Why Do Membership Plans Need Recurring Billing
Instead of Recurring Payments?

Many practices in the Dental industry do not understand the difference between recurring payments and recurring billing. Prior to membership programs, there was no real need for a practice to understand the difference; however, with the growth of recurring billing programs like membership programs, it is a must. Most of today’s membership solutions are built on recurring payments only and as a result, cause headache and frustration to team members as payment issues increase and they have to spend more and more time tracking account balances and calling patients regarding payment issues. Solutions that only offer recurring payments, do not address the full set of issues that a practice will encounter with a membership program. So, what is the difference between the two?

General Overview By Tasks

EC is the only solution with recurring billing which automates the entire process around billing, payment attempts and missed payment management. On top of that, only your EC customer support team makes missed payment calls on your behalf to rectify payment issues and get your patients back on track. Recurring billing starts with a complete accounts receivable system at the core, so you can easily track and account for everything! Key features of recurring billing include:

  • Monthly statements including your carry-forward accounts receivable balance – i.e. if a missed payment was not corrected last month, a missed payment fee is automatically assessed, and if you go into the next month, next month’s amount is also added to the statement balance.
  • Statements are available on the practice-branded patient portal, allowing patients to understand the specifics of any balances due.
  • Proactive payment reminder emails are sent each month, 3 days prior to the recurring payment.
  • If a payment is rejected, the software automatically reattempts over the next 7 days, curing many of the common issues with payment issues.
  • When the patient calls, payment tools are available to help get the patient current and potentially avoid missed payments. Features include:
    • Delaying the current month’s payment before a miss occurs
    • Taking partial payments, with the remainder automatically becoming part of the balance charged the following month
    • Ability for the practice to take payment directly (e.g. cash) and have the system not take the current month’s balance
    • Point-and-click adjustment of day of the month to debit.
    • The underlying accounting system tracks all activity including A/R balances, missed payment fees, etc.
    • Missed Payments are tracked in a sophisticated, but easy to use, workflow, with EC providing call center support to deal with your missed payments, with software features which let you keep your finger on the pulse of what is happening

Let’s assume that your program has grown to 300 plans and you experience the nationwide average rate of 6-8% of rejected payments (based on 12 million membership payments in 50% of US zip codes). That would result in 18 to 24 missed payments, so let’s assume that you have 21 payments that failed. Immediately your EC solution would jump into action.

  • All patients are notified that there has been a payment issue
  • Those that failed due to daily limits being maxed would automatically be charged the next day
  • Debits for cards with insufficient funds due to temporary authorizations would be reattempted several times looking for the temporary hold to be removed
  • Lost cards would be noted, and alerts sent out to patients to notify of payment failure
  • Approximately 35% or 7 issues would be resolved automatically without team involvement
  • For the remaining missed payments, the EC call center team reaches out to remaining patients and resolves the rest of the issues (except for customers that can’t get current)
  • In this example, your team may need to follow up on an average of 1 patient per month
  • All activity is logged in the Payment Issues list, to which you have full access, so that you understand exactly what is happening with your patients.
  • All of this is tracked using a full accounts receivable system, with the various actions being recorded in corresponding general ledger buckets so that your book keeping can understand exactly what is happening.
As mentioned above, only EC offers recurring billing. Other solutions only offer recurring payments. So, why is this an issue? Payment management often becomes one of the biggest frustrations for practices, whether utilizing membership software or managing it themselves. As those solutions only utilize recurring payments, if a payment fails for any reason, it is left to the practice team to figure out why, make phone calls to get new payment information, track call attempts, record conversations, and keep track of monthly balances. On average it takes 2.6 calls to rectify a payment issue and using the example of 21 missed payments above, your team may need to make over 55 phone calls each month.
Simply put, recurring payments allow you to set a recurring charge to your client. In membership plans, that means each month a request for payment is sent to your patient’s credit card or bank account – That is it!

  • No monthly statements are generated explaining charges to the patient. These might include late payment fees or prior month missed payments. The assumption is made that the monthly payment is always the same amount.
  • No accounting transactions are tracked other than a simple “charged it” – no provision for automating tracking of missed payments, bad debt, good will write-off, etc.
  • For payments that do not go through (roughly 6-8% nationwide), it is up to the practice’s busy staff to manually track, call patients and deal with the issues, which may include manually re-debiting accounts, tracking partial payments and more.
  • Since you don’t want miscellaneous credits affecting the membership accounts receivable balance, you must track your membership balance manually, outside of the system. If payments span multiple months, you would have to manually accrue multiple months of billing.
  • Any missed payment fees to cover your teams valuable time chasing down issues, must be manually assessed and accounted for.

Your membership program has grown to 300 plans. On average there would be 21 accounts with payment issues to address each month.

  • 21 payments would fail, the practice contact would receive an email with a list of the failed accounts or have to remember to log into the processor’s portal to figure that out
  • With typically 2.6 calls per missed payment, tracking the person down and them calling you back, so, 55 phone calls during the month
  • Any assessed missed payment fees need to be manually added to the amount own
  • If payment is not cured within the month, you need to manually add the next month’s payment to the amount you need to collect
  • You have to manually do debits to get each account current
  • Just when you think you are getting ahead, the next week’s email arrives, and you will need to track which payments are due and when, growing your list of items to track
  • You have to build your own system to track all of the above, typically done in Excel

EC, the software that fuels Dental Membership Plan Programs.