Eric Johnson is the founder and CEO of membersy, a digital health company democratizing access to quality, affordable dental care through subscription-based dentistry. While building his career in the dental care space, Eric founded membersy in 2015 with the mission of helping dental professionals take back the dental care narrative from big insurance companies through pricing transparency and a personalized membership experience for patients.
In 2015, Membersy's CEO sold his car and raised $20,000 from friends and family with the goal of creating a platform that disrupted "antiquated dental insurance". Just six years later, Membersy has received $66 million in venture funding and is on par to continue disrupting the dental care industry. The company's reward for disrupting the industry is clear: ample digital opportunities, but also risks that needs to be balanced if the company is to be a true success story. Have a listen
[00:00:00] INTRO: Welcome to The Power of Digital Policy, a show that helps digital marketers, online communications directors, and others throughout the organization balance out risks and opportunities created by using digital channels. Here's your host, Kristina Podnar.
[00:00:18] KRISTINA: Hello everybody. Welcome back to The Power of Digital Policy. I'm excited today to have with us, Eric, John. Eric is the founder and CEO of Membercy, which is a digital health company democratizing access to quality, affordable dental care through subscription-based dentistry. An interesting topic, a timely topic in one that everybody should be thinking top of mind because it's changing, not just the industry, but how each and one of us take in healthcare today. So, Eric, welcome!
[00:00:47] ERIC: Thank you, Kristina. I'm happy to be here and very excited to share our story, Membercy story and how we're disrupting ancillary healthcare.
[00:00:58] KRISTINA: Well, let's start there because the COVID 19 pandemic has been such an accelerator in terms of shifting consumer preferences. Most days, I think members that are listening today feel like they really can't understand, which way is up, which way is down because everything is shifting, what have you seen transpire in the healthcare space because of the pandemic, especially when it comes to kind of patient behavior, and what you can offer from a healthcare perspective?
[00:01:22] ERIC: Prior to the pandemic, dental has had significant issues with access and affordability, and proof of that is roughly 120 million Americans, I'm going to have dental insurance and pay cash when they visit the dentist. These are folks that are across the spectrum, right? Rich, poor black, white, and then inTexas, in New York and California. So it's totally agnostic to the region. And when COVID hit, that really accelerated those numbers. As a result of COVID, a lot of employer’s kind of looked at the benefits, and a lot of employees, were let go, particularly folks that are kind of gig workers, part-time workers in a retail space when they were let go, they lost their health benefits. Traditionally some health benefits included dental. Most of them include dental, but they're not really utilized within the overall benefits package for cost reasons. And the fact that dental insurance is traditionally not really insurance, right? You've got your thousand dollars maximum; you've got waiting periods. And you've got just a bunch of red tape around that. As a result, there have been more folks than ever in the market that aren't quoted unquote paying cash if, and when they go to the dentist, and we believe that our model is better than insurance cause it is democratizing access to care. It's not insurance, there's no risk standard model, right? Folks that utilize our program are really utilizing them to have a more connected and personal experience when they go to the dentist.
[00:02:52] KRISTINA: So, tell us a little bit about that. What does that look like? Really, when we're talking about a subscription-based model and democratization of that kind of care paradigm, what does that look like? What does that really mean at the end of the day?
[00:03:05] ERIC: About ten years ago, dentistry started to consolidate meaning prior to 2010-ish, dentistry was, was still kind of a cottage industry. And you'd have a dentist who worked in the back of a medical office. It wasn't really a consumer retail-minded organization out there. And dentistry started to consolidate, meaning dental service organizations are where they called DSL, started to acquire dental offices, and handle all non-clinical aspects of those practices. Today about 25% of all dentists with the DSO back in 2010, it was one to 2%, and projections are by 2025 that roughly 50% of all dentists will be affiliated with DSL. So, what we do is we go to the DSO or the DSRs approach us and they say, Hey, we have a problem with getting patients to come into the office. Or we have a problem with getting patients to say yes to their recommended treatment, or we have a problem with getting patients to continue to visit our office for their regular scheduled visits, typically once every six months for routine care. So, we come in and we'll analyze the data. And we'll see, okay, this DSO has these issues with pricing writing with case presentations and with patient loyalty and we'll help them create an infrastructure and a plan that is offered out of their office at the time of service to patients to accomplish increasing case acceptance services rather than patient loyalty. So, they essentially are becoming a member of that officer group of offices. And that program we create for the DSO is proprietary to tactic to that organization. So no longer, in our mantra, are insurance companies kind of creating the narrative and controlling the narrative on how that office can service patients, we're really allowing through our platform these offices to have a professionally administered and licensed dental plan.
