This Article was originally posted on Aesthetic Dentistry Magazine
Given the opportunity, I’d probably talk about dental practice in-house membership programs all day long. Why? This kind of business model can transform a traditional view of a dental practice, by reducing dependence on PPOs and creating a loyal patient base. An in-house membership plan can provide practices with a predictable, recurring revenue cycle—which makes any business run more smoothly.
For seven years, I managed my father’s dental laboratory. During that time, I witnessed myriad issues that dentists and office managers often struggle with. As such, I couldn’t help but notice one overarching, universal issue for dental practices: unpredictable cash flow cycles.
Some months, dental practices would collect more funds than ever before, but the next month might be a different story. Such unpredictability inevitably causes stress, anxiety and old-fashioned burnout for any business or practice owner.
What’s more, I also noticed that too often, practices were dealing with the “red tape” of dental insurance, and in most cases, were fighting insurance companies for payment in order to help their patients.
Imagine what would happen if your practice could reduce or even eliminate worrying about rejected claims, insurance verifications and delays, and, of course, cashflow unpredictability. For most dental practices, it’s worth investigating how to do that.
The U.S. Surgeon General estimates that over 108 million Americans lack dental insurance, with other sources estimated more than 60 percent of the population is uninsured. By implementing a membership plan, you’re can offer a means for uninsured patients get the dental care they need.
A dental membership program is an alternative to dental insurance that is managed by your practice. To join, patients pay a monthly or yearly fee that covers certain benefits and cost savings at your practice.
Your membership program is just that—yours. Your practice decides if a patient can sign up, what the fee is on a monthly or yearly basis, which benefits are included, and how much patients can save off full-priced treatments. Best of all, it helps patients by offering a real, tangible service.
In a dental membership club, patients pay monthly or yearly to gain access to benefits at your practice. With no annual maximums, patients can get as much dentistry as they need—far different from an insurance company that stops paying out at $1000 to $1500 per year.
The practice wins because of recurring revenue, patient loyalty and increased case acceptance, while the patient wins by actually getting the needed treatment while saving money. It’s a win-win strategy.
Main benefits of in-house dental membership programs include:
- Reducing dependence on PPOs
- Creating patient loyalty
- Generating predictable recurring revenue (*if it is not predictable and automatic, it is not a true membership program)
- Attracting more patients
- Encouraging wider case acceptance
With a membership program, it’s important to understand how to ensure a plan’s success. Here’s what I recommend:
- Create a Scalable System
Systems are a key part of any business. Systems hold the team accountable for their responsibilities, offer a predictable way of doing things, a method for tracking your successes, and make it easier to train new people.
An organized system is a scalable one. I once worked with a practice enjoying a growing in-house membership program for which they used sticky notes to remind them when to run patient credit cards for payment. (Note: saving payment information on a piece of paper is against the Payment Card Industry (PCI) compliance and can cost your practice tens of thousands of dollars in fees.) The office manager lost one of the sticky notes and stopped billing the customer for the program, which is detrimental to the program and the practice. It is extremely important to create a predictable system in your membership model so that if an office manager quits or gets fired, the system get move forward with your next hire.
Michael Gerber, the author of the E-Myth: Why Most Small Business Don’t Work and What to do About it, said, “What you do in your model is not nearly as important as doing what you do the same way, each and every time.”
Businessdictionary.com defines scalability as a, “System designed to handle proportionally very small to very large usage and service levels almost instantly, and with no significant drop in cost effectiveness, functionality, performance, or reliability. Scalable systems employ technologies.”
Do you think a sticky note system, google docs system or even a paper binder system is scalable? Dental membership software is available to help dentists and their teams manage such programs. The software handles recurring credit card data privately and securely, and makes program metrics easily-accessible for team members. By using software, in-house membership plans are much more scalable.
- Know Your Metrics
As a dentist, there’s not enough time in the day to memorize your current membership program sign-ups or the monthly/yearly recurring revenue your program is generating.
If you have an existing program, can you easily report your monthly-generated revenue? Can you easily access the number of active members your that practice has signed up? Generally speaking, if you can measure something, you can improve it, so to grow a successful membership program, your metrics are critical.
