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!

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Perhaps now or some time in the future, you’ll think about adding an associate. Whether that time is today or ten years from now, it is best to be informed on the subject. Part one of this article offered guidelines to help determine the need for an associate in your practice.

In this article, we’ll pick up with questions you should ask once the decision is made to hire an associate. Specifically:

1. Do you want an associate or a partner?
2. What type of work do you expect the associate to do – i.e. what would be his or her job description?
3. How should you pay an associate?
4. How do you find the right associate?
5. How does the associate’s treatment philosophy match up with yours?
6. How can you tell if the associate “fits in” with your office, staff and patients

Let’s start with the first one: “Do you want an associate or partner?”

You should never enter a relationship saying “Well – come on board and we’ll see how it goes and work out the details later.” If agreements are not clearly delineated, each party has their own “idea” of what the agreement is and they seldom match! The associate starts with the idea he or she will be offered a partnership and eventually buy the owner/doctor out. The owner/doctor is entertaining the thought but is ambivalent. The associate makes the schedule easier so the owner/doctor, who originally planned on retiring in three to five years, has more time off, feels better, and decides to work another fifteen years. The associate feels abused and taken advantage of and decides to leave. The owner/doctor finds himself back at square one. What happened? In this case the doctor failed on both the communication and leadership fronts.

Had good communication existed from the get go, with a clear reality of where the relationship was headed, things might have turned out different. You don’t have to offer a partnership right up front. If partnership is a possibility though, at least have some benchmarks in place and get these agreed upon by both parties beforehand – and stick to the agreement. For example, you both agree that you will work together for a set evaluation period before talking partnership, etc. One excellent example I saw was a doctor who had his new associate (potential partner) sign three agreements: a) associate, b) buy-in and c) buy-out. If the associate met certain guidelines and the relationship was good, he could buy in. If the owner then wanted to sell the remainder the associate could buy him out, etc. Either way – you might not want a partner – ever. This should also be made clear. Talk it over with your accountant or other advisors and decide what you are shopping for before you start on this journey.

The next question is: “What type of work do you expect the associate to do – i.e. what would be his or her job description?”

Do you expect them to take all operative and root canals off your schedule and see all the children that come in? Will they treatment plan and present their own cases? Determine issues like this prior to interviewing, much less hiring. Keep in mind that the associate is there for you and your office. They either fit or they don’t. Imagine you were selling your house. If the realtor brought in a potential buyer that asked you to add a pool and two more bedrooms, you wouldn’t do that to make it work. The realtor would find another buyer. Same concept with an associate. For example: You want an associate to free up your schedule by taking all of the fillings, kids and root canals. The prospect you are interviewing refuses to do root canals and doesn’t really like kids. Next… You get the idea. While some things are of course open to negotiation – don’t go crazy attempting to accommodate. If you needed a full time receptionist and you interview someone who can’t work Mondays and Wednesdays– why hire them? You eventually will find someone who can.

The third question is “What should you pay an associate?”

This depends on what you expect the associate to do. If they are to find their own new patients, present their own cases, etc. the percentage would be higher. Conversely, if you handle all of the treatment planning and fill their schedule for them, the percentage would be lower. Sit down and do the math. If you had an associate producing X amount at Y percentage – what would that equate to and how would that impact your bottom line? Also consider how this would impact your schedule. If you are booked out for several weeks and you give an associate all of the operative, root canals, single unit crowns, etc. you would be able to move all of the major work on your schedule forward making you more productive. For a GP associate, anything over 35% of collections in compensation is too high in my opinion (specialists are an exception). I’ve seen some doctors who pay their associates 25% if all they do is work on patients with no treatment planning responsibilities. You can also mix a per diem and percentage. If you are going to do this, you have to ensure it is viable for the office.

For example:

You guarantee a doctor $450 per day. He works 16 days per month, making the guaranteed salary $7,200 per month. You decide you don’t want to exceed, let’s say, 30% in compensation for the associate. So we take that $7,200 and divide it by 30 and multiply by 100. We do this to determine what $7,200 is 30% of.

