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Implementing Dental Membership Plans

Implementing Dental Membership Plans

Dental membership plans provide an alternative to dental insurance and address the primary barrier to increasing new patient flow and practice growth. A dental membership plan can provide you with predictable recurring revenue. Offering a plan can help your practice as well as your patients.

Dental Membership Plan Overview

There are several specific attributes of a dental membership plan:

Practice Specific

A dental membership plan is specific only to the practice that is offering it. If you're a larger practice that has multiple offices under the same name, one dental membership plan can cover all your offices. A patient just can’t sign up for the dental membership plan in your office and then use it at a competitor. It’s not portable like an insurance plan.

Set Fee Per Member

Typically there's a set fee charge per member, either on an annual basis or monthly basis, which covers a group of services such as exams, cleanings, and x-rays.

Patient Discounts

Anything not covered by the set fee usually is offered to the patient with some sort of discount. Examples of discounts include different rates for children, periodontic patients, and even family discount plans.

Reasons to Offer a Dental Membership Plan

Why might your practice want to offer your patients the option of a dental membership plan?

No Excuses

A dental membership plan takes the excuses off the table for why patients might not want to accept the treatment plan you're proposing. A lot of patients use the crutch of not having dental insurance for the reason they don't want to see their dentist and this plan eliminates that excuse.

Easy Access

These plans are easy for patients to sign up for as there's no pre-approval process, there's not a big insurance application, and they can't only get it through their employer like health insurance. It's easy for them to come into your office, complete the quick signup, pay the fee, and be a part of your dental membership plan.

Patient Power

Dental membership plans shift the responsibility in the relationship between a practice and its patients. It empowers patients to take more of a proactive approach to their dental health. Because the patient has already paid for cleanings and other follow-up appointments, the pressure is on them to make sure they're scheduling those appointments and coming back in to see you.

Control

A practice is also empowered in the relationship with the insurance companies. In the typical relationship, a patient who has dental insurance comes in with a fee schedule and a payment plan that is set by the insurance company. When the number of insured patients decreases and costs rise, insurance companies have the power and control to maintain their profits by decreasing payments to the dentist.

With a dental membership plan, the practice has control over setting the price, fee schedule, and payment timing. As a result, your practice controls the revenue stream, and you have choices that you can make to put yourself in an empowered position.

dental-practices-its-time-to-review-your-fee-scheduleBIZ TIP: Dental Practices: It's Time to Review Your Fee Schedule

Acceptance Rates

Dental membership plans help to increase acceptance rates on additional work (such as restorative and cosmetic procedures) due in large part to the discount the plan offers its members.

Patients are also motivated to schedule their hygiene appointments and regularly see you since, through paying the membership fees, they've essentially already paid for their appointments and they want to make sure they use the value that's provided by the membership plan.

Benefits to Patients

There are three benefits that dental membership plans provide patients:

  1. Affordable Typically a dental membership plan is affordable for patients. The patient isn't paying much more out-of-pocket for those services as compared to no dental membership plan. Also, they may be getting a slight discount (such as 10 or 15 percent) so it's really inexpensive for a patient to sign up and there's not a big out-of-pocket cost for patients to get their dental care.
  2. Budget Friendly The cost does not have to be an upfront membership fee the moment a patient signs up. You can make it even more budget friendly for your patients if you break that payment up into four quarterly payments or a monthly payment to make it even more affordable and cost competitive.
  3. Clarity These plans are typically easy for a patient to understand and are very clear about what benefits are covered and what the discount is going to be. Unlike most traditional health insurance plans that are sometimes difficult for the patient to understand, the dental membership plan is clear about what the patient is paying, what they're going to get for it, and what they're going to have to pay for any services that are not covered.

Benefits to Your Practice

There are three benefits that dental membership plans can provide to your practice:

  1. Marketing Tool Use the dental membership plan offering as a marketing tool for your practice. If you have a website, you can link to your dental membership plan or you can have information posted on your website about the specifics of that plan. Your website is up and running all the time, even outside the hours of your practice, so potential patients can find information about your membership plan 24/7.
  2. Consistent Income and Cash Flow Whether you have your membership plan set to process patient payments monthly, quarterly, or annually, the plan helps generate consistent and regular income for your practice because you're continually accepting payments for the plan itself. Also, when your hygiene appointments tend to be light or if there are days with cancellations due to weather or illnesses, you will have that membership plan income still coming in that helps create consistent cash flow for your practice.
  3. Patient Loyalty When a patient signs up for your membership plan, it strengthens the relationship between the patient and the practice because you're able to provide their dental care at a reasonable price. The patient also has a greater understanding for what is included and, because of the discount, they are more likely to accept additional treatments.

