Dental Memberships: 3 Reasons – One Perspective
(Part 1 in a 3-part series)
For almost 40 years practicing dentistry, my husband, a general dentist in southern California, was contracted as an in-network provider. Many of those years were good.
In exchange for reduced contracted rates, he was a preferred provider and received referrals. Before he changed his relationship with his last in-network insurance, he had not received a fee increase in his crown fee in over 12 years. We were concerned with ongoing under-reimbursement from dental insurance companies.
How Dental Membership Plans Solve Common Issues
We identified three key problems we were experiencing in our practice that were directly or indirectly related to insurance issues. A dental membership has helped us solve these problems:
- Patients without dental insurance benefits visit the dentist less often than those with benefits. We wanted to provide an alternative to dental insurance, to improve access to dental care for our patients who were without coverage, self-employed, or retired, while still being able to cover our overhead. Our uninsured patients needed a solution.
- Continually low reimbursement rates from dental insurance were not keeping up with the cost of operating a dental practice in southern California, and it was becoming increasingly more difficult to profitably provide the excellent quality care our patients had become accustomed to and deserved. Not only did our patients need a solution, but so did our practice and team.
- Being an in-network provider was a deterrent to attracting a high-quality dentist to carry on my husband’s legacy when he is ready to retire. An associate coming into our practice under the existing in-network contract would enter at a lower PPO level and significantly lower reimbursement rates than my husband. Like selling a home, we are preparing the practice for the best possible transition, and we needed a solution for our future associate(s), practice, team, and patients.
It’s important to understand a little background of the State of California that I believe has implications for dental practices in other states as well; the reimbursement rates for most in-network insurance companies have not risen with the cost of living and inflation, and yet our patients’ premiums and out-of-pocket expenses are increasing.
According to Alex Sadusky, as long ago as the June 30, 2018, edition of Dental Economics,
“The current relationship between dental insurance companies and doctors and patients is not an equitable one. For example, research shows that, based on the market value of services rendered, doctors are routinely under reimbursed while patients overpay. In fact, in 2014 the California Dental Association filed a class-action lawsuit against Delta Dental, claiming that Delta Dental had violated a “duty of good faith and fair dealing” when it tried to lower the reimbursement rates by 8% to 12%.”1
Eight years later, reimbursement rates from dental insurance companies have continued to decline. On December 30, 2022, the California Dental Association (CDA) filed yet another suit against Delta Dental of California for the following verified complaint for Breach of Duty of Care, Loyalty, Implied Covenant of Good Faith and Fair Dealing, Breach of Contract, and Declaratory Relief. Now, I am not a lawyer and do not profess to understand all the specifics of the case. However, the complaint clearly describes the Nature of the Action:
This case challenges the actions and decisions of Delta Dental, a non-profit, tax-exempt corporation that receives billions of dollars in annual revenues and pays its directors hundreds of thousands of dollars per year and its officers millions of dollars per year – all supposedly in furtherance of its stated mission of enlisting the “strongest network” of dentists in California so that these dentists, who are members of Delta Dental, can provide critical services to the public. Unfortunately, the reality is that, under the guise of seeking to provide affordable dental plans to large corporate and government clients, Defendants have operated Delta Dental as a private insurance company for their own financial gain without regard for the extraordinary community of dentists and their teams who actually provide the critical oral health care to the adults and children who need these services. As a result, Defendants are obtaining substantial wealth at the expense of Delta Dental’s Dentist Members.2
On September 1, 2022, Delta Dental of California notified dentist members that premier specialty reimbursement rates would be substantially reduced for allowable services, specifically to periodontists, endodontists, and oral surgeons. In addition, other (general) dentist members would experience a lowering of more common fees while modestly increasing less frequently used services.
“The result is that Delta Dental’s Dentist Members not only continue to receive below market reimbursement fees for the majority of their services, but the changes Delta Dental has announced it will implement in January 2023, stand to lower overall reimbursement fees even more.”3
At the 2018 American Association of Dental Office Management (AADOM) conference, I first heard about dental office memberships from Dave Monahan, CEO of Kleer.
Quite honestly, I was leery of offering an in-office membership. Why would we offer a membership to our patients, discounting our services even more when we were already being under-reimbursed by in-network insurance contracts?
With the help of my non-dental business consultant son, who was in graduate business school at the time, we researched the details, including pros and cons of in-office dental membership plans.