Here’s how the example works out:
1. Associate Monthly Base = $7,200
2. $7,200 Divided by 30 equals 240.
3. 240 multiplied by 100 equals $24,000.
4. $7,200 is 30% of $24,000.

So, if we are going to give a percentage on top of the base, we tell the associate that they get 30% of anything they collect over $24,000 in a given month and distribute that amount at the end of the month.

On the other side of this, what happens if this associate who you are paying $7,200 a month and, after ramping up, their average collections are only $15,000? In that case, you had better do something as they are costing you more than they are worth – in this case 48%!

In my experience, if an associate can’t do $40,000 per month, no one is going to be happy. They won’t be making enough money and below that level of production you aren’t making enough of a profit to keep them around. You must have enough business to make it worth everyone’s while and they must be confident enough clinically to produce it.

The next question is: “How do you find the right associate?”

You’ve filled in the blanks and decided what you want and what you have to offer. If no prospects are immediately to hand, you need to go out and find someone. The question is: where to look? The answer: Everywhere! Here are some ideas:

1. Advertise in the paper.
2. Ask various sales reps (i.e. your supplier, etc.)
3. Call your friends and colleagues.
4. Advertise in local and state dental journals and newsletters.
5. Advertise online.
6. Have your office manager help you contact doctors in your immediate area to see if they know anyone.
7. Sign up for an associate “headhunting” service (these can be pricey).
8. Contact residency programs in your state. Dental schools are also an option, but if you need someone who can hit the ground running from a production standpoint, this may not be the best option as you may have to deal with a learning curve.

Just keep in mind that if you outflow enough, you’ll eventually find someone who will be a good fit.

The fifth question is: “How does the associate’s treatment philosophy match up with yours?”

Let’s say you’ve worked out the need for an associate, what the level of compensation is, the job description and the hours that he or she will work. You also searched for an associate and are now interviewing an associate prospect. He or she seems like a nice person but what is his or her treatment philosophy? Divergent treatment philosophies between a senior doctor and his or her associate is the cause of more turmoil than you’d suspect.

How can you prevent this in lieu of having to work together for six or more months? Try this approach: During the interview with your prospective associate, take ten charts, along with accompanying x-rays, models (if there are any) and temporarily remove the treatment plans. Now, ask the associate to draw up a treatment plan based on the information to hand. Match up the associate’s treatment plan with the treatment plan you made for the case. If they are relatively the same, you may have a good match. You could also describe a number of clinical scenarios and see what course of action he or she would take and see how that agrees with what you might do.

Ultimately, the MOST important thing to consider with an associate is their level of clinical competence.

You may not be able to establish this for yourself without working with him or her. There are a couple of things you can do to get an idea of where they are at clinically.

1. They could treat you. (Even if it is a prophy, you’ll see their chairside manner and the like.)
2. You could have them bring in models and pictures for cases they have completed.

Other than that, you’ll have to check up on their work with your patients.

If you feel you have found the right candidate, you could possible have them treat you and some of your staff. If the team isn’t sold on them as a clinician they’ll be reluctant to have patients see the ‘new guy/girl’. You’ll end up just as busy as you are now while paying the associate to sit around because “none of the patients wants to see the associate.” It may be a great ego-trip to a have an associate but if it doesn’t move you in the direction of lightening your load or expanding the practice, it’s not worth it.

I once had a doctor tell me that there was no way he would let his associate work on him. Excuse me?! They represent your office. Their treatment is your treatment! You are responsible for their work. And no one wants to be re-doing dentistry for free after a sub par clinician leaves the practice, not to mention the effect this has on your patients and practice.

These are a few of my thoughts on a subject that could easily fill a book. Try these simple guidelines and get good advice from your advisors. In the end, the decision ultimately is YOURS. Choose wisely. If you would like to get more information on this subject, or on how to get more fee-for-service new patients to keep your practice healthy, to expand or to make it possible to add an associate the “New Patient Workshop” from MGE (http://www.mgeonline.com) is the solution.

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