IN-HOUSE DENTAL PLANS
By inspiration or desperation I am getting more and more questions about in-house dental plans for your patients without dental insurance. You know what I mean: An internal program you promote to patients that don’t have insurance that gives them a discount plan for dentistry without actually being any form of insurance. I wanted to give you a quick reference to doing these types of programs, and doing them well. Like most things, we always need to consider our current number of new patients, overhead constraints, and insurance penetration in our communities.
1. The secret to success will always be your ability to ask the “right” questions. In this case, we need to consider “why?” you are considering this outreach. If meant to correct a lack of new patients, then I would look elsewhere. Lack of new patients (especially referrals from existing patients) is always an internal problem. Bluntly, it means that patients don’t like you or something about your practice. In a consumer driven business, potential clients will always have the ability to vote you off the island. Lack of new patients and referrals is the visible symptom of an internal marketing problem. So, first figure out the why and make sure your actions are working on the problem and not just a symptom.
2. If you are going to do the in-house dental plan, don’t sit on the sidelines thinking about it. Be first in you area to have an in-house dental plan so that in all of your marketing you can use the phrase “No insurance? No problem!” If you are first in your area to do this, your marketing will stand out and you can get the most bang for your buck.
3. Next, do your homework. Is this program, in the form you are about to use, legal? Does it meet or exceed the parameters of not being considered fee splitting by your state dental board, and is not considered an “insurance” plan by the state and federal statutes governing such plans. Both violations could mean hundreds of thousands of dollars in fines and fees. My suggestion is that you use some form of disclaimer stating that this is not a dental insurance plan. Here is an example used by a nation-wide company that creates plans like this.
• THIS PLAN IS NOT INSURANCE and is not intended to replace insurance. THIS IS NOT A MEDICARE PRESCRIPTION DRUG PLAN*. This plan does not meet the minimum creditable coverage requirements under M.G.L. c. 111M and 956 CMR 5.00. This plan is not a Qualified Health Plan under the Affordable Care Act. The plan provides discounts at certain health care providers for medical services. The range of discounts will vary depending on the type of provider and service. The plan does not make payments directly to the providers of medical services. Plan members are obligated to pay for all health care services but will receive a discount from those health care providers who have contracted with the discount medical plan organization. You may access a list of participating health care providers at this website. Upon request the plan will make available a written list of participating health care providers. You have the right to cancel within the first 30 days after receipt of membership materials and receive a full refund, less a nominal processing fee (nominal fee for MD residents is $5, AR and TN residents will be refunded processing fee.
• (NOTE: WHILE THIS IS NOT EXACTLY WHAT YOU NEED TO PLACE IN YOUR MATERIAL, ITS SUBSTANCE IS. I WOULD HAVE AN ATTORNEY READ YOUR FINAL COPY TO MAKE SURE THAT YOU ARE IN COMPLIANCE AND HAVE LEGALLY MET ALL THE REQUIREMENTS TO NOT VIOLATE ANY INSURANCE OR PROFESSIONAL LAWS AND/OR STATUTES.
4. For this type of program, you would need to consider the effect your overhead might have on your profitability. Consider that any discount will affect your production and overhead adversely. With that in mind we want the fee to be low enough to sound good but not so low as to leave money on the table. I would look at a current fee schedule for your zip code and assume that the average general practice would charge about the 80th The idea is that you want to create an incentive with potential patients wherever they go or compare prices. Your price should reflect what your overhead would allow and still produce a profit. Because the money is paid ahead of the service, you also have the value of money in hand and its possible investment potential, while creating phantom pressure for your clients to follow through with their investment and take advantage of the preventative services it covers.
5. We have to consider the hygiene cost in this. For our purposes here I don’t really have good numbers to compare, but as an example: If the average hygienist is paid say $40 per hour or a commission of around 25-30%, we would want to make sure that we did not reduce our fees so low that it created a loss in pay for the hygienist or a problem in maintaining a good overhead. Keep in mind that it is not just the hygienist’s salary, but the matching taxes, any benefits, hygiene assistants, the front office staff that interface with this patient and any other additional costs that might be incurred running the office. One thing to consider is that we will encourage every practice to go to a “commission based” pay for hygiene. You pay when they work, not a flat $40/hour (in our example) whether they have a patient or not. If this happens, you will see your overhead drop, but consider that because any offer or discount as well as any insurance PPO you take lessens the take home for your hygienist, you need to involve them in the planning of this strategy. It’s all about balance and leadership while involving those affected in the planning process. It is important that you capture the hearts and minds of your staff on any strategy, before its implementation.
6. When posting the annual payments to your patient’s accounts, split the production for those fees between the hygienists if they are on commission. This will give them some compensation for doing the hygiene appointments and inspire them to sell your plan.
7. You need a design and layout that is great, and, very importantly, appeals to the female eye. You need to come up with a marketing strategy to use this graphic design in order to maximize your return and the increase of new patients you hope to garner from this exercise. This will be an on-going outreach, so take the time to consider the ripple effect in the future. I would consider direct mail, inserts in the newspaper, web site banners, and temporary signage in the office and at the front desk. The most important part would be a strict protocol for the front desk to confront non-insured patients with the opportunity to take advantage of this plan. At the end of this article, you will find links to several examples from one of our consulting clients, Dr. Mary Ellen Nesnay. She is one of those rare doctors who continues to work “on” her practice while working “in” it. For years she has been setting the bar for other dentists to take whatever they were given and improve each year to affect a better overhead, more production, and consistent growth.
8. Don’t make the mistake I often see in areas where insurance penetration is not that large. I would consider an in-office plan if you live in an area of 65%-75% or higher insurance penetration. Any lower than that, and you might be shooting yourself in the foot. Why would you discount services if half the population or more live with the reality of not having insurance to fall back on?
9. The offer would be for 2 “free” cleanings a year along with fluoride treatment, x-rays, and exams by the doctor plus a discount on any treatment you do for the patient (I would not make the discount any deeper than 15%). The annual “membership fee” for this should run about $225-$250.
10. Adding family members to the plan might require a slight additional discount, and children would of course be less expensive.
11. The biggest mistake I see is charging too much, and not marketing it enough.
12. All team members should work to sell your in-house program. When everyone helps to sell your plan, you have a better chance of tapping into those pockets in your community that don’t have dental insurance. If your plan members work for a company that doesn’t have dental insurance benefits, they will (with encouragement from you) tell their co-workers about this great office where they can get 15% off of treatment.
13. I would never use this strategy for not being in network for the insurance plans in the area. It will not work. There is no substitute for “convenience” for the patient. If you have an insurance saturated location, you need to learn how to still have a 50-60% overhead and be in-network. It is possible and we see it every day.
14. Remember, when patients have insurance, they can go to any dentist that is in network. When they have your in-house plan, it can’t be transferred anywhere else, so they are committed to staying with you.
In-office plans should not be your primary marketing strategy, attempting to correct a lack of share of the market of new patients, but should be a multiplier in an office that is already getting a healthy new patient per month per doctor number. It, like technology, is an addition to accelerate an already good program of external and internal marketing. This is how you Summit.
Michael Abernathy, DDS