[00:04:59] KRISTINA: Do you see consumers driving that mostly? I mean, it sounds like; basically, we do have entities that need the business, or they understand the opportunity to provide increased care to their patients. But our consumers, the ones that are mostly driving this, or what are the biggest drivers.
[00:05:18] ERIC: So these DSOs that see tons of patients and have heavy patient volume are the ones really driving it because when you walk into their practices, are you going to their websites? You're going to see all types of content and marketing materials that are talking about their membership program. If the program wasn't working and it, consumers were not enrolling in it, it obviously wouldn't be growing. So today, for example, we've got to work 4,000 locations across the country. And 41 states that consist of about a million members in total that are members. So members are really, our patients are really driving, I think, the next level of growth, of the movement. And initially, right when we rolled this out, we were the first people in the country to do it. And it was a joint in three of them kind of grassroots movement amongst organized dentistry. Now today, or what you call like a B2B to C model, meaning we enable our channel partners, which are dental practices to, to enroll patients. We're excited to launch in January of Membercy marketplace, which will be our first-ever direct to consumer initiative where we will be marketing directly to consumers. And there'll be able to compare and enroll in one of our 40 plus Membercy powered subscription programs and then go into the office, present their membership by the guard, and get the services at a discounted rate.
[00:06:40] KRISTINA: Eric, as you're speaking, I'm thinking about the different types of that's required here. And obviously, digital is one of the pillars of the democratization of dental care that you're describing. What are your thoughts or predictions in terms of the impact of this digital what kind of components are we talking about from a digital perspective? Is it going in the direction of AI and sort of using AI to help understand consumers and deliver ultimately the type of care they need or what components do we need to make the ecosystem?
[00:07:07] ERIC: Yeah. So, number one is transparency, so we believe through the digital ecosystem, we can enable dentists to take back kind of the narrative from insurance companies who traditionally never published fees and publish a transparent savings menu for our members. So, if you look at any of our plans, we publish the quote-unquote retail fees for the 40 most utilized services on that group. And then we have a member-only discounted fee for members of their program. So, we're really enabling through digital channels, consumers to know, hey, when I get a crown, it's going to cost this much, if I get a cleaning, it's going to cost this much, or if I get a root canal, it's going to cost this much. It's what we call retail feeds; it's different than traditional kind of insurance, UCR, reimbursement rates. Education of the member throughout the member lifecycle on what it means to be a member and how to properly achieve oral healthcare. And what that means to them as a consumer, how much money they want to save, et cetera. We are a digital-first company. All our websites, we build out for each of our plans. We have kind of a consumer-facing website as well.
[00:08:17] KRISTINA: I love that because one of the things that my dentist does is regularly text me and, by interfaces like texting, don't call me, text me. And I think it's always fascinating that they text me to make my appointments, which is super convenient. But when I go in, they seem to like to print out a lot of stuff. It's like always getting printouts of what I must do. And then I get a printout of my visit, and I get a print. Like there's a lot of paper, and I always try and reconcile this. I'm like, if you could be texting me to make my appointment, it's so convenient digital-first, but then you print stuff out. Is it hard for actual dentists themselves in the back offices to switch, to think digital?
[00:08:54] ERIC: Historically, yes. Because dentistry was a cottage industry, right? So, you might have a dentist with their wife, who was an office manager, and they might have one or two hygienists. And these are clinicians who're focused on practicing dentistry. They didn't go to dental school to learn about the tools and resources in the digital world to help them kind of run a more streamlined practice. So, the DSO is, are the ones who really enable at the kind of business level and enable their offices with the tools to be digital-first. So, we see that kind of the traditional solo practices, independent practices are very much, a little bit more old school and you'll see the DSO supportive practices have a more digital-first structure because, they have that support at the kind of corporate level to support them when they're practicing dentistry.
