Episode #394: Understanding & Optimizing Coverage Options, with Dave Monahan – CEO of Kleer.com

Patients want more dental care — they're just afraid of costs. So, how do you get patients to come in more often and accept more treatment? One secret is membership plans. And to explain how membership plans benefit both dentists and patients, Kirk Behrendt brings back Dave Monahan, CEO of Kleer, to share his data comparing behaviors of uninsured, insured, and membership plan patients. By switching to membership or subscription plans, patients can get the care they want and need without the hassle of insurance. If you're frustrated with third parties and want to liberate dental care, listen to Episode 394 of The Best Practices Show!

Main Takeaways:

• On average, membership patients visit the dentist 50% more.
• Membership patients accept two to three times more treatment.
• Having membership plans will help generate twice your production.
• Most practices are not collecting full fees from their fee-for-service patients.
• Investors will pay five times more for a business that has recurring revenue.

Quotes:

• “In our market research, we saw . . . it frustrated dentists and dental practices who were basically at the whim of third parties, and we saw patients who couldn't get access to the care they wanted. Because when you think about a patient, they really have two options: they can buy dental insurance, which when they look at that, very complicated 20-page agreements; very difficult to understand if they're going to get the value out of it; they're expensive. Then, on the other side, they can go without coverage. But being a patient without coverage is scary. They don't have any idea how much things are going to cost. So, they stay away from the dentist. So, we wanted to marry those two things under “liberate dental care”; give dentists control and give patients better access for the care they need.” (5:05—5:44)
• “When [patients] buy a subscription, they come in two to three times more often. So, you're not just getting that subscription revenue, they're also coming in for their recare. And where does treatment come from outside of recare? It comes from sitting in the chair, talking to the hygienist, talking to the dentist. 75% of all non-preventative care treatment comes from coming in for recare. And that treatment revenue, just to explain that, that's from them sitting in the chair, talking to the hygienist, talking to the dentist and accepting fillings, crowns, so on and so forth. It’s the other things outside of the preventive care that they're accepting. So, you have to add those two things together. So, you have this recurring model, people paying subscriptions year in and year out, and they're coming in two to three times more often, and they're accepting twice the amount of treatment as they normally would. And that's what that treatment revenue is.” (12:39—13:32)
• “There's a book out there called The Membership Economy. It’s now getting aged, but it studies companies in all kinds of industries and they compare companies that offer subscriptions or memberships versus companies that don't. And the average across all the industries is, if you are part of a membership or a subscription, you buy twice as much as somebody who is not. That's the key.” (14:19—14:44)
• “The patient, in our example, wants more care. They're just afraid of costs. They're afraid of not having coverage. They're afraid of not getting a good deal. And so, they're timid about coming in. Or when they're in their chair and you're saying, ‘You should get this treatment,’ or that treatment, they're skeptical. They're not bought in. But the membership gives them access to the care they want and makes them more comfortable accepting treatment that they want. So, normally, if they don't have it, they're not accepting it. But they're walking out your door saying, ‘I should've gotten it. But I was afraid of how much it’s going to cost,’ or, ‘It’s going to cost too much.’ It’s like, you're giving them the avenue to get the care they want.” (14:54—15:30)
• “It is this simple: by having a subscription and a membership, there are two things going on. One is, [patients] are paying you a subscription for that, so you're getting paid. If the patient doesn't show up, ‘I don't want this,’ you're still getting paid through the subscription. So, you have this backbone of subscription revenue coming through from Kleer patients. More importantly is what I talked about before — they're coming in for their hygiene visits. And when they're in for hygiene, they're accepting treatment. It is that simple. And that number over uninsured is typically two to three times more. They’ll accept two to three times more treatment than they would if they're uninsured.” (19:25—20:08)
• “It’s that whole thing about being comfortable, ‘I have coverage. I'm getting some type of discount. I'm more [trusting] of the practice. It’s transparent. I can see pricing.’ All that works to get the patient to come in and accept treatment.” (20:12—20:26)
• “There are a couple reasons why [patients go to the dentist]. One is health. They know their oral health is tied to overall health. And we've seen that over, and over, and over again. That's number one. But number two is, even though everybody pretty much knows that, the reason they do go — the ones that do go, that 50% — is because they have coverage. That is the key, is that if I have coverage, I'm much more comfortable going to the dentist. It’s that simple.” (21:29—21:59)
• “What we tell practices is, don't think of this as a transaction. Think of this as a relationship. We have practices who when a member first joins, or a patient first joins, they give them a little gift. It could be anything, but just share their appreciation. And then, if something happens, and let's say the patient is upset about something, or they felt like they got overcharged, just give them a credit. Make everything super easy for them so it’s convenient, simple, they never question that [they] would ever leave this practice. [They think,] ‘I'm committed to this practice. I'm bought into the subscription because of that. I'm getting treated fairly, and I can trust this practice.’” (24:57—25:31)
• “You want your uninsured patients to have coverage. That's number one. Look at the data. They're going to come in 50% more often. They're going to buy three times more treatment. Why have an uninsured patient? Now, one of the pushbacks we get every once in a while is, ‘Well, some of these patients will pay full fee. I don't want to put them on a membership plan.’ Don't think that way. That is a tiny percentage of your patient base. If you get your whole patient base buying two or three times more, that person who got a little bit of a discount that normally wouldn't get it, it’s going to wash out. You're not even going to be thinking about it.” (27:00—27:33)
• “Number one is, don't have uninsured patients. Have patients with coverage through a membership plan. Number two is, we see this over and over again, if you look at Kleer versus the insured patients, you're basically doing about the same amount of work. The patient’s coming in about the same amount of times. You're giving them about the same amount of procedures. It’s taking up the same amount of assets, the resources on your team, your space, your chair. And we see this over and over again, you spend about the same amount of time with an insured patient as you do with a Kleer patient, but you're going to get paid in collections twice as much for a Kleer patient than you would for an insured patient. So, do the same work but collect twice as much. So, that's another aspect of this, I think, that jumps out at people.” (27:33—28:18)
• “Most practices think they're collecting full fee from their fee-for-service patients, but they are not. And there's typically a couple things that are happening. A lot of times, they’ll give them some free cleanings, and exams, and things to get them in the door. And a lot of those patients are not coming back. But the other thing they do is they have discretionary discounts. They’ll throw 5%, or 10%, or 15% here or there. They stack up. They become embedded discounts. You're not collecting your full fee. And I can show you that with this practice. And it was really eye-opening to them what they were actually giving away to their fee-for-service patients, not really knowing what the total giveaway was.” (29:36—30:12)
• “It’s not just about production. That, really, at the end of the day, does not matter. The question is, how much did you actually collect? How much actually went into your bank? And what's really interesting is when you look at that across the different coverage plans that a practice is involved with, you start to see very different results. And I'm not here to bash PPOs. That's not our goal. What our goal is, is to show everybody data so that you understand what you're getting yourself involved with and what you can expect moving forward from different types of plans. And so, that's what this is trying to do. And what we’re trying to get to is, someone might be behaving well for your practice, and then for no reason, they move away. But some might be really damaging your practice. And you need to understand that and do something about it.” (31:39—32:26)
• “Uninsured patients; great production. They're doing a good job on the production side. But they're just not collecting the money from these patients. And we were asking, ‘Why is that?’ Typically, uninsured will have a higher percent collected. But we asked them what's going on. They do the classic free exam, free cleaning, free X-rays to get the patient in the door. And what happens to those patients? They don't come back. So, you're giving away a lot of treatment for free. So, that's going to impact your total percentage discount for your uninsured. The second thing [dentists] do is what I talked about before, discretionary discounts. So, they give their team members up to 20% discretionary discounts. And so, what do team members do? They give it away every day, all day. And so, those two things are killing them. We’re like, ‘You should probably change that behavior. Let's try to stop that.’” (33:37—34:24)
• “Investors, on average, will pay five times more for a business that has recurring revenue versus one that does not. There are two reasons, and they're related. One is, you have guaranteed revenue. So, just think about a business where I can guarantee you, ‘Next year, we’ll have this much revenue.’ Yeah, I'm going to put value on that. And what does that mean? It means less risk. Less risk means higher value. Right? And so, these businesses, once you start to build up to subscription, if you go to sell your practice, you're going to get a premium on that recurring revenue.” (41:06—41:38)

