Dentists are adopting in-house dental plans at record rates, and with good reason. Statistics show that offering a quality in-house membership program is an excellent way to grow and retain patients, reduce your dependency on insurance companies, and grow the bottom line. Membership programs can offer many benefits to uninsured patients while providing a stream of recurring revenue for your business.
What Is an In-House Membership Program?
In a nutshell, it's a club membership that you offer your patients. In exchange for an affordable annual or monthly subscription, patients receive member-only discounts such as free cleanings and x-rays, plus a discount on other procedures. Programs typically feature:
- A low-cost subscription fee typically ranging from $10 to $25 per person per month
- Discounts ranging from 5 percent to 50 percent on various dental procedures
- Streamlined paperwork, with no claim forms to file or waiting for reimbursement from an insurance company
- No exclusions or deductibles, and no exam needed to qualify
Some practices administer the plan directly; others link up with a professional provider such as Smile Care Savings Plan and TX Dental Plan. These companies offer technology support and workflows to practices that don't have the time or resources to manage a membership scheme themselves.
What Are the Benefits?
For dentists, the major benefit is recurring revenue. Suppose, for example, that a family pays $400 per year for your membership program, and 500 families sign up. That means your office will generate an additional $200,000 of steady and predictable revenue each year. Plus, patients tend to buy more dentistry when they are given transparent and pre-negotiated discounts for their dental work. You'll likely sell more services than you might have otherwise.
How Does It Compare With Traditional Insurance?
In-house membership programs decrease the hassle of working with insurance companies. Claim submission, slow payouts, and low compensation rates are headaches that ultimately damage your cash flow. With a membership program, the patient joins the plan, receives treatment, and that's it — you're done. You don't have to bill the patient if the procedure was included in the plan payments. You don't have to call the insurance company and argue a denied claim.
Frustration with insurance is mounting, as evidenced by the 130 million Americans who don't have dental insurance. In-house membership plans typically feature no deductibles, no claim forms, no annual maximum, and no treatment limitations, and preexisting conditions are covered. These advantages give your cash-paying patients access to unlimited, quality dental care at discounted rates while giving you total control over your fees.
Nuts and Bolts of Establishing a Plan
Here are the key areas you need to consider when establishing an in-house membership program:
In-house membership programs are neither insurance nor a healthcare service, and thus may fall outside the regulatory role of a state insurance department or a health agency. However, you may have to obtain a DMPO (discount medical plan organization) license and give proof of financial stability to the state. It's a good idea to speak to an attorney. The National Conference of State Legislatures has useful information on its website.
Legislation restricts the type of claims that can be made in marketing materials. For example, you'll need to clarify that a plan is not health insurance and allow patients to cancel their enrollment if they are dissatisfied, typically during the first 30 days.
If you don't have them already, you'll need to invest in software solutions that automate subscription payments and make it easy to manage plans and members.
The whole purpose of creating an in-house membership program is to retain loyal patients who stay with your practice year after year, so you will need to develop strategies for maximizing membership renewals. Getting the pricing strategy right, streamlining the renewal process, and offering great service are ways to keep your patients coming back for more.
Being able to see your program's numbers in real-time is key to ensuring that your price points are correct. Third-party providers should give your practice the ability to view your plan metrics by location, patient type, month and so on, or you can sign up for membership software that offers this functionality.
How Much Should You Charge?
Pricing is tricky, especially since you're introducing a plan that's unfamiliar to many patients. If your subscription fee is too high or your discounts are too small, patients won't buy into the program. If you charge too little or offer steep discounts, you'll end up leaving money on the table with every plan that you sell.
The key is to find a price point where both you and your patients are better off than if you dealt with the insurance companies. The average fee across the nation is around $299 per patient per year; use this to guide your pricing.
After you decide what the subscription will cost and what services it will include for the patient, you need to establish the percentage discount on a range of associated fees. From a practical standpoint, it's important to understand your local market and what other plan providers are offering so you can keep prices in line with the market.
Summing It Up
In-house membership programs are not traditional dental insurance, but a smart alternative. They offer a beneficial and sustainable way to increase patient volume, add predictable recurring revenue, and reduce your business risk. Offering an in-house discount plan may provide a solution to if you're frustrated with the many stipulations of dental insurance plans or struggle with getting patients to accept and schedule treatment.
Contact the Dental CPA tax professionals at Goldin Peiser & Peiser if you want additional information on how to make your practice more profitable.