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Is a membership plan really right for your practice?

April 1, 2020
Are you considering a membership plan in your dental practice? These plans are popping up everywhere, and their popularity can make them seem almost irresistible.

Are you considering a membership plan in your dental practice? These plans are popping up everywhere, and their popularity can make them seem almost irresistible. However, many valid questions must be addressed before starting a plan.

Is a “membership plan” simply a short-term Band-Aid? How might it impact your practice’s long-term success? Will a plan like this just cannibalize your full-fee and loyal cash-paying patients? 

These are not stand-alone concerns. Incorporating a membership plan into a practice needs to be considered in the proper context. With the rapid evolution of health care, which includes consumers’ needs and desires, a practice’s philosophy must align with this evolution, both clinically and administratively. 

The consumerization of dentistry

The driving force in this evolution is the consumer. Patients are no longer passive recipients of care funded by third parties. They are active consumers who are less tolerant of the current legacy system. They are now taking responsibility for their own health and picking up the tab. They are demanding a better, more consumer-inspired experience. 

Active consumers have learned that the best value in health care is staying healthy. This has created a powerful impetus for people to adopt wellness as a lifestyle for both personal health and budgetary reasons. These two social forces—wellness and affordability—are accelerating dentistry’s evolution into a value-based marketplace.

The good news is that there are significant opportunities to improve your services in areas patients can understand. When a practice has a well-defined, value-based approach, it can build trust and increase repeat appointments and referrals. This is the essence of “brand loyalty” and should be a goal for any growth-oriented initiative. Therefore, based on your practice’s brand and long-term objective, a membership plan may be a desirable option.

For simplicity, this article will focus on the two basic options most likely to be considered (insurance company-sponsored programs excluded): (1) an in-house discount plan, marketed as a membership plan, which is predominate in today’s dental market, and (2) a true membership program, which is well entrenched in many value-based markets. 

In-house discount plans 

Often marketed as “membership plans,” the term “membership” seems attractive and simple enough, right? Although there is a membership aspect to in-house discount plans, marketers of these early-generation programs realized the disarming nature of this otherwise common phrase, suggesting these are modern “must-haves” for a practice to thrive.

However, a deeper dive reveals that many of these plans rely heavily on fee cutting. They typically allow participation only to uninsured patients. This is then often cited as a major benefit to the practice—not having to deal with insurance companies. But it’s important to recognize that “no paperwork” is an attribute of uninsured patients regardless of membership. In many practices, the uninsured represent only about 20% of patients. So, unless a practice has an aggressive external marketing stance, this means in most cases a practice is selling on “price” to about 20% of their current patients.

Membership programs

True membership programs are well established in many consumer markets. Who hasn’t heard about Amazon Prime? True membership programs focus more on the total patient experience. A well-designed membership program reflects a curated series of services, promotions, and educational information to create a value proposition to attract and retain the right patients. By contrast, prices (fees) play only a minor role in this equation.

A well-structured program engenders long-term patient loyalty reflected in patients who purchase, repurchase, and refer. It pays to have loyal patients, but you can’t pay patients to be loyal. 

To compare “fit” between a practice brand—solid clinical care, skilled team offering a good value—and membership options, let’s start with the advantages of in-house discount plans.

They can increase production. Many vendors have data supporting increased acceptance of uninsured members versus uninsured nonmembers.

The office may offer membership cards, online patient portals, etc. But all of these attributes and services only support the major focus: a discounted fee schedule.

They could have little immediate negative impact on the patient relationship.This is assuming the team does not feel that these “discounted” patients should be treated differently. 

Now let’s turn the discussion to “fit” as it relates to the long-term benefit of a practice. Many of the current offers are promoted using impressive ad campaigns and messaging about immediate benefit to the practice, aka, a short-term economic gain. If these ad campaigns and sales presentations are accurate, is it only a matter of time before every practice has its own in-house discount plan? In that environment, any and all differentiation between your practice and others is quickly lost. It now becomes a “race to the bottom,” a price war. For most dental practices with normal operating expenses, a price war is a no-win situation. 

