How to Compete with Insurance Practices as Fee For Service
Most dental practices are currently being suffocated by a velvet pillow. That pillow is called a PPO contract. 💸
In most practices we see, the owner is working harder than ever, yet the bank account looks like a leaky bucket. You’re doing the same procedures, but your reimbursement rates haven’t changed since the early 2000s.
Typically, we see dentists who think they have a “patient volume” problem. They don’t. They have a margin problem. They are locked in a race to the bottom, competing on price against corporate chains that treat dentistry like a fast-food drive-thru. This can lead to significant patient retention problems.
A common mistake is thinking you can’t survive without being “in-network.” But let me ask you: How much longer can you afford to give away 40% of your production for the “privilege” of seeing a patient? How many crowns do you have to do just to cover your hygiene overhead?
In our experience, the only way to win is to stop playing the insurance game entirely. You need to know how to compete with insurance practices as fee for service by creating your own sandbox. 🏖️
The PPO Trap: Why Working Harder is Making You Poorer
I recently spoke with a doc—let’s call him Dr. Dave. Dave was seeing 50 new patients a month. On paper, he was a rockstar. In reality? He was flat broke. 📉
Dave was so dependent on insurance that he’d essentially turned his clinical expertise into a commodity. He was a “preferred provider,” which is just insurance-speak for “the guy who agreed to take the biggest pay cut.”
In most practices we see, docs are terrified that if they go FFS, their patients will vanish. They think patients are loyal to the insurance card. They aren’t. They are loyal to the relationship—but only if you give them a reason to stay.
The real problem isn’t that patients want “cheap” dentistry; it’s that insurance has trained them to only value what’s “covered.” When you learn how to compete with insurance practices as fee for service, you break that conditioning. 🧠
Operator Insight: The “Gateway” to FFS Freedom
From experience, we’ve noticed a pattern. The most successful fee-for-service transitions don’t happen by sending out a “Dear John” insurance exit letter and hoping for the best. They happen by building a “Parachute.”
That parachute is a private dental membership plan. Typically, when a dentist wants to earn more per patient, they try to raise their UCR fees. That’s fine, but it doesn’t solve the loyalty problem.
A membership plan creates a “locked-in” relationship. It bypasses the middleman. You stop answering to an adjuster in a cubicle and start answering to the person in your chair. Software alone doesn’t solve this; you need a strategy to flip the script on value.
In our experience, FFS practices that thrive are those that provide a “lateral move” for their patients. When you drop Delta or Cigna, you tell the patient: “We aren’t taking your insurance, but we’ve created something better just for you.” 🤝
The Financial Reality: Why Membership Patients are Worth 2X–4X More
Let’s look at the cold, hard numbers. In most insurance-based practices, the goal is “utilization.” In a thriving FFS practice, the goal is Revenue Per Patient (RPP).
Data across thousands of users on BoomCloud™ shows that membership patients spend 2X to 4X more on elective and restorative treatment than insurance patients. Why? Because the “insurance barrier” is gone. 🚀
When an insurance patient hears they need a $1,200 crown, they ask: “Does my insurance cover it?” If the answer is no, the treatment stays in the chart. When a membership patient hears they need a crown, they ask: “What’s my member discount?”
This subtle shift in psychology is the difference between a $600 prophy-only patient and a $3,000 restorative patient. You aren’t just getting higher fees; you are getting higher case acceptance.
Case Study: Scaling to $25k in Recurring Revenue
Take one of our users, an FFS practice in a competitive suburban market. They used cash pay dental practice software to automate their entire process. Here is what their 18-month journey looked like:
| Metric | Month 1 (Baseline) | Month 18 (BoomCloud™) |
|---|---|---|
| Active Members | 0 | 845 |
| Monthly Recurring Revenue (MRR) | $0 | $27,462 |
| Annual Recurring Revenue (ARR) | $0 | $329,544 |
| Average Spend Per Patient | $450 (Insurance) | $1,350 (Member) |
In just 18 months, this practice created over $300k in guaranteed, “mailbox money” revenue. That doesn’t even count the additional restorative work generated by those 845 loyal members. 💎
Why Most Practices Fail at the FFS Transition
If going FFS were easy, everyone would do it. Most fail because they make one of these three real-world mistakes:
- The “Cold Turkey” Mistake: They drop all insurance at once without having a membership plan in place. This creates a massive cash flow crater.