We decided to start a plan in our practice.
Problem #1: Providing an alternative for affordable dental care for our uninsured patients.
One of the top three reasons people delay going to the dentist is due to the cost.4 The best way for people to save on dental expenses is to take care of their teeth at home and with regular in-office preventive care.
If we could make visiting the dentist regularly more affordable, we could potentially help prevent the need for future dental treatment and related costs.
Problems #2 and #3: Under reimbursement and deterrents to high-quality associate candidates
By not allowing new dentists to become premier providers, the value of the practice is reduced and decreases earning potential.
We wanted to provide an alternative to our patients beyond simply keeping their existing dental insurance, and continuing in our practice with out-of-network benefits, so we decided to offer an in-office dental membership plan.
We hoped that by exiting our last in-network contract and implementing a membership plan we would be creating a win-win for everyone, our patients, our team, our practice, and the future ideal associate(s) to carry on my husband’s legacy.
Benefits for Patients
We soon realized that our patients, team, and practice benefited from this change. We have seen steady growth over two years and currently have more than 200 patients on the plan.
Patients love being members so much that they are referring their friends and family, so we added a New Patient Plan to our list of offerings.
When we changed our relationship with our last in-network insurance company, we had an extensive communication plan that we shared with affected patients, offering them several alternatives as we discussed what this change would mean for them, one of which was our in-office membership. Initially, those patients were slow to enroll, but many of those purchasing individual policies later decided it was financially better to be a member of our plan.
With the membership, there are no deductibles, no waiting periods, no maximums, no claim denials, and no pre-authorizations. Patients can receive all the treatment they want without the restrictions imposed by their dental insurance company and not leave any maximums on the table.
In a recent Bulletproof podcast with Teresa Duncan,5 she stated that “employers typically pay $400-$500 in premiums for dental insurance.” “The average maximum benefit per year is $1500-$2000, and only three to five percent of people use their maximums.”
That means 95-97% of people leave some portion of their yearly maximum in the hands of the insurance company. Insured patients are consistently not using their maximum benefits, and once the year is up, that annual maximum is gone for good.
In addition, patients who previously were coming in only once a year due to financial reasons are now coming in twice a year to take advantage of their membership benefits; thus, receiving better oral care, and this is beneficial for their oral-systemic health.
Other patients have been motivated to sign up for the membership specifically to receive additional member savings on larger restorative treatments. They are incentivized to move forward sooner with their restorative work.
Overall, members are happy to receive affordable, high-quality dental care, especially when they don’t have dental insurance.
Benefits for the Practice and Team
By offering a membership plan, the practice has the potential to increase revenue each year with recurring renewals and increased treatment acceptance. As we are producing and collecting more, the practice is financially healthy, allowing our team to be compensated fairly. The practice can cover overhead and offer team bonuses.
The opposite is also true; when the practice cannot meet overhead expenses, there is nothing left from which to offer team bonuses.
Benefits for the Future
A successful in-office dental membership plan contributes to more reliable revenue for the practice, benefiting the team and overall business. When the practice culture is positive, offering team bonuses helps to contribute to team member morale, encouraging team member loyalty and employee retention, as well as creating a desirable work environment for recruiting new employees.
As we think about the future, we hope the improvements in the practice, not being handcuffed by in-network contracts and offering an alternative for patients with our in-office membership, will attract a high-quality associate who fits with our mission, vision, and values.
Implementing a dental membership in our practice has created another option for patients who are without dental benefits, and has provided an answer to the widespread negative effects of under-reimbursement for those who do have coverage.
As dental insurances fail to adequately reimburse for dental care, I anticipate more dental practices will be implementing dental memberships to provide quality care at affordable fees, resulting in great value to our patients and our practices.
Stay tuned for parts 2 & 3!
About the Author
Debbie Jones, RN MN, MAADOM, is the Practice Administrator for her husband Mike Jones’ General Dental Practice in Newport Beach, CA. Debbie has been an AADOM member since 2018, and in 2021 she earned her Fellowship (FAADOM) designation. In 2022 Debbie completed the requirements and successfully received her Mastership (MAADOM) designation. She is currently enrolled in the diplomate program and is on track to receive her DAADOM designation at the 2023 conference. Debbie loves learning and has attended every AADOM conference since she first joined the association in 2018.