Why Going Out of Network Without a Real Plan Will Shrink Your Practice

I talk to dental practices all day long about membership plans. And I'll be straight with you the same way I was straight with Adrian Lefler when I sat down with him on the Byte Sized Podcast: if somebody tells you a membership plan is going to solve all your problems, go out of network, drop all your insurances, and everything is going to be great, that's a partial truth. That's not true. Adrian asked me the hard questions and I gave him the real answers, so let me give them to you too.

You Need All Three Pieces. Not Two. All Three.

I get calls from practice owners who dropped their insurance plans and their new patient numbers tanked. They did one thing right and skipped the other two. Here is what I told Adrian when he asked me about the single biggest mistake practices make going out of network:

"They don't have a good plan of what insurances to drop. They don't have a good plan of an alternative product. They need a membership plan, an alternative product for these patients to convert on. And the third thing is they don't have their external marketing plan figured out."

That's it right there. Three things. And you've got to have all three lined up or you're going to shrink. I don't mean you might shrink. You're going to shrink. You are not converting all of those insurance patients to your dental membership plan. There is no way. So if you're not bringing in new patients from the outside, you need to be okay with a smaller practice, because that is exactly what is coming.

This Is Why Recurring Revenue Hits Different

Adrian asked me why recurring revenue feels so different from everything else a practice has ever done. Good question. Think about it this way: dental insurance companies get revenue no matter what happens. The patient comes in or doesn't, they still collect. That's what you're building with a membership plan. Here's exactly how I said it on the show:

"You're getting revenue regardless of whether you see the patient or not. If you think of dental insurance companies, they get revenue no matter what. So you're going to get that revenue coming in during COVID. You're shut down. Guess what's coming in?"

That subscription revenue keeps arriving. It stabilizes cash flow, reduces your dependence on daily chair production, and gives you a cushion that fee-for-service practices just don't have. That alone should make you want to get moving on this today, not next quarter.

Your Books Are Probably a Mess and You Don't Know It

This is the part that catches people off guard. Most practices are recording membership revenue in a way that is wrecking their numbers, and nobody is talking about it. Revenue comes in, say $35 a month per patient, but there is no offsetting service against it. So you've got this credit sitting on your books. Then the patient comes in for their exam, cleaning, and X-rays, and those are "free" as part of the plan. So what do you do to balance the ledger? Most offices write those off as bad debt. Like the insurance company never paid. That's how it hits your practice management software.

Now your production and collection don't match. Your associate is getting credited zero on membership patients. Your hygienist is not hitting her collection bonus because three of her patients today were on the plan. And if someone is looking to buy your practice and you've got 300 membership patients with all that pre-collected revenue on the books, they're buying a liability. Fix the accounting or the whole model works against you.

Stop Waiting Until Next Quarter

If a dentist tells me they're going to drop insurance and launch a membership plan next quarter, first thing I'm going to do is give them a high five for getting out of network. Second thing I'm going to ask is why on earth are you waiting on the membership plan? Get that going right now. And while you're at it, what is your dental marketing strategy for external new patients? Because you need that locked in before you pull the trigger on dropping insurance, not after. All three prongs have to be ready to go at the same time.

The Bottom Line

I'm not anti-insurance. I'm pro making money, and that's what you've got to look at. The practices that win this transition are the ones who plan it right, build a real membership product, and invest in marketing for dentists to keep new patients flowing in the door. Do all three and you've got something. Skip one and you're going to feel it.

Go listen to the full conversation on the Byte Sized Podcast and if you want to dig into your specific situation, come find me at Dental Menu.

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