Let’s have a chat about something that is often an issue for dental practices: revenue.
More specifically, many practices are struggling with bringing in the revenue they need due to a range of different factors that impact their market. Assuming you provide a great service and top-quality care, what’s stopping you from meeting revenue goals?
We found ourselves in this boat, where revenue was a struggle. In fact, we lost around one-third of our revenue almost overnight when the state of Illinois withheld the payment of benefits for state employees, insurance benefits for which we were still contractually obligated to carry out the dental work because the patient still holds the policy.
What is a dental practice to do when put in this situation? We found ways around the crunch period which have helped us to double per-patient revenue. Here’s how we did it:
As mentioned, we had a specific incident (the non-payment of insurance benefits from the state) which lead to a serious revenue drop. We could blame this incident entirely and drop our service to that insurance plan, but this would mean losing a large chunk of our client base whom we’d worked hard to build up too.
The truth is, while this non-payment made a huge hit on our practices, it wasn’t the underlying cause of all issues with revenue. We experience many of the same factors that lead to revenue struggles as many other practices do. For example:
Most dental practices are finding that fee suppression by insurance companies runs rife. They’re trying to keep you to a lower rate which has been in place for a decade or more, yet in that time your overheads have increased significantly. Think rents, utilities, salaries, office expenses, equipment, and your own insurances—have any of those remained the same in the last decade?
There’s a general feeling of being held back by the large insurance companies and almost forced to accept a status quo. As Kevin Burniston says:
“Insurance companies are less likely to negotiate today because insurance has changed overall. Preferred provider organization (PPO), the number one plan sold today, has increased from 35% to over 85% of the market. More and more dentists are choosing to go in-network—and the more who do, the less the insurance companies are willing to negotiate. Employers are looking for ways to save money on medical and dental costs, and lower fees directly impact an employer’s bottom line.”
Third parties are hamstringing dental practices and capping needed revenue. Click To TweetThose patients you have who are insured often find that their annual cap is very low. This means no matter how much work they may need done, they’re probably trying to spread it out so that it doesn’t exceed their insurance cap.
Besides the low caps, there’s definitely a perceived lack of transparency when it comes to dental insurance. There are thousands of codes and there’s a lot of fine print to decipher, where a patient might discover that the work they urgently need done is not covered. Patients will often abruptly leave a practice when they discover they can’t get the work done as they thought.
You’ll often see uninsured patients only when an oral condition has become so acute that they need something done about it as a matter of urgency. They often either can’t afford insurance or have trouble actually getting a policy, particularly if they need one as an individual. They are usually your most underserved patients.
You know the patient really needs more work done to get to a good state of health, or, they need to come in regularly for hygiene appointments to maintain it, but they just can’t afford to do so.
All of the above can lead to low treatment plan acceptance, which is lose/lose for the patient and the dental practice. The patient is losing out on the chance to get to optimum health while the dentist finds themselves with lower per-patient revenue.
Another point that fits here is that there’s often a misconception about dentists as being available as a “repair shop.” Patients see the miraculous fixes that dentists can perform and think that they’ll just turn up when something goes wrong. It misses the point. Treatments aren’t cures and regular maintenance is necessary for good health.
Every practice naturally goes through some times of the year that are much quieter than others. You need a plan in place to tackle the quiet months so that they aren’t such a major blip in revenue.
“We dentists need to take a leap forward; we need to bypass the reductive thinking of the Industrial Age and look forward to the conceptual age. We need to determine how we will thrive.” – Dr. Fries with That
Notice how many of the problems that lead to lower revenue are related to inaccessibility of care or restrictions put in place by insurance companies? There are also the very real pains felt by the patient as a result of all this. Basically, there is a discrepancy between how we offer dentistry and the needs of the patient.
Our solution was to offer something different—a way to give patients accessibility, affordability, and transparency in their dental care. That solution?
After assessing our practices we decided at first to try a subscription-based dental plan. We had looked at what was available on the market and found that other plans often didn’t suit ours or our patients’ needs.
Specifically, we needed to be able to offer customized plans that were suited to the needs of our patient base and we needed a low-maintenance solution that wouldn’t create a heavy administrative burden. Other subscription packages didn’t offer these things, so we built our own.
Health Assurance Plan allowed us to offer our uninsured patients something that would better position them in the driver’s seat when it comes to their own dental care. We were able to define and reach specific target markets, such as older, retired persons and gig economy workers, both groups of which have a lower chance of having insurance.
For our team, Health Assurance Plan helped us to transition from being service providers to being personal care coordinators. Importantly, it allows a bias toward long-term health rather than a repair shop mentality.
Here are a few points on the benefits we realized, which lead to doubling per-patient revenue:
Health Assurance has allowed our practice to diversify our revenue stream beyond typically insured patients. Our practice has grown in size. Our annual average patient revenue for Health Assurance patients was 78% higher than average for all patients. When we added software and a three-tier option for patients, our average Health Assurance per patient revenue doubled the average.
Before Health Assurance, uninsured patients paid full a la carte fees. For those that became members, they saved an average of 34-38% on total care. While we still haven’t been paid from the state, our cash flow is stabilized by the growth of Health Assurance.
We need to do something different in our dental practices if we want to avoid struggling for revenue. We need to do something different for our patients who can’t access care as they need it.
For us, the answer was to offer monthly Health Assurance subscription plans. We found that, not only did uninsured patients like it and stick around, but they would refer friends or family members who also needed coverage.
Don’t let third parties or quiet months dictate your practice revenue. Take control and offer win/win solutions for your practice and patients.