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March 17th, 2021

Facing Your Fee-For-Service Fears

So many doctors are held back from providing the services they would diagnose because they can only offer the care insurance will cover. Your practice should be building you up, not holding you back. But moving to FFS can be a frightening prospect for many dentists. Brad James, Director of Partner Development at Kleer, joins Regan to debunk the top 3 fears that keep dentists from moving to the FFS model and give you practical tips about:

  • What the numbers really say about profits and patient trends
  • Creating a plan to successfully transition to FFS
  • What doctors who successfully transition to FFS have in common

Membership Plan Bonus:

Listen to the end of the interview for tips on how to make a membership plan take off in your practice, and learn the secret target group you should be marketing your membership plan to.


REGAN: Welcome to Everyday Practices. I am your co host, Reagan Robertson, Dr. Chad Johnson would be with us but he’s driving from Shenandoah, which I like to say Iowa right now between practices. So I get to have today’s guests all to myself, it is a treat, buckle up, get ready. This is going to be a lot of fun if you like understanding data. Today, we’re gonna be talking about removing the fears, facing your fears and removing them when it comes to making the transition into fee for service. Our guest today is Brad James, and he’s the director of partner development at Kleer. Welcome. Happy to have you on the show today.

BRAD: Yeah, thanks for having me on. I’m excited to to have a conversation.

REGAN: Yeah. So we’ve talked about, you know, if you’ve listened to our podcast in the past, we’ve talked a lot about making the transition from PPO to fee for service. You know, my co host, Dr. Chad Johnson has a very firm opinion about it having switched in gun completely off of PPS earlier this year. We got involved with with clear they are a beautiful partner of productive dentist academies and clear provides membership programs, which is a great gateway and a great resource for doctors to be able to make that transition. But you know, with that said, it’s not it sounds easy? Like Yes, you can just call up dental and write them a letter and say, Okay, that’s it.

But it’s a very scary and it’s a very real fear that many dentists are contemplating right now. And Brad, I specifically invited you I call you the data King, that is how everyone knows you, within PDA, I really appreciate clears approach to using data. Because to me, when I’m evaluating anything as a business owner data removes any fear that I have. And I know that you’ve come armed with, you know, data from 1000s of practices all over the United States. So I would love to jump in with you. Why do you think dentists get get stuck Besides, you know, on PPO, besides the fact that, you know, for the obvious reasons?

BRAD: Yeah. So I think a lot of it stems from just the dominance and how much dental insurance has really swallowed up the dental market. I mean, they can completely control everything, the patient experience the practices, these dental insurers really dominate everything. And it’s really interesting like it, it first got started back in 1954. That was the first time a dental benefit was offered. And it was offered by like the long shores men warehouse union, which are essentially like the people in the warehouse and on these shipping boats that like are in charge of the weight management and how everything’s distributed. So that was the first dental dental benefit offered ever as an employee benefit.

Yeah. So that was out in San Francisco, I believe. And then it kind of grew into popularity in the 60s and 70s, where more and more employers were adding these benefits packages, and then it’s kind of ballooned into where we are today. And and what’s really interesting is there was a day and there was a point in time where these dental dental benefits were really a great deal for the employees, so the patients and also for the dental practices, but it’s no secret that it has mutated into what it what it is today where you have a lot of you know, they’re essentially paying more for premiums and more for deductibles for the same type of care that they were getting a decade or two ago.

And on the other side of it, you’re seeing these five to six conglomerates really owning about 70% of the dental market where they’re controlling everything. And now that there’s such a high demand with these employers and what they’re offering to their employees, we actually see that 93% of dental benefits are employer sponsored. So what what we’re looking at now his employers are dominating the offerings of dental plans to the end users which are the patients and since these patients are essentially getting it from their employers, we’re seeing that there hasn’t been a lot of innovation in the last few years, these big insurers know that they dominate the market.

