BUSINESS BITES - Stay In OR Drop PPO
Once you understand what a PPO is, the harder question follows: should you stay in the ones you’re in? It’s the issue that quietly weighs on more practice owners than almost any other. Many feel trapped, resentful of the write-offs, but afraid of empty chairs if they leave. Here’s the reframe that makes the decision manageable: this isn’t an ideological call about whether PPOs are “good or bad.” It’s a calculation you can actually run. And staying by default, in plans you signed years ago under very different circumstances, is itself a decision. Let’s make it a deliberate one.
Why the question is sharper now
Most practices are in plans they joined when they were newer and hungry for patients, and never revisited. Meanwhile the squeeze has tightened: PPO reimbursement has stayed largely flat, in some cases it has actually fallen, while overhead from staff, labs, supplies, and rent keeps climbing. A fee schedule you accepted five years ago and never renegotiated is worth less every year in real terms. Drift, in other words, is expensive and doing nothing is not the same as doing fine.
The deciding variable is your capacity
This is the heart of the entire decision, so be honest with yourself about it. If you have open chair time, a PPO patient at a discount genuinely beats an empty chair. You’re covering overhead you’d pay anyway, so even discounted production helps. But if your schedule is consistently full, every PPO patient may be displacing a full-fee patient, and the write-off becomes pure lost margin. As one analysis puts it bluntly, a full schedule paired with significant write-offs means you’re giving away a chunk of your capacity for free.
So the rule of thumb is counterintuitive but sound: a busy practice has the most to gain from dropping, while a practice with open time and a thin new-patient pipeline has the most to lose. Figure out which one you are before anything else.
Run the numbers
This decision rewards arithmetic over emotion. Work through it plan by plan.
Calculate the write-off per plan. Compare your full fee to the contracted fee across the procedures you actually perform most, weighted by frequency. What percentage are you discounting, and how many dollars a year does this plan cost you in write-offs? Discounts commonly run 30% to 50%.
Attribute production and patients to each plan. How many active patients, and how much annual production, come from each specific plan? Your practice management software can report this.
Find your break-even retention rate. This is the number that changes minds. Because every patient you keep becomes substantially more profitable once you’re out of network. You collect your full fee, or close to it, instead of the discounted one. You can lose a meaningful share of a plan’s patients and still come out even. A rule of thumb popularized in Dental Economics puts it as a simple ratio: your break-even patient loss roughly equals the plan’s discount divided by your net margin. By that math, a practice with a 40% net margin dropping a plan with a 20% discount could lose up to half of those patients and not lose a dollar of profit — and would be ahead if it lost less than half. Treat that as a rough guide rather than gospel, and have your dental CPA model your actual numbers.
What actually happens to patients (less than you fear)
The fear is a mass exodus. The reality, again and again, is the opposite. Patients value the relationship with their dentist far more than the network discount. Dentists who go out-of-network and communicate well typically keep the large majority of their patients. One dentist who dropped seven plans wrote that he was prepared to lose up to 30% and came in well under that figure, with most former PPO patients staying on as fee-for-service. CPAs who guide these transitions report the same pattern: patients usually don't want to change dentists, so when the change is handled well, patient loss is generally very low.
It also helps to know which patients leave. They tend to be the ones with the lowest treatment acceptance and the shortest tenure, while long-standing, established patients are the most likely to stay. And the financial hit to those who stay is often smaller than expected, because out-of-network reimbursement can land much closer to your standard fees than people assume.
Before you drop, try these first
Dropping isn’t all-or-nothing, and it isn’t the only lever.
Negotiate the fee schedule. Many dentists simply never ask. The ADA notes you can request reimbursement increases and renegotiate contract terms, individually with the plan. A better schedule can change the math entirely and is worth attempting before you walk away.
Drop selectively, not all at once. Start with the worst offenders, the lowest fee schedules and the fewest patients, and keep the plans that pay reasonably or deliver real volume. Phasing the change protects your schedule while you adjust.
Know exactly what you’re in. Check each agreement for the leasing and affiliated-carrier clauses we covered last issue, so you understand every plan your discounted fees are actually exposed to.
Time it from a position of strength. Drop when you’re busy and have a plan to backfill new patients, not when you already have open time and a quiet phone.
If you decide to drop, execute it well
Two things make or break the transition.
First, follow the contract’s termination terms. Read the termination clause for the required notice period and the method of notice, and notify the plan properly and in writing. The ADA offers guidance for dentists considering terminating an agreement to help you do it cleanly.
Second — and this is the one most practices underestimate — control the patient message; don’t let the insurer control it. When you terminate, the carrier will send your patients a letter encouraging them to switch to a different in-network dentist. Your patients should never hear this news from the insurance company first. Get ahead of it: start talking to patients at their appointments months in advance, explain clearly why you’re making the change, when it takes effect, and how it affects their costs. Reassure them you’ll keep filing their out-of-network claims, give them concrete cost expectations, and offer bridges, an in-house membership plan, cash courtesies, and financing options, so that cost alone is never the reason someone leaves. Then train your front desk on exactly how to have that conversation.
When to be cautious
A few situations call for a slower hand. If you have significant open capacity and no strong new-patient pipeline, dropping is genuinely risky. If a single plan dominates your patient base, say, the carrier for a major local employer, losing it could be severe, so lean toward negotiating or phasing rather than a clean break. If your fees aren’t actually competitive or clearly justified, going out of network will expose that, so get your fee schedule right first. And in heavily PPO-saturated, price-sensitive markets, expect more attrition and plan accordingly.
The bottom line
The stay-or-drop question isn’t about whether you like PPOs. It’s a capacity-and-margin calculation, and the right answer is specific to your practice. Inventory your plans, calculate the write-off and the production each one delivers, assess your true capacity honestly, and try to negotiate the worst fee schedules before you do anything drastic. If you do decide to drop, model your break-even retention, follow the contract to the letter, and own the patient message from the start. A busy practice writing off six figures a year to a stagnant fee schedule has a very different answer than one with open chairs, and the only way to know yours is to run the numbers, ideally alongside your dental CPA. Then put it on the calendar to revisit every year.