One more important consideration: what type of patients does a price war attract? “Deals of the day” marketing is a recent example of price-driven consumer dentistry. When these deals first hit the market, new-patient exams were offered at a 20% discount. At first, this attracted some good patients. As more practices adopted similar plans, the 20% discount jumped to 30%, then 40%, until profitability was all but gone. As many practices experienced, these initiatives delivered short-term success, but in the long-term attracted only price shoppers and transient coupon clippers.

If we take the aforementioned brand attributes, here are the advantages of a true membership program.

It has benefits for all patients, insured, uninsured, current patients, and new patients.

It has a well-defined list of member benefits, including reward points highlighting a practice’s market position. 

It is integrated with the practice management system (HIPAA secure), eliminating many burdens on the administrative team and automating patient communication and membership marketing. 

It has a mobile application branded to the practice; it is more than just a mobile-friendly website.

It gives the patient and practice a constant, easy-to-use method of continual communication beyond just three-, four-, or six-month recall notices.

It leverages the clinical skills and patient services with coactive care/guided self-care. It has a consumer-friendly, practice-branded online store (which is tied to its website and mobile app), which gives the practice the ability to curate and personalize home-care products that can auto ship on a predetermined schedule 24/7. These home-care products are exclusive to professional practices.

It promotes value and affordability. The membership application has the option for a prospective member to establish a predetermined line of credit, such as Alphaeon Credit, with the practice. 

Well-defined membership programs focus on the entire patient experience. They are designed to attract consumers who recognize that oral health is a key to overall health and who want the best value, with price being only a small portion of the equation. The program highlights the practice’s position, both short- and long-term. 

Cost to the practice: installation/integration of software

When getting started, whether with an in-house discount plan or a true membership program, there are two factors to consider: installation/integration and monthly subscription fees. 

Whether to make it or buy it is the first question when it comes to software. Of course, there are practices that have the expertise to write a program. But is that the best use of resources considering there are already many well-written, cloud-based programs available? A simple Excel spreadsheet is way behind the curve. 

There is a difference between installation and integration. As for installation, many commercial plans have no fee, but they may provide webinars only for training and templated marketing. This still leaves many enrollment and monthly operations as a manual process. 

With integration, there may be a reasonable fee at startup that includes webinar training and program setup but also includes integration with your practice management system; automating daily processes; a practice-branded mobile app to stay current with today’s consumer; and automated membership marketing with seasonal offers and member contests. 

As for monthly fees, there are currently a variety of different billing models for both in-house discount plans and true membership plans. A flat monthly subscription fee, regardless of membership size, can range from $99 to $299. There are plans that vary the monthly fee depending on the number of members enrolled (100, 300, 500, etc.). There are also plans that charge monthly fees on a per-member, per-month rate. The rates vary depending on the number of members enrolled. 

The question is, will a few dollars invested up front be the best buy long-term? When it comes to a monthly fee, which fee structure is most consistent with the practice’s financial strategy? This all depends on your brand and the level you wish to stay competitive. 

Whether you select an in-house discount plan or a true membership program, consider the long-term health of your practice, which often relies on a series of short-term adjustments. Health care is evolving rapidly, so you need an agile practice with the ability to astutely react to changes. We’ve all heard the idea of upselling. In today’s consumer-based market, it’s time to “upserve” your patients.  

ROBERT H. MACCARIO, MBA, is president of Dental Management Sciences LLC. With over 40 years of experience in the dental profession, he codeveloped the Dental Concierge Club, a true membership program. He previously held a faculty position at University of Pacific Dental School. He currently manages four private practices. Contact him at [email protected] or (800) 332-0363 ext. 2#.

ROBERT J. RIGGS, MSc, CDT, FICOI, is the founder and managing member of Oralogix LLC, a health-care consultancy and specialty retailer of oral and perioral care products. He has over 20 years of experience in product commercialization and entrepreneurship. Riggs is a member of the Dental Management Science advisory team, the American Marketing Association, and a fellow of the International Congress of Oral Implantology. He can be reached at [email protected].

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