Wednesday, October 2, 2013

Out of Network !?!? (Part 1)




Since Obamacare is now upon us, I thought I'd write something about insurance to shed some light on the subject. More specifically, the nuances of being out of network. There are some implications to both patients and providers.

 Let's first start with the implications of being out of network from the patient's perspective:

People often have difficulty finding "in-network" providers. They can simply go to their insurance company's website to locate a nearby provider. A nearby provider could be difficult to find. Especially when the reimbursement rates are so low that most offices would go out of business if they accepted the  deeply discounted insurance plans.

In many cases people opt to visit a provider that is not in-network for a variety of reasons. This can add some confusion to the already confusing world of insurance. In some cases, there is no difference to the patient's out-of-pocket costs. However, in some cases the out-of-pocket costs can be more than what they would pay at an in-network provider. This is perhaps the biggest disadvantage of going to an out-of-network provider.

It can be a challenge getting an accurate estimate since insurance companies don't make things clear and simple. So try to eliminate as much guesswork as possible. If you opt to go out of network, make sure you get an estimate of your insurance coverage prior to any treatment being rendered.

Now let' look at it from the provider's perspective:

Many of these providers are business owners. A business can only compete in two of the following three areas: 1. Quality 2. Service 3. Price

To illustrate this point, let's take a look the restaurant industry. Keep in mind that this applies to every industry.

If we examine the business model of a fast food restaurant, we know that they compete on price. They also compete in either quality or service, but not both. A high end restaurant will compete on service and quality, but not price.

Here are some examples of contrasting businesses: McDonalds vs 5 star hotel restaurant; Starbucks vs gas station coffee; WalMart vs Nordstrom; Hagen-Das ice cream vs store brand ice cream. It doesn't matter what type of business, they can only compete in two areas. They all of course try to compete in all three areas, but one of the areas is severely compromised.

How does this specifically apply to a dental office? Let's look at two extreme's.


Dental office focused on quality and maybe even service.

Dental office focused on price.














The first is an office that deals with a high volume of patients that accepts deeply discounted insurance plans and government reimbursements. These offices certainly provide a valuable service to as many people as possible. However, given the low reimbursement rates, these offices must see a large volume of people to just break even. Quality or service will have to take a back seat. In order to be profitable or to stay in business, they must make a decision on which corners to cut. Perhaps it could be cheaper materials, cheaper labs, cheaper employees or any other corners that can be cut. Since they need to see a high volume of patients, either quality or service must be compromised.

The second office sees fewer patients but provides much better quality and service. In this type of office, the provider is able to provide much better care and service. However, price is compromised and the expense can be higher.

The first example is not much different than Walmart. The second is not much different from Nordstrom. Of course there is quite a bit of variation from business to business and many fall somewhere in between.

As you may have already figured out, I choose to focus on quality and service. I also try to keep the costs as affordable as possible. However, I cannot compete on price as effectively as a low reimbursement office or a government aid clinic.


Conclusion:

So which one is better? Depends on what you value most. There is no wrong answer. Sometimes I want to have a quick and inexpensive meal and will choose to go to McDonald's. Sometimes I want a nice relaxing meal where I can enjoy the entire culinary experience. You must determine which of the two factors are most important to you--and then seek a provider that shares your philosophy.


Dr. Cisneros maintains a practice in Freeburg and Columbia, IL. Both are in the Greater St Louis, MO area. For more information on a wide variety of subjects, please visit www.advanced-smiles.com



Addendum: The next week I felt that this blog was incomplete, so I wrote a bit more on this subject from the perspective of insurance companies. Click on the following link: http://blog.advanced-smiles.com/2013/10/out-of-network-part-2.html






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