“I’m Fee-for-Service, why would I want a membership program and give away percentages that I don’t have to?”
This is a great question. My answer is that you don’t have to give away any discounts in the end. Let me explain.
Building an “In House Membership Program” when you are fee for service is a proactive way to build another layer of loyalty on top of the layers you already have created.
By NOT HAVING one, you limit your practice growth portfolio with three primary investments:
- Loyal cash paying patients
- Extremely well trained team members that can help patients see beyond insurance
- Specialists who refer to you (if you are a GP) and explain to patients that they will have to pay cash when they see you
By HAVING one, you diversify your practice growth portfolio with a 4th powerful asset:
- You now have an easy way to attract the largest segment of people in dentistry. Patients that go to the dentist because they perceive they have some type of benefit to do so. It is sad, but painfully true. And the data shows it. Americans who have dental benefits are more likely to go to the dentist, take their children to the dentist, receive restorative care and experience greater overall health. That is 77% of the population. Last I checked, that was a big percentage of anything. To ignore 77% of the population when building a business is just negligent as a business owner.
Yes, I get it. But What about the discounts?
As for the so call “discounts?” At the end of the year every dentist should do a fee balance to look at what they gave away for patients to use this program in your office and adjust it properly within your fees for the upcoming year to absorb 100% of the cost of doing business with a membership program.
For instance, lets say you produced and collected $1.5 million (fee-for-service) and $400,000 of it came from discretionary care beyond the base membership fee from patients who elected to use your membership program. You would be offering a savings of 15% for that $400,000, which is $60,000.
Let me pause there. Are you with me so far?
That means you gave away $60,000 to get $400,000 in additional production that you wouldn’t have. Now that doesn’t include the fact that these 300 patients also pay $30 a month to be a part of your program which is $9000 a month in recurring revenue. That covers a lot of rent and debt payments. $9000 x 12 = $108,000. Heck, your monthly membership fees cover the adjustment alone.
Also, keep in mind, that $60,000 that you gave away to get $400,000 is a cost of doing business (that is better than paying an insurance company) that has to be figured into the next 12 months of doing business. My coaching is to do a fee adjustment of your top 10 fees that were used within that $400,000. Print them out. See what the fee is for each and adjust them to easily cover what you gave away for the last 12 months.
Way too easy to do. Even easier, when you take into the fact that our ACT Dental Coaches go into the best practices in the country and find that most dentists aren’t anywhere near the 70th percentile with their fees according to the NDAS figures.
These are dentists that regularly attend Seattle Study Club meetings, Spear Education, The Kois Center, The Dawson Academy and the Pankey Institute. These are committed dentists. They care about the quality of their work. They are much better than 70%. Just putting their fees in the 80th percentile alone will MORE THAN cover the savings you gave away in a year of providing a membership program.
So lets review the math.
You gave away $60,000 to get $400,000 of production that you wouldn’t otherwise have had on this program. This program has 300 patients (loyal ones) that pay $30 a month which equals $108,000 a year of recurring revenue that comes to your practice whether these patients come in or not. On top of it, your going to do a fee adjustment for the next 12 months to cover the cost of doing business for the last 12 months (so now you get the $60,000 or more back in the next 12 months) so you didn’t really lose it anyway. So the final net gain on having 300 patients paying $30 a month is $400,000 + $108,000 + $60,000 or more (delayed by a few months) = $568,000.
That is $568,000 that you wouldn’t have if you didn’t have one.
Sounds like a triple win to me. The patient wins because they can now get optimal care in a way they can afford it. The practice wins because you build a bigger base of truly loyal patients that won’t go anywhere else because “members enjoy benefits.” The dentist wins, because they don’t have to sign up for any more lousy PPOs and deal with shared agreements for decades to come. On top of it, the dentist is the sole administrator of the plan and decides what “optimal” care is. There is no maximum to the plan you have created. The dentist also makes more profits year over year. Oh and lastly, when it comes time to sell, your practice valuation is exponentially higher than ANY other practice that produces the same as you, because the other practices have a ton of PPO’s and you decided to go another route and build your practice with hundreds of truly loyal patients that stayed in your practice.
So my suggestion is to do it. Don’t even think about it. Everyone wins.
Implementing an in-house membership program for your dental practice not only improves your business’s profits, but it can also make your team’s life a little easier and provide your patients with better, less expensive and restrictive care than they receive through dental insurance.
I encourage all dental practices to consider implementing this type of program because it truly helps grow your patient base, retain patients and bolster your bottom line.
Members enjoy benefits……so will you.
See you soon!