The Group Dentistry Now Show: The Voice Of The DSO Industry – Episode 161

Hear it here First: Kleer and Membersy Merge to Create a Stronger Future for Patients and Providers

Kleer and Membersy are joining forces to provide a dental membership plan solution at a scale that will change the dental market payer model forever. With over 20,000 dentists, from solo practices to the largest DSOs in the country, and millions of patients across all 50 states, Kleer and Membersy are improving patient access to care and practice performance at a scale that makes subscription dentistry a true alternative to the antiquated and unsustainable PPO model.

Hear from Dave Monahan, CEO of Kleer and Membersy as he discusses the merger and what is next for subscription dentistry.

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Full Transcript:

Bill Neumann: And I’d like to welcome everyone to the Quick Dentistry Now show. I’m Bill Neumann. And as always, we appreciate you listening in. This is an audio only podcast. We wanted to make sure we got this news out quickly. So it is a breaking news podcast, and we’re happy to be able to break this news. Really, big news in the dental industry, and it’s gonna affect both solo practitioners and merging group practices and DSOs in a really positive way. So I’m happy to bring on the podcast for what I believe is the third time, the CEO of Clear, Dave Monahan. Dave, thanks for being back on here, and I’m really excited to have this conversation. some really interesting things going on in your world, and it’s going to impact the DSOs, emerging groups, and dental practices in a real positive way.

Dave Monahan: Yeah, absolutely. Yeah, thanks, Bill, for having me on. I really appreciate it. Yeah, so the big announcement, just sort of cutting to the chase, is we are bringing Clear and Membersy together. And basically what we’re doing is we’re joining forces. We’re going to merge two companies together. And it’s basically, we’re going to be by far the largest, most capable dental membership plan solution in the marketplace. And just for a little bit of backdrop in case, I know your audience probably knows Member Z, probably maybe even better than Claire, but just to give a quick overview, Member Z is obviously a dental membership plan solution. They focused on the DSO space and the emerging group space. That’s been their sort of focus area from a market perspective and segment perspective. And they have some of the largest DSOs on their platform. Clear sort of came into the market from a different angle. We came in on the solo side up through the emergent group side. Basically, when we bring together, we have full coverage from single office, independent locations all the way up to the Heartlands and the Aspens of the world. What’s great about that is it provides us a lot of leverage and ability to invest in the marketplace and really drive membership plan and subscription dentistry to a whole new level. So we feel really good about it. And just at a high level, what we look like, we’re going to be over 100 employees. We’re going to have about 20,000 dentists on the platform. and we’ll have millions of patients across all 50 states. So we really now have some size and capability from an investment perspective to really move the market forward. So we’re super excited about it.

Bill Neumann: Well, congratulations. Yeah, that is big news. And so you said over 100 employees and you said about 20,000 dentists. Any idea how many locations that is? I know I might be putting you on the spot here, but

Dave Monahan: Yeah, so if I go through my memory on the data side, it’s probably about 12,000, 13,000 locations.

Bill Neumann: Okay, wow. All right. Yeah. I think people in our audience know both Clear and Member-C. To your point, I think Member-C might be working with some of the larger DSO platforms. And I know Clear does a lot of work with you know, solos, and then Dr., you know, kind of that private group practice, Dr. Owned and Led, and then even some of the emerging groups. So we’ve had not only Yuan from Clear, but, you know, a lot of other people on webinars from Clear. And I know we had member C and, and, and Aspen Dental on a recent podcast as well. So yeah, you really cover the gamut now and have a solution for whatever size you are, whatever type of practice you have. So maybe we should, what led to this decision? Because certainly it’s not an easy thing to bring two organizations together. It seems like you both had different client bases for the most part. You probably met in the middle somewhere, but what led to this decision?