And I think a lot of the fear that comes with that is just dentists are nervous in ultra competitive markets, where they’re afraid that if they drop a particular PPO, their competitor down the street might still offer that, and they might lose patients for that reason, or maybe some of their favorite patients are still participating with that particular plan. So a lot of it is just being comfortable with what they’re used to. And it’s really funny, I mean, you hear that you hear it all the time as well. You see it on forums, you see it on blogs, the dentists are really are fed up. It’s it’s it really is ubiquitous on how fed up they are with dental insurance, but you’re just starting to see a lot of them start to kind of take a stand and, and move away from P pios. The biggest thing, though, is yet these practices need to make sure that they’re being very analytical and data driven, and methodical with how they end up dropping these plans.

REGAN: Right. So having PPS isn’t necessarily all bad at what I’m hearing you say there needs to be a bit of a strategy around it. Is that what you’re saying?

BRAD: Yeah, I would, I would say that’s true. I mean, it’s, I don’t want to say it’s a necessary evil, but there definitely are some dental insurance plans that have higher reimbursement rates. Or maybe it’s just something that the dentist is really doesn’t want to get rid of, if a large employer offers in the area, but you do really want to make sure that it is profitable. And you do want to look at the data, you want to see how many patients are on that specific PPO, you want to also look at strategic. You also do want to take a look into how much revenue that’s driven. So you actually want to look at net profits with when it comes to that. So you certainly do want to take care of that and be as analytical as possible.

REGAN: So I’m hearing fear, number one, removing people from a scarcity mindset. And it’s I think it’s very real, they won’t come they won’t, you know, they’ll just switch and go to another dentist because it’s employer driven. So fear number one to me is wouldn’t this negatively impact profit and production for me as a dentist?

BRAD: Yeah.

REGAN: And so is there data around that, that could kind of help alleviate some of that fear of, you know, if I do this are not going to be negatively impacted in my profit and production?

BRAD: Yeah, so we’re so a lot of these practices, actually, they overestimate when it comes to, if they decided to drop a particular PPO, I think that they don’t see that there’s a lot of wiggle room. And what we’re seeing on average is that practices will typically keep around 60% of profits. So the insurance companies are taking 40% of those UCR payments, which is, which is pretty bad. And that’s after, that’s usually after the discounts and after claims denials, but what the mindset that they really have to have is that they can afford to lose up to 40% of those patients within that particular PPO. And at the same time, they’ll be working less. And they’ll still be hypothetically bringing in the same income, because now you’re earning 100% of those profits, or whatever that particular number is, and you’re going to be working 40% less.

So basically, what you’re doing is you can afford to drop 40% of those patients, you have to somehow retain those six, some of those 60% or be ready to attract some of some new patients to your practice, if you do end up losing more more than 40%. So a lot of these practices that are starting to trend from PPO driven to fee for service, they need to start to pick up their marketing budgets because some practices really think of these PPO as essentially as their marketing. So you do typically see those PPO dependent practices have smaller marketing budgets. But as you do start to trend towards dropping those plans, you definitely need to have a marketing strategy in place to be able to pick up from probably like two to 4% of your of your budget being in marketing, probably upwards of like eight, maybe 10. And I’m sure you guys see something around the same. Can you kind of speak to that at all?

REGAN: Well, I was what I was just thinking of as my my my brain went into how a membership plan, bringing that into the practice really bridges that gap. So you’re talking about being prepared and making a plan before you go ahead and pull that trigger. So I was wondering if you could if you could talk to me about you know, the doctors that you’ve worked with, and and in their making of the plan. Do they keep PP o ‘s and bring in a membership plan or did I mean They use that as a strategy to bring it in and then slowly release over time.

BRAD: Yeah, it’s a great question. And when we were just one of my last points is, you not only want to make sure that you’re able to attract new patients to your practice when you’re dropping a PPO, but you want to retain some as well. And what a lot of practices are doing right now is that they are implementing a membership plan, probably anywhere around like six to 12 months prior to when they’re fully going to drop certain PP O’s. And what’s really funny is internally at clear, the number one reason why we’re seeing practices wanting to learn more about our platform, is that they want to offer a more affordable solution for their uninsured patients, or for the baby boomers who are going to be losing their benefits.

