Many dentists I speak with say their primary source of new patients is participation in dental insurance networks. While this can provide a steady flow of new patients, there are a few problems with being overly reliant on this source of new patient acquisition.
1) Lack of control: It is the insurance company, not the dentist that dictates fees. Lately insurance companies are even telling dentists how much they can charge for non-covered procedures. You do not want to be in a position of wanting/needing to increase your fees, only to discover that the majority of your patients are covered by insurance and you have no control over the fees you charge them.
2) The deck will always be stacked in the insurance company’s favor: My first job out of college in the early 90’s was marketing employee benefits, including dental insurance, for a large insurance company. Back then dental insurance premiums were increasing at around 12-15% per year. I have not been an insider in that industry in almost 20 years, however I have heard that annual increases have remained somewhere around that level, yet the annual maximum amount that insurance companies will pay out for treatment hasn’t increased ($1,000 – $2,000 per year) in decades. And it’s also safe to assume they haven’t increased their reasonable & customary (usual & customary) reimbursement amounts at anywhere near the rate of inflation.
So bottom line, the insurance companies are paying dentists less than ever (on an inflation adjusted basis), controlling how much dentists can charge more than ever, and capping coverage at the same levels they were 20 years ago in spite of inflation and annual premium increases.
3) Additional staffing requirements: The insurance companies have made it so burdensome that you need staff dedicated to filing claims, checking coverage, completing redundant paperwork and following up on unreimbursed claims. This of course increases your overhead with staffers who are not direct revenue generators (like a hygienist is).
4) Lack of diversification: This not only applies to insurance network participation, but all other forms of marketing and advertising. For example, just as patient referrals shouldn’t be your sole source of new patient acquisition, you shouldn’t be 100% reliant on insurance companies either. As with most things in life, the key is moderation and diversification. You may have heard your financial planner tell you not to put “all your eggs in one basket” – the same holds true with marketing and promotion.
5) Patient retention: When patients that initially came to you solely because you were in-network with their insurance company change jobs, or their employer switches insurance companies and you aren’t on the list for their new insurance company, you will most likely lose that patient.
It is much easier and more profitable to keep an existing patient than to get a new one. Your existing patients already know & trust you – this is not the case with a new patient. Not only does it cost more to acquire a new patient than to get an existing patient to return, your case acceptance rate will be higher with long-term patients due to the higher level of comfort and trust.
I’m not recommending dentists who currently accept insurance stop doing so all together – especially not in the current economy. I am however, suggesting they diversify their new patient acquisition methods to include things like building referral networks with specialists, direct mail (and I don’t mean the “me too” cookie cutter postcards that are way overused by dentists), internet marketing (SEO, blogs, link building, online videos & press releases), patient newsletters and better internal marketing (lost patient reactivation campaigns, training staff to properly handle call-ins, formalized patient referral programs, etc.).