Dave Monahan: Yeah, it’s a good question. So yeah, we have met in the middle. And actually part of the reason I think we came together is because we did meet in the middle and we started understanding and respecting each other. So there was one aspect of this, which is we just had respect for each other. They were a leader in their segment. We were a leader in our segment. As we competed, we realized we were the two sort of, you know, premier solutions in the marketplace. So that was one thing was respecting the same goal. So both of us from a mission perspective, we’re focused on really two things, improving patient access to care, and then also helping practices improve their performance. And so we had a lot of respect for each other. The other part of it was that the market is ready. So membership plans are being adopted at an increasing rate and what we’re seeing in the marketplace, like when I first started Clare six years ago, we were doing a lot of education of explaining membership plans and why somebody might want a membership plan in their practice. And now when we start the discussions with a partner The practices understand that there’s two value propositions at a high level. One is it engages your underserved patients. They come in more often. They accept more treatment, obviously, to drive more revenue. And the other part is everybody’s having more and more pain, as you know, and everybody in the market knows, of managing their payers and their PPOs. And so it gives them an alternative model for offering coverage within their practice that works for the practice and for the patient. So it’s just this market readiness is there. The other part was that we actually started discussions a little over two years ago. Back then, we weren’t small, and the other one was small, but we weren’t large enough at that point to really bring the capital into it that we felt we needed to really drive this market forward and truly invest in this and truly make subscription dentistry a true alternative to the PPO model. So we were able, as you know, bringing the, I mentioned the size, 100 employees, 20,000 dentists, millions of patients, that attracted a lot of capital options for us and gave us options on how we capitalize the two companies come together. and having a significant amount of capital to invest moving forward. And so all those things came together. And then lastly, it really was about fulfilling our ultimate mission. So when I started Clare, I know when Membersy got started, it wasn’t just sort of a tactical, you know, we want to put a solution to marketplace, you know, whatever, you know, make some revenue, make some profit, stuff like that. The ultimate goal of this was always to scale it to a point where it is the most efficient, most modern way patients and practices come together for care. And that’s where we’re headed as a combined entity. So it was a way when we looked at each other and looked at the sort of size and scope and reach of the two entities that we could ultimately fulfill that goal of ours when we first started Clear and Members.

Bill Neumann: Excellent. Excellent. So Existing customers, DSOs, emerging groups, what can they expect from this combined clear and membership organization? And then maybe what would potential customers, people that maybe have in-house plans or don’t have any plan at all, what can they expect? Much larger organization for sure, probably more customer support, but tell us a little bit about what that looks like from the customer perspective, both existing and potential.

Dave Monahan: Yeah. So from an existing customer perspective, in the short term, you’re not going to see much of any change. So we’re going to continue to support and provide customer success capabilities and support capabilities to our partners and customers as we have. And that’s not going to change. In the background, there’s going to be a few things happening. One is Obviously, our teams are going to be quite a bit larger, we’re going to have quite a bit more resource, we’re actually doubling like our customer success team, we’re doubling our support team, we’re doubling our product team. So that investment, you’re going to start, you know, see coming through in different ways. So for example, we’re going to bring the two platforms together and create sort of the ultimate membership plan platform and innovate on top of it. So We have a full roadmap of innovation, like one area we’re innovating around is just PMS integration. And we can do things like automate payment posting into the practice management system. We can automate marketing to patients that are a good fit for a membership plan, where the practice doesn’t need to do anything. We do that automatically. we can do things like show a practice the impact that the membership plan is having on their patients. Like, are your membership plan patients coming in more often and accepting more care? Are they driving more revenue for the practice relative to your insured patients, relative to your uninsured patients? And so we have this deeper level of sort of product capabilities and innovation. And another aspect that we’re gonna be bringing into the product is actually built in right now, we just haven’t exposed it yet, is the ability actually to analyze your PPOs. and understand are your PPOs working for you or aren’t working for you. We’re neutral in that conversation. We basically just want to show you if they are or they aren’t. It enables you to manage your payers. At a high level, you get more customer success, more support, and that’s just capabilities and resource, but more product innovation. Then on the other side, we can actually, in other areas of the solution, we can now do things we couldn’t do before. For example, Obviously, data security is a big deal in dental and in health care in general. We now have a data security team who’s basically managing security 24-7, detecting and responding to security threats. That’s a big deal. Like I said, we now have the resources and scale to do that. Our compliance efforts, state by state and federal, we’re bringing two companies together who have compliance across all the states and federal. We can even boost that a little bit more by bringing the two together because we both took a little bit of a different tact on that, but we’ll be fully licensed across the states. And also we just have capabilities built into the project that manages compliance. We now have financial strength. So we have a private equity firm who’s come in, they’re called Charles Bank. large private equity firm up in Boston who’s providing the capital for us to be super solid financially and again be able to invest over the long term. And then the other thing we’re going to start doing is taking the market leadership role. So we have a lot of data coming into our platform for all the practices that are on it. And we can see things and we can help at a market level. you know, move the payer model in the right direction. And so we’re excited, like at the end of the day, it’s just, you know, a lot more resource, a lot more ability to invest, a lot more ability to innovate and provide customer success and support. And just, you know, make everything better for existing customers, any other customer that is going to be coming on the platform over time.

