By Brent Wells, DDS
To understand what is happening in our dental offices today, let’s first establish some fundamental statistics: Approximately 75% of Americans currently have dental coverage, but only around 50% of them reported visiting the dentist in the past year. Of the 25% without insurance, only around 20% reported visiting the dentist. This equates to about 80 million Americans without dental insurance who avoided our offices. When asked why, the top reason cited should come as no surprise—cost. With a preventive dental appointment costing uninsured consumers roughly $150 to $200, it is easy to see why Americans in need of care push dentistry aside.
We all know intuitively that people with any sort of dental coverage are more likely to visit the dentist. Statistically, they are nearly two-and-a-half times more likely than those without a plan. But as the population ages, it is likely there will be fewer Americans with employer-based private dental coverage in the coming years, as adults over 65 statistically have the lowest rates of dental coverage.
What about private-pay insurance plans? Americans are increasingly seeking out this type of coverage, with a threefold increase in Americans purchasing plans in the past five years. However, in nearly 70% of cases, the costs of the insurance premium and copays are higher than the actual market price of the dental care received in a given year. While these plans provide patients with the monthly payment installments they desire, the private-pay dental insurance model is clearly broken.
In spite of an increase in private-pay insurance coverage, it should come as no surprise that dentist and consumer satisfaction with insurance is on the decline. As a practicing dentist for the past decade with a finger on the pulse of the industry, I hear the anger and frustration that dentists across the country voice toward insurance companies. The penetration of dental insurance coverage has increased considerably over the past five years, and insurance companies clearly know they have the upper hand. The relationship has become more adversarial as insurance companies keep reimbursement rates low and make payment more difficult and convoluted. Furthermore, many insurance providers are beginning to make it more difficult (if not impossible) for subscribers to visit out-of-network providers.
There is a solution to reduce dentistry’s dependency on dental insurance, and it has begun to catch fire across the profession. Subscription-based dentistry allows private dental offices to create a packaged plan of preventive care and offer it to uninsured patients at an affordable price point.
Subscription-based plans typically include prophylaxes, evaluations, and radiographs, plus a discount on treatment. Currently, many offices with in-house memberships are offering annual plans, which are easier to administer. However, the rise of automated subscription platforms has made administration of monthly membership subscriptions possible—and profitable.
Many Americans prefer to organize their spending into monthly budgets. The better of a job we do as an industry to take this into account and allow consumers better ways to budget for their care, the better utilization numbers we can expect. Monthly membership plans break down cost barriers of entry for uninsured patients: they create affordable monthly options similar to dental insurance, but the arrangement is made directly with the dentist. By eliminating insurance from the equation, this direct relationship allows fees to go directly to dentists, allowing them to improve their bottom lines.
Another benefit of these plans is retention of current uninsured patients. In my experience, I have seen that patient attrition rates can hover around 15%. The availability of monthly plans builds loyalty and keeps members coming back regularly.
Offering an in-house subscription plan is not a decision that should be made haphazardly. Effective implementation requires up-front thought and effort. Careful planning can significantly increase the effectiveness of your membership plan, and it can be broken down into four steps:
Step 1: Check state regulatory laws
The first step—and this needs to be done before you create your plan—is to check your state’s regulatory laws regarding in-house discount plans. The majority of states allow these plans, but many have specific rules regarding them. For example, you must clearly indicate that your plan is not dental insurance. Also, a common requirement is a 30-day refund policy. There are a number of solutions for this rule that prevent you from providing services and then being left high and dry when a refund is requested. Check with your state dental board as well as any third-party facilitator of your plan prior to implementation.
Step 2: Determine your membership plan(s)
Second, you should carefully determine what type of plan (or plans) to offer and what to charge. While an annual plan is easier to administer, it is generally less attractive to consumers than a monthly plan. Should you choose to maintain a plan without the use of automated tracking and payment software, be sure that you have carefully protected the records of your members’ payment information and enrollment dates so that you can renew their memberships on a specific schedule. Renewal payments of annual memberships should not correspond to hygiene appointments: often these appointments are not tied directly to the 12-month renewal date, and even a one-month delay in renewal can add up to hundreds of dollars in lost revenue over time for that one member.
The most common in-house membership plans are set up first by calculating your annual costs of two standard prophylaxes, exams, and x-rays. Next, determine the discount you want to offer. Discounts are typically in the 10% to 30% range. Offer that as a prepaid annual plan, or divide it by 12 to determine the pricing for a monthly plan. Typically, a smaller discount (if any) is offered with a monthly plan, as the monthly payments are already creating a more affordable solution.
Offering a limited exam and x-ray as part of the package is a great additional perk that, in my experience, has only a 2% utilization rate. It is a great option to offer new patients who contact your office with a dental emergency. On top of the included preventive services should be a discounted fee schedule for additional treatment. As noted above, these vary from 10% to 30%. Understand that while both annual and monthly plans do a great job of retaining your uninsured patients, a monthly plan is more effective when marketing your office to attract new patients. Protections must be put in place when offering a monthly plan to ensure that a member doesn’t take advantage of benefits and then discontinue membership payments. Most third-party software includes protections as part of the terms and conditions, as well as in the automated process.
Step 3: Training
Third, you must spend time training your team on the plan. For your plan to be most effective, the entire team must be involved with implementation. Team members should understand the benefits of enrollment—both for the practice and the patient. You should have a specific system for getting your members enrolled, whether through custom paperwork or online through a third-party automated solution with terms and conditions. Always have an agreement with your team member laying out the terms of the plan.
Step 4: Marketing
The fourth step is to shout from the rooftops: effective marketing of your plan is vital to its success. From personal experience in my practice, as well as others we have worked with, I can vouch that effectively marketing these plans brings a significant number of new, uninsured patients to your practice.
Create office displays and brochures, send direct mailers, use print ads, create a section on your website, use social media, make presentations to local businesses and clubs, use word of mouth . . . and on and on. Use all of the ways you market your practice in general. Automated online signup pages even allow offices to sign up new subscribers outside of the office at local community events. Just bring a laptop or tablet.
The subscription model is exploding across the country for different industries. It increases consumer loyalty by allowing better budgeting of goods and services. There are 160 million Americans without private dental insurance, and most of them avoid dental care. This represents a tremendous opportunity for every one of us. A subscription-based approach to dental care can increase patient acquisition by reducing the cost barrier to entry for those potential patients, and can also increase patient retention by developing a membership mindset.
American consumers are looking for an affordable solution to access dental care. If our profession as a whole does not create more options for consumers, then the penetration of dental insurance will continue to increase. With the subscription model, we have the ability to cut down on the trend of private dental insurance by creating an affordable model—where we control the pricing—to bring consumers back into our offices. Whether you choose to manage your in-house membership plan on your own or utilize an automated software solution, subscription-based dentistry is a hot trend that should go a long way toward recapturing the millions of Americans currently avoiding our chairs.
Source: Dental Economics, March 20, 2018 (https://www.dentaleconomics.com/articles/print/volume-108/issue-3/practice/subscription-based-dentistry-the-solution-dentistry-desperately-needs.html)