Discounts vs Membership: What Do Patients Really Want? – Episode #390

Does the membership plan you use give fee-for-service patients the benefits that they really want? To keep them satisfied and coming back, it should. On this episode of the Dentist Money™ Show, Ryan welcomes Paul Lowry of Dental Menu. There’s a big difference between Groupon-like discount plans and a Netflix-style membership plan that actually improves patient retention.

 

 

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Podcast Transcript

Ryan Isaac:
Hello everybody, welcome back to another episode of The Dentist Money Show brought to you by Dentist Advisors, a no commission fiduciary financial advisor just for dentists all over the country. Check us out at dentistadvisors.com. Today on the show, a long time friend, Paul Lowry from Dental Menu. We’re talking about inflation and how to grow revenue, profitability and income. We’re talking about how to set up a membership plan in the practice, why it matters, what is the difference between a membership plan and a discount plan. Lots of questions here, the state of the industry, where things are headed. I’m always impressed by these discussions because there’s always something that you can do in the practice to grow revenue and profitability which equals income, without having to get another location, add more chairs, get an associate, add more overhead. There’s things you can do with people who are already there, efficiencies, and this is constantly one of them. I’m always impressed by Paul’s grasp of the subject and the industry and the work they’re doing and where they’re headed.

Ryan Isaac:
So, thanks Paul, that was awesome. And thanks to all of you for tuning in. If you have any questions, go to dentistadvisors.com, and we’d love to have a chat with you any time and answer your money questions and point you in the right direction. Thanks for being here. Enjoy the show.

Jess Reynolds:
Hey there. It’s Jess with Dentist Advisors. Did you know we’ve recently launched a new service called the Dentist Money Membership? It’s an affordable way to support your personal financial strategy with cutting edge technology and guidance from dental-focused CFP advisors. The Dentist Money Membership includes the Elements Financial Monitoring app, an annual financial check-up, CE courses, an automated investment platform, and more. To learn more about the Dentist Money Membership and to get started, go visit dentistadvisors.com/money.

Announcer:
Consulting an advisor, conduct your own due diligence when making financial decisions. General principles discussed during this program do not constitute personal advice. This program is furnished by Dentist Advisors, a registered investment advisor. This is Dentist Money. Now, here’s your host, Ryan Isaac.

Ryan Isaac:
Welcome to The Dentist Money Show where we help dentists make smart financial decisions. I’m your host Ryan Isaac. Welcome back, and I’m excited to be here with Paul Lowry from Dental Menu. What’s up Paul? Thanks for being here this morning, man.

Paul Lowry:
Yeah, you bet. Happy to be on, and excited for spring.

Ryan Isaac:
Yeah, you’re in Utah, and you guys don’t get spring. You just go like nine months of winter and then go into July at 100 degrees.

Paul Lowry:
Yeah. [chuckle] Yep.

Ryan Isaac:
And then you get to fall though. I’m just kidding. Hopefully, it’s all right. A lot of snow for you, man.

Paul Lowry:
I’m good.

Ryan Isaac:
I was gonna say, here’s what is on our mind today for everyone listening. This is a topic I get feedback from a policy expert in this industry, but I get feedback hearing people talk about the membership plan space and the role it plays in practices. So that’s something I’ve been hearing from people and the feedback from people, it seems like it’s a big growing thing, so I wanna touch on this. But, I guess let’s do this. I wanna tell everyone what is on our mind for what we wanna hit for today’s agenda and talk about. I think these are the big topics in the industry policy expert, and then I want you to all list these out, and then Paul maybe just give us a quick intro. We’ll dive into more details, but who is Dental Menu, and what you guys are working on? So here’s our plan for today. First of all, what is the space right now? What’s going on with it? What’s the climate? What’s changing? What’s growing? Like you said, my perspective or anecdotal perspective is that it’s just growing a lot. So, we’re gonna hit why does a practice need a membership plan? People hear about it. I get that question too, people hear about it and then they really wonder like, “Why is that a thing I need?”

Ryan Isaac:
What types of membership plans do you see in practices? How do they vary? How are they different? Maybe how they’re different in different kinds of practices, specialties. Those are things I don’t know about. Any specific ways that practices can be accounting for their revenue from these things? I would also like to talk about maybe just people setting their fees when they set these things up, how to set fees. And then with inflation, how do we keep ahead of it? How do we keep growing? I swear, payroll overhead just went from a standard 20 to a standard 30 overnight and everyone is just feeling it. Cash flow is just pinching everyone. And then, how do they set them up? How do they charge for this stuff? Do they do it annually, monthly, quarterly? How do they bill people? What’s the logistics? So those are the questions I think we’re gonna hit that will be helpful today. But Paul, tell us what’s the history, what’s the story of Dental Menu? How did you guys get your start, and what are you up to today?