Bill Neumann: So we’ve got a challenging environment economically for some, and I think it affects certain patients. It may affect certain practices and the DSOs that have those practices that roll up to them. So let’s talk a little bit about how CLEAR and member C really can help DSOs and group practices you know, reach their grow their goals. There’s a lot of there’s a lot of focus on organic same store growth right now. So let’s talk a little bit about, you know, that and how you can help.

Dave Monahan: Yeah, and that’s sort of the secret sauce of membership plans. I know a lot of people go into membership plans thinking this is the way I’m going to attract a lot of new patients. And it can do that. There’s no issue with that. But that requires marketing. Right. And that requires a cost associated and aligned to the membership plan. And that’s fine. You can do that. You just want to make sure you’re doing it in the right way, in a smart way. But the bigger opportunity, the opportunity that’s by far the lowest hanging fruit is, as you were saying, organic growth or same-store growth. And I can just give you, like, again, we have data coming in from all over the place. And we get to see what’s happening sort of practice by practice. And then we can average it across all of our practices. And just to give some numbers, for every office, there’s about 400 active uninsured patients that walk in the door every year. So let me just say that again, 400 active uninsured patients. So these are just uninsured patients who come into practice at some point during the year. And these patients, if you look at them, again, on average, they’ll come in on average about every two years. That’s their average frequency of walking into the practice. And so you churn through this group, but most of them are coming in every six months or every year. That’s a huge opportunity. So what happens when they come on to a membership plan is they start acting like an insured patient. So they’re coming in almost two times a year. They accept twice the amount of care as uninsured patients. They make their appointment. their cancellation rates are 50% below what an uninsured patient is. And it’s because they’ve committed, they’re paying a subscription. And so you can double your, you know, pretty much across the board, visits, treatment acceptance, you know, production for those active uninsured patients by moving them from uninsured over to your membership line. So that’s opportunity number one, that’s organic growth, right? Same sort of growth. The next group of patients that are really important, and most practices don’t realize the scope of this, but on average is about 2000 dormant patients in your practice management system. So they came into your office at some point, and they haven’t come back for at least 18 months. And the average is 2000 of those patients per office. And one thing we do on the clearer side is we actually market to those patients through the platform. So we integrate your practice management system, we bring that data back, and we send nice marketing material to them about your membership plan. Many of these patients don’t come back because they’re worried about cost. They don’t have coverage. And so marketing your membership plan to them is a big deal. If you can just move, you know, 10% of them, right, a year, you got 200 new patients by doing that per office, right? And that is incredibly low cost to do marketing that you already have the information, the data, you know, actually, we can get more sophisticated, look at what treatment, right? They haven’t completed, and so on and so forth. So there’s another big opportunity there. Again, organic growth, same storage growth, same store growth. And then one other one that gets lost sometimes is retaining your new patients. And so about, the numbers vary a little bit, but about 60 or 70% of any new patient that walks into your office doesn’t come back. That’s a big deal, given how much you spent to get them in that door. And on average, it’s about 25 or 30 new patients per office per month. And so if you start doing the math, there’s a significant opportunity. If you could just retain those new patients, you would drive growth. And it can be significant, right, across a DSO and an emerging group practice. If, if you don’t get them as new patients onto a subscription or membership plan, like I said about 30 or 40% of them will come back. If you get them onto a subscription plan and membership plan, 100% will come back. And so you’ll have a significant impact on those new patients coming back buying more treatment and driving growth. those three areas are by far the highest value you’ll get out of a membership plan. And then you can extend that into the future. Once you get those things down and you feel good about those, then you can start offering and marketing it outside your practice to drive new patients into your office.