But the number two reason why I would say is, is because a lot a lot of these customers, or excuse me, a lot of these prospects are planning on dropping PPS in the future. And they know that they need something in place to hopefully retain some of those patients that are network with some of those insurers that are going to be dropping. So the membership plan. And for those of you that that don’t know, essentially what it is, is that the practice is designing these care plans, they have full autonomy for setting the treatment protocol, setting your fee schedule, they set the pricing for what the patient’s going to pay. And they’re essentially offering this dental benefit alternative directly to their uninsured patients, or even their full patient population.

And what’s included in that is on the patient side of it, they’re essentially paying like a monthly or annual subscription fee to get access to their hygiene care. And then in addition, another perk for the membership plan is that they get discounts on all of our procedures. So it improves patient loyalty, specifically to that practice, because we are seeing as a whole patients are more loyal to their PPO network, as opposed to their their local, their local dentists. So we’re looking to really bridge that gap. So that was a I was digressing a bit, but you really do want these membership plans in place, educate your patients have effective communication, and really prepare them for not being surprised when the next time they come into your office and they and you tell them that they’re gonna have to pay the full fee, because you’re actually at the network with their PPO now.

So the membership plans are great. There’s way less red tape, as opposed to all the complexities and complications that come with insurance. So no more maximums, pre approvals, whatever it is no more headache, it’s a you’re creating the plans as a dentist or the office manager and offering a directive to that patient. And we’ve actually seen, we’ve published two new case studies of one practice that’s a Newport Beach, California. And another practice that is in lady Lake, Florida, which is one of the larger retirement communities in Florida. Both of those practices separately planned on dropping certain PP O’s. And they were pretty, pretty methodical with their process, they knew that they needed something in place, especially in Florida, with that retirement community where the mindset of those patients is they’ve had dental benefits their whole lives, and they’re going to want something like that moving forward. And the last thing you want is them going to an individual PPO plan, because their reimbursement rates are awful.

So we have so we have the Newport Beach beach practice that is now fully fee for service. They have over around 60 patients on their membership plan, and they’re generating over $30,000 of recurring revenue, which is great. And then the practice is based out of Florida, bigger patient population, I think it’s actually double the size of the practice that’s in California. And they have successfully gone from transition from PPO dependency to fee for service. And they actually have 170 patients on their membership plan with over $80,000 of recurring revenue. And that’s something that you really just want in place. And when you’re preparing to drop these plans, and I even think just one, one more last quick note is if COVID showed that anything right now within the dental industry is that there is a certain vulnerability with the model that we have where it’s a kind of pay as you go, and you’re hoping that these patients come in when when doors were closed due to the pandemic, there was no income for these practices. And what we saw is that there was a huge appreciation or at least relief with a lot of our clients. And I’m sure Chad, Dr. Johnson was kind of feeling the same way because at least you know, with your subscriptions fees, that you know that now you’re improving your cash. Flow no matter what you do have this Predictable Revenue that you can hang your hat on and really depend on.

REGAN: I really, there’s to me, I see there’s education on two levels, there’s education for the dentist and the planning of it. And then there’s the education to the patients. And so those kind of number two and three fears to me stick. I saw my dermatologist I don’t know, a month or so ago. And it was the first time when I called to schedule an appointment. The front desk said, we’re taking insurance now. And I was like, Oh, sweet, cool, okay, I’ll give you my card. And, you know, you can run and she said, Oh, you’re accepted. I was like, wonderful. It was a terrible experience that I ended up having.

I went in. And I was so surprised. This is what really got me. I was very surprised, because it seems to be a more friction type meeting, which usually it’s always been really great have jovial fun time. And I was confused with it. And then I realized, the doctor was stressing about what insurance was going to cover. And he was kind of tripping over himself, it was not an easy conversation. And, and I said to him, I don’t care I paid before without insurance, if you think insurance isn’t going to pay, this is fine. He gave an audible sigh. And he said, Great, now we can do whatever we want to do.

