Is it safe to compete with medicaid fees as oppose to accepting medicaid?

[The Candidate]

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Before you throw me into the fire, this is just a thought.

We all know how bad the economy has been in many communities and how that affected many dental offices' bottom line. So since there is a larger group of underserved and un-employed communities out there, would it make sense to start a practice that would serve these groups by providing affordable dentistry (medicaid level) without accepting medicaid? I don't mean to the penny, but $20-50 more what medicaid would reimburse. Obviously these patients would pay in cash, and you don't have to worry about the crazy and complex medicaid red tapes. Also, from business sense, could this work?

Just a thought.

 

[ODEP PEDO]

Would work in theory only, but only for those that do not have medicaid.
But a person that DOES have medicaid, likely would go to an office that does accept their no co-pay "insurance", unless you are located soooo remotely that instead of going to a provider in their "list", they would go to you for an emergency quick fix only, I don't think that an unemployed person would be shopping to have a full mouth rehabilitation. you would be doing basic fillings or extraction.

 

[newyorkblork]

Before you throw me into the fire, this is just a thought.

We all know how bad the economy has been in many communities and how that affected many dental offices' bottom line. So since there is a larger group of underserved and un-employed communities out there, would it make sense to start a practice that would serve these groups by providing affordable dentistry (medicaid level) without accepting medicaid? I don't mean to the penny, but $20-50 more what medicaid would reimburse. Obviously these patients would pay in cash, and you don't have to worry about the crazy and complex medicaid red tapes. Also, from business sense, could this work?

Just a thought.

Maybe I'm misunderstanding, but doesn't medicaid essentially provide money the patient doesn't have? If you give a patient two options

1) use medicaid that they already have for free treatment
2) hand you cash

Why would they go with #2?

 

[MRSA]

1) use medicaid that they already have for free treatment
2) hand you cash

Why would they go with #2?

because many dentists will refuse to see such patients otherwise

 

[mike3kgt]

Before you throw me into the fire, this is just a thought.

We all know how bad the economy has been in many communities and how that affected many dental offices' bottom line. So since there is a larger group of underserved and un-employed communities out there, would it make sense to start a practice that would serve these groups by providing affordable dentistry (medicaid level) without accepting medicaid? I don't mean to the penny, but $20-50 more what medicaid would reimburse. Obviously these patients would pay in cash, and you don't have to worry about the crazy and complex medicaid red tapes. Also, from business sense, could this work?

Just a thought.

If you can stay open charging these fees and you have a market for it, do it. This is often the CHC model (along with sliding-scale-fees).

You may be successful, but more often than not, it will lead to burnout. Certainly it will depend on your expenses vs. production, but assume you can do it, you certainly can do quite well at that model.

What comes into consideration is that people who are on medicaid will typically go only to a medicaid provider because they want their treatment for free. There isn't much of a marketing advantage to say "we charge only as much as medicaid does" because people don't know what medicaid pays because they pay nothing. Furthermore, people who don't pay anything or much less than the going rate don't necessarily cause less problems. They tend to be just as demanding, and sometimes, feel entitled to A+ care just because you "accept the medical card."

Good luck!

 

[charlestweed]

Yes, it definitely works. This is the business model that my sister and I and many doctors in southern California have used for years and they’ve been very successful. Here are their reasons:

- Doing cheap $50 fillings is better than sitting around doing nothing and paying the assistant, who is also sitting around doing nothing.
- As MRSA pointed out, many dentists refuse to see such patients. Therefore, these patients have to go to see the GPs who charge less (ie close to medicaid fees).
- In order for this to work, you have to be good and fast and keep your overhead low…ie smaller office with low rent, fewer staff (my sister has 2…one FT, one PT) etc.

High volume is the key. For GPs, it is tough to jump from chairs to chairs all day. I think it works better for orthodontists like myself because I don’t have to be good and fast. I just hire a bunch of RDAs who help me see 50-80 patients a day. This is the advice I gave to many new ortho grads but many of them think I am crazy.

 

[Munks]

- In order for this to work, you have to be good and fast and keep your overhead low…ie smaller office with low rent, fewer staff (my sister has 2…one FT, one PT) etc.

High volume is the key. For GPs, it is tough to jump from chairs to chairs all day. I think it works better for orthodontists like myself because I don't have to be good and fast. I just hire a bunch of RDAs who help me see 50-80 patients a day. This is the advice I gave to many new ortho grads but many of them think I am crazy.

Agreed. I believe this situation would work in a low-overhead high-volume practice.. but then again, as a GP how long will it be before you burn out as others have stated?

