all need to see a dentist. They all suffer from dental disease, and all of their lives are equally relevant. They all want to be with their families, go to the movies, and provide food for their kids without a toothache.
I’ll give you an example. I have a family whose father is on a waiting list for two organ transplants. He needs a kidney and a new heart. He cannot work, and he hasn’t been able to for at least a decade. The mom shoulders all of the financial strain, works as much as she can, and takes care of not just her kids but also her husband. She isn’t a doctor or a lawyer. She is a random office worker making a fair income for the amount of education and experience she has, but not enough to allow her family the spoils of an American culture.
Her daughter, a college student, needed a crown on a broken lower molar. My neighbor’s dentist would present her with a treatment plan of $1,200, which her mom would not be able to afford. But her HMO plan requires her to pay us $415 with no additional support from the insurance company. The crown and buildup have to be done for $415.
If my office didn’t exist, the daughter might down the line lose that broken lower molar due to recurrent decay or further fracture. Does accepting this fee and helping out this family give me some kind of high? Not anymore. It’s basically what I do every day, all day, and all of my patients have their own story.
Be Glad It’s Not You
Your patients all have their own stories. Many of you, in fact, may go a step further and offer care to your patients at no charge. But most dentists won’t go in day after day and prep crowns for $400 each and every time.
The way I put it in my head is like this: I’ll see the patients who no one else wants. I’m okay doing that. Having done it for so long, I don’t know any other way. So the next time you get irritated by someone like me, devaluing what we work for, just be glad at this time that it isn’t you. There’s always the possibility—with changes in politics, laws, access to care, or the costs of being a dentist—that we all may end working for a lot less than we feel we are worth.
Dr. Augustynis a practicing general dentist. She earned a DDS from the University of Illinois at Chicago. She also has completed the course sequence with the Dawson Academy’s continuum in oral equilibration and cosmetic dentistry. She completes a minimum of 30 hours of continuing education each year as well, including orthodontics, implantology, periodontics, prosthodontics, and cosmetics. Additionally, she is a moderator on the Dental Nachos and I Love Dentistry Facebook group forums. She can be reached at .