You may be familiar with the current controversy in the state of Washington regarding the 15% fee cut that Washington Dental Service (WDS), a member of the Delta Dental Plans Association applied in June 2011. The 15% fee cut was an across the board reduction for all Dentists who participate with WDS. I believe that this action is a sneak preview of coming attractions. Since last June, Delta Associations in the states of Idaho and Pennsylvania have initiated similar cuts. Stay tuned, more cuts may be coming to a state near you.
These cuts to member dentists have occurred while WDS executives voted themselves pay raises of 35-45% over the past five years. Jim Dwyer, CEO of WDS is paid an annual salary of $1.2 Million. Recently, Mr Dwyer added fuel to the fire when he was interviewed on the Seattle news station King 5. In the interview, Mr Dwyer said that Dentists could “start working five days per week” to make up for the 15% fee cut that WDS instituted in 2011. After WA Dentists rightfully expressed outrage over his comments, Mr. Dwyer subsequently apologized, saying that his words were taken out of context. King 5 ran more of the video interview, where Dwyer says this not once but twice and also says, quite smugly, that dentists only work three and a half days a week. ”They certainly don’t work four days a week,” he adds, dripping with contempt. Below Dwyer’s lame apology:
Fred Joyal, the author of the fantastic book titled Everything is Marketing, has written an excellent blog post titled, ‘Who Profits from Non-Profits? Not You!’ that is all about this WDS subject. Here’s a link for Fred’s blog post:
Hopefully the combination of Mr Dwyer’s arrogance and contempt with the self-serving irony of granting themselves 35-45% executive raises while cutting fees to members 15% has you seething about now! However the important question is; what does this all mean to you?
While this is an emotional issue, I am going to try and take the emotion out of it. Here goes. I want to encourage you to look at insurance fee adjustments as a marketing expense. Because that is exactly what they are! You are agreeing to accept reduced fees from the insurance company in exchange for them providing you with patients. It really is that simple. Does it make sense to be a member of their PPO? That depends. If you cannot attract new patients via your own marketing efforts or if the cost of doing so is greater than your insurance adjustments then it would make sense to be a provider in their network.
However, if you do the math you might just discover that you could develop a very productive comprehensive marketing plan (that produces a consistent supply of quality new patients) for a small fraction of the amount of money you were paying for insurance adjustments, then tell the insurance companies to take a hike! Ooops, the emotion just crept back in!!
Seriously though, that is exactly what we have done. We have developed a comprehensive marketing plan using internal, external, and digital strategies. Our marketing plan results in a steady supply of quality new patients. It costs us a small fraction of what we were paying in the form of insurance adjustments. The added benefit is that I sleep better knowing I am not contributing anything to Mr. Dwyer’s bloated salary! Keep Smiling!