Bill Neumann: Do you have a sense of how many practices out there or how many groups have membership plans? I know there’s in-house versus a clear or a member C platform, but any sense of the percentage?

Dave Monahan: Yeah, so roughly 30 or 40% of offices have some type of membership plan, and then roughly half of them have a membership plan from a third party. By the way, when we talk to practices that have tried their own membership plan, they turn into our best customers because they typically see the value of it once they get it started, but they can’t maintain it and administration becomes a real hassle and a cost for the team to manage. Also, it’s not as effective as it could be because you can’t do things like automatically renew a patient or you know, like we can do benefit status tracking where we can see what care they’ve already used and what’s included in the plan and what’s remaining. You know, if somebody’s trying to do that manually, it’s very difficult. Just understanding the results you’re getting, processing payments and all that good stuff. So there’s a big advantage to automating all that and putting it on a platform. But to answer your question, it’s about 30 or 40 percent with about half of them using a third party tool versus doing it on their own.

Bill Neumann: And I think one of the other benefits, especially to people in our audience that have multiple locations, is the ability to look across all of your locations and look at the performance. You can adjust pricing or membership plans in different markets, so it doesn’t have to be the same across all locations, if I understand it correctly.

Dave Monahan: Yeah, absolutely. So it’s huge, Bill. So we see like we go in and somebody’s tried to do something manually, we’ll see it’s a one is like a piece of paper that it’s one pricing across all the offices. And I with our platform, you can do multiple things, you can customize the actual care plans you’re offering by office. So if you have an office, that’s let’s say, You know, in a lower income city environment versus a higher income suburban environment, you can make the membership plans totally different. They can be different types of care plans, they can be different, they can be priced differently, subscription can be different, the fee schedule can be different in each location. And what we always say is, if you, if you price it too high your price is too low you’re leaving money on the table so you really need to customize it by office that’s by far the best way to get a result from a membership plan. The other thing is you’re describing, like, even though each one of those offices can be different. in our portal, where you can give access, let’s say, to a regional manager who will see just the offices that they are managing from a regional perspective. And they can see their full summary and the results they’re getting. And then you have a roll-up all the way at the corporate level that rolls up all of the locations. And it doesn’t matter if they’re all custom and different. We normalize all that so that each person gets the view that makes sense for them.

Bill Neumann: Yeah, that makes a ton of sense. So let’s look a little bit into the future. You know, you talked a little bit about, you talked about the reasons why you brought Clear and MemberSee together. What does the future look like of this combined organization? I know you’ve got some pretty aggressive plans here and love to kind of hear about that. What can the audience and the dental industry expect to see from Clear and MemberSee in the near future?