One thing I'm doubtful of however is that most dentists do not accept medicaid. I am especially surprised to hear this from you Charles, as I would have thought that the mass competition would force many into accepting Medicaid, as it's a much better alternative than accepting HMOs as well. Though, like you said, your situation may be different as an orthodontist.

 

[charlestweed]

Agreed. I believe this situation would work in a low-overhead high-volume practice.. but then again, as a GP how long will it be before you burn out as others have stated?

Not very long. My sister has practiced as a GP for 10 years. She started her own practice 6 years ago. Like many Asian dentists who practice in Orange County, she charges very low fees and accepts medicaid, but she does not accept any HMO plan. She was busy on day one. Six months later, she gave up her associate job and devoted full time to her newly built practice. She is currently living a dream. The recent medicaid cut and the decline in new patients due to the poor economy don’t really bother her. She works a lot less than what she used to….on some weekdays, she only see 2-3 patients a day. She no longer advertises and relies on word of mouth and walk-ins. Had she not accepted the medicaid and charged low fees in the beginning, she wouldn’t has the kind of lifestyle she currently enjoys. I applied the same business model to 3 of my ortho practices and get similar success.

One thing she didn’t have was a huge amount of student loan. She only borrowed $80K for her 4 years at UCSF.

 

[Demeter]

Yes, it definitely works. This is the business model that my sister and I and many doctors in southern California have used for years and they’ve been very successful. Here are their reasons:

- Doing cheap $50 fillings is better than sitting around doing nothing and paying the assistant, who is also sitting around doing nothing.
- As MRSA pointed out, many dentists refuse to see such patients. Therefore, these patients have to go to see the GPs who charge less (ie close to medicaid fees).
- In order for this to work, you have to be good and fast and keep your overhead low…ie smaller office with low rent, fewer staff (my sister has 2…one FT, one PT) etc.

High volume is the key. For GPs, it is tough to jump from chairs to chairs all day. I think it works better for orthodontists like myself because I don’t have to be good and fast. I just hire a bunch of RDAs who help me see 50-80 patients a day. This is the advice I gave to many new ortho grads but many of them think I am crazy.

This works well for Ortho, because you can have your assistants take impressions, do all the banding, change wires etc... It would different for a GP, because you actually have to pick a handpiece to produce $$$.

 

[Daurang]

Yes it can and does work. If you open any Chinese or VNmese newspaper in Southern Cali, you will see ads for $5 cleaning, $20 fillings, $200 'deep clean', $200 root canal, $300 crowns, free whitening.

 

[Saddleshoes]

Before you throw me into the fire, this is just a thought.

We all know how bad the economy has been in many communities and how that affected many dental offices' bottom line. So since there is a larger group of underserved and un-employed communities out there, would it make sense to start a practice that would serve these groups by providing affordable dentistry (medicaid level) without accepting medicaid? I don't mean to the penny, but $20-50 more what medicaid would reimburse. Obviously these patients would pay in cash, and you don't have to worry about the crazy and complex medicaid red tapes. Also, from business sense, could this work?

Just a thought.

The medicaid reimbursement is different from state to state. So this model may work in some states and fail in some states.

In Illinois, for example, the reimbursement for a crown is $185. If you can figure out a way to survive on $185 crowns the under-served of Illinois will beat a path to your door. (BTW Illinois public aid has the third lowest dental reimbursement rate of the 50 states.)

 

[Cold Front]

Yes it can and does work. If you open any Chinese or VNmese newspaper in Southern Cali, you will see ads for $5 cleaning, $20 fillings, $200 'deep clean', $200 root canal, $300 crowns, free whitening.

What's the catch? The overhead for a $5 cleaning is under $5? 😀

 

[Guy Smiley]

What's the catch? The overhead for a $5 cleaning is under $5? 😀

Catch is they all need deep cleanings?

 

[charlestweed]

This works well for Ortho, because you can have your assistants take impressions, do all the banding, change wires etc... It would different for a GP, because you actually have to pick a handpiece to produce $$$.

I think it works well for general dentistry and other specialties as well.

When you start a practice from scratch, you’re gonna lose your money to pay for the office rent, staff salaries, advertisement, business insurance, worker comp etc anyway. So why not pick up the handpieces and do these fillings at cheap fees? This way, you will lose less $$$ or break even if you do a lot of them. Since you pay your assistant for being at your office for 8 hours, why not keep him/her busy?

 

[The Candidate]

I think it works well for general dentistry and other specialties as well.

