Disruption in Dentistry: Understanding In-House Dental Membership Plans
August 18, 2021
Erick Cutler, Partner, Health Care Services of EisnerAmper, speaks with Dave Monahan, CEO and Founder of Kleer, an industry leader of subscription dental membership plans. Dave explains what a dental membership plan is, how they can improve patient experience and make care more accessible, and the operational challenges that can be solved by providing an in-house plan.
EC: Not a problem. Let's just dive right in. I know everyone is kind of really wanting to know, what exactly is a dental membership plan and why are we seeing a rise in their popularity?
DM: Just at a real basic level, the way to think of a dental membership plan is, it's a direct care arrangement between dentists and their patients. In a typical plan, a patient will pay a subscription to their dental practice. That payment goes directly to the dental practice, and in return they get things like their preventative care business, their cleaning, their exams, their X-rays. That's built into their subscription. They don't need to pay extra for those things. They come in, as part of the subscription, get that done, and then they also get discounts, typically, on another treatments, so, fillings, crowns, and so on.
It's got a lot of the same components of dental insurance but without all the hassles. There's no waiting periods. There's no deductibles. There's no claims. None of that. Dentist gets to control what care is provided in a plan, and they also control the fee schedule and the subscription amounts that are tied to a client, so the dentist is in control. All the hassles go away and it's a direct relationship to the dentist and the patient. The reason they've become so popular lately is, first, most people don't know this, but 50% of US adults don't have a dental benefit, and a lot of that has to do with small businesses where they offer dental benefits to their employees.
One is, there's a lot of people out there without coverage, but they want coverage, so we've done a lot of research, as you mentioned at the beginning. These patients really do want coverage. They want to get more care, but they're sort of locked outside the system because they feel like dental care is very expensive. We have that on the patient side, so they want coverage that's simple and affordable, and then, on the dentist side, dental insurance becoming pretty much obsolete, it's really difficult for a dental practice to make a profit off of the reimbursements they're getting from dental insurers.
They're really looking for an alternative to dental insurance, and they know patients like coverage, so a membership plan fills that gap.
EC:All right, so then, keeping that thought going on the patient side, and I think you just touched on this, but, do you find that the overall patient experience is improved through a membership plan?
DM: When we dig down and talk to patients about this, there's really two things that they give us feedback on, primarily about the experience. Most of these patients, I mean like, 80, 90% of these patients have looked at dental insurance but they've decided not to go down that path because it's expensive, it's complex, and during our market research, one of the patients put it the best I've ever heard. They said, "I know they're going to get me." The data is, what they like about membership plans and the user experience and why it's so strong for the patient is, it's really simple and affordable. You can honestly look at a membership plan. There'll be three or four lines that explain the membership plan. That's it. You will understand it right off the bat. It's very simple.
It's like an Amazon Prime membership or a Netflix membership. It's really simple. You don't have 20 pages that you got to go through and caveats and all those things, so, one is, from a patient experience perspective, it's simple, it's affordable, and also, the other benefit we hear patients talk about all the time is the direct relationship with their dentist. They don't want to deal with a third party and all the hassles that go with that. They can work directly with their dentist and just focus on care without having to worry about all the overhead passes. Those are the two primary things you hear from businesses
EC:I guess, to your point, who's going to know the patient better than the doctor themselves, as far as keeping that relationship and what they need and what they don't need? All right. Now, let's flip that for a second, though, and look at it now from the standpoint of the doctor, the dentist. Operationally, what sort of challenges can this help a dental practice overcome? A follow up on that would be, also, very important, and what about the financial impacts? What kind of financial impact would having these available to patients do for the practice?
DM: Yeah, so, to answer the first question, what problems does it solve or operational challenges does it solve? One is, right in front of dentist, they get it right away. The other one's a little bit, you got to dig under, and we explain it to them so they better understand. The first one is, going back to insurers and how hard it is for a practice to make profit off of the reimbursements provided by dental insurers, what this does is give control back to the dentist, so that dentists can create their own coverage plan, offer it directly to their patients. They get paid directly from the patient, and they manage and control all aspects of the plan, so it puts them in control and allows them to provide coverage, and a lot of practices who implement membership plans end up dropping some of their worst PPOs as a result.
If they have a bad PPO they know they're losing money on, they'll drop that and they'll tell those patients to come over to their membership plan, because it's better for them and it's better for the patient. That's an obvious operational issue that practices deal with every day that this helps solve. The other one is the one that, sometimes practices don't believe it until we actually show them the data, but their uninsured patients do not come in and visit very often, so, on average, this is stats we pull from the practice management systems of our dental practices, on average, uninsured patients comes to a practice once every two years.
It's once every two years, so, an average insured or covered patient comes in about 1.5 times a year, so when you have coverage, patients come in about three times more often than if they don't have coverage, and so, an operational challenge the practice has and sometimes it's hidden is that their uninsured patients aren't coming in, getting their hygiene completed, and accepting treatment. They're staying away, and they stay away because they're afraid of costs so they don't have coverage. It's like going back to what I was originally talking about. These uninsured patients want coverage. They just don't want insurance, so, the operational challenge the membership plan solves is, these patients come in more often, so when they subscribe, and now getting to the financial impact, this is data from the practice management systems all in our platform, those uninsured patients who move to the membership plan, come in on average three times more.
