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Is a membership plan right for your practice?

Sept. 30, 2021
Dr. Gary D. Light’s focus is on maintaining the quality of dental care and preserving the doctor-patient relationship. He explains how membership plans can make your dentistry financially worthwhile, while offering multiple benefits to your patients.

As a general dentist of 35 years, I have firsthand experience in adapting my practice to conform with the evolution of the business end of dentistry. The influence of managed care—namely preferred provider organizations (PPOs) and dental service organizations (DSOs)—has impacted how dentistry is practiced and even what is taught in dental school. Although clinical technique remains the basis of a dental student’s education, the speed and efficiency of the delivery of care have been emphasized to prepare new graduates for the world in which dentistry is now practiced.

The problem, as I see it, and a solution

I’ve been a part of the ever-changing world of dentistry, both as a clinician and business owner, and I’ve spent the past 16 years sharing my experience through consulting, mentoring, and coaching dentists regarding development, maintenance, and growth of their practices in today’s challenging environment. As a consultant and coach, my focus has been maintaining the quality of care and preserving the doctor-patient relationship.

Fee-for-service dentistry is the ideal, but it is not always practical in today’s world, particularly given the commanding prevalence of PPOs. As business owners, dentists are faced with decisions as to what insurance plans to participate in, and they are challenged by the detrimental effect these plans can have on their practice’s bottom line. Dentistry is expensive to deliver, and as clinicians we want to put the patient’s care first. However, one cannot disregard the cost of doing business; dentists must understand that delivery of care must be financially worthwhile.

When dentists seek my advice about maintaining the profitability of their practices, my first inclination is to suggest they decrease their dependence on PPOs. In simple terms, PPOs are basically equivalent to discount dentistry—participating dentists provide services at a reduced fee pursuant to the terms of the provider agreement. In addition, they are subject to the internal cost-containing policies of the insurance companies, all of which adversely affect reimbursement. Decreasing dependence on PPOs is emotionally challenging for dentists due to the fear of losing patients—a realistic concern since the key to a successful transformation from a PPO-dependent practice to a fee-for-service practice is patient retention. One strategy to reduce such dependence is to introduce a membership plan.

What is a membership plan?

Membership plans are internal, self-administered insurance plans. Patients pay a membership fee that is comparable to an insurance premium. This fee allows them certain benefits under the plan at a discounted fee. For example, one such plan could include one periodic exam, two dental prophylaxes, a set of bitewing radiographs, and a discount on other procedures per calendar year. The benefit to patients is obvious: they receive treatment at a discounted fee. And for dentists, although they are providing treatment at a discount, the discount is generally far less than what it would be as a PPO provider. Plus, there are some additional upsides:

  1. Patients pay the membership fee for the year upfront, so, in effect, they are paying for treatment in advance. If they do not present for treatment, they lose their benefit so there tend to be fewer failed appointments.
  2. Patients may need treatment that is not included in their membership plan, or they may choose to have elective treatment for which they are charged a usual and customary fee.
  3. As the originator and administrator of the plan, you can design it so it is not subject to “bundling” or other cost-containing limitations commonly imposed in PPO plans.

Membership plans are generally well received by patients. Those without dental insurance are grateful for the opportunity to receive treatment at a discount and perceive the membership fee as a fixed cost rather than a variable one. If you are considering dropping out of a PPO, a membership plan can be set up so there is little or no financial impact on those patients with dental insurance, which reduces the risk of losing patients. Every practice is unique, and every membership plan should be tailored to what works best for the patients and practice involved. Membership plans are easy to set up and administer, and they can also serve as a marketing tool to attract new patients.

Membership plans keep patients committed to your practice

As a proponent of fee-for-service dentistry, I maintain that dentists are entitled to a fair and reasonable fee for the treatment they provide, so I am not one to endorse discount dentistry. However, in my experience of counseling and coaching dentists to lessen their dependence on PPOs, I have often found that incorporating a membership plan into the practice is an adjunctive aid to help them achieve financial independence.  

Editor's note: This article appeared in the September 2021 print edition of Dental Economics.

Gary D. Light, DMD, FICD, has been a practicing dentist for 35 years. He successfully transformed a practice dominated by PPOs into a thriving fee-for-service business. Dr. Light is a graduate of the Harvard School of Dental Medicine and a certified leadership and performance coach. He is deeply motivated to support other health-care professionals in achieving financial independence, enhanced patient care, and professional and emotional satisfaction. Contact him at [email protected].

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