Paul Lowry:
Yeah. So just briefly, yeah, I’m one of the co-founders of Dental Menu. We’ve been around for several years. We just got our start a little… I was doing marketing for dentists for a lot of years, the other co-founder was doing transitions and coaching consulting, things like that. So in the space, we saw a lot of issues. Most of our clients had “membership plans”, they really were failing to be effective from what we saw. So we didn’t start out trying to solve this problem, we were trying to solve the marketing problem, which was generate new patients. Patients with insurance stick, patients without insurance don’t stick long-term. And again, they had membership plans who are like, wait a second, I thought these things were designed to be able to market to new patients without dental insurance, get ’em into the practice, and then retain them long-term, and that’s not what we saw that was happening. And so, that’s really why we started Dental Menu. We ran about 20 of our guys on a minimum viable product for two years. So these were guys we knew really well.

Paul Lowry:
We knew their front and back office teams. We’re in there every day, and so we ran really an experiment for two years, learning the ins and outs. It’s a little bit different way to grow our company. And again, we had revenue from marketing and transition. So we weren’t trying to make a bunch of money in the membership space…

Ryan Isaac:
Just trying to learn.

Paul Lowry:
Solve the problem. And then as we saw more and more that nobody was solving those problems, we said, “Hey, let’s get into the space.” And we re-did our software with the 2.0 version to solve the issues that we discovered, and that’s kind of how we got our start. So a little different story than some…

Ryan Isaac:
Some other, yeah, companies in the way they choose to do it. I respect it highly. It reminds me a lot of the way our company did, which was just slow and grindy and spending all of our money on learning, [chuckle] and not actually making any more of it.

Paul Lowry:
Yeah.

Ryan Isaac:
Yeah, so that’s really cool, man. Let’s jump into the questions. Let’s start with the one… That’s the background, that’s where you began. I love that kind of origin story. I like what that teaches you as people in the business too, and how that… I feel like that kind of curiosity for learning and education from you growing the business translates into the way you work with customers and team, and I just feel like that goes a long way. So fast forward to today, what’s the space like? What’s out there? What are people… How are they interacting with this stuff? How are people thinking about membership plans, and what’s the space like right now?

Paul Lowry:
Yeah, so there’s a lot of you guys that are listening and probably like, holy cow, you start doing a search and there’s a new membership software that pops up all over.

Ryan Isaac:
Yeah, totally.

Paul Lowry:
And we started about five-and-a-half, six years ago with our MVP, really nobody was in the space. And really what’s going on Ryan, and the reason there’s so many people, when we built an MVP software, it’s a minimum viable product in the software world, that’s what you’d call it. You spend as little as possible amount to get a minimal viable product to put people on it to kind of test. And so, really what’s going on in the space, we spent like $40,000 on our MVP, and all we did was take a merchant account, we put a skin on the front end of it that kept track of some patients, it processes monthly payments, and it’s like, “Hey, look, we got a membership platform,” right?

Ryan Isaac:
Yeah, let’s go.

Paul Lowry:
And so that’s what you’re seeing, is like, look, if you can process monthly payments and you can attach that this customer’s name is to this payment, and you have a little database and stuff, it’s like, “Well, you got a membership [chuckle] software.” And so that’s what we’re seeing in the space is, “Hey, as long as I can help you do monthly payments and I can say, hey, have a recurring revenue model, and that’s all you need, and here’s an easy way to sign someone up and it’ll charge you every single month.” And it’s like, “Here’s the membership software.” That’s really what we’re seeing in the space get done over and over and over, and it’s part of the equation in the membership software. But I always like to say, and you’re a financial guy, Ryan. If all you’re doing is keeping track of top line revenue, and you’re ignoring expenses and usage of benefits, how do you know how profitable you are in your business?

Paul Lowry:
If you ran your dental practice and you said, all we care about is collections and we don’t care about… You just talked about overhead and you talked about payroll, we don’t care what hygienists are being paid, we don’t care what our overhead is, we don’t care about any of that, all we wanna see is how much did we produce and collect and we’ll just ignore every single other metric in the office, that’s what we’re seeing in the space. And so you’ve got people getting dentists really emotionally charged about, “Hey, drop insurances, membership plans are gonna solve all your problems,” which they’re not. It sounds really good to say, “Hey, we hate PPO insurances. We hate what they’re doing to us. We hate reimbursement rates, and so we’re gonna fight back and we’re gonna get really frothy, and we’re gonna launch this membership plan and we’re gonna drop all our insurance plans.” And to just carte blanche say that’s what’s gonna solve everything is not that.

Ryan Isaac:
Yeah, it’s more nuanced than that. You can’t approach a complex practice revenue financial payment system that way.

Paul Lowry:
Yeah. So that’s what we’re seeing in the space. That kinda ties into the question, why does a practice need a membership plan and why we built this? I like to use the analogy of hunting versus farming.

Ryan Isaac:
Okay, hold on. Hunting versus farming. Two things that I don’t know anything about or have any experience in whatsoever. Okay.

Paul Lowry:
So borrowing an idea from Scott Martin, he uses this analogy. But if you think of a caveman, Ryan, how does a caveman get his food?

