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How to address unprofitability in your dental practice

Dec. 4, 2020
Times are tough. Profits are down for many dental practices. Dr. Thomas Cleary has found a solution for revenue loss, and it's surprisingly easy to get going in your practice.

Thomas M. Cleary, Jr., DDS

The American Dental Association recently reported that 40% of dental offices are not making a profit at this time. This is eight times the number of offices that weren’t profitable prior to COVID-19.

If you’re among the 40% of dentists struggling to get by right now, it’s reassuring to know that you’re not alone. But just because you’re in good company does not mean you shouldn’t work to become profitable again. There are some simple things you can do now that will help you turn yourself around and increase long-term profitability.

I have used an in-office membership program to help keep my office profitable, despite changes in the economy and patients’ insurance status, during the downturn that has affected many of my patients. I anticipate the membership program will continue to drive profitability—and remain an attractive option for patients—throughout the downturn and well into the future, even after the economy recovers.

In their minds, many dentists group membership programs with discount plans and believe that starting a membership program means simply that they must discount their fees and provide the same treatment for less. But rather than offering patients steep discounts, a membership program allows you to create an attractive option for patients while still generating the revenue you need to provide quality care and make a profit.

A dental coach I spoke with earlier this year summed it up well. As a dentist, your goal should be to find ways to make care more affordable for patients without having to offer steep discounts. A membership program does just that. On top of that, a membership program can do a lot to help you return your practice to profitability and make it more profitable than ever once we emerge from this downturn.

If you’re like me, you’ve paid a lot of money to consultants who try to teach you ways to boost patient loyalty, fill out your schedule, decrease cancellations, increase case acceptance, and generate stable revenue. A membership program does all of these things. Better yet, it does these things organically. These benefits are baked into a well-run membership program. Just by offering the program you will boost patient loyalty, fill out your schedule, decrease cancellations, increase case acceptance, and diversify your revenue streams.

A look at each of these benefits individually

Boost patient loyalty. If you are a member of something, you are likely to be more loyal to it. Just think about your own behavior. I’m a member of Amazon Prime. Next-day shipping is included as part of my membership. If I need to buy something online, Amazon is my first stop. In fact, I’m often frustrated when I need to buy something elsewhere and I’m not able to use the membership benefits that come with Prime. This holds true for dental practices as well. As soon as patients sign up for a membership in your office, they are no longer just patients. They are members. They are less likely to leave the office and they are more likely to recommend you to their friends. Some practices even offer members small perks while they are in the office, such as a bottle of water or cup of tea, to make them feel extra special—and extra loyal.

Better case acceptance. You know how your patients are now more loyal because they are members of your office? With that loyalty comes increased trust, and with that increased trust comes better case acceptance. Plus, a well-designed membership program can include a way for patients to save money for the treatment you recommend. In my office, many members contribute $30 a month to their “nest egg” savings account, which is part of their membership. Patients who have money available are far more likely to follow through on the treatment you recommend. So, in addition to boosting loyalty, a membership program is a way you can help patients pay for recommended treatment.

Fewer cancellations. With a membership program, patients have paid for their preventive visits before they even walk in your door. People are far less likely to cancel or forget about something that they’ve already paid for. Fewer cancellations don’t just mean a full appointment book. This also means more opportunities to catch oral issues earlier. This is better for both patients and your revenue stream. Even if someone does cancel, they’re canceling on their dime, not yours. As part of the membership program, they are paying for regular, preventive care. So, if they’ve cancelled, they’re missing out on a benefit they’ve already paid you for.

Fill out your schedule. This is a bit of a follow-up to the other benefits, but it’s just as important. If you have higher case acceptance and fewer cancellations, it follows that your schedule is fuller. It’s also important how you fill your schedule. Right now, you may be filling your schedule with patients who have PPOs that are reimbursing you at rates below your costs. So, each time you book an appointment, you lose money. With a membership program, you will be booking patients who pay you at a rate that you set. Each time you book an appointment, you make money.

Stable (and recurring) revenue. This is the golden goose of business. Do you ever wonder why all of those tech companies are valued at billions of dollars when they haven’t made any money? It’s the promise of recurring revenue. To be clear, I’m not saying your practice is going to be valued at billions of dollars just because you start a membership program. But the recurring revenue can benefit you just like it benefits an investor in a big tech company. When patients sign up for your membership program, they are agreeing to pay you $35 (or whatever fee you set) every month. Sign up 100 patients, you’ll get a $3,500 recurring payment every month. With 500 patients, you’ll see $17,500 a month. This is guaranteed every month. It’s kind of like a mortgage payment in reverse. Not only is recurring revenue great because it’s guaranteed month after month, it’s also a great way to stabilize your office revenue. If you’re like me, you have months where you’re going gangbusters, and others where you’ve got nothing but time. Recurring revenue helps a lot here—you get just as much in the slow months as you do in the busy months.

Even though it has all of these benefits, a membership program can be shockingly simple to set up. I use an automated, user-friendly platform that shifts the work from my busy staff to a software system. Since it is so easy to implement, it’s simple for a dentist to try out with a small group of patients.

There may not be a magic bullet to deal with the current state of unprofitability in a lot of dental offices. But I’ve found that my membership program comes pretty close. Plus, it’s something that I can continue well past this current rough patch. I know that my membership program will be a big part of running my practice in a smooth and profitable way for years to come.

Thomas M. Cleary, Jr., DDS, practices in Easthampton, Massachusetts. He is an active participant in organized dentistry. He is also a speaker with dental associations and host of the Toothonomics podcast. Dr. Cleary is continually improving his practice through increased efficiency and by implementing the best techniques and products. He has transformed his practice by successfully changing his relationship with the major dental insurers. Dr. Cleary is the cofounder of Cirrus Dental, which offers the Cirrus membership platform that allows dentists to address some of their biggest economic challenges with an innovative solution. Contact Dr. Cleary at [email protected].