Dentaltown June 2021 - 10

howard speaks
column
It Figures!
Investor Warren Buffett has always taught that you
shouldn't go into a business that requires high capital
investment while someone else sets your fees. Well, that's
what all health care is! High-tech equipment, highly
regulated and third parties set your fees while you're
locked into their contracts.
An age-old question
For 30 years now, dentists have been asking me if
they should go out of network with preferred provider
organizations-while at the same time the average dentist
is participating with more than six different PPOs!
Here's why joining a PPO sounds good at fi rst:
* Americans who have dental benefi ts are nearly
twice as likely to go to the dentist at least
annually as those without dental benefi ts.
* Lack of dental insurance is the most common
reason why people won't schedule a dental
appointment.
So it seems like accepting a lot of PPOs should put
you in the patient pipeline-one fewer thing to keep
patients from crossing your practice threshold.
But if your prices start going up 20% or 30% like
they have for the housing or lumber industries recently,
do you think a PPO is going to be accommodating and
start increasing allowable fees? Absolutely not, because
they're also locked into three-, four- and fi ve-year contracts
with a lot of big companies.
True tabulations
If you made bottled water and each bottle cost
50 cents to make, you'd know to sell it for a dollar and
make 50 cents in profi t. But if dentists were selling a
bottle of water, they'd have to sell it for
six to 12 different prices, depending
on whichever third-party insurance
plan each customer had.
This on top of the fact the dentists
probably wouldn't know how much it
cost them to make that bottle in the
fi rst place! Every time I ask dentists
how much they charge for a fi lling, for
example, they'll quote me the mental
by Howard Farran, DDS, MBA, publisher, Dentaltown magazine
10 JUNE 2021 // dentaltown.com
cash fee that they think their price is. But they're not
taking into account that although they " charge " $250
for a fi lling, the adjusted production was $125 so they
actually got only $125. And they don't know how long
the patient was in the room for to get that $125, or what
it costs to keep that room open for an hour.
Knowledge is fi nancial power
This decision isn't about just fl atly whether or not
to accept PPO plans-it's about going in clear-eyed
about what you're getting into if you do accept them.
When you don't know your costs and you get into
an infl ationary environment where your costs are going
up signifi cantly, and rapidly, that's a recipe for disaster.
You thought the pandemic was bad?
Confi dence and stability is the foundation of success
for almost everything: countries, currencies, economies
and last but not least your business. Brands are built
on this from the start, and in dentistry that should
be the dentist. The opposite of stability is instability,
which doesn't have to bankrupt your business! Instead,
the practice could become even stronger thanks to the
changes you made to survive, whether you're reacting
to anything from recessions and higher taxes to new
demands from your customers or staffers.
But again, you can't do that smartly if you don't
know your numbers! Uneducated decisions are just
hunches or guesses, which can sink your business. ■
1.5-credit online CE course:
" Should I Be Insurance-Free? "
This course helps viewers answer six questions that
help determine the right way to go in relation to dental
insurance, and how to make smooth practice transitions
that position the practice to succeed, either in-network
or out. To view the course for the chance to earn 1.5 CE
credits, head to dentaltown.com/insurance-free-ce.
http://www.dentaltown.com/insurance-free-ce http://www.dentaltown.com

Dentaltown June 2021

Table of Contents for the Digital Edition of Dentaltown June 2021

Dentaltown June 2021 - Intro
Dentaltown June 2021 - Cover1
Dentaltown June 2021 - Cover2
Dentaltown June 2021 - 1
Dentaltown June 2021 - 2
Dentaltown June 2021 - 3
Dentaltown June 2021 - 4
Dentaltown June 2021 - 5
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Dentaltown June 2021 - Cover3
Dentaltown June 2021 - Cover4
Dentaltown June 2021 - Outsert_1
Dentaltown June 2021 - Outsert_2
Dentaltown June 2021 - Outsert_3
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