Ryan Isaac:
He’s gotta go out and chase things around and kill it, and put his life on the line, is how I imagine a caveman does it.

Paul Lowry:
Yeah, so he’s chasing the [0:11:00.7] ____ of the herd moves, he moves, right?

Ryan Isaac:
Oh, yeah, yeah.

Paul Lowry:
And then when he gets something, he gets a big animal, at that point, he kinda sets up shop for a little while and he eats, he’s got this big animal to eat, and so he’s good for a little while. He doesn’t really go hunt another animal if he’s got something down, he spends time processing that and taking care of it and eating it and using it, and then maybe he tries to make some jerky or something to last a little longer. But then what does he have to do once that’s used up?

Ryan Isaac:
All over again.

Paul Lowry:
All over again. So if it’s winter or spring or summer, he might change his techniques, but essentially he’s following that herd and having to move along. And if that herd gets diminished or goes away, then he’s in big trouble. But perhaps he’s hunting whatever he can get. Well, if you look at a caveman, what’s the greatest invention for the caveman?

Ryan Isaac:
Fire, wheel… I don’t know. I would say fire.

Paul Lowry:
That’s what most… Yeah, fire or wheel. So, I like to, again, borrowing this idea about a fence. So if you think of a fence and he moves from a hunter to a farmer, what he did is he set up a farm and he planted… He’s raising chickens and getting eggs. He’s got piglets grown over here, he’s planting corn, he’s planting some fruit trees. But when does he actually eat those? When the little teeny chicks come out, does he say like, “Sweet, I’m gonna have some fried chicken,” when he’s got these tiny little chicks? It’s like no, it’s not time to harvest those. He doesn’t go out and when the apples are real small and little and green, he doesn’t grab those and start eating those ’cause they’re not ready to harvest.

Ryan Isaac:
Yeah, man. You’re actually reminding me of the book Sapiens. I don’t know if you ever read that, but the history, this is exactly how we evolved as humans. So yeah, that’s actually really fascinating.

Paul Lowry:
So let’s take that idea, let’s transition it into dentistry. So fee-for-service dentistry, patients without dental insurance, most of the time we see in practices are operated in a hunting mentality. So going back to marketing. If you think of marketing for new patients, a new patient calls the office. Within the first 60 seconds, Ryan, they’re gonna say either A, do you accept my insurance? And then that conversation is around insurance, or B, they’re gonna say how much is it for whatever those services? So you look at offers when you’re trying to bring new patients and what do you see? You see $99 new patient exam…

Ryan Isaac:
Yeah, the mailers.

Paul Lowry:
Yeah, exactly. You see whitening, you see discounts on treatment, you see these types of things. Most of those are to get fee-for-service patients. And the other side is in Google with pay-per-click. You’re hoping people break a tooth or something, they’re in pain, so they come to your trap in Google, so to speak, with the hunting, but they really need water, so they’re coming to your water hole, there you are. So Google is kind of this pinch point for when they need something. And so someone that’s in pain, they’re easy… It’s like an animal that’s got a hurt leg, you’re like, “Of course I can kill ’em. He can’t even run away from me.” You sit in my chair being like, “I don’t care what it costs…

Ryan Isaac:
Just wanna fix it.

Paul Lowry:
“For an abscess, fix it.” [chuckle] You know?

Ryan Isaac:
Yeah, totally.

Paul Lowry:
If you look at a practice, the hygiene department is their farm. Those are the seeds you’re planting right now. And so when new patients come in, just think about it, whoever is listening. If you have dental insurance, Ryan, and I say, “Hey, do you want to pre-appoint for your next exam, cleaning and x-ray?” Your farming mentality. If you have dental insurance, you say yes because that’s essentially free. You don’t have dental insurance, “Hey Ryan, do you wanna come back in in six months for an exam, cleaning and x-rays? It’s gonna be 300 bucks.” Maybe you say yes, but then you kick that appointment off ’cause we see that a lot, like, “Well, I don’t wanna tell the hygienist that I have a low dental IQ, so sure, I’ll pre-appoint. And you better believe I’m gonna either not show up or I’m gonna kinda kick that out to eight months, nine months, 12.” I think I mentioned this on a previous podcast, but we did a study on 250,000 new patients into practices. This was primary research we did in this MVP study. Fast forward five years, it’s either 62% or 64% of patients with dental insurance were still active in the practice after five years. Only 12% of uninsured patients were active in the practice.

Ryan Isaac:
Interesting.

Paul Lowry:
So you generate 100 new patients, fast forward five years, only 12 out of those hundred that don’t have dental insurance are still active in the practice. And again, all of our practices had membership plans, which is nuts, ’cause we’re like, what the heck? We just generated 100 patients for you and only 12 are active. What the heck is going on?

Ryan Isaac:
Oh, yeah. Do you have a sense for nationally how those ratios work out right now in practices, like uninsured to insured? Do you have a sense for that ratