08/01/2013

Member Profile: Handling a high-volume PPO practice


The loss of adult Denti-Cal, an overall drop in adults seeking dental care, the decline in the economy and real estate market, increased regulatory compliance, reduced reimbursement rates...these are just some of the challenges dentists face in their dental practices. At what point do members consider changes in how they practice or ask for help to make changes in their practices? What kinds of changes should they consider? How do they implement these changes and still maintain practice production and income? CDA has heard from members, those seeking assistance and those who offer up their own experiences.

As part of an ongoing series, CDA is profiling members who have taken different approaches to how they practice.

It has been an interesting ride for Tod Anderson, DDS, a 43-year-old general dentist in his third career. An avid surfer, Anderson grew up just over the hill from the beach and boardwalks of Santa Cruz. He spent the first part of his professional career in the technology field, following in the footsteps of his dad and brothers. Because of his previous health care experience as a pre-med undergraduate student, Anderson eventually cashed in his tech stock and migrated to a pharmaceutical career before attending dental school at USC in his early 30s.

Like many graduating dental school students in California, Anderson accrued a large amount of debt to pay for his education, therefore establishing a private practice right after graduation seemed out of the question. He worked as an associate in a dental office for a couple of years before purchasing a well-established, high-volume dental practice in Santa Cruz. As part of the purchase agreement, the selling dentist agreed to stay with the practice for 18 months to assist with the patient and practice transition.

Once the former owner dentist left the practice, Anderson said he gained a clearer picture of what running a high-volume PPO practice was like — challenging in a variety of aspects. Despite working four days per week and bringing in an associate dentist two days per month, Anderson said meeting patient demand as a solo practitioner when treating 450 patients per month is difficult.

While patient volume is high, Anderson said he struggles to meet his practice production goals. Recent practice analysis fleshed out several issues to be addressed, but Anderson noted that his contract with one dental PPO raises a large red flag for him.

“That particular plan’s PPO fee schedule is lower than any other PPO I’m contracted with,” said Anderson, who participates as a contracted provider with five other dental plans.

With almost 40 percent of his patients enrolled in the lowest paying PPO plan, Anderson estimates that he was losing more than $100,000 per year in revenue. Anderson said he is now rethinking his participation with that plan as well as closely evaluating all practice systems to make his practice more of a “well-oiled machine.”  

Anderson said he would eventually like to move toward a full fee-for-service practice. He recognizes that this will be a challenge due to several reasons: he started in the profession later than most dentists; he will be carrying large student loans for many years to come; practicing in the Santa Cruz area is more expensive than in other parts of the state, resulting in higher overhead costs; and most of the school districts and other large employers provide PPO coverage for their employees. Anderson is seeking advice and assistance through well-seasoned colleagues and a practice management consultant as he takes the necessary next steps for his practice. He admits that he is anxious about making the changes, but he knows it will benefit him and his patients in the long run.

If given an opportunity to rethink what he would have done differently since making dentistry his career, Anderson said he made the following observations:

  • He would have saved and paid for more of his dental school education out of pocket instead of taking out a large amount of student loans.  He acknowledges that coming out of school with a high debt load has made things like buying a practice or purchasing a home more difficult.
  • He would have done his due diligence before buying a practice. Anderson said he would have spent some time associating with and working in the practice before he purchased it. “In my opinion, the idea of purchasing good will sounds good, but in reality I feel it is difficult to accomplish unless you’re acquiring a practice from a family member,” Anderson said.

In his experience, Anderson notes that “having a thick skin” is necessary for those dentists considering acquiring a long-standing dental practice. The selling dentist had the practice for 30 years, so patient management during the transition was more difficult than he anticipated. Despite acquiring and retaining most of the prior owner’s staff, Anderson said that he experienced some patient anxiety as he made changes to practice policies. He hopes this anxiety will dissipate as he enters his fifth year as the practice owner (he is currently in the midst of year four).

Finally, Anderson admits that having the expertise and resources to fully evaluate the impact of dental PPO contracts and fee schedules on his practice is a skill that he has not fully mastered. By acknowledging that fact and reaching out for assistance from consultants and other experts, he said he knows that he is on the right path to reach his goals.

For tools and resources to evaluate dental plans and the impact to your practice, visit cda.org/compass.