[00:09:40] KRISTINA: You have to have data; you have to have access to data by everybody. So, who owns the data? How does that get structured? And are you seeing shifts there or even deltas between the traditional kind of cottage dentists versus the consumer and what you are offering?
[00:10:28] ERIC: Yeah. So, there are two data sets here that we're talking about, one that's the subscription enrollee data. So, we own all that data because we're licensed by an entity, and we do the billing, right? So, we do all the recurring subscription billing for our programs. Our partners own the data on the services rendered components. So, meaning what are the members spending in the practice? What are the trends for members prepared to, a straight fee for service patients are PPO patients that might be under Delta dental or MetLife, we are launching first quarter of next year API where we're going to be extracting that procedural data real-time, and then aggregating it in our end and displaying it to for their use? Historically our partners have provided that data to us on a quarterly basis, a procedural manner. And we've always wanted to have more real-time access to the services, render data, but we've been held back by kind of the practice management systems in dentistry right there. They're not fully open source, like other healthcare sectors right down the street, traditionally are a little bit behind on innovation.
[00:11:27] KRISTINA: Do you run into issues or challenges with trying to train people on how to safeguard your data? I'm thinking about a situation. That I've seen across practices, right? It's like I have my dentist; my kid has two different dentists. Cause he goes to the orthodontists now to which is a joy, pure joy, I must say. But it's interesting because they're always in these kinds of open environments. It's a very lovely place because there's lots of white space. They're always open. I can see who the other patients are, but one of the things that always creeps me out because I'm a policy person. I get to see sometimes screens with patient data on them, or people are calling out to me like, oh yeah. You saw the dentist last time, four months ago or five months ago. And here's what we said, how's that crown doing? And I'm thinking to myself, wow, that's personal information that I don't necessarily. Want shouted out loud enough that other people sitting next to me or in the chair across the way from me can hear. I'm wondering about how that works with your systems because you are digital-first, right? So, it's like you have practices in place that are around privacy around security, but you can only control that really within your universe. Once you invite your partners in this B2B we lose a little bit of control over that privacy and security. Is that something that you educate for along the way, or do you assume that a lot of these dentists' offices already are up to speed on that and managing to HIPAA compliance and to privacy requirements?
[00:12:51] ERIC: So, most of our partners, we are taking that very seriously. About five years ago, I hired in-house counsel, who is prior to joining Membercy was healthcare focused attorney out of Dallas. So, we here at Membercy, I've implemented very strict HIPAA policies and procedures for the entire company. And that trickles all the way down to product. So, whenever we're building out anything on the product side, our digital side, we're always making sure that at the HIPPA compliance aspects of it are looked at. And with us, we are today from a, from a data perspective, like I said earlier, handling the subscription-related data. We rely on our partners to provide us the services, vendor component data; when we were all on our API, we believe that will enhance the ability for us to guide our partners in a more compliant HIPPA focused manner. But today, we're very limited on the services rendered data that we're collecting through our platform because the API is not launched yet. But that's a great question. It's, it's, it's one that obviously we get a lot from our partners, and in all our agreements, we have, know HIPAA addendums and enter into terms and policies, which our partners to make sure that the handoff of data from POS to them and vice versa, it is done in a, a HIPAA compliant manner.
[00:14:12] KRISTINA: Yeah, I just, I always wonder about that. I don't have concerns about you personally or a Membercy the data aspect. It seems like it's well in hand, but I always do hark back to the dental pediatrician or to my pediatrician and wonder a little bit about that.
[00:14:24] ERIC: Yeah, when we get the data to like was, it's a lot of times, from a non-members it's de-identified, right? So we want to make sure that we're only collecting what we need—identifying any specific patients attached to that data. What is the most exciting part about our data plan is, is if you look at the American dental association, and their Policy Institute, and they'd publish every single year various trends and data-related metrics, for insured patients. And that's they can aggregate the various insurance companies and look at the claims data and see trends in dental stand amongst patients. But historically, these 120 million Americans have service or cash-based patients. No one has been able to aggregate that data and really see coast to coast what the spending trends are, the consumer habits for that sector of patients; with us being the platform and kind of the facilitator of cash-paying patients through subscription we have a unique perspective and unique ability to take in that data from coast to coast and then be able to analyze it and show kind of what the trends are amongst fee for service patients in specific.