And I was like, dude, is this is this. And I had this moment of and doctors that are listening to me or be like, oh, Reagan, this is what doctors have to put up with this is they can’t provide the care that they need that they would prescribe, they would diagnose they would give patients because they are trapped. And they can only offer so much what with what it you know what insurance is going to cover. And that is insane to me. So there’s the communication of, you know, to the patient, what this means, please don’t give a heavy sigh of relief. Doctors say great, we can do whatever we want. But you know, there’s there’s two, two sides of this. So what from your perspective and all the 1000s of practices you’ve worked with? Is there something that doctors who make this transition successfully from dropping some PP o ‘s moving into fee for service, maybe taking on a membership plan do they have in common?

BRAD: The ones that do it successfully are extremely business minded and business oriented. They’re very analytical, they’re problem solvers. And they’re always also just forward thinking. Those are really the types of dentists that we see the most, the most successful when it comes to this. And they really take pride in not only just being a clinician at their practice, and being an X provide providing excellent dental care, but they really take a lot of pride in running a business to being a small business owner. And a lot of these practices, they really take their time figuring out how the money is flowing into their business.

And then they love figuring out which PPO is are profitable, and which ones aren’t. Because when you’re taking a step back, and you’re looking at these IPOs, and you’re looking at your agreements that you have with certain insurers, you need to figure out okay, which which plans, am I going, am I going to keep? Which plans Am I going to renegotiate? And then which ones Am I going to completely drop. And sometimes more than not, you know, you’re going to start dropping one at a time. And then you’re going to kind of go down the funnel until you’re dropping that last plan and then you’re fully fee for service. Now, that’s not a model that really fits every single dental office like not, not everyone can go full for fee for service. And there are plenty of dentists out there that have extremely successful practices that are in network. But it definitely does bring a lot of that freedom and like you said so yourself that that sigh of relief when you are able to completely manage the type of care that you’re providing to your patients. And the I’m really just focusing on patient care and the relationship building side of being a dentist.

REGAN: Those are such good takeaways, I just remembered we have I believe you have a really cool white paper like an interactive white paper that I think it includes the white the webinar that Chad and we did for for clear earlier. Is that right? Am I remembering that correctly?

BRAD: It has some type of content that Dr. Chad has out there because no one no one can speak better to it than someone who is actually completely impartial and is absolutely running a great dental practice. I mean he Dr. Johnson is fee for service. Now he has the membership plan in place and I know that they have hundreds of patients on their plan. So yes, we do have what we call sevens. Steps to move away from bad PP O’s. We’re not saying all PPS are bad. We’re just saying step away from the PPO dependency. And yes, there is a story of Dr. Johnson, Dr. Johnson’s anecdote on how he started to trend towards fee for service and how he successfully implemented his membership plan.

REGAN: I’m gonna put that link in in the show notes, because I, from what I recall on that it really does dive down into the how to evaluate how to look at what, what steps need to be taken. And I think that’ll be a great resource for anybody listening to this, because I know the doctors that are listening to this are exactly as you described, Brad, they are numbers focused, they do want to know more about business, and they’re pretty fed up with it overall.

BRAD: Absolutely. And like when they are getting ready to implement that membership plan, you always just want to make sure it can be a big burden to take on a new project. And I always think that’s intimidating. It’s almost like the fear that comes with finally getting out of network with that first PPO, and a lot of the teams can kind of the front office teams or just the the dental teams in general can kind of roll their eyes when they’re saying the dentist is bringing on another project.

But if you’re doing it, you do want to make sure a everyone’s completely bought in with just in this instance, like implementing the membership plan. And then also, you do and this could kind of be a shameless plug. But you definitely do want to make sure that what you’re implementing is going to be an efficient practice. And that it’s not going to bring on a huge burden for your front office team, because you want them to focus on the most important aspects of your business. Like providing patient, great patient care and building relationships with your patients. So using a third party for the membership platform can really just help implement that. And then make sure that it’s easy for your for your front office team to administer and manage throughout its its its journey of being in new in your practice.

REGAN: This is a little off ball question for you. Do you have a story in your mind thinking of all the practices that you’ve worked for that you’re particularly proud of something that sticks out in your head?

