859: Metric Mondays: The Truth About Write-Off Percentage – Dr. Barrett Straub

You might think you know your write-off percentage. But do you, really? In this episode of Metric Mondays, Kirk Behrendt brings back Dr. Barrett Straub, ACT’s CEO, to break down this important KPI. They explain what it is, how it affects your profitability, and countermeasures to start adding some percentage points back to your bottom line. For step-by-step guidance through this process, become a Premium member of ACT’s BPA and listen to Episode 859 of The Best Practices Show!Learn More About Dr. Straub:Send Dr. Straub an email: [email protected] Join Dr. Straub on Facebook: https://www.facebook.com/barrett.d.straubSend Gina an email: [email protected] Learn More About ACT Dental:ACT’s webinars: https://www.actdental.com/134ACT’s website: https://www.actdental.comACT’s Instagram: https://www.instagram.com/actdentalACT’s YouTube: https://www.youtube.com/actdentalACT’s Facebook: https://www.facebook.com/actdentalACT’s LinkedIn: https://www.linkedin.com/company/3137520/admin/feed/posts/ACT’s Twitter: https://twitter.com/actdentalMore Helpful Links for a Better Practice & a Better Life:Subscribe to The Best Practices Show: https://the-best-practices-show.captivate.fm/listenJoin The Best Practices Association: https://www.actdental.com/bpaDownload ACT’s BPA app on the Apple App Store: https://apps.apple.com/us/app/best-practices-association/id6738960360Download ACT’s BPA app on the Google Play Store: https://play.google.com/store/apps/details?id=com.actdental.join&hl=en_USJoin ACT’s To The Top Study Club: https://www.actdental.com/tttSee the ACT Dental/BPA Live Event Schedule: https://www.actdental.com/eventGet The Best Practices Magazine for free: https://www.actdental.com/magazinePlease leave us a review on the podcast: https://podcasts.apple.com/us/podcast/the-best-practices-show-with-kirk-behrendt/id1223838218Episode Resources:Register for ACT’s To The Top Study Club (April 11, 2025): https://www.eventbrite.com/e/climb-with-us-register-for-april-11-2025-ttt-study-club-tickets-1012966789937Register for ACT’s To The Top Study Club (July 25, 2025): https://www.eventbrite.com/e/climb-with-us-register-for-july-25-2025-ttt-study-club-tickets-1205497959849Main Takeaways:Understand the causes of large write-off percentages.Higher write-offs mean more pressure on your profit margin.Learn the four steps to add some percentage points back to your bottom line.If you don't know how much you're writing off, you're working too many days for free!To master this KPI and many others, register to become a Premium BPA member today!Quotes:“Today's KPI metric is write-off percentage. It is the percentage of total charges that are adjusted off. There are three different ways or reasons you would adjust off production. One would be PPO insurance adjustments that are contracted through your PPO contract. Number two would be your elective patient discounts or adjustments. Number three would be those discounts that come as part of your membership plan, if you had them. So, basically, we're saying of all the dollars of production, what dollar value, and then what percentage of that did you write off or adjust off and knowingly make non-collectible?” (0:53—1:34) -Dr. Straub“I know what you're thinking if you're listening to this. ‘We've got this. I know what my write-offs percentages are.’ No, you don't. Most of the clients that we coach do not have their arms around this. Now, it's becoming even more complex. Prior to COVID-19, it wasn’t unusual for us to see practices writing off 20%. Even prior to COVID-19, I thought that’s a lot of money. I’ve been doing this for almost 30 years. Now, we’re seeing people north of 35%, 42%. We’re even finding people that are writing off 50%. So, this gap is climbing.” (1:36—2:11) -Kirk“Another factor in the reason why many of us don’t know our write-offs — and we’ve covered this on a previous Metric Monday — is the question, do you bill your full fee? A lot of times, when you're not billing your full fee, you're billing the UCR or the approved fee by insurance. You're under-reporting your gross production, and you're under-reporting your adjustments or write-off off of production. So, it is a little complex, and we can simplify it pretty easily. And the why — what is a write-off? Now, why is it important? Your write-offs are a huge factor in your profit margin. The higher your write-offs — we call it the effort gap — the more pressure there is on your profit margin.” (2:20—3:10) -Dr. Straub“Let's really simplify it, just to make sure all the listeners are on the same page. If we charge $100 for a fee, every time we do that billable code, in our ledger, the top line should say $100. Now, we may have to adjust off $20 of that because we're part of a PPO, contracted. We would write that off and say X, Y, Z insurance. We might write off the total amount of that if it was a guaranteed service for a patient. We would write off the whole $100. We would say — and I did this a lot — NC, no charge. Make it zero. We need to bill out the full fee, write off the full amount. We might write off part or all of it for charitable cases. We might write off 15% of it for our membership plan. All is fine and good, and the goal is not to hide your write-offs or adjustments. The goal is to bill out your full fee all the time, cleanly and accurately calculate those write-offs so you know, ‘I write off X percent. Of that percent, I write off X to PPOs, I write off X to memberships, and I write off X to my elective write-offs.’ So, that's how you do it.” (3:47—5:03) -Dr. Straub“Again, going back to the story, we produce X dollars of production. That's our output. That's our business's output, and it takes energy, time, money, and people to do that. We want to know what percentage of that effort are we writing off before we can start collecting money. Obviously, the larger that amount or the bigger that gap, the less profitable we are. So, what can cause that percentage to grow? One is reduced reimbursements from our PPO contracts. That's largely out of our hands, and part of that is the reason that we're always saying, ‘Hey, let's take a crucial eye at how many plans we're a part of, which ones we're a part of, and what's our strategy going forward regarding PPOs.’ That's one.” (5:08—6:52) -Dr. Straub“Another reason your effort gap or your write-off could increase would be, of your active patients, how many are in-network versus out-of-network? So, theoretically . . . we could have not signed up for a new PPO, and our write-offs could be growing because, for whatever reason, all our new patients are in-network. Or conversely, we can lower our effort gap with bringing in new patients that are out-of-network. And it begs the question, how many of your active patients are paying you 100% of your fee? The more that do, the smaller your write-offs and the higher your profitability. So, when you have a larger proportion of your active patients on PPOs, your profit margin will be squeezed and your write-offs will be increased. Again, we're not making any judgments. We're not saying to do PPOs or not to do PPOs. We're saying, let's understand what our write-off is and what proportion of our patients are on these PPOs, and therefore, we can understand our profitability.” (6:52—7:06) -Dr. Straub“Our best practices in that fee-for-service model live in the four to eight