Dave Monahan: So we really are focused on three things. One is an investment in patient engagement. So the best way to get patients, I mentioned some of the stats, but the best way to get your patients into your office in a consistent way that, you know, and also, you know, being loyal and, you know, like not canceling appointments and things like that and committed to care is to have them on a subscription. It has a major impact. And what we’re seeing is practices understand that they have a little bit of sometimes difficulty making sure their team is positioning it properly, selling it properly, offering patients the membership plan and things like that. And by the way, just to flip on the other side, patients want more care. And so all the research shows that we’ve done research ourselves, but it correlates with all the research we’ve seen out there done by third parties. They want more care, they’re just worried about cost. So they’re receptive to the membership plan in a big way, because it gives them access to affordable care. So you’ve got patients who want the care, you’ve got your team who has the ability to give it to them. Sometimes that just doesn’t work. The team’s uncomfortable, quote unquote, selling to the patient, or the patient might not understand it, things like that. What we’re investing in is around patient engagement. And I mentioned some of the things that we’re investing in, like the ability to market to your patients, understand the profiles of your patients, market the membership plan to the right profiles, like dormant patients or active uninsured patients with, let’s say, outstanding treatment and things like that. We actually also, by the way, have marketed to insured patients, and we’ve actually gotten insured patients buying membership plans because, as everybody knows, you got poor insurance plans out there, and so you can convert some of them over. But anyway, so that engagement piece from a marketing perspective is really important. We’re also building out new capabilities from an engagement perspective, like a loyalty program, that it’s great that a patient’s on the membership plan, and we have about 70% renewals across our platforms. But we can increase that to 80 or 85% if we’re able to give the patient some incentive for staying on the platform, renewing their subscription and things like that. So we’re working on patient loyalty in addition to that. And I’m not going to give out too much there, but we have partnerships that we’re building to engage with patients and give them rewards for being on the platform. So, patient engagement is the first area. The second area, I mentioned this a little bit in passing, but we’re really investing in payer management. So, we obviously, you know, membership plan is part of your payer strategy. You just happen to be the payer on the back end, right, to yourself. But, you know, the ability to understand how PPOs are behaving in your locations. On average, a office has about 10 or 11 dental insurance programs that they’re in network with. That’s on average. I know some are less, some are more, but that’s the average. And so trying to understand how those, let’s say 10, are behaving within your office is very difficult. I can’t tell you, the amount of data that goes behind trying to understand, is this PPO working for me or not working for me? And so we’ve actually created algorithms in our platform that will break each PPO down. and show you whether it is performing well or not. And we’re doing that currently on the platform sort of on the side. We’re letting offices get access to that and we’re learning how the data sort of behaves and just making sure it’s consistent and high quality. But what we’re seeing is some eye-opening moments for offices where they didn’t realize one number of PPOs that they were dealing with and the performance and the comparative performance. So you might have one PPO where it’s driving, let’s say, $500,000 in production, and you’re collecting 50% of your UCR. You might have another one where it’s $250,000 in production, but you’re getting 80% of your UCR. It can vary drastically. And so we help practices sort through that, understand that, and then take decisions off that. So we’re expanding our solution to be beyond membership plans and be about your payer strategy across your offices. And then lastly, this is the sort of big, you know, bold goal, is now that we’re getting to the size we are, we truly want to challenge the PPO model. We think there’s no reason you can’t have a more efficient, right, model that’s easier to manage, that’s lower cost, right, that’s better for the patients, better for the practice. Like, what’s keeping the industry from moving? from a model that only works for dental insurance companies. And so that’s the longer term one, but I’m absolutely committed to it. And we are going to, you know, as we get more and more momentum here is to truly challenge that model.

Bill Neumann: Yeah, I’m sure a lot of dentists and DSOs are thankful for anything that challenges the PPO model. You look at some of the stats, and you probably know them better than I do, but they’re clinicians, dental groups are using multiple, working with multiple PPOs. And I forget what the stat was from the ADA, from HPI, but I know that there was a high percentage of practices that were looking to drop one or more insurances in the next year. So there is definitely a need for, and it’s reimbursement really is the issue.

