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To paraphrase Dickens, it’s the best of times and worst of times for the dental market

July 1, 2018
While the dental market has grown significantly, dentists’ earnings stagnate
While the dental market has grown significantly, dentists’ earnings stagnate

Dave Monahan

Sometimes it takes an outsider to bring perspective to a market. I am not a dentist or a dental consultant, and I know very little about the clinical side of dentistry. What I am is a data nerd, strategic thinker, and disrupter who detests middlemen, red tape, inefficiency, and waste. I am deeply passionate about consumer access to affordable health care and the right of health-care providers to remain independent while earning a living. I honed my craft working at Microsoft and then building and selling a wearable technology company to a major medical diagnostics company. I then turned my attention to the dental industry and spent a year researching it.

What I discovered bothers me. The dental industry is broken, and those hit hardest for its shortcomings are you, the dentists—the men and women who have committed your lives to improving dental health and expanding access to dental care for all Americans.

There’s not a dentist I have spoken with who doesn’t know that the cost to operate a practice continues to escalate. Payroll has increased, rent has increased, equipment costs have increased, and so on. Yet reimbursement through the primary payment channel in dentistry, dental insurance, has stagnated or declined. That’s the finding of this year’s State of the Dental Market: Outlook 2018, published by the American Dental Association (ADA) Health Policy Institute (HPI).

The ADA HPI study found that (1) while the dental market has grown a respectable 70% since 1997, general dentists earnings have remained flat; (2) from 2011 to 2016 submitted charges to insurers increased in 36 states, while reimbursement rates dropped in a staggering 46 of them; and (3) fees paid to dentists through dental benefit plans are significantly lower than market fees.1 Even more disturbing from a consumer perspective, for nearly 70% of insured adults, total copayments, coinsurance, and premiums exceed the market value of their dental care.1 That means patients are paying more out of pocket and in premiums than what their dental care is worth. Basically, the ADA HPI study found that dental insurance does not work for dentists or patients.

On the other side of the coin, there are 97 million Americans without dental benefits. About one third them, or 38 million people, visit the dentist at least once a year. However, they are 50% to 70% less compliant than insured patients.1 Many people assume low compliance is due to fear of dental procedures. In reality, it’s fear of costs. Let’s face it, pricing in the dental industry, and the broader health-care industry, is not transparent. Upfront pricing is difficult to come by. Our research at Kleer found that consumers know little about dental care pricing and routinely overestimate dental procedure costs by 100% to 400%. So, they assume they cannot afford the dental care they want. In a world where consumers now turn to the Internet to find the fair price of a car or a home, the lack of transparency and fear of cost keeps the uninsured at home, out of your chair.

Overcoming and calming that fear represents the greatest financial opportunity to build your practice and your income. Research shows that an incredible 89% of the uninsured are interested in buying a dental care plan.1 They understand the value of dental care and the impact it has on their overall health. But they want a plan that is simple, transparent, and affordable. Think about it. The uninsured are a huge market who understand the value of dentistry and the impact it has on their overall health and well-being, and they want more dental care. In short, they get it.

So, the equation is simple. Dentists need to improve revenue and profitability and break their dependence on insurers. And patients want simple, affordable, and comprehensive dental care plans.

That’s where membership plans come into play. Membership plans are dental care plans offered directly by dentists to their patients. Membership plans eliminate the costs and hassle of a middleman, enable patients to get the affordable dental care they want, and create a “sticky,” ongoing relationship between your patients and your practice. The “club effect” of membership plans increases patient visits and treatment compliance while the transparency of membership plans takes the guesswork out of the cost of dental care and builds trust and loyalty among these patients.

This loyalty unlocks newfound, hidden revenue—the kind that comes with no additional acquisition costs. Our research at Kleer shows that membership plan patients accept 55% more treatment than uninsured patients and generate 54% more annual revenue due to the guaranteed subscription and higher treatment acceptance.

Membership plans also increase the value of your practice significantly. It’s doubtful whether the patients of the past would have been open to subscription-based dentistry. Fortunately, your patients’ behavior has been conditioned by a range of products and services provided to consumers according to a predetermined monthly fee. They are now open to pay-as-you-go, monthly recurring payment models à la Netflix. That’s a good thing, because this model creates real long-term value for your practice. Recurring revenue provides predictability, eliminates risk, and evens out cash flow. According to The Automatic Customer by John Warrillow, investors and buyers pay anywhere from 200% to 400% more for subscription-based businesses than transactional businesses.2

All that spells good news for dentists, particularly in the current environment, as operational expenses continue to increase, and insurance reimbursement stagnates or declines. So, Dickens’ expression about it being both the best and worst of times rings true, at least for dentistry. But there is a solution. Membership plans provide a compelling path to affordable dental care for patients and increased revenue and profits for dentists.

Author’s note: Kleer is an advanced, cloud-based platform that enables dentists to easily design and manage their own membership plan and offer it directly to their patients. Kleer is turnkey and free to implement. To learn more about our innovative platform, give us a call at 1-844-Yo-Kleer.

References

1. State of the U.S. Dental Market: Outlook 2018. American Dental Association website. https://www.ada.org/en/science-research/health-policy-institute/publications/webinars/state-of-the-us-dental-care-market-outlook-2018. Published November 2017.

2. Warrillow J. The Automatic Customer: Creating a Subscription Business in Any Industry. New York, NY: Portfolio; 2015.

Dave Monahan CEO of Kleer, has a passion for creating technology-enabled businesses that improve people’s lives. His advocation for subscription-based dental care led to a tenfold increase in membership since Kleer’s pilot launch in September 2017. Under his leadership, Kleer has quadrupled the number of the dentists on its platform. He previously served as president and CEO of FitLinxx, a leader in the wearables market.

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