Create and Grow a Successful In-House Membership Program.
Most dental practices would jump at the opportunity to reduce dependence on PPOs and build a loyal patient base. It can be done! The best way to do both is by utilizing an in-house dental membership program. It is a business model that can transform dental practices. An in-house membership plan also provides a recurring revenue cycle—which makes any business run more smoothly.
For seven years I managed my father’s dental laboratory. During that time, I saw a myriad of issues that many dental teams struggle with. I couldn’t help but notice one universal issue: unpredictable cash flow cycles.
Some months, dental practices would collect more funds than ever before, but the following month would be a different story. Such unpredictability can cause stress, anxiety, and old-fashioned burnout for any business or practice owner.
What’s more, I noticed that too often, practices were dealing with the “red tape” of dental insurance and 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 cashflow unpredictability. For most dental practices, the idea is at least worth investigating.
The U.S. Surgeon General estimates that over 108 million Americans lack dental insurance, with other sources estimating that more than 60 percent of the population is uninsured. By implementing a membership plan, dental practices can offer a means for uninsured patients to 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 provides a 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.
In a dental membership club, patients pay monthly or yearly fees 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 $1,000 to $1,500 per year.
The practice wins because of recurring revenue, patient loyalty, and increased case acceptance. The patient wins by actually getting the needed treatment and 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
It’s important to understand how to ensure a membership program’s success. Here’s what I recommend:
1. Create a Simple Plan
Some practices get so excited about a membership program that they create multiple plans with different benefits and price points. Don’t do this. If you plan to enroll hundreds or even thousands of patients, make your plan super simple. A variety of complicated plans will be challenging for your staff—both to understand and to educate your patients about. A complicated plan could result in fewer patients enrolling.
I always recommend starting out with one or two simple plans that look like this:
Monthly: $30 per patient (additional family members can join for $25 month)
Yearly: $300 per patient (additional family members can join for $250 year)*
*price may vary based on your city/state
You can give discounts for family memberships but I don’t recommend excessive volume discounts.
The benefits included in the membership program can vary. Some examples include:
• 1 comprehensive exam
• 1 Pano or FMX
• 1 annual exam
• 1 emergency exam
• 2 cleanings
• 2 oral cancer screenings
• 2 fluoride treatments
• 4 bitewing X-rays
• 20 percent cost savings on oral surgery/extractions, fillings/core build-ups, scaling, and root planing
• 15 percent cost savings on root canals, crowns, veneers, and implants
I recommend the plan outlined above as a first-time in-house membership program. Remember, it is not considered a membership program if it does not offer predictability through automated membership payments.
Most practices think they have a membership program because a patient pays his yearly dues up front in cash, but that means there’s no system in place for auto renewals and collection. Instead of an annual membership program, they’ve created a cash system, which does not offer the same benefits.
2. Make the System Scalable
Systems are essential for any business. Systems hold the team accountable for their responsibilities, offer predictability, help the business track its successes, and make it easier to train new team members.
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 Payment Card Industry 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.
Michael Gerber, author of The E-Myth Revisited: Why Most Small Businesses 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 describes a scalable system as one that is “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 almost always employ software 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.
3. Know Your Metrics
There’s not enough time in the day for dental teams to manually manage the membership program sign-ups or the monthly/yearly recurring revenue the program is generating.
If you already have an existing program, make sure you can easily report your monthly-generated revenue. Ask yourself, “Can I easily access the number of active members that my practice has signed up?” In general, if you can measure something, you can improve it. Metrics are critical for growth.
Some important membership plan metrics 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
4. 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 predictable, recurring revenue because the team worked together to educate patients about the benefits of membership programs.
Every team needs a commitment strategy. Decide how much effort you are going to put into the program. Ask your team to set goals for how many patients you will speak to per day about the program. If you don’t do both of these, you may fail before you begin.
As a practice owner, it is your responsibility to hold team members accountable for their responsibilities. If you decide that your team’s goal is to sign up 30 patients per month, hold weekly or monthly meetings with whoever manages the program.
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 that the team knows that you are conscious of the practice’s goals and are eager to help fulfill them.
Presenting an in-house membership program to patients is an art, and it should be monitored. All dentists should read the book Influence: The Psychology of Persuasion, by Robert Cialdini, which outlines the benefits of using the Contrast Principle. The book explores the way perceptions are formed with comparison techniques.
When people experience similar things in succession or simultaneously, they evaluate the lesser or greater value of the second through direct comparison with the first.
This contrast effect leads 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 seem 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, people tend to evaluate by comparison to accessible references rather than by using more correct, absolute values (as these aren’t readily available for the brain to utilize). Such comparisons can lead to biased judgments.
In terms of dentistry, if an uninsured patient comes into your office needing a crown, after the exam, take them into a consultation room to discuss their financial options. Explain what the treatment fee would be if they were not part of the in-house membership program, and then explain what it would be if they joined the plan.
For example, if a crown costs $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—plus they get all the additional benefits of the in-house 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 when a patient needs a covered treatment. Knowing how to present an in-house membership program (and making sure team members know how to present it) is essential to its growth.
5. Start With the Low-Hanging Fruit
The easiest way to get traction on 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 those patients via text, email, or phone to gauge interest in your in-house membership program. This is the best way to generate early success.
6. 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 the program from stagnating. There are so many marketing channels to choose from; pick one, and focus on making it successful.
You may want to consider getting help from a marketing agency if you do not have time to do the marketing yourself.
Here are some channels that I recommend:
• Facebook ads: Target your local community 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 older 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 small local businesses on the benefits of joining your program. Explain to them that it’s just another benefit that their employees could receive for working at their 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 by getting team members on board, in-house dental membership plans can be easy to implement and maintain.