By: Jessica Nunn

As practice owners are searching for more ways to combat increasing costs of doing business, many have looked for ways to increase revenue to help maintain profitability.  While dropping insurance payors isn’t a new concept in practices, it’s becoming one more widely explored.  Reimbursement rates continue to decline, leaving practices scrambling to cover their overhead.  With payroll costs rising, supplies costs rising (what costs AREN’T rising?), practices are really feeling the pinch.  

Many of our dental practice clients have dropped insurance, changing to a fee for service model. With these arrangements, patients still maintain their dental insurance. Oftentimes, the practice files the insurance on behalf of the patient, and the patient receives a check directly from their insurance company. Our family practice healthcare clients are also changing their relationship with health insurance as they adopt the DPC (Direct Primary Care) model.  DPC practices charge patients a monthly membership fee that often covers office visits, labs, and vaccines.

The primary benefits of these fee-for-service practices are both financial and operational. Financially, the practices no longer have to write off a large portion of their fees to meet the insurance contracted rates. Operationally, no longer having to verify insurance, file claims, fight denials, or follow up on receivables saves practices time and money. The flip side of practices no longer in network with insurance is that they will likely have fewer patients. Practices have to train their team members to be able to communicate what a patient might experience with an out-of-network practice. Patients often think they are only allowed to visit a dental office in network with their insurance, unaware how it works to be seen by out-of-network providers. Training staff members to educate patient questions and concerns is critical. Team members and doctors should be equipped to answer questions about financial implications.

While it may sound enticing to increase revenue and no longer chase insurance receivables, practices should be very intentional when considering changing their relationship with insurance payors. Steps should be taken to ensure the practice doesn’t experience a financial hit due to a large exodus of patients. First, does your practice have enough patients to keep the provider schedules full, even if it loses a good percentage? How many new patients is the practice seeing monthly? Is the practice prepared and willing to make a larger investment in marketing now that you will no longer receive patients from insurance? If the practice has a healthy volume of patients, is seeing enough new patients to sustain growth, and is willing to invest more, the next step is to run some numbers. How many patients are on insurance plans? What collections have been received from these plans in the last 12 months? Can the practice cut the plans first that represent a smaller percentage of patients and/or collections? It is a good idea to test the communication and education with fewer patients at first before jumping in the deep end.  

Over the next 8-12 months, the practice can reduce in-network contracts, work to continue to educate patients and provide exceptional patient care. Watch the patient visit counts, new patient counts, and active patient base numbers to ensure the practice isn’t shrinking more than it can financially withstand

With proper preparation, education, and ongoing analysis, a practice can effectively increase revenue and combat increasing costs by changing its relationship with insurance carriers. For more information on how to determine if your practice is ready to make the switch, reach out for a complimentary assessment with Maven Financial Partners at hello@mavenfp.com.

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