The Pros and Cons of In-house Dental Membership Plans
I bet you’ve never thought of Amazon as competition for your dental practice.
No, Jeff Bezos hasn’t released a new, mail-order dental treatment service (yet), but he does have Amazon Prime. More than 100 million Americans subscribe to Prime, and why not? For a reasonable annual fee, users get perks like free shipping, free services, and discounted offers.
What does that have to do with you? Well, that same type of discount subscription model has been gaining popularity in dental practices over the past decade, and if you don’t currently offer an in-house dental membership plan for your patients, your competitors may be. Before you fall too far behind, it may be time to reevaluate your dental marketing strategies and at least consider the pros and cons of adding a subscription plan to your practice.
What an In-House Dental Membership Plan Is (and Isn’t)
In-house dental membership plans are basically subscription services where your patients pay a recurring monthly or annual fee and receive a defined package of included services and discounted pricing on other care. Typical dentistry plans might include a limited number of free hygiene, preventive care visits and discounted rates on elective or restorative care.
Patients like in-house dental membership plans because they make dental care more affordable, especially for uninsured patients who don’t have an employer-provided dental insurance plan. We’ve also found these plans to be a highly effective dental marketing strategy.
It’s important not to confuse these plans with national and regional dental membership networks. Those are more like traditional insurance providers in the sense that patients choose from a list of participating dentists and show their membership cards to receive discounts. The benefits are similar for patients, but not for dentists.
Why You Might Like an In-house Dental Membership Plan for Your Practice
There are several big reasons why an in-house dental membership plan might make good business sense for your practice. Much like the benefits of offering dental financing, these plans attract new patients, help create more loyal patients, and can increase the value of your practice..
Attract New Patients
More than a third of American adults haven’t seen a dentist in the past year, with many people not going because they couldn’t afford treatment. The discounted dental care that in-house dental membership plans provide can open the door for people who may have previously skipped preventive, restorative and elective procedures based on expense. These house membership plans are great for family members because they help make comprehensive oral care affordable for kids and adults. Happy patients are more likely to refer you to others, which can create another source of revenue.
More Patient Loyalty and Fewer Cancellations
Because patients pre-pay for services and discounts with in-house dental membership plans, their “use it or lose it” mindset will make them more likely to schedule and keep appointments. Even if they do fail to redeem a free hygiene appointment, you’ve already collected the fee upfront, so it ends up being their loss, not yours.
Case Acceptance
When presenting treatment plans, showing your patients exactly how much money they will save compared to what they would have paid without an in-house dental membership membership can be an effective way to convince them to sign up. A two-column comparison price sheet of your dental services can be a great tool to demonstrate to them that they made a smart decision in subscribing to your plan.
Generate Consistent Recurring Revenue
With annual or monthly billing as part of your in-house dental plan, you’ll know exactly how much baseline revenue you’ll be collecting from your membership patients. Having patients pay for memberships at your dental office ensures a steady income flow that you can plan your budget around. With accurate tracking, you’ll also be able to reliably predict how much in additional fees you can expect from restorative, elective, and other procedures; and other additional treatments over the coming months.
Increase the Value of Your Practice
If you’re considering selling your practice, two primary factors that can increase its value are how much profit you expect your business to make in the future and the reliability of that estimate. An in-house dental insurance model creates a more predictable, recurring revenue stream, making it much easier to justify a higher price than if you were only doing inconsistent one-off treatment transactions and continually working to attract new patients. According to The Automatic Customer by John Warrillow, buyers may pay anywhere from 200% to 400% more for subscription-based businesses than transactional ones.
Why You Might Not Like an In-house Dental Membership Plan for Your Practice
While there are many reasons to create a dental membership plan for your patients, there are a few drawbacks to consider.
Discounting Rates
Discounting fees doesn’t sit well with some dentists. After all, why would you want to offer lower fees for high-quality dental care if you already have patients who are willing to pay full price? Consider the big picture and look at a discounted in-house dental membership plan in terms of overall return on investment (ROI). If you take into account the increases in new patients, treatment acceptance, and recurring revenue, the positives should far outweigh the amount you sacrificed in reduced fees.
Cost
Unless you are building your own in-house dental membership plan from scratch, you will likely pay for third-party software or cloud-based software as a service (SaaS). Typical billing models are flat rate, per member, or per transaction. Again, the benefit should outweigh the expense, but you can further reduce the cost by choosing a payment structure (and the resources you need to enable your plan) that makes the most sense for your practice and the number of members you expect to have.
Managing the Plan
If you decide to use one of the dozens of software solutions out there, most will help you set up your dental in-house membership program structures, implementation, management, marketing, and regulatory compliance. If you decide you want to manage the plan on your own, it can be a handful. Keeping the plan as simple as possible can help, but it may still be more work than you or your staff are willing or able to take on.
Legalities
As of 2018, 34 states had discount health program laws, while 23 of those states required a license or registration for discount health programs including in-house dental plans. Some states may consider them a form of prepaid insurance and require dentists to license or register with the state accordingly. This may not be enough to discourage you, but you should definitely consult with your legal advisor.
Conclusion
So, are in-house dental plans worth it? There’s really no right or wrong answer when it comes to deciding if it’s a good idea for your office. Ultimately, it needs to fit in with your treatment philosophy, business goals, and what is best for your patients.
If you would like to give it some additional consideration, we can offer our insight and share some of our experiences with clients who have gone through the process. Schedule a Dental Marketing Breakthrough Call today to learn more!