Swimming with the Sharks: An Introduction to In-House Discount Plans

Approximately 11 PPO plans are sold for each indemnity (fee-for-service) plan sold, putting significant pressure on dentists to join PPOs. Often doctors join the PPO network without determining whether the practice can make it work. Because of overhead and large contractual write-offs, it may actually lose money on some PPO patients. What can a doctor do to “swim with the sharks” and not be devoured?

Consider reaching out to the relatively untapped uninsured market. Statistics show that 50% of adults do not have dental coverage, and yet, they still need high-quality dental care. One way to provide them with this service is by offering them an alternative that helps them manage their dental costs while receiving the treatment they desire–an in-house discount plan/membership plan.

An in-house discount plan offers several advantages to patients. There are no deductibles, no waiting periods, and no health qualifications or hassles associated with pre-existing conditions. There are also no annual maximums or exclusions and no age limits or complicated administrative forms. There are no exclusions at all… including core buildups, laser procedures, Arestin™, cosmetic procedures, implants, or replacement of any prosthesis. Best of all, there are no pre-determinations necessary, and there are no denials. Thus, the doctor and patient are free to openly discuss the treatment needs without third party intervention. The patient receives any and all treatment at the predetermined flat rate or discount and optimum preventive and emergency care without limitations. The patient can accept the treatment they need instead of what insurance covers.

The second key advantage of an in-house discount plan is it encourages a tighter recall schedule resulting in improved cash flow. When patients are more conscientious and faithful in their recall scheduling, those hygiene appointments will be shorter and the hygienist is more productive. Discount plans generate greater patient loyalty since patients only have access to their benefits through the practice offering the plan. Patients will be more likely to refer their non-insured family and friends because the practice provides something that can’t be found elsewhere. The in-house discount plan can be structured so that the discounts are much less than the contractual write-offs associated with PPO participation, often a 35% reduction in the fee. By providing a reduced payment plan and tapping into the huge non-insured patient market, new patients will come, old patients will be retained, and more dentistry will be accepted.

"An in-house discount plan offers several advantages to patients. There are no deductibles, no waiting periods, and no health qualifications or hassles associated with pre-existing conditions."

One type of in-house discount plan might be termed the Prepaid Preventive Plan. This plan requires a flat annual fee which entitles the patient to two preventive visits per year and 15-20% discounts on subsequent treatment. The status of the periodontal condition would be assessed at the first appointment. If the patient is diagnosed with an existing periodontal condition in need of treatment or maintenance, the membership is upgraded from a “preventive” membership to a “perio” membership to cover additional costs of scaling and root planning and subsequent periodontal maintenance visits. The cost of any additional adjunctive periodontal treatment like Arestin would be provided at an additional charge to the patient at a predetermined discounted rate. The membership amount is determined by the practice to cover most/all preventive charges that are incurred by the new or existing patient (including necessary X-rays). An alternative plan could charge a monthly fee to a credit card to cover the two checkups per year and then a 15%–20% discount for additional work.

Another in-house discount plan is a straight discount plan that provides across-the-board discounts requiring no prepayment. The patient would pay a nominal membership fee (like Sam’s or Costco) and would receive a discount on all treatment provided during the course of the membership year. Cards are issued to the paid member and could be used for any service. All household members would be covered by a single membership fee.

If you have challenges keeping the chairs filled and getting patients to accept and schedule treatment, offering a discount plan may provide a solution to those challenges. For help, contact your Henry Schein Representative.

This article was originally published in Sidekick Magazine.