You’re Already Buying Patients. You Just Don’t Call it Marketing.

The discount you write off to a PPO (typically 30–40% of every fee) is a patient acquisition cost, and it’s usually bigger than a full marketing budget. A practice producing $40,000 a month and writing off 35% is spending $14,000 a month buying those patients, and it recurs for as long as you stay in the plan. Dropping a plan doesn’t hand that cash back, though: some patients leave, some stay at full fee, and the net depends on your market and readiness.

A practice owner told us she was about to sit down with her consultants for a practice analysis, and that she already knew what they were going to say. She predicted that there were too many write-offs, and too much spent on labor.

She was almost right. Practice owners are not unaware of their write-offs. The number is in the software. It gets discussed at every review. What almost nobody does is put it in the right column.

The reframe

“You may not think you’re buying patients today when you get an insurance patient, but you are, because you’re decreasing your fees by 30, 40% to get them. So if you take whatever the write-off is, that’s your marketing budget today. Not just what you’re paying the current company.”

Andre Santos, Co-Founder, Pain-Free Dental Marketing

You joined PPO to be findable. Being in the directory is what puts you in front of patients who would otherwise never have heard of you, and the price of admission is a permanent discount on everything you do for them. That is a customer acquisition cost. It has a different name and a different accounting treatment, but it is money you give up in order to obtain patients, which is the definition.

The reason it does not feel like one is that it never leaves your bank account. You don’t write a check for it. It’s subtracted before the money arrives, which makes it psychologically invisible in a way a marketing invoice never is.

Putting a number on it

Take a practice producing $40,000 a month on one plan, writing off 35%. That is $14,000 a month spent on patient acquisition through that single plan.

Now compare it with what patients cost when you buy them the visible way. One practice owner we spoke with had calculated his own acquisition cost at roughly $427 per new patient. Our assessment was that around $400 for a patient who arrived through Google is not a bad number, depending on the market.

Set those side by side and the comparison most practices have never run comes into focus. The invisible budget in that example is several times the size of a typical marketing engagement, and it recurs for as long as you stay in the plan.

The part that costs more than money

If you take some of the major dental insurance plans as a provider, you will almost always write off 30 to 40 cents on every dollar. So you have to see almost double the number of patients to make the same money as if you were private.

This works its way into how many new patients a practice actually needs, and the numbers are not close. For a full-time doctor in network, we want to see 25 to 30 new patients a month, because the write-offs mean volume is what makes the arithmetic work. For a full-time doctor out of network, 15 to 20 is enough to run a good business.

That runs against the instinct almost every owner brings to the decision. The assumption is that going out of network means you now have to go and find patients, so you had better budget for it. In fact the volume requirement drops, because every patient you do see is worth substantially more. What changes is not the quantity of marketing but the kind, and that is a genuinely different problem from the one people brace for.

Why it’s the worst-performing budget you have

Set the size aside for a moment. Judge the write-off as you would judge any acquisition spend, and it performs badly on every dimension that matters.

1. It does not compound. A discount produces one patient at a time. It does not get cheaper with scale, it does not improve with optimization, and year five costs exactly what year one did.
2. It does not build anything you keep. Money spent on a reputation (reviews, a site that explains what you do, patients who talk about you) accumulates. A directory listing accumulates nothing. Stop paying and it is as though you never did.
3. The relationship is not yours. The patient’s loyalty is to their benefits, and their benefits can be changed by an employer neither of you controls. You rented an audience from an intermediary whose interests are not aligned with yours.
4. You cannot turn it off for a month. Every other acquisition channel can be paused when the schedule is full or the practice closes for two weeks. The write-off applies to every claim, every day, whether or not you needed the patient.

The honest caveats

We have seen this reframe used as though it settles the question, but it doesn’t, and a practice owner who acts on it without the following will be disappointed.

The write-off is not cash you get to redirect. This is the big one. Drop a plan and $14,000 a month does not appear. Some of those patients leave, some stay and pay full fee, and the net sits somewhere in between and are determined by your market, your fees, and how well the five readiness checks went. Anyone presenting the write-off as a marketing budget waiting to be reallocated is selling something.

Some of those patients were never bought. A portion of the people on that plan would have found you anyway, whether it be through a friend, their neighborhood, or an online search. You are discounting them too. That makes the true acquisition portion of the write-off smaller than the headline figure, though it also means you are paying a fee on patients you already had, which is its own argument.

There is a dip, and it’s the real risk. The patients leave on a timetable you set and the replacement production arrives on one you do not. Managing that gap is the real work of a transition, and no amount of arithmetic about write-offs makes it disappear.

The choice was never “keep my costs where they are, or start spending on marketing.” It has always been “which acquisition cost do I prefer, and which one leaves me owning something at the end.”

Where we stop

We do not model your fee schedule, calculate your true write-off across plans, or advise on which contract to terminate first. Those are questions for a CPA who works in dentistry or a consultant who negotiates PPO contracts for a living, and both will give you a far more precise number.

What we can do is the part that starts afterwards: making a practice that is no longer on a list into one people choose deliberately, and tracking every patient from the first click through to the chair so you can see which of it is working. That is a smaller job than modeling your economics. It is also the one that produces something you keep.

What it looks like on the other side

The version worth wanting is not a busier practice. It’s a practice where the arithmetic works without volume, where a third of the fees are not disappearing before the money arrives, where raises are easier to justify, and where the schedule can hold fewer patients who are each worth more.

Owners who get there tend to describe the change in terms of the days rather than the accounts. Fewer people, more time with each, and the same or better production. That was always available. The write-off was what made it unaffordable.

The check to do today

Work out what one plan costs you in write-offs this year. Compare it with what your marketing costs, and with what a patient would cost to acquire directly. It will not tell you what to do (that depends solely on your fees, your market, and whether the practice is ready) but it will replace a comparison that was never true with one that is.

And, if you work out that your practice is ready for marketing, we can help.

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