43: Live at MDIBS CEO Roundtable 2023: Patient Membership Plans 101 w/ Kleer

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It's Wes Reed coming at you with another episode of the Dental Boardroom. Today is going to be a little bit of a unique podcast. This is the first podcast where I have done it while I am on the road. And today I am at the MDIBS CEO Conference. MDIBS is a really cool group. It's called Mommy Dentists in Business. And they have such a good crowd of women who are parents, who are moms, who also own a dental practice and who juggle that into their lives. And they find a lot of camaraderie and support here and they're learning a lot about the business side of dentistry. And I did a presentation on running your practice as a CEO, but also with me are just a couple other venue vendors. It's a fairly quaint or small conference in terms of vendors. And I have with me on this podcast, Brad James with Clear. Brad, welcome.

Yeah, thanks for having me on, Wes.

Brad is literally next to me in the booth in the exhibitors area and he is with a company that does in house membership plans. Brad, I want you to give me Membership Plans 101 for, let's say a dental student coming out of school. They maybe don't even own a dental practice yet. Explain what Clear does and what a membership program is.

Yeah, so I'll start with the membership program first. And essentially what it is is it's an alternative to traditional dental insurance where instead of third parties, third party administrators that are managing discount plans or insurance plans, you essentially are allowed to create your own care plans that you're reserving specifically for primarily uninsured patients. But we're starting to see more practices are offering it more to, you know, if they're dropping insurances, they want to retain some of those patients. So with the membership plans, what you're doing is the practices of full autonomy for controlling the pricing, the treatment protocol, and they essentially are extending it directly to their patients at a monthly or annual subscription fee. So what you're doing here is you're enabling these patients to get more comprehensive care where some of the cut isn't going to these third parties. You're essentially reallocating that wealth between you as a practice owner and profiting more off those patients. And then no more maximums, no more restrictions that come with traditional insurance. Your patients are now getting more care and more comprehensive care on top of that. So that's what a membership plan is. And then what Clear does is we've been around since January 2018. We essentially automate processes through our software where we can essentially help practices easily implement and scale these membership plans. And then we have obviously the headcount and the success teams to make sure that they're implementing the best practices.

Got it. So it is a technology, right. You're a technology provider that enables a practice to implement a membership program and do it in a organized, easy to implement way. Yes, as good technology can do that, it can take a process or something that's a program, something that's complicated and make it manageable because it just organizes all the data around that. What practices do you feel, if there's any practices that are most suited, and you may say every practice under the sun, but are there certain practices that would be most suited for a membership plan in that practice?

Yeah. So the types of practices that can utilize these membership plans directly are, are general dentists, pediatric dentists and periodontists. So some specialists can't necessarily deploy their own membership plan, but they can actually participate and be specialists. Where if a general dentist wants to say, hey, for my patients, I'm going to include 10% off orthodontics or 10% off oral surgery for membership plan patients. So that's how specialists can be a part of it, but not necessarily, I guess, offer their own I. And then on top of the membership plan. I think what's also important is. Sorry, I lost my train of thought. Is that okay?

Yeah, no, that's fine. And it makes sense with the general dentist because you have recurring patients. Yeah, you have a recurring traffic with your patients. And so therefore a membership plan makes sense where if it's a one time transaction or a one time treatment or a treatment that, you know, you don't know if you're even going to need like, like a, like, like a, a root canal, for example. Probably not better best for an endodontic style practice than in that practice. That makes sense. It's very similar to an insurance plan. They pay a monthly fee, sort of like a premium, and then for that they get a certain amount of coverage at no cost or a discount on certain treatments. But it's not insurance. And I want to make that very clear. This is not insurance. And a dentist is a trying to be an insurer. But explain the differences in how it is because it is similar. Explain those differences and maybe try to allay any fears that dentists have about all the regulations sometimes that are imposed on a business who is implementing something that looks like an insurance plan.

Yeah, I think the main differences are instead of it going to a third party, it's just going directly to the practice. And we're essentially removing a lot of the red hate that comes with insurances. So maximums, pre approvals, waiting, all of that is out the window. And it's just a cleaner process that's easier to understand for the patient. So better experience for the patient and then for the practice, you know, you're not dealing with the claims and the denials, that entire headache as well, especially on the administrative side. So with that, you're making it just an easier coverage option for your patients to have. And I think what's really interesting is that we're seeing from a profitability standpoint, a lot of these membership plan patients end up being the most profitable within the practice because you're essentially what we've seen. Our research shows that 40% of revenue that's generated from patient care is going to insurance companies. So if we can basically just redistribute that 40%, it ends up being a really good deal for the practice. And I know that's like kind of counterintuitive because you're providing these savings with the membership plan, but all works out and we have the data to show to our customers that it ends up being profitable. So.