BRAD: It’s a great question. I would say there’s one practice that is in Montana, and we talk about them all the time that actually kind of like our poster child, if you will. A customer. I mean, it’s Dr. Turley, who’s based out of Montana, I believe he has two locations, but they have day one, we’ve we’ve been closely monitoring them because we are very data driven. And we always want to figure out who is what we call internally a high sloper. And that’s totally a statistical term. And that’s something that was created by either Paul, who’s our CTO or David’s our C CEO, either way, engineering minds came up with that thought process.

And we always want to figure out, you know, who is going to take take off from the get go and Dr. Turtle his office has, I mean, they have so many patients on their membership plan, and there’s definitely a buzz around it that it’s like we’ve seen them grow over over a few years. And it’s almost like, what are they going to slow down and they just haven’t, and you can tell the whole team’s completely bought in, they have an amazing practice administrator, business manager who has taken the bull by the horns from day one. And they have they have 1000s of patients on their membership plan. It’s not like they’re like a they’re not like a multilocation DSO by any means. They’re just a practice who has been passionate about it day one. We’ve been watching them closely, since since their infancy as a clear customer. And it’s just been really impressive. Seeing the huge numbers that they’re bringing in from a subscription and recurring revenue model and how big of a of a foundational piece and pillar it is for their practice their membership plan. So that is who I would say, Dr. Turley based out of Montana.

REGAN: You mentioned, I noticed that you mentioned team bias that they adopted it right away. Is that one of the secrets to making a membership plan sticky?

BRAD: Yes. Because it’s always really funny. We we hear, and I kind of touched on it earlier, when these when these doctors go to these conferences, obviously pre COVID. They come back and they’re excited about all these new products, solutions, whatever it is, and they kind of just like, it’s almost like they physically come with a stack of papers and they bring it to their office manager and they’re like, let’s implement all this and they’re probably just like no, but it’s always really interesting. The practices that are successful. Everyone is bought in front office, back office, there is just this treat ruins when it comes to them being completely committed to the membership plan.

They understand the opportunity Because compared to an uninsured patients, clear membership plan, patients are twice as profitable. So they’re generating twice the production, we’re actually seeing the exact numbers 2.1 times. So when they’re looking at that figure, and they see, okay, we have 500 fee for service patients, and we have an opportunity to double the profits for each and every one of them.

If we get them all on the membership plan is that likely probably not to get them all on, but they see the opportunity, and they see how happy their patients are when you’re providing them with a dental benefits that they want. Because we see 90% of patients who are uninsured want a dental benefit, but they don’t want to join a PPO because they think the insurance companies are going to get them or they’re not really attracted to the red tape that comes with PPO. So it’s really your job as a business owner and as a clinician to give these patients access to care that you’ve actually personalized for them. And you give them a small deal.

And it’s really funny, just because you’re giving them some savings on these membership plans, doesn’t mean you’re losing money from them, we’re actually seeing that case, acceptance increases between 50 and 75% percent, which is why you’re seeing the doubling and production overall for these patients. So yes, you definitely want someone who is going to take the bull by the horns and your front office team, because they’re gonna run the day to day operations and make sure it’s successful. So though, that’s definitely a key ingredient of having a successful implementation.

REGAN: So that sounds like a really awesome strong internal campaign. So strong internal team buy in? Do you see any practices that are killing it with external marketing? How are How are your best practices marketing this out in, you know, into the their ecosystems?

BRAD: It’s a great question we actually. So it’s interesting, the the best practices usually will internally market heavily, and they see the opportunity with their active uninsured patients, because not only do you want to potentially get new patients on your plan, but you have a large enough opportunity with your active uninsured. And with your doormen, uninsured patients, too, so what can you do to get them and keep them committed to your practice, because I feel like it’s always top of mind for new patients. It’s just the mindset that people that these that dentists are in, but you need to also track attrition, and retain the patient and retain the patients you have, because they’re the easiest ones to keep and to get that revenue from and to provide the the oral oral health care they need.

So you definitely want to make sure that you’re internally marketing it have have conversations with these patients communicate with them. Obviously, that requires your team feeling comfortable having the conversations, which is we can always help out with our customers. But on the other side of it to touch on your point, yes, the external marketing is always something that once they’ve gotten a good portion of their internal patient or the active active patients, we look to help them strategize on ways to attract new patients. And we usually recommend shopping to new patients special because we’ve seen that that’s usually a revolving door when it comes to attracting new patients. So the membership plans get some gets these new patients to commit for the year.