That's the average across our platform, and they accept 2.1 times more treatment. I get the question all the time, why do they accept more treatment, and it's really simple. It's because they come in more often and they have coverage. Think about a patient who comes in once every two years. How often do you have to sell them treatment? Once every two years. If they come in twice a year, because they're on a subscription, they also have access to discounts, they're going to accept a lot more treatment. One is because they're coming in more often, you have more chances to talk to them. Second is because they now have a discount that they can apply for the treatment they're going to accept.
Dave Monahan: That's our average, is the financial impact is they come in two to three times more often and they accept 2.1 times more treatment.
EC:I can see, too, that the more times that you come in and you've now built more of a relationship with your dentist, so you've got a natural building of trust there, and again, just a more familiar relationship, so then when they do present a treatment plan that is obviously outside the normal cleaning, every six month cleaning, I would assume, then, you would be more apt to accept that treatment plan, again, because you said, I'm in more frequently. I now have coverage, and I also now have a much better, closer relationship with my doctor.
DM: You hit on a real big one, Erick, is that trust is really important, is the trust and the relationship that occurs. What we tell our dental practices who are offering membership plans is to treat those members special. Treat them like a true member of your practice, and we even have dental practices who will give little gifts when they come into their office. It can be just something really, really small. It's just a way of recognizing and thanking those patients for being members of their practice.
EC:Yeah, so then what you want is you want the other patients to look and go, "Hey, how come he got a gift? I want a gift," right?
DM: We get that question. Dentists are like, "What about my other patients? They'll get jealous." We said, "Yeah, we hope so."
EC:Yeah. Absolutely, make them jealous. Absolutely. Absolutely. I think you actually answered this question already, but I'm going to go ahead and pose it just in case you want to expand on it a little bit more, but I'm going to assume you're going to say yes in that, I imagine these type of membership plans are going to basically create easier and more affordable and better access for patients to dentistry.
DM: Absolutely. The two sided value proposition, and it's funny you asked this question, one side is practices can engage with uninsured patients more. Get them to come in more often, accept more treatment. That's one value proposition for the dental practice. The value proposition for the patient is access to care. I didn't share all this, but during our market research for starting Kleer, what these uninsured patients were saying to us is, "I value care. Oral care is valuable to me," and they relate it to things like their overall health, their quality of life, even their longevity. How long they believe they're going to live is partly based on oral care, and you get that right, right?
There's public announcements and things that make that common knowledge, so, they want care, but they stay away because they don't have coverage and they fear the cost. They don't know how much things cost. When you think about dental pricing, it's opaque. It's hard to understand. One is to get access to pricing. Number two is what prices should you trust? You can't compare shop and things like that, so, the net is, what a membership plan does is it makes it easy for these patients to get access to care. That's the key part of all this, is that they commit to that subscription, they have access to care, they understand pricing, it's simple, it's affordable, and they can commit and trust it.
Then, just on the side, we also get a lot of positive reactions from the office managers and the other staff members of a practice because they are thrilled that they can offer access to care to their patients, so we get as much positive reaction from the team as we do from the patients about being able to provide this to their patients.
EC:Just real quick, to keep playing off of that theme of access to care, typically, like you know and we've seen, a lot of times, if you do have insurance, you have dental insurance and then you have mental insurance. There's two different kinds, but more and more, it's being shown and proven, we actually discussed a little bit of this in another podcast, in that, really, healthcare should be wholistic. You should not separate the mouth, so to speak, from the rest of the body because a lot of things that they're showing, a lot of medical type issues could either have been prevented or detected or mitigated, in something, had their not been a neglect in the dental area.
Again, you give me more access to my dentist, then maybe that access has now made me just a better overall patient from a standpoint of health and wellness.
DM: Absolutely. Yeah. Oral health is absolutely systemic to overall health, and it's been proven over and over again, and to your point, when you can show, through oral health issues, that shows other health issues, and they're really related. There are even a lot of connections now, not going through all the details of all the different types of illnesses tied to ti, but dementia can even be identified through oral issues, so, somewhere along the line, the two separated. I don't know why. I don't know the history there, but the net is that it is incredibly important to your overall health, and people know it. That's the good news is, is our market research shows that consumers understand that and they want access to oral care.
EC:Okay. Well, that's good. That's encouraging. Now, say, if you're talking about this to a dentist, are there any types or parameters that make certain practices better suited for offering this type of service to their patients?
DM: I'm not sure about parameters. I'll talk about how we see, I guess, one is from an applicability standpoint, it works really well for general practices, number one, and then also pediatric practices. Those are the two places we see great applicability. It gets a little more difficult when you get into ortho and oral surgery, because they're not as repetitive and longterm commitments, but general and pediatric are. We see equal effect at independent practices and group practices, so we have an equal amount of group and independent, so it works perfectly well across the two of them. The thing that's really important, though, when these practices implement, is, there's a few things.