Dave Monahan: Absolutely. So Bill, here’s the numbers. Yeah. So that survey you’re talking about, it’s 80% of offices say they’re looking at dropping a PPO. And based on my just talking to offices every day, I would say it’s 100%. I think 80% is an underestimation. And maybe it’s the 20% who are already off the PPO. Maybe that’s probably the kicker. And then on average, again, we look at this data, on average, if you look across the PPOs across the country, a practice will collect 60% of their office fees when they’re on average across the PPOs. 60%. So they’re giving a 40% discount. uh when a ppo when you do a a membership plan or if you’re just and this is a another thing it’s hard sometimes for uh office to get their mind around or if you’re just your insured patients are coming uninsured patients are coming in the office like one thing people will you know say well i’m not going to give a discount to my uninsured patients because they’re paying full price well in actuality On average, across all the offices we see, uninsured patients get a 14% discount off of office fees. And people would say, well, why is that? Well, it’s because you’ll give day treatment discount, right? Or they won’t pay their bill, or they’ll pay partial bills. So if you add all that up, you’re getting about 86% of your office fees. If you move them to a membership plan, you get 85%. It’s 1% difference. But for the trade-off, so you’re trading off 1% of your pricing, what you’re getting is somebody coming in twice as often, buying twice the amount of care and driving twice the amount of production. It’s a simple trade off. And you just got to get over the idea that your current uninsured patients aren’t getting discounts because they are. It’s just not. It’s a hidden discount. It’s hidden in the data. You just don’t see it.

Bill Neumann: Well, this is exciting news. We are going to have, in the show notes, we’ll drop, and actually on the Group Dentistry Now website, we will have the official press release. Certainly, this podcast was a deeper dive than the press release, but you can look through that. So right now, if I’m a customer that’s working with Clear, I still right now reach out to my contacts at Clear. If I have any issues, go to the clear.com website and members see this on that side of things. Everything’s going to operate the same way for the foreseeable future.

Dave Monahan: Yeah, for the foreseeable future, continue to do what you’re doing. And all you’re going to see is we created a little brand called ClearMembersy. So on our website, we’ll show it. On their website, they’ll show it. But our websites will still look exactly the same. You’ll still be getting supported by the same people and all that stuff. Over time, we’ll be bringing the teams together. We’ll be bringing the brands together. But for now, it’s exactly the same. You won’t see any change.

Bill Neumann: Excellent. All right. Well, that’s great. Any final thoughts here? And we appreciate you sharing this with our audience first, Dave. So, you know, we’ve always been big fans of yours. And it’s not just because we’re both in Philadelphia, but it’s, we’re really proud of what, you know, you’ve done with CLEAR and what the team at Member-C’s built as well. So it really does make quite a bit of sense. And You know, I think if you can really create a solution to go up against the PPO model and challenge that, that’s great for the entire industry.

Dave Monahan: Yeah. And my only final thought is just thanking everybody for getting us to this point. Both the members of the team and my team at Clare are just thankful that we have such good partners and customers to help us with this. And we think part of that was just because, yeah, because we’re allies, right, in this. as a combined, you know, clear members and combined with our partners and our customers, we have the power to change things. And it doesn’t never seem like that. I’ve been through multiple tech and, you know, sort of movements and there’s it feels like you’re pushing against the wall forever. And then suddenly this wall starts to break. And that’s our goal is to break that wall down. And Yeah, for me, competition is important in any marketplace. And this market, from a payer perspective, has not had competition. And now it’s time to bring that competition to the marketplace. But I’m just very thankful for all the support we’ve received and the customers that we’ve had and the partners we’ve had over the last six years. And now moving forward, I feel like we can execute even better with the Clear members together and then with all of our partners and customers together.

Bill Neumann: So we’ll see at the upcoming DSO shows that both Clear and Member-C will be there. And I think we’re gonna drop this podcast in early May so that we’ll have the ADSO meeting coming up and we’ll have Dykema and I’m sure there’s a million other shows after that, but you’ll both be there as well. But yeah, really exciting news. We’re happy to break the news. And yeah, I think the industry is really looking forward to that competition on the payer side of things. And if you can disrupt that, it’s going to be really beneficial. So thanks, Steve Monahan. CEO of Clear, now the CEO of Clear and Membersee. We’ll have the press release in the show notes that everybody can check out. And we appreciate everybody listening in today. Until next time, I’m Bill Neumann.