Greg Winteregg, DDS Answers The Managed Care Riddle

During eleven in practice, I spent tens of thousands of dollars on consultants to teach me how to have a great staff meeting, run my schedule, etc. But, after all of this consulting, I was still left with no solution to increasing the number of new patients which had fallen to only 10 per month. I was frustrated. I began investigating PPO and HMO plans as a solution.

Keywords:

MGE, dental practice, dental practice management, new patients, new dental patients

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What am I going to do?

In 1992, after eleven years in my dental practice, I was asking myself this very question. My practice was in a strip mall and the supermarket moved out. The foot traffic left with it. New patients crashed to fewer than 10 per month and collections were down by 25%. Over the eleven years prior to this I spent tens of thousands of dollars on consultants to teach me how to have a great staff meeting, run my schedule, etc. But, after all of this consulting, I was still left with no solution to my lowered income and new patients. I was frustrated. I began investigating PPO and HMO plans as a solution.

Perhaps you to are or have look at managed care (HMOs and PPOs) either as a source of new patients or how to get out of it. As the topic of managed care is one that I get asked about on a regular basis, I thought it would be a good idea to look at A) why people join up and B) What it really takes to get out. If you are involved with any HMOs, PPOs, discount plans or just want to know how to stay out of them, this article is for you.

In looking at an exit strategy, we should first examine what prompts dentists to join these plans. Common answers I hear from colleagues are:

1. I needed to be busier. It is better to fill that empty chair time with a patient (even at a reduced fee) than to have it empty.

2. I wanted to join the plan before I got "locked out"

3. A lot of my patients switched over to this plan.

4. I needed to improve my cash flow.

5. I needed more new patients.

You may find that the reasons you joined or are thinking of joining are similar. While these are all valid reasons, let me pose this question: If I were to ask if you would prefer to be paid your usual full fee for work you are doing, what would be your answer? (I am assuming it would be "yes.") The obvious problem with these plans is you are doing the same amount and quality of work at a reduced fee. This would work if your lab, suppliers, landlord and staff were willing to perform their services at a commensurately reduced fee - but we know that this is not going to happen! Generally, the write off percentage begins at 15-25% and go as high as 60% with some plans. You are reducing your income for a procedure, but not expense. At best you are cutting your profit; in severe cases may find yourself with a busy office having a difficult time paying bills.

What problem is managed care solving? You join a plan, you get more patients. Well, this begs the question: Why not go and just get more new patients without joining a plan? Think about it: If you knew how to attract enough fee-for-service new patients for practice to be successful - what would be the point of signing up for any plan?

This brings us to the first requirement of getting out of managed care - the ability to attract fee-for-service new patients.

I find that when most doctors look at how to get new patients, they a) can see that they need more b) have trouble making a decision about what to do because they are not educated in the areas of promotion and marketing and c) wish someone or something else would do it for them! The problem with this operating basis is it puts you in a position where you are not in control of the area - rather you are at the mercy of who ever you hire to do it or the "hope" that some marketing idea will work for you, knowing little to nothing about it.

Well, how do you go about increasing your ability in an area such as marketing and new patients? The answer is simple: get trained on the subject so you can handle it yourself and be confident enough to act. Like it or not, you ARE an EXECUTIVE, by virtue of the fact you own a business. You can try to get around this fact, but it is what it is. An executive needs to know how to handle (competently) any area of his or her organization.

So, hurdle number one to overcome when looking to get out of managed care is having the ability to attract an adequate volume of fee-for-service new patients. Hurdle number two believe it or not is case acceptance.

In another article I wrote, I detailed the relationship between low collections, case acceptance and of all things referrals. Without going into great detail again, I'll point out that an inability to "sell" full treatment plans, can convince a doctor that the reason for his or her low collections is not enough new patients. In other words, "to increase my collections, I need to more new patients coming in." It is true that an abundance of new patients is healthy for a practice and should be maintained. But look at it this way: If you have three patients each with a $6000 treatment plan, only accepting a third of needed treatment presented (i.e. each do $2000 worth of treatment), this is the same from a collections standpoint of one patient accepting their full plan of $6000. That one patient who accepts their full plan will also be healthier and more likely to refer!

With all of the above in mind, there is a basic formula that ANY business follows:

1. Sell their product or service.

2. Deliver their product or service.

3. Get new people to sell and deliver their product or service to.

"Management" coordinates and holds the organization together so that it will continue to sell and deliver more services or goods to the public (which means expansion). However, if there is ineffective marketing and sales then there isn't enough activity in the business to have something to manage.

Dental school and continuing education trains you how to "deliver the product." Where most practitioners fail is in 1 and 3 above - selling and getting new people to sell and deliver to. The reason for this failure is not hard to see - you will be successful in areas where you are effectively trained. Areas in which you are not trained in or know little to nothing about will be troublesome. You will also have a hard time making decisions about these areas. And let me make clear that by effective training - I mean learning techniques that actually get a desirable result!

Having difficulty in sales and marketing due to no training, it is easy to see how Managed Care Plans can appear to be a solution. While they will make you busier, they in fact breed other problems when it comes to overhead and profitability.

The solution to this problem is simple, learn how to properly market and sell in your office. With that ability, you will then have the confidence to start getting off the plans.

To finish my story above, at the same time in 1992 that I was investigating managed care plans, I heard about the MGE New Patient Workshop (http://www.mgeonline.com). I found out more about it and decided to give it a shot. What attracted me to it was the idea that MGE was going to train me to fix the problem myself and that there was no risk involved (money back guarantee). So, with the managed care contracts on my desk, I signed for the MGE New Patient Workshop. I did the New Patient Workshop and was able to handle my new patient problem on my own - without having to join any plans. From there, I did more sales and executive training with MGE, built a very successful practice and in 1994 sold it and became a partner in the company to help other doctors like me.