And then on top of that, one exciting product that we have coming out in May or June 2021 is what we’re calling employee care, which is, instead of offering it directly to your active uninsured patients, or just to your active patient base, we are looking to connect dentists to small local businesses in their area, whether they currently offer dental benefits or not to their employees, we’re looking to roll out a solution that is not only great for the dental practice, that’s going to be profitable. But we’re looking to create something that’s going to be beneficial for the employers and for the employees. So just for instance, we’re going to remove minimum contributions, minimum minimum contributions from a finance standpoint, and also, we’re going to remove minimum participation for their employees, because we typically see that that is a deterrent. For a lot of small businesses, they have to go recruit, say 50% of their employees to join onto this care plan.

And then they have to contribute at least $500 on average per employee. So that’s a huge deterrent. And and that’s what we’re looking to do with the employee care, we’re looking to make it a better experience for everyone involved. And that’ll be a nice way to attract new patients to your practice. And to kind of get that started, we actually see the best way is to have conversations with your current active patients, because a lot of them are small business owners. So that’s the always the best way to all right what you currently have, and just send some feelers out there.

REGAN: So you’re going after Goliath’s kneecaps with employer care, you said at the beginning of our interview was, you know, basically, what was it, it was a huge percentage of people just default to their employers plan or their employers insurance offered. And so you’re going straight to the source and helping employers get on board with a whole new way of offering dental care to their employees. Is that right? Did I hear you right?

BRAD: That’s correct. Because we actually receive that dental benefits, it’s a third ask for a benefit behind medical and 401k. So there’s an enormous demand out there with these employees, and they expect to get it from their employers. And that’s why 93% of patients get their dental benefits from employer sponsored care plans. Because there is such a large demand out there. And it’s all almost an expectation now, for a lot of these employees to have some type of dental benefit. But we have seen that there is a big market out there, especially in the small employer space. If it’s 50 or less employees, only 37% of them have dental benefits for their employees.

So it’s an enormous opportunity not only for those that are offering dental benefits, currently, but also for those that may not currently offer them. And there is a huge level of interest for those employers as well looking to offer a dental benefit down the line and, and they’re just waiting for something and alternative, that’s a good deal for them and for their employees. And that’s what we’re hoping to do. And that’s hopefully something that we’re looking to equip these dentists with, where we can look to scale their membership plans, and hopefully not just to patients but also small businesses.

REGAN: It’s exciting news, this is this feels like didn’t didn’t cutting edge. Thanks for sharing that. I love it. I think that’s very exciting. And my my favorite takeaway right before you share that is, you know, around making it easy and making it not difficult. And the number one thing that I hear, if I’m in clubhouse, or I’m on a webinar, or a Facebook group, or dental town,

Wherever I am, it it really is I don’t do any marketing, because I’m heavily PPO and I don’t have any idea where to start. And to me that is removing a fear by doing what I call guerilla marketing, which is internal, it doesn’t cost a lot by educating your team and supporting your team and making it successful. You’re not if I’m hearing you correctly, you’re not saying you know, go out and spend 10 grand a month and try to market this and build this up.

You could actually start internally and be massively successful. there’s a there’s a podcast listeners, just one or two back Dr. Tessa Miller chat and I interviewed her and she is absolutely killing it in her referral game. And it’s incredible. It is internal marketing only. So I know it works. And Brad, I appreciate your data that you put with it to show with a membership plan. You know, it works with the internal as well. So thank you for taking the time with us and dispelling some of these fears and making it you know, bite sized, relatable and you can do it doctors, you can absolutely do it.

BRAD: Yeah, absolutely. Thanks for having me on. It’s always fun working with the PDA. So,

REGAN: absolutely. I look forward to seeing you hopefully in September.

BRAD: Seriously, I’ll be there.

REGAN: That sounds great. All right. Well, thank you so much, Brad, and we’ll let you get back to your day.

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