Dental ProfitabilityEGUIDE: 10 Ways to Grow Your Dental Practice Profitability

Steps to Get Started

1. Design

Determine the pricing to set for your dental membership plan. What is the annual fee? How frequently are you going to require payment (i.e., annually, monthly, quarterly)? What services will be included?

Typically, practices set their plan fees annually in a range of approximately $275 to $350. Keep in mind that it will vary based on geographic location so it's important to know what's going on in your marketplace and price your plans accordingly to remain competitive.

Another consideration is the discount you are willing to provide on the additional services for your patients. You might also consider offering a discount depending on how the patient is paying. Every time you swipe a patient's credit card, you're paying a credit card transaction fee that's anywhere from 2% to 3%. Consider offering a discount to account for that additional cost for processing credit card payments.

One final thing to consider are the services included in the annual fee component of the membership plan. What might you offer as additional services based on the percentage discount you're willing to give? Some practices exclude certain services by perhaps not offering a discount on braces or an orthodontist plan.

2. Education

It’s important to educate your patients, hygienists, and front desk on your dental membership plan. Staff should be prepared for when someone calls your practice. The people in your clinic answering the phone need to be well informed about the membership plan and have some main talking points to discuss with your patients about it.

3. Marketing

Promote your dental membership plan on your website, through marketing materials in your lobby and at the front desk, and perhaps a one-page handout that covers the key components of the plan for you to hand out and use as a guide for having discussions with your patients.

Consider launching a marketing campaign to the surrounding areas around your office. This might just be the push that someone needs to help them make the decision to change dental providers.

Finally, once you have some patients signed up for your dental membership plan, tell them you're looking to expand it and have them help spread the word on your behalf. A customer talking about their experience with you is worth ten times that which you write or say about yourself.

4. How To Price

As you're thinking about setting up your dental membership plan, you want to make sure you price it right from the start. Determine what level of discount you want to offer. Typically, most plans have a discount of somewhere between 10 and 15 percent built into the plan. Compare this to your insurance contracts, what kind of discount you're offering patients who have dental insurance, and what your cash discount is for people who are paying on the day of service. Make sure you're setting it up in a way that makes sense compared to these other discounts.

As you determine pricing, also consider a one-time initial enrollment fee that would cover the setup of the plan as well as the upfront administrative costs for establishing the dental membership plan.

Determine the services that will be included in the standard fee of the plan. Know your patients and offer the types of treatments and benefits they are going to want in your plan. It’s also imperative you look at how your plan compares to your competitors. You don't want to price yourself too high or too low in relation to the competition.

5. Special Considerations

Do Not Combine with Care Credit Patients can sign up for your dental membership plan, use the benefits under that plan for any services you're providing, and pay for those services at the time you're providing them, but they don't also get to use care credit and spread out that payment. Patients must choose one or the other, not both.

Payment Timing Think about the timing of the membership fee payment in your plan. Should payment be annually, quarterly, or monthly? Balance how much more administrative time you're going to put on your office staff if you're billing more frequently with the benefit of receiving regular and consistent cash flow into the office for patients who are paying on a more frequent schedule than just once a year. Many practices are requiring payment annually for the membership fee, but you could certainly look at doing it more frequently to smooth out cash flow.

Tracking System Create a tracking system to administer the plan and document those patients enrolled, who's eligible for discounts, when their membership period ends, and how you're going to renew their membership in the plan.

Automatic Re-enrollment Once a patient signs up initially, do you want them to automatically receive an invoice or automatically charge them to re-enroll in the plan? Or do you want patients to have time to think about the plan and re-engage them every time their current enrollment in the plan has expired?

Administration How do you want to handle the administration of your dental membership plan? Do you want to take care of it all in-house and have your office staff administer it or do you want to contract with someone else to provide that administrative process for you?

 
Measurable Results®: Racine Dental Group

The Most Important Step

As you're thinking about a dental membership plan and whether you should implement one or not, you should first and foremost consult with a professional.

SVA has in-depth knowledge of the dental industry that comes with years of experience working with dental practices. We can assist you with all aspects of a dental membership plan from helping determine pricing, knowing what services to offer, assisting with the design of your plan, and creating the reporting required to help you monitor and track your dental membership plan.

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Biz Tip Topic Expert: Laura Zach

Laura Zach

Laura is a Principal with SVA Certified Public Accountants and focuses on the dental, veterinary, and healthcare industries. Laura provides a variety of accounting, tax, and consulting services for her clients. Her passion is to help others achieve their goals and be successful. Using her business expertise, Laura advises her clients through all stages of business including exploration, start-up, growth, and beyond.

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