Dentists are always looking for opportunities to increase production and revenue. Signing up for insurance plans is an appealing option to help boost practice growth, and it’s one that dentists feel doesn’t require analysis or planning.
However, simply signing up for the next insurance plan won’t necessarily solve your production and revenue problem. As with every decision that you make, planning is key, and you must analyze the effects that it might have on your practice.
Analyze Your Insurance Scenario in Four Steps
Dental insurance is a complicated area that requires proper research and planning. Follow these four key steps to help you analyze a potential insurance plan’s revenue and relative profitability:
- Review all of your patients with the potential insurance plan in consideration. Analyze any potential lost revenue from current patients covered with lower reimbursements under the insurance plan.
- Review local plan participation. Determine how many people are covered by the plan within a 5- to 15-mile radius to have a sense of the potential pool of patients you may gain if your practice becomes a participating office.
- Estimate the number of new patients who will come to the practice. While this is a subjective analysis, the practice needs some type of benchmark to determine how many new patients will become active patients. Once this is established, the practice can analyze both the average production per new patient and the average production per current patient covered by the insurance plan and determine how much of a revenue increase will be accrued. Keep in mind that this is merely an estimate, but it’s a necessary assumption to make for the analysis.
- Determine whether enrolling in the plan will lead to a revenue increase or loss. If lower reimbursements from current patients significantly outweigh new patient revenue, then it’s not advisable to enroll in that plan. Conversely, if the practice acquisition of new patient revenue outweighs the decreased reimbursements from current active patients covered by the plan, then it may be advisable to enroll in that plan.
Production and revenue losses can sometimes cause kneejerk reactions. However, you shouldn’t enroll in a new plan just because your practice is feeling pressure. And pulling out of a plan that isn’t working out will almost always result in losing the patients who are enrolled in it. Avoid these missteps by using this four-step approach to analyze all potential and current insurance plans to determine the revenue and profitability relative to each plan.
Dr. Levin is a third-generation general dentist and the founder and CEO of Levin Group Inc, a dental management consulting firm that has worked with more than 26,000 dentists. An internationally known dental practice management speaker, he has written 65 books and more than 4,300 articles. He is also the executive founder of Dental Business Study Clubs, dentistry’s only all-business study clubs, the next generation of dental business education.