We will run a few numbers to show how it works. Let us say that our hypothetical practice has $800,000 revenues and 1000 total active patients
This breaks down to:
150 active patients from Delta 125 active patients from Met Life 80 active patients from Aetna
50 active patients from Prudential
So, a total of 405 active patients are insured through participating plans, while 595 active patients have not been referred through plans.
Now let us line up the revenues:
$128,000 collected from Delta
$101,000 collected from Met Life
$74,000 collected from Aetna
$39,000 collected from Prudential
See how the revenues pretty much line up with the patient numbers? This is typical.
Now, taking these numbers into consideration, what are the prospects of making a complete insurance transition with this dental practice? As always, let us look at the numbers. Numbers never lie.
In the example practice above, we have 405 active patients to replace with indemnity or fee-for-service patients. If you tried to do all that in one year, you would likely be disappointed. You would need to be attracting about 35 additional, high-quality new patients each month. Even in a very positive market area, attempting this kind of volume would be setting yourself up for failure.
To figure out what is realistic, use this rule of thumb:
Take the number of active patients currently enrolled with insurance plans in your dental practice and divide that number by 12, much like we just did to find out how many additional new patients we need to replace the participating patients. In this case, the result was 35. All you have to do now is add the word “months” to the end.
In our example practice, it will likely take 35 months to completely, comfortably, and with limited stress wean the office from insurance participation. This means our short-term promotion goal is to attract about 10 to 14 additional high-quality new patients each month to start the replacement process. This is an attainable goal. This is a reasonable goal. This is a goal that can be exceeded, making the owner and team more and more confident as the months pass.
So, we’ve established that:
- It’s going to take 35 months to complete the transition
- We need to keep the active patient number at 1,000 active patients
- We need to add about 10 to 14 new fee-for-service patients each month to begin offsetting the participating patient base
- We need to establish an annual marketing budget of $40,000 to $50,000
We now have the ‘new patient acquisition’ part of our transition plan well in hand. So, when do we start actually dropping out of the insurance plans?
This is key.
You start dropping plans AFTER you have acquired the new fee-for-service patients!
Look back at the insurance numbers again. You will notice that there are 50 active patients with Prudential. If, after five months, you have achieved your goal of 50 new fee-for-service patients, you will be in a position to drop Prudential.
We have had client offices mark up the calendar in their business office with the designated day that they finally call the insurance company to tell them that they no longer want to participate. It can be an incredibly motivating team objective to which everyone can contribute.
Wouldn’t it be great if you and your team were able to celebrate with each plan you eliminated? We bet the person in your office that deals with insurance inquiries will be stoked!
Now you go through this process all over again for the remaining insurance plans your practice participates in. In our example, Aetna is the next target. Now you need 80 more fee-for-service patients. Every promotional activity, every new inquiry, every new patient booked becomes part of the effort, and every member of your team can be involved in the goal of attracting enough high-quality patients to be able to say goodbye to Aetna. We have seen insurance transitions bring entire dental teams together to attain a common goal. It can actually be fun!