DENTAL PRACTICE ECONOMICS

Which PPO contract should I renegotiate first?

Not the plan with the worst rate, and not a plan you happened to see nothing from this month. The calculator's own plan table already ranks every contract by write-off dollars and flags which ones sit below what the chair costs to run — this page walks through how to read those two things together before you pick up the phone.

Rank by dollars, not by rate

The contract worth a conversation first is the one taking the most money out of the practice, and that is very often not the one with the worst percentage. A plan reimbursing 55% on $31,000 of production writes off $13,950. A plan reimbursing 60% on $62,000 writes off $24,800 — nearly twice as much, on the better rate. A practice that renegotiates by rate alone spends its one conversation this quarter on the smaller number.

A zero-production plan is not evidence about its rate

The calculator's below-break-even flag deliberately skips any plan with no production for the period. A carrier you saw no patients from this month contributed no write-off either, so there is nothing in that row to judge — it is an absence, not a bad rate. Rating it anyway would put a contract on the "renegotiate this" list on the strength of a coincidence: the month you happened to check was slow for that plan, not the plan being underpriced. Look at a period where the plan actually saw production before deciding it belongs on the list.

Below break-even means the contract is worth a conversation, not a cancellation

A plan reimbursing below your break-even rate is buying chair time for less than the chair costs to keep open — that is a fact about the contract, stated as a rate so it lines up against the others by eye. It is not, on its own, a reason to drop the plan. Terminating a participating-provider agreement removes the write-off and the production together, and whether the practice comes out ahead depends on how much of that schedule refills at your own fees in your market — a question this page cannot answer for you. Renegotiating keeps the patients and asks for a better rate on them; that is the cheaper move to try first.

Renegotiating the schedule is not the same lever as raising your own fees

These get confused because both are described as "raising fees," and they collect in opposite ways. Your own posted fee schedule is what you charge; a PPO allowed fee is a dollar amount the contract fixes, and it does not move when your posted fee does. Raising your own fees raises what you bill on a contracted procedure and raises the write-off by exactly the same amount, so it collects almost nothing where a plan is heavily used. Renegotiating asks the carrier itself to raise the allowed fee — the only one of the two that actually changes what a PPO plan pays. If the goal is more cash from a specific contract, the conversation is with that carrier, not with your own fee schedule.

How many contracts is the write-off actually spread across?

The calculator's concentration reading counts carriers from the top of the ranked table until the running total reaches half the write-off. One or two contracts making up half of it is a concentrated practice: a focused push on those specific plans moves the whole number. Six or eight carriers splitting it close to evenly is a different situation — no single renegotiation moves much, and the more useful lever is often which plans a new patient is steered toward, not reworking an existing contract.

Before the call

Pull the ranked write-off table and the break-even line for a normal, representative month — not your slowest one and not your busiest. Note which contracts are both high on the write-off ranking and below break-even; that pair is the strongest case, because it says the contract is both expensive in dollars and unprofitable per chair hour. Bring the production and write-off figures the carrier's own claims already support — this page and the calculator only order your numbers, they do not draft the request or predict what any carrier will agree to.

Common questions

Which PPO contract should I renegotiate first?

The one taking the most write-off dollars, not the one with the worst rate — they are usually different contracts. A plan reimbursing 55% on $31,000 of production costs less than one reimbursing 60% on $62,000. Start the conversation with the carrier at the top of the calculator's plan table, ranked by dollars, and use the rate beside it to say by how much.

A plan shows zero production this month — is it the worst contract?

Not from this reading. A plan with no production this period contributed no write-off either, so it cannot be ranked against the others on a month where you saw nothing from it. The calculator excludes zero-production plans from its below-break-even flag for exactly this reason: rating a plan you did not use would send you to renegotiate a contract on the strength of a coincidence, not a rate. Check a period where the plan actually saw patients before judging it.

Does a plan below break-even mean I should drop it?

It means that plan is buying chair time for less than the chair costs to keep open — a fact about the contract, not a recommendation. Terminating a participating-provider agreement removes the write-off and the production together, and whether the practice is better off depends on how much of that schedule refills at your own fees. Renegotiating keeps the production and asks for a better rate on it; dropping trades the production away. Try the first before the second.

Is renegotiating a fee schedule the same as raising my own fees?

No, and the two collect very differently. Raising your own posted fee schedule raises what you bill and raises the contractual write-off by the same amount on every contracted procedure, so it collects almost nothing where a plan is heavily used. Renegotiating asks the carrier to raise the allowed fee itself — the contracted dollar amount your posted fee cannot move — which is the only lever of the two that changes what a PPO plan actually pays.

How many carriers make up half of my write-off?

The calculator counts it directly: starting from the biggest contract and adding the next until the running total reaches half the total write-off. One or two carriers taking half the write-off is a concentrated practice, worth a focused renegotiation push on those contracts. Eight carriers splitting it evenly is a different problem — no single conversation moves the total much, and the more useful lever is likely the plan mix a new patient is steered into, not any one existing contract.

Is this legal, contract or negotiation advice?

No. It ranks your own numbers and states which contract they say is worth a conversation; it does not tell you what to ask for, how to conduct the negotiation, or how any participating-provider agreement should be read or amended. Verify every figure against your practice management system and your accounts, and take the contract itself to a qualified professional before acting on it.

What is my effective reimbursement rate? works through the underlying arithmetic, with a worked example.