So yeah, you know what's really interesting to me about it as a financial person is you are creating a predictable income stream. So if you get a thousand patients all on your discount plan, they're all paying you monthly and suddenly you have this almost annuity, this predictable income stream in your practice, which is, and dental generally has a lot of predict, some predictability to it. It's, if you look over from year to year, it's usually pretty stable. Month to month, it fluctuates up and down. But this creates a month to month, the element of stability in the cash flows of the practice. And I know in the world of finance, the more predictability you have, the more.

Sort of subscription style business model, actually the more valuation that that practice has. I could almost see if I were a buyer that that practice might almost be more valuable or might, might feel more valuable to me and I might pay a little bit more more because the cash flow is so predictable as, as a buyer. Is that some of the comments of some of the feedback you get among people who use clear and have a growing membership plan is just that stability, that predictability that comes with it. Yeah.

So I mean, it's something we certainly want to bring to the practices. I don't necessarily know if it's a driving force for a lot of our customers when they are implementing A lot of it's. They want to provide a better, better foundation for their patients. They want to provide some coverage for retirees. But the cash flow is very important. And I heard you talking about it when you were going over your presentation yesterday. I feel like sometimes it can get into the weeds of, of like financial, I'm not going to say financial literacy, but I feel like they're very concerned about being clinicians for the most part. Always worried about that point in time, like one specific patient. But yeah, it takes care of the cash flow. And there's plenty of case studies out there in the stock market, like Disney pops up. As soon as Disney started implementing Disney and having that subscription service you saw at the time, their stock kind of went through the roof. Now, where all that's at today, I'm not really sure, but certainly with dental practices, we've seen that if they are successfully implementing membership plan, and they have a lot of active patients on there, so hundreds or thousands of patients, that they have a successful renewal percentage. So if you can show like a buyer that we have 80 plus, 80% or higher renewal percentages with our membership plan, then you're able to get, we've seen from two, as high as five times about higher valuation.

That's impressive. Let's get specific a little bit on a sample discount plan. What is the discount? What is the premium or the monthly payment that the patient pays? And what are the benefits of being a member as a patient, being a member in that plan? So give us maybe some specific scenarios, some examples.

Yeah, so it definitely varies based upon wherever the practice is, is located in the United States and what their patient demographics are. But just like a very standard price range is probably somewhere between 300 and 380 for the year. And you can, it's up to the practice if they want to break that down into monthly payments as well. We see some of our customers offer annual only. Some offer annual and monthly. And then say, like Washington State practices should probably only offer monthly. And we can touch on that later. But.

And is that for one person or a family?

That is for one person. Now, the way we deploy it is if they want to add family members, they can say like 5% off additional family members. So that's kind of what the patient's looking at from a pricing perspective. The way we lay out, like the marketing, we show the patients what the savings are. Because what we want to do is we want to bring transparency for these patients to understand. Like if you're in a retail store, if you're shopping in whatever store it may be and you're looking around, they have price tags. You know, when you're going up to the counter, you've done the math in your head and you can expect what you're spending. From what our data shows us and research shows us is that patients don't necessarily understand when they are sitting in a dental chair, they don't know what they're going to pay. They think it's going to be very expensive. So what our mission is and what really the biggest goal for membership plans is, is not only better coverage, but you want transparency with your patients as well. You want them to feel like they're financially savvy. So you're empowering these patients by feeling smarter as consumers, or in this case, patients. And then on top of that, you're providing them with better, better care plans that are less restrictive. So patient feels great for the practice. It's great too, because you don't have to deal with all the insurance headaches as well. But that is what the patients see. And then they'll see included in this 300 to 3, 380 a year. I get my hygiene care, my preventive care. So that includes X rays, routine care, whatever the practice wants to put in there, they can, they can design that. But. And then lastly, the other additional perk is they'll receive like discounts off procedures. So to sweeten the pot a little bit more, it's we'll say, okay, 10% off all of the procedures that don't apply to your preventive and diagnostic care. So that's kind of what the patients see.

And as long as there's ample communication and there is enough marketing collateral where the patients feel educated about it, they'll want to join up. Our research shows us that the number one reason why patients don't sign up is because they think it's too good to be true. So it's, how can we get over that hurdle? Let them understand and educate them. You know, why? Why is our practice implementing it? And why is it good for the patient and good for us?

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It's almost it has an element of loyalty program where if a patient is paying that, especially if it's monthly, they know they're paying that and they know that includes the the hygiene appointments, that there's a sense of connectedness to the practice on a regular basis. And it might, I would think, perhaps strengthen the recall program because they know they're paying for it, so hopefully they're motivated to go in and get that done. And of course a strong recall program leads to so many other so many other benefits in a practice. How about the implementation of it with staff? I assume there's a certain message and communication that the staff now has to become versed in when they're explaining this. And maybe there's a financial coordinator in a practice. Some practices have a financial coordinator who's usually doing that discussion and how do you make sure that the, that the team is conveying what this is accurately and clearly to a potential patient and member?

