As you consider creating a dental membership plan for your office, many concerns and questions will pop up. Membership plans are so impactful because they are a relatively new (and improved) way of managing revenue, marketing, and patient relationships within your practice. If you have a larger practice with associate dentists on the payroll, one big question on your mind remains. How do you pay them from membership plan revenue? Let’s explore a few possible ways to approach this.
1. Align dental membership plan fees with the usual production
When you have a membership plan, one confusing factor in determining how to pay your associate dentist is the lack of production. When your practice collects revenue via an annual or monthly plan, you continue to perform procedures as needed and scheduled for your patients. But your billing department may not always receive the exact amount of revenue for that treatment on the day, week, or month that your office actually performs the procedure. On paper, revenue and production are no longer as clearly and directly connected from a financial perspective.
One way to approach the solution of paying associate dentists: Even things out. Ensure that the cost of the services included in your membership plan offer equals (or exceeds) the annual pricing of the membership plan. This approach requires transparency with your patients and associate dentists while you adjust membership pricing for various goals of your practice.
Let's say you decide you want to attract new patients by offering a discounted price on your membership plan for a limited time. If payroll for your associate dentists directly correlates with the price of the plan, this decision would require communication. Tell your associate dentists about your plan and ensure they agree to the change in pay rate.
This is the most straightforward approach. But we recommend you consider your relationships with your associate dentists before moving forward with it. Will they understand your business goals and be flexible for the sake of growing the practice? That is a need-to-know factor.
2. Agree on a set reimbursement rate for your associate dentists
Another approach is to discuss a standard reimbursement rate with your associate dentists. This option would give you more freedom to adjust the pricing of your membership plan down the road without impacting your associate dentists’ payroll. But it also means that if you decide to decrease your plan pricing, you may have to compensate with your own revenue.
While that may not be ideal, we recommend you do the math. Calculate your pricing and payroll to ensure you set the dental membership plan fees with room for adjustments. You need to meet your associate dentists’ expectations for pay while giving yourself potential wiggle room, and ensuring you’re still making money. Such is business!
3. The hybrid approach
Let’s consider a hybrid approach that blends these two options.
Let’s say your membership plan includes two annual cleanings and exams, one annual set of x-rays, and one annual whitening treatment. You could fix the pay rate your associate dentists receive for the exams, but not for the other services. This offers flexibility for you to raise or lower prices based on those categories.
This approach necessitates clear communication with hygienists about how your practice will pay them. You'll also need to keep them updated about fluctuations in payment from your plans. You certainly want to ensure they are in the loop and comfortable with the payment they will receive. However, there may be less of a need to be as fully transparent as with your associate dentists.
Associate dentists are closer to partners in business than your hygienists are. It is a rare company in which every employee knows all of the inner workings of revenue and payroll. Your approach to discussions around how you organize your dental membership plan fees can be separate for associate dentists and for hygienists.
Essentially, you could take any one of three approaches to paying your associate dentists when you have a dental membership plan:
- Align membership fees with production.
- Establish a rate of pay that offers wiggle room.
- Provide adequate transparency to your associate dentists, but find flexibility in the hygienist services.
Remember, the key to deciding which approach will work best for you is to understand your goals for your practice from a business perspective. That will heavily inform your approach!
And if you feel like some consultation would help you make the right decision, we would love to help. Our founder is himself a dentist and group practice owner. He has seen up close the pros and cons to every way of paying your associate dentists. Reach out to us for his expert insights!