Some membership metrics to measure include:
- MRR (monthly-recurring revenue)
- ARR (annually-recurring revenue)
- Active patients
- Churn rate (cancellation rate)
- Total new patient enrollments (monthly)
- Online new patient enrollments (monthly)
- Lifetime value per member
- Refunds (monthly)
- Failed charges (monthly)
- Monthly enrollment goals
- Get Your ENTIRE Team On Board
Dentists and team members need to be on board with the program in order for it to be successful. I have seen countless practices generate hundreds of thousands of dollars in yearly predictable, recurring revenue, because the entire team is working together to help educate patients on the benefits of in-house membership programs.
Every team needs a commitment strategy. How much effort are you going to put into the program? How many patients will you speak to per day about the program? Determine answers to both questions or you may fail before you begin.
As a practice owner it is your responsibility to get your team on board by creating a scalable system and holding team members accountable. If you decided your team’s goal is to sign up 30 patients per month, hold weekly or monthly meetings with whoever with the program manager.
Ask specific questions such as: how many people did you talk to about our membership program? How many signed up this week or month? Dentists should create a predictable cadence for such meetings, so your team knows that you are conscious of the practice’s goals and are eager to help them succeed.
Presenting an in-house membership program to patients is an art and it should be monitored. All dentists should read the book , Influence, by Robert Cialdini, which outlines the benefits of using the principle of contrast. Here is the definition of the principle:
The Contrast Principle, studied by Robert Cialdini in his 2007 book The Psychology of Persuasion, explores the way in which perceptions are formed by using comparison techniques. When people experience similar things in succession or simultaneously, we evaluate the lesser or greater value of the second through direct comparison with the first.
This contrast effect will therefore lead to an enhanced or diminished perception of the comparison. For example, when you first pick up a heavy box and then a second, lighter one, the second box will appear lighter than it really is.
The contrast is due to the fact that the brain evaluates things based on the mode of comparison that is most easily accessible at that given moment,. In other words, we tend to evaluate by comparison to accessible references rather than by using more correct, absolute values, as these aren’t readily available for our brains to utilize, and this leads us to make biased judgments.
In terms of dentistry, if an uninsured patient comes into your office needing a crown, you should take them into a consultation room to discuss financial options. Show them what the fee would be today if they were not part of the membership program, and then show them what it would look be if they joined the plan.
For example, if a crown will cost $1,000 without any benefits, let the patient know that if he or she signs up for the in-house membership program, it will only cost them $800 and they will get all the additional benefits of the membership program for a year. Make sure the patient is told what the cost will be without membership in the plan prior to the discussion of the costs when using the plan’s benefits. This is one of the best approaches to take when a patient needs a covered treatment.
Knowing how to present an in-house membership program is essential to its growth. Dentists make sure you know how your team is presenting your program to patients and how to help them improve.
- Start With the Low-Hanging Fruit
The easiest way to get some traction with an in-house membership program is to start with your existing patient base. Most practice management software provides reports listing your patients who do not have dental insurance. That’s a great place to start. Such patients may not be coming to your office on a regular basis and may assume they need “benefits” in order to receive dental care.
Reach out to these patients via text, email or phone to see if they would be interested in your in-house membership program. This is vital when starting out because it’s the best way to generate early success.
- The Value of External Marketing
Once you get a solid list of existing patients signed up to your membership program, execute an external marketing strategy to keep your program from stagnating. There are so many marketing channels to choose from; pick one and focus hard on making it successful. You may want to consider getting help from a marketing agency if you do not have the time. Here are some channels that I recommend:
Facebook ads: Target your local and create ads that say something like: “Don’t have dental insurance? No worries, we can help!”
Direct-mail marketing: Target communities for adults ages 55 and send them a direct-mail message educating them on your membership program and how they can save by joining your program.
Ground marketing: Appoint someone in your practice to go out and speak to local small businesses on the benefits of joining your program: it’s just another benefit their employees receive for working at the company.
Dental membership programs can be a huge asset to your practice. Take advantage of the opportunity to give your patients more options than simply “insurance or no insurance.” With the help of technology and getting team members on board, in-house dental membership plans can be easy to implement and maintain. Get started today!
Jordon Comstock is the founder & CEO of BoomCloud Apps, a software company that allows dental offices to easily create, organize, track, and automate an in-house membership program. You can download a free e-book about membership programs. For any questions about dental membership programs and software, contact Jordan at firstname.lastname@example.org.