- The Poor Communication Mistake: They don’t use a tested dental insurance exit letter template. They sound apologetic instead of empowering.
- The Management Mistake: They try to manage their membership plan on an Excel spreadsheet. This is a nightmare for credit card expirations and recurring billing.
The real problem isn’t the patients leaving; it’s the practice’s inability to show the patient why they should stay. You have to sell a better experience, not just a better price. 📢 This ties into broader dso growth strategies as well.
The Math of Freedom: MRR and ARR Explained
In a standard practice, your revenue starts at $0 on the first of every month. You are on a treadmill. If you don’t show up and drill, you don’t eat.
When you implement a membership plan, you create Monthly Recurring Revenue (MRR). Imagine starting every month with $20,000 already in the bank before you even open your doors. That is the power of subscription dentistry. 💳
The Math:
1,000 Members x $35/month = $35,000 MRR.
$35,000 x 12 Months = $420,000 ARR (Annual Recurring Revenue).
This isn’t just “extra money.” This is predictability. This is what makes your practice worth 2X–3X more when you eventually go to sell it. A buyer isn’t buying your “goodwill”—they are buying your contracted recurring revenue.
How to Retain Patients During the Exit
When you drop a PPO, you are going to get an influx of calls. Your front desk needs to be armed with a script that focuses on access and transparency. 🗣️
Instead of saying “We no longer take your insurance,” say: “We have moved to a direct-care model so we can spend more time with our patients and use higher-quality materials that insurance companies refuse to cover. To help our patients, we’ve created an exclusive Membership Plan that offers better value than your current PPO.”
Typically, we see a 70%–80% retention rate when this is handled correctly. The 20% you lose? They were your lowest-margin, most demanding patients anyway. Let the corporate clinics deal with the “prophy-only” bargain hunters. You are building a boutique FFS powerhouse. 🏆
From Experience: The Team Performance Gap
Software alone doesn’t solve this. Your team has to believe in the mission. A common mistake is not incentivizing the team to sign up members. 🏃♂️
In our experience, the top-growing practices on BoomCloud™ offer a small bonus for every new member sign-up. This keeps the plan top-of-mind during every hygiene exam. If your hygienist doesn’t believe that the membership plan is better for the patient than insurance, they won’t sell it. And if they don’t sell it, you stay stuck in the PPO trap.
You have to realize that how to compete with insurance practices as fee for service is 10% clinical and 90% communication. You are selling a relationship. Insurance is just a financial product. Relationships win every time. 🥇
Frequently Asked Questions
How do I write a dental insurance exit letter that works?
An effective dental insurance exit letter template should be positive and forward-looking. Avoid apologizing. Instead, state that you are transitioning to a “direct-patient care” model to ensure the highest quality of service. Introduce your membership plan as the new, better way for them to receive care. Focus on the benefits: no deductibles, no maximums, and no waiting periods.
What is the best way to handle patients who want to remain cash pay?
For a dentist who wants to earn more per patient, offering a membership plan is far superior to offering a standard “cash discount.” A cash discount is a one-time transaction; a membership plan is a relationship. Use cash pay dental practice software like BoomCloud™ to show patients that by paying a small monthly fee, they get better long-term value and preventative care without the “bill shock” of traditional FFS.
How many members do I need to replace my insurance income?
It’s fewer than you think. Because you are reclaiming 30%–50% of your lost margin from insurance write-offs, you can often generate the same net profit with 40% fewer patients. Usually, a base of 500–800 members is enough to provide a massive financial “floor” for a solo practitioner to go fully FFS or significantly out-of-network. 📈
Calculate Your Opportunity
The dental industry is shifting. You can either be a victim of the PPO squeeze or a leader in the FFS revolution. The docs who win are those who own their patient relationships and their revenue streams. 🛡️ With effective new patient marketing, you can fill the gaps even as you transition.
If you are tired of working for the insurance companies and ready to start working for yourself, it’s time to see what your numbers could look like. Stop guessing and start scaling.
Ready to see how a membership plan can change your life?
- Schedule a Demo of BoomCloud™ & Learn how to manage & grow your membership plan 🚀
- Download the million-dollar membership plan ebook 📖
- Take The Six-Figure Patient Membership Plan Course 🎓
Don’t wait for the next insurance fee schedule cut. Create your own freedom today. Create your BoomCloud™ Account now.