One is, you need to know what your goal is of the membership plan, so, we have some practices whose goal is that they want to get more patients into their practice, and so they're going to be aggressive around pricing, and they just want to get as many people onto the subscription as possible. We have other practices that, no, they want to make it a profit center and they want that subscription to be profitable for the practice. Great. No issue with either one of those, but just understand what your goals are of your practice and you can sort of frame the membership plan and pricing around it.
The other thing to consider is your demographics of your patient base. We have practices, a large part of their patient population is older patients so they will create typical plans, like one for an adult care plans, one for adult, one for a child, one for perio patients, but then, they'll often create another one for seniors, and they'll do things like, we have one at the senior club where the senior club is a little cheaper than the adult plan, but, the patients have to come in between 1:00 and 3:00 in the afternoon, and it has driven a 3X increase in production for those patients, because they have the time. They want to get that extra discount, and they're using the downtime of the practice, which is often.
The demographics are important, and the other one I put out there is value. You want to balance value between your practice and your patient, so, we've had some practices that try to be too aggressive on how they price and others try to be pricing it too low. We have other practices pricing too high. If you don't get the value balanced properly, let's say it's too expensive, you're not going to have a lot of patients buy it. If it's too cheap, your practice won't want to sell it, and so, actually, our CTO has a PhD in machine learning. He actually created an algorithm to find the perfect pricing that balances that patient and the practice value and creates a good volume of membership purchases, so, those are three things to think about when you're designing these plans.
EC:Not to make a shameless plug, but it's funny. Machine learning was actually part of another podcast that we were doing, again, machine learning and artificial intelligence in dentistry. That was a little bit more on the diagnostics side, but to me, it's just amazing how all this stuff is circulating and kind of coming together around dentistry. Okay, so, I've heard everything you've had to say and it all sounds great. I'm now sitting here and I'm thinking, okay, I want to do this. I want to do this for my practice. Now what? How would I even go about doing this or start doing this?
DM: Obviously, you can try to do it on your own. Some practices are out there, manually do this. If you're interested in learning from us, you can just go up to kleer.com, and book a consult. We have people to get live, online with you and just talk you through things that, one is, just the overall membership plan, why to have it, the value, all that good stuff, but also the Kleer platform and how we can implement a membership plan in your practice very quickly and effectively, so, that's an option you want to look at, just go up to kleer.com.
EC:In my opinion, it's a good option, because if somebody else has already invented the wheel, I don't want to necessarily have to do it again, and maybe that somebody else has thought through this a lot better than I have, so I think that would be a good option. Well, Dave, let me just put it out there to you. Any final thoughts around this topic to our listeners that you want to throw out there?
DM: Maybe two things. From what we've been talking about, it just makes sense to do this. You improve access to care for your patients and you drive more production for your practice. It's really simple. It works. We have thousands of dental practices that have done, so we actually have more than 5,000 dentists on our platform and we have the model to prove it, and we will actually pull your data and show you if it's working or not working. We'd never have one not work, but we'll always prove it and show it to you. Then, on the other thing, one thing we haven't talked about, though, is we're actually releasing a new product in August that enables a dental practice to offer a dental benefit directly to employers.
It takes this whole concept I just described, wraps it up for employers, so employers can contribute to that membership plan and make it a dental benefit they offer to their employees, and 63% of all small businesses do not offer a dental benefit to their employees and these small businesses are all around these dental practices. You probably have hundreds of small businesses within 5 or 10 miles of your dental plan, so, we're just enabling dental practices to offer a group dental benefit directly to local employers.
EC:That's an angle I didn't even think about, being able to offer that to employers. I thought earlier about, a lot of times when people don't have insurance it's simply because their employer is just unable to provide it because it's so expensive and so forth, but this would be a way to actually get around that, get over that hurdle, and allow businesses to do that and stay competitive in the employee market and so forth, so that's really good.
DM: Yeah. Yeah. We interviewed a lot of small businesses before we designed this product, and what you just said is, they want to offer it. It's too expensive, it's too complicated. They have management they got to do. They got to do things like, with insurance, you got to have minimal participation requirements. They don't want any of that. They just want to say, "Hey, here's a benefit. Hey, my employees, I'm offering this to you. If you want to sign up, here's a link. Go sign up if you'd like to sign up," and that's it, and so that's what we've created, the ability to do that.
EC:Easy, affordable, and keeps them competitive.
Dave Monahan: Exactly.
EC:Well, Dave, man, really, I thank you very much for participating and hanging out with us and talking to us and providing your insight and your knowledge on this topic. It's been really great.
Dave Monahan: I appreciate you having me on the show. Thank you.
EC:Absolutely, and thank you all for listening to the last series of our Dental Dialogues podcast. Visit eisneramper.com for more information on this and a host of other topics. Reach out to let us know if there are any topics you'd like to hear us discuss at a later time, or if you'd like to be featured in any of our next series.