It's a great question. We typically see when it comes to actual enablement, it's usually the office manager that kind of takes the bull by the horns because they are very much involved with the patient relationships the day to day front office operations. So we usually see that that's the office manager. But the biggest thing is not just, you know, the office manager is going to be the, the champion for the membership plan, making sure that everything's going well, the team' but it does trickle down to full buy in. The hygienist who spends the most time with the patient needs to be able to educate, say uninsured patients that this is an option. The front office, when they're checking out needs to reposition it. When the patient's checking in, they can bring it up. So there's all these different touch points during a patient's visit where everyone can bring it up in a non salesy way. Because we get, we hear from some customers that their teams feel uncomfortable feeling like that they're selling something to the patient. But if, if the staff is completely in the know and they understand why the membership plan is conducive to the practice's success and why it's good for their day to day as an employee within the practice, we, that's, we see that as like direct correlation of member enrollment. Because when the team is fully aware and they feel like they're in the know, that's where we kind of see the patients feel empowered and that's where they want to sign up for it.

Got it. And you, it seems like when you're meeting with a patient, let's say I'm a financial coordinator or the front office, you got, you got carecredit. If you're taking insurance, of course there's other third party financing out there. There's just, you know, pay fully. Here's, here's the bill. You can swipe your credit card right there. Where does this line up? Is this usually like a go to as your first choice you would present to a patient or is better for fee for service practices only. Does it complement other insurance in any way or interact with. It.

Might and there's a lot to that question. But it seems to me like first you want them to pay all cash. All cash or credit card, just 100% of the fee, no discount. Because essentially a discount plan, right. A membership plan is like a discount plan. You don't want to take insurance because you're giving up 40% of your UCRS somewhere around there just for the insurance. So that's, that's kind of your last choice is having to use insurance. But if somebody had the choice of, of carecredit or signing up for a discount or membership program, where does the membership program fall in line or in competition with say a CareCredit?

So the membership plan is definitely more preventive base. It's like how can we get these patients to, to be proactive with their routine care? That's like first and foremost it's just coverage. I say it would compete more with an insurance as opposed to a carecredit because carecredit they can, patients can use that whether they have insurance, whether they have a membership plan or whether they're fee for service. That's more for like the case acceptance especially for expensive, expensive procedures that patients just can't pay for upfront. Additionally, I just want to touch on so discount plans and membership plans, they are like in theory kind of similar, but the, the, the main like difference is the discount plans. The patients are just paying for access to discounts across the board. Like there's really no incentive for them to come with recurring visits where with like the membership plan they're paying for their two routine visits. And on top of that, it's kind of interesting. Like it, it sounds like it's not real, but you're kind of changing the patient psychology a little bit and the behavior where they be begin to, to kind of mimic the patterns of an patient. And with the membership plans, consumers are primed for these subscription plans anyway. I mean, how many, how many subscriptions do you have?

It's death by a thousand subscriptions. You know, that's the way we operate these days.

Exactly. So your consumer, so the consumer on the consumer side, patients are used to it and they're primed to understand what this is fundamentally. So that's really the difference. The discount plan is like, hey, I'm paying for this and I'm going to get and I'm still going to be paying out of pocket for my preventive care or for procedures. I'm getting like a 40% discount. But with the membership plan they almost feel like insured, insured patients where, okay, whether I'm paying monthly or annually, if I just need to get a cleaning, I'm in it, I'm out. I don't have to physically pull out a card, pay cash, check, whatever it may be. So they, it kind of builds that behavior with them and Then what's really interesting is our data shows that patients increase or patient visits increase for the membership plans. And then when visits increase, that's where everything else falls into place. Implanting, case acceptance, et cetera.

That makes. That makes a lot of sense. So it can drive a lot of other forms of collections from other treatments because it strengthens that.

Recurring visit program. The recall program.

Correct.

Great. Let's see. I think that's a good profiling of what membership programs are. I think that there is absolutely a place in these, especially for people who are used to insurance. And then for whatever reason, they cannot be on insurance, so they retire, obviously, as an example there. Or maybe they become, I don't know, a gig worker, you know, working for. Working. Working for Uber or whatever, and they don't get benefits. This gives access to essentially something similar to insurance.

But without having to be part of, you know, a big company that offers an insurance plan. So I absolutely see value that there, and then I see value to the doctor and that they're not having to discount 40% from insurance, real insurance, they're discounting 10% or 15%. And they have a motivating force for their patients to keep coming back into the practice. Yeah. That's awesome. Anything else you want to share with our listener base about the clearance? Where are you guys based out of? Do you work with.