Snippets:

• 0:00 Introduction.
• 2:26 Dave’s background.
• 4:05 Dave’s core purpose.
• 6:12 Why understanding and optimizing your coverage options is important.
• 8:31 Data on patient behavior under Kleer’s membership plan.
• 11:20 The annual subscription revenue and the treatment revenue.
• 13:32 Give patients access to the care they want.
• 15:31 Kleer patients versus uninsured and insured patients.
• 19:12 Why membership and subscription patients generate twice the production.
• 21:10 Why people go to the dentist.
• 21:59 The psychology of utilizing memberships.
• 26:28 Advice for dentists.
• 28:19 Most practices are not collecting their full fee.
• 30:25 It’s not just about production.
• 32:26 Curb your discretionary discounts.
• 34:25 Drop PPOs in steps and provide support to patients.
• 37:30 The rise of uninsured patients during The Great Resignation.
• 38:52 Present options for patients.
• 40:12 Benefits of recurring revenue when selling.
• 42:21 Kleer discount for ACT members.

Reach Out to Dave:

Dave’s email: [email protected] 

Kleer’s website: https://www.kleer.com/

Kleer’s Facebook: https://www.facebook.com/KleerLLC/

Kleer’s social media: @kleerllc

Resources:

The Membership Economy by Robbie Kellman Baxter: https://robbiekellmanbaxter.com/the-membership-economy/

Dave Monahan Bio

Dave Monahan is the CEO of Kleer, an advanced, cloud-based platform that enables dentists to easily design and manage their own Membership Plan and offer it directly to their patients. Kleer is turn-key and free to implement. Kleer’s mission is simple: partner with dentists to increase the value of their practices by making dental care accessible and affordable to everyone.