So, when I tell you that learning how to do it yourself is a solution - I am not saying this from some detached viewpoint - I lived this experience myself and saw the benefit!

So, my advice to you - make this the best year you have had in practice. Get started by increasing your ABILTY with the MGE New Patient Workshop (http://www.mgeonline.com). I look forward to meeting you and tracking your success!

Cut Health Plan Costs By Cutting Out the Managed Care Middleman

Cutting out the managed care middleman and contracting directly with medical providers may seem like a drastic way to cut health plan costs. Yet for employers whipsawed by relentless cost increases, it may be the only solution that works. The profit-bloated managed care industry, with much to lose, has propagated many myths why this sensible approach won't work. This article debunks the myths about direct provider contracting and sheds light on this ingenious cost-containment strategy.

Keywords:

direct provider contracting,managed care,employee benefits,reduce medical costs

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Cutting out the managed care middleman and contracting directly with medical providers may seem like a drastic solution for reducing health plan costs. Yet for employers who've been whipsawed by relentless cost increases, it may be the only solution that actually works. The profit-bloated managed care industry, with much to lose, has propagated many myths about why this sensible approach won't work. But their solutions haven't worked. Costs continue to surge and employers are desperately seeking relief. It's time to debunk the myths about direct provider contracting and shed some light on this ingenious, innovative cost-containment strategy.

Myth 1: Employers cannot negotiate as good a deal with medical providers as can managed care companies. The truth is employers can often negotiate just as good a deal, or better. Providers welcome direct agreements for the very reason that they are not like conventional managed care contracts. Physicians have complained for years about adversarial agreements and poor reimbursements forced upon them by HMOs and PPOs. This negative perception has created a strong willingness among medical providers to do business directly with employers. These "win-win" agreements ultimately save employers money without shortchanging the providers. Unlike managed care companies, direct agreements disclose all contractual details so both employer and provider know the deal they're getting and nothing can be hidden by a middleman's "cut."

Myth 2: You need large numbers of employees to negotiate direct provider contracts. The truth is physicians and hospitals will often contract with employers for limited numbers of employees. When a direct agreement is fair and reimbursement terms are reasonable, providers quickly realize it's a smart business decision to work with employers in their own community. A local employer, regardless of size, represents an established group of existing lives as prospective patients, ready to use the direct network providers. Direct networks have been successfully developed in areas where the employer had as few as 30 employees.

Myth 3: Direct contracting won't work in areas where other PPO networks are available. The truth is doctors are sick of disadvantageous agreements and miserable reimbursements forced upon them by managed care companies. They actually welcome the opportunity to contract directly with employers. For many doctors, the very fact it's an agreement with the employer, and not a managed care company, is reason enough to participate in a direct network. A direct agreement establishes a true business relationship between provider and employer, one that promises the provider quicker reimbursements, better benefit payment levels, and easier access to the ultimate payer (the employer). It's also a gesture of good community relations for any physician, medical group, or hospital to demonstrate.

Myth 4: Direct networks create more administrative burdens and higher costs. The truth is once direct networks are developed, the advantages of "owning" a network quickly outweigh "leasing" one from a managed care company. There are no recurring network access fees; less physician attrition; fewer employee complaints; simpler self-renewing contracts; better provider relationships; straightforward plan design features; and the ability to choose the best contractors for utilization review, case management, claims processing, and other administrative tasks. Managed care companies have failed to contain employer medical cost increases, despite all their so-called network management efforts. Ironically, and coincidentally, managed care industry profits are at an all-time high while employers continue to suffer.

Myth 5: Direct contracting exposes employers to greater liability. The truth is direct contracting poses no greater risk of litigation than any other benefit program component and may actually offer greater protection against it. Direct contracting is intended only for self-insured employers whose plans are governed by ERISA, which offers built-in protection against liability. ERISA preempts state tort laws and limits the employee's ability to hold an ERISA plan liable for malpractice under state laws, which govern malpractice, not ERISA. Because direct provider agreements state the employer is not providing/directing medical care and has no role whatsoever in any medical decision, the protection offered by ERISA's preemption is safely maintained.

Myth 6: Managed care companies can't (or won't) process claims for direct networks.
The truth is that processing claims and administering benefits for employer-owned provider networks are well within the technical capabilities of managed care companies. Their feigned inability to process direct network claims is one of many ways that managed care companies hold their employer-clients hostage in networks that are owned, leased, or arranged by the managed care companies themselves. If an existing managed care company cannot or will not administer direct network claims, there are plenty of third party administrators (TPAs) than can handle it, usually at a lower cost per employee. For employers that want direct networks in select locations (but want to keep commercial networks elsewhere), using a TPA is a convenient and cost-effective way to get the job done.

Myth 7: Managed care companies do a better job containing costs and saving employers money. If that was true, employer medical plan costs would be falling instead of rising. The truth is employers who have implemented direct provider contracting are experiencing lower costs and higher savings. One national employer with 20,000 employees has used direct networks to keep their health plan cost trend flat for the past five years. Another major employer reduced its health plan costs by more than 20% without reducing benefits or shifting costs to employees.

Bottom Line: Cutting out the managed care middleman and contracting directly with medical providers can help savvy employers reduce benefit costs and regain control over their corporate health care plans.