[00:15:39] KRISTINA: Yeah, that's insightful. One of the things that's unique, I think about you, Eric is, and I didn't say this upfront, but, from a practitioner perspective, you've practiced dentistry. You've kind of seen both sides of the coin here. I'm wondering just with this many data as, as being created, obviously for, the consumer support, better service delivery, but how is the deluge of healthcare data impacting practitioners?
[00:16:03] ERIC: I think practitioners are overwhelmed with various quote unquote dashboards or quote unquote, platforms. I think there's a shift going on. It's going to continue to where you can kind of consolidate all of that into a central dashboard, centralized set of data so you can get a holistic view at. In our case, a membership program, how that relates to the overall practice, I know there's a big push in dentistry right now, to connect dental data with overall medical data. And we see the correlation between primary care physician and your dentist. Cause there are all types of studies that point to better world care leading to better overall healthcare.
[00:16:41] KRISTINA: Well, without a trend, an industry, what potential and challenges do you see in technology companies such as maybe Google or Amazon jumping into this dental space? I know Amazon, for example, bought out Pillpack, so they're all about, let's get into that space, but do you see an increasing focus on fostering innovation in healthcare by these companies?
[00:17:00] ERIC: No. I'm not seeing anything from those companies in dentistry specifically. I think those companies are more focused on the pharmacy side. And more focused on the medical side. We've got aspirations to go into other industries that are similar to dental, meaning consolidations are occurring. They add a retail consumer kind of mindset. And there's cash in the market, meaning insurance is not favorable. And those spaces are dermatology, med spa space, optometry and ophthalmology. And then veterinary. If you, if you look at those spaces, they're there. They're just like the dental market, kind of five to 10 years ago. So, we're very excited about the possibility of going to those spaces, but we're really kind of focused here at Membercy on the ancillary healthcare space. So, we don't have any plans on going into the medical,into the pharmacy side of healthcare, but staying strictly focused on ancillary spaces.
[00:17:49] KRISTINA: Stay true to the mission. I like it. I don't think we're going to really be out of the pandemic, I don't know that we necessarily see a clear start and stop to the pandemic. But as you look ahead to 2022 going into 2023, what are your biggest predictions? Like what are the biggest risks and opportunities? It seems like it's all kind of goodness coming ahead. But what are the things that you kind of foresee are the biggest opportunities, the risks that are out there? What should dental practitioners be thinking about? What should they be doing if they're going to stay in the game and accel?
[00:18:22] ERIC: Yeah, look, I think at the end of the day, dental practitioners are assigned responsibility to provide the right oral healthcare to the greater population. And I think that there are so many Americans that do not go to the dentist or only go to the dentist when they have an emergency, where I view that the future of dentistry is membership. And we think that because of the consolidation and the predictions that, the DSO market will be almost 50% of the overall dental market by 2025. And our focus on the DSO market, we feel like we're on the right side of the trendier where when we create our programs for our partners, we might have a part of that as a hundred locations today. Well, in a couple of years, they might have 300 locations. So we're, yeah, really kind of powering the grassroots movement of the dental industry. And they're wanting their need to create a more connected and personal experience for their members without third-party dental insurance companies getting in the way. So, I view, like you said, the pandemic dental spending is still bad. About 15, 20%. I don't think that's going to stop anytime soon. But I, we have seen a significant increase over the last 12 months and dental spending and dental office business. So we, we think that's going to continue to get better, but I don't think it's going to be back to pre-pandemic norms anytime soon. But overall, we're just super, super excited about our company kind of being the third-party company that does not represent the interest of an insurance company, but as representing the interests of the dentist themselves.
[00:19:54] KRISTINA: Eric, this is phenomenal; I really enjoyed this, mostly because you've been at this for a long time and disrupting the industry, I think for longer than we knew you could disrupt the dental industry. So, appreciate you sharing the journey, what lies ahead, and just what member sees. Come back and tell us more about it as it progresses.
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