When you start a practice from scratch, you’re gonna lose your money to pay for the office rent, staff salaries, advertisement, business insurance, worker comp etc anyway. So why not pick up the handpieces and do these fillings at cheap fees? This way, you will lose less $$$ or break even if you do a lot of them. Since you pay your assistant for being at your office for 8 hours, why not keep him/her busy?

I don't know about CA, but in my state, medicaid pays $26 for an exam, $60 for FMX, $34 for prophy, $64 for a 2 surface composite, $53 for simple EXT, Sealants $22, deep cleanings are not covered (why not? because this is a highly abused procedure for any type of insurance).

I guess a combination of these could add up to pay the bills in the begining, but the production of a typical medicaid patient will probably be $50-100 depending on their needs. Unfortunately, you have to see about 30 patients (maybe more) to break even. Wouldn't this scheme make your office look like a mill? how would your patients view you if you just walk into the room and jump straight to the tooth?

 

[charlestweed]

I don't know about CA, but in my state, medicaid pays $26 for an exam, $60 for FMX, $34 for prophy, $64 for a 2 surface composite, $53 for simple EXT, Sealants $22, deep cleanings are not covered (why not? because this is a highly abused procedure for any type of insurance).

Medicaid is worse in CA. Don’t assume that when you accept medicaid, your office will be flooded with medicaid patients. Less than 20% of my sister’s patients are medicaid pts. Her office sees a lot of cash and PPO patients. Patients come to see her because her fees are low (similar to the medicaid fees). Since medicaid denies most expensive procedures, my sister does mostly cleanings, fillings, and extractions when she sees medicaid patients. The non-medicaid patients are the ones who help her pay the bill. If the fees are reasonable, cash and PPO patients will pay for RCT, PFM, implants, gum surgeries etc in order to keep their teeth.

I guess a combination of these could add up to pay the bills in the begining, but the production of a typical medicaid patient will probably be $50-100 depending on their needs. Unfortunately, you have to see about 30 patients (maybe more) to break even.

Yes, you would have to see 30 patients/day to break even if you set up a high overhead 3000sf office in a busy shopping center and pay $7-8k per month in rent. My sister pays $1500/month for her 1200sf office. She sees, on the average, 5-10 pts on the weekdays and 10-15 patients on Saturdays. She has enough patients to keep my wife and me (her in-house periodontist and orthodontist) busy.

Wouldn't this scheme make your office look like a mill?

Many patients, especially the Hispanic pts, don’t like to walk into a clean, high-end looking office because they know the fees will be high there. They don’t want to go to a mill office either because of the long wait and chaos. They come to see a dentist who owns a simple office like the one my sister has.

how would your patients view you if you just walk into the room and jump straight to the tooth?

Most blue collar patients are very simple people. They don’t want to hear long explanations. They trust the doctor. So the faster the doctor works on their tooth the better it is for them. The longer the patients have to sit on the dental chairs the more stressful they feel.

 

[Daurang]

My sister pays $1500/month for her 1200sf office.

Where is this in SoCal? Way too cheap unless it's in the ghetto.

 

[charlestweed]

Where is this in SoCal? Way too cheap unless it's in the ghetto.

It's in Garden Grove, CA. The cool thing about this is the landlord doesn't know how much my sister makes. He hasn't increased the rate for years because he doesn't want to lose his valued tenant. A GP friend of mine set up his practice just 4 miles away in Fountain Valley 2 years and he currently pays $6500/month for a $1450sf office space…this is crazy.

I pay $1900/month for our 990sf, 4 op, perio/ortho office….no triple net and water + electricity included. I don't need to have mine in a highly visible area. When the price is right and the works are good, patients will come to see you.

 

[The Candidate]

It's in Garden Grove, CA. The cool thing about this is the landlord doesn't know how much my sister makes. He hasn't increased the rate for years because he doesn't want to lose his valued tenant. A GP friend of mine set up his practice just 4 miles away in Fountain Valley 2 years and he currently pays $6500/month for a $1450sf office space…this is crazy.

I pay $1900/month for our 990sf, 4 op, perio/ortho office….no triple net and water + electricity included. I don't need to have mine in a highly visible area. When the price is right and the works are good, patients will come to see you.

I got a quote for 1,540 sft space today, $3k a month. 4 ops should come out of this space based on designs I have seen in other offices. It's within 30,000 sft a plaza (other tenants include; Urgent Care, Big Supermarket with Pharmacy, Subway, Las Margaritas, Asian Kitchen, Pizza place, Nail Salon, Sonic, etc). Does the rent sound reasonable for this setting?

Also, the space is empty (no dry walls, no bathroom, zip!!). Landlord will reimburse $60k for construction. 👍 or 👎 ?