The Math Behind Profitable Membership with Dr. Matthew Gillespie
February 19, 2020
One of the most common questions that we get from people considering adding membership plans to their practice is how they can do it without losing profits on each patient. In today’s interview, Dr. Gillespie shows how in his practice, each membership patient has been more profitable than each FFS patient or PPO patient.
“We recently did some calculations in my practice where we compared production per active patient in 3 categories. 2015 PPO patients; 2019 In-Office Dental Plan Patients(doctor owned); 2019 FFS patients. I used 2015 because that is the most recent year that I was in network for the full year and my practice was 70/30 PPO to FFS. This year we are 100% out of network no assignment of benefits, but we do offer an in-house dental plan. Patients on our in-house plan made up 30% of our patient volume but near 50% of our revenue; while our FFS patients were 70% of our volume and about 50% of our revenue.
I calculated total revenue per patient group and divided by the number of active patients in each group who received treatment in the practice in that calendar year. For example, if your office produced $100,000 in revenue from 1000 patients your value would be $100 / patient.
I then compared everything to the 2015 value which I set at 1. I found that 1 FFS patient is equivalent to 1.75 PPO patients and 1 dental plan patient is equivalent to 2.5 PPO patients in terms of revenue production. We also found that dental plan patients spend about 30% more than the FFS patients. Dental plan patients were more profitable for my office than FFS patients.
In my mind this questions the concept that a strictly FFS practice model is the most profitable model a dental practice can take.”