People or dentists in all states? I would think so. As a technology company. Nothing should prevent you from doing that. Yeah.

So we're based out of Philadelphia, Pennsylvania, by and large. Our team is in the greater Philadelphia area, and we're headquartered out in an area called Wayne, Pennsylvania, which is like 15 miles west of Philly in the suburbs. So that's where we are located. And on top of that, yeah, we do work with practices in all 50 states.

I know we started fairly recently, just over five years ago, but we're working with now over 7,000 dentists in all 50 states.

Obviously, you guys have grown.

We've grown quickly and we've had some exciting features come out on the tech side. So we're finally able to fully integrate with practice management softwares.

Oh, yeah, that's actually a really good point. So you've got Dentrix, Eaglesoft. What about the cloud versions of those? Dentrix, Ascend, Eaglesoft. Oh, I forgot the cloud version of eaglesoft. But are you able to do the cloud versions yet as well? Because those are so new.

Yeah, so we are, to my knowledge, I think we're able to read from Ascend, but we're not able to write back. And what that essentially means is, like, we can pull the data and we can analyze it, we can run dashboards, whatever that may be. But, like, our first big feature that we rolled out with the integration was automatic payment posting into the patient's ledger. So that requires us to push data back in and literally write it within Dentrix, Eosoft, Open Dental. So at the moment, we don't have it with Ascend. It's something we're working on. And I don't remember what eaglesauce is.

I think it might be called a fuse.

Oh, yes, yes, yes, it is fused, you're right.

And to be honest, I'm seeing very, very few clients actually on the cloud version of Eaglesoft and Dentrix. I am seeing curve emerge. And there are definitely other ones as well. Yep, I've seen that one emerging as well. But your, Your mate, your. Your APIs are with the legacy kind of really established ones. Open Dental, Dentrix, Eaglesoft.

It's about 8% of the market.

Yeah, well, that makes. Yep, that makes a lot of sense. Okay, great. And then lastly, if you're comfortable sharing, how does Clear make money? What are their fees for their patients, for their clients?

Yeah, so it's, it's, it's very much a partnership at its core. So we make money if they are making money. If they don't have patients signing up, then we don't make any money. So we charge per patient, and it's reflective upon how that patient is paying. So if they're paying a monthly subscription, we'll take out a monthly payment. Excuse me, a monthly fee. And then if the patient's paying annually, we'll take out an annual fee.

And you let the dentist decide with the patient whether they're monthly or annual.

Yeah, what they want to offer. The patient will ultimately have the choice of how they want to pay. But yes, the, the like. Say a dentist is afraid of patients gaming the system, which we actually, it's. We see it's less than 1%, but say they are. They can just offer annual payment options for their patients. So they all would have to sign up paying annually. But. So, yeah, so we charge our basic. Is. Is about four. It's $4 for. Per month. And then for the integration we have, we charge a smaller fee, but then we have a standard monthly fee because the integrations, you know, it's an expensive piece and we need guaranteed revenue. Great.

Are there any other technology companies out there that you have an API integration with, or is it. You really only need the practice Management softwares.

It.

Right now we only integrate with the practice management software.

Yeah, that was more of a curiosity question because there's so many great technologies out there. There's, there's BI business intelligence softwares out there like Practice by Numbers and Dental intel and there's, there's more that are going to emerge. You know, it's an ecosystem of tech in dental with a lot of really cool things happening these days. And so with a membership program, I know if I were a dentist I would not try to run a membership program without a technology platform. And Clear provides that technology platform in a structured way where basically you can turn it on and then you have to learn how to communicate to your patients, but you can turn it on and go pretty much on day one as an off the shelf technology solution, which is very, very cool. So. Well, thanks Brad for being a part of the podcast and for being here. This is a really cool conference. Any comments you want to make about MDIBs?

I. So this is my first time attending. We've been partnered with them for about three years. So I'm just excited to be able to see it all in the flesh. And it seems like it's a very, very tight knit group of. Even though a lot of them don't actually personally know each other, you can tell that there's this connection that they're all a part of MDIBs. And, and you know, we were just sitting at the tables for that kind of speed dating thing. But it was really nice hearing this, this, this dialogue between all of them about like, you know, what, what problems are they facing, how are they facing overcoming those, those problems and providing solutions. I just thought it was fun hearing how constructive everyone was and supporting each other. So that was a cool element.

Very much so. You and I are one of the few men at this event because you have to be a mommy and you have to be a dentist and a. I think, I don't think you have to be a practice owner. I think you can be an associate and still be here. Most of them are practice owners, but such good camaraderie. If anybody's interested, Little plug for MDIBs Mommy Dentist in business. They got a Facebook account as well. Dr. Grace Yum is the founder of it. Very cool event. Well, thanks for joining and good luck to you.

Thanks Ross.

Sam.