HMO Trap

This is how we define the “HMO Trap”: (This article applies mostly to specialists who accept monthly capitation payments and traditional HMO plans in the same way it applies to GPs.

An office with a lot of free chair time decides to sign up with HMO plans. Unaware of all the detailed rules and policies and without reading the lengthy and complicated contracts, the doctor starts seeing patients with HMO plans.

In the beginning it seems nice. All of a sudden you get a nice flow of patients and you are not worrying about a lack of business anymore.

But as time goes by you gradually start seeing how these plans really work. They send you a ridiculous "capitation check" which pays you an average of $2 to $5 per patient per month. Then they expect (better word is "require") you to do the following, free of charge: exams, x-rays, fillings, and extractions, just to name a few. They then tell you, "Not everything is free; patients have co-pays for a lot of procedures".... and they are right. Maybe they will pay you $20 for a molar root canal or $200 for a crown! Isn't that enough?!

Eventually you start thinking, "How is it possible that all these dentists I know make so much money by seeing HMO patients?" You research a little, go to a few seminars and bring in a couple of advisors.

They introduce you to the wonderful world of upgrades and soft tissue management!

They tell you how to refuse to do things for free by aggressively marketing your new upgraded procedures!

Before you realize what is happening, it affects your entire practice and the way you run it. Now you are in the business of 'selling' things, rather than providing a service. You don't like patients who don't accept the upgrades. Your staff (following your lead) has a bad attitude toward patients who don't accept the "soft tissue management program" and want "just a cleaning."

Some of your patients call the insurance companies to check your fees. They then call you back and are upset because you "overcharged" them.

Don't let me remind you of the times that you had to see a screaming kid and extract a few teeth, then do a cleaning plus fluoride treatment for a grand total of $0!

Over time, the reputation of your practice changes. Your staff is tired of the extra volume of work, which is all too apparent in their attitudes.

This change of 'practice image' begins affecting other patients. Your PPO and cash patients are tired of long waits and 'rushed cleanings.' They start leaving you.

Less that two years go by and you evaluate your books. You come to the realization that you are running an 'HMO office' with more that 80% of collections from HMO patients.

You are caught in the "HMO Trap"!

There is no way back because if you drop the plans, you lose 80% of your production! If you don’t, you are going to get into it even deeper.

So what do you do?

Avoid the "HMO trap" at all costs. This is how:

If you have not signed up with any HMOs yet, but are considering it, answer these questions first:

• Have you evaluated all your other options in getting new patients to your office?
• Have you done everything possible to improve your practice according to Practice-XL™ guidelines?
• Have you considered referral services?
• Can you prove on paper that your practice will be better off with HMO patients in your chairs versus having empty chairs?
• Have you read and fully understood the contracts and rules of the plans you are considering?
• Have you contemplated the changes you will have to make to your practice's policies?
• Have you though about the effects this will have on your current patients?

There are a number of other questions to be asked and answered. I can't outright tell you not to do it. But I can tell you this; if you are going to do it, you must seriously consider all the factors involved, and above all avoid the 'HMO trap' in the long run.

If you already have contracts with HMOs:

• Try your best to keep your HMO production under 25% and in no circumstances over 50% of your practice's overall production.
• Do not allow a reduction in the quality of your work for your HMO patients (it won't end there).
• Avoid just signing up with any plan; if they don't make sense on paper, stay away.
• Don't let your staff treat your HMO patients differently.
• Think long term!

If you are already a heavy HMO office:

• You must initiate the change gradually.
• Follow Practice-XL™ guidelines to achieve control of your customer service.
• Assemble a list of your plans in order of their performances and contributions to production
• Drop 10 to 20% of the plans from the bottom of the list.
• Concentrate on other methods of advertising to acquire more patients (see Income).
• By doing this systematically and trying to get your lost PPO and cash patients back, you can regain control of your practice and get out of the trap within few months to a year.
• Remember to be patient and stay focused on customer service. As a practitioner, you cannot maintain your competitive edge if you are not running an ideal practice!

Fortunately, dental HMO growth is starting to slow down. With our increased attention and more resistance toward at least the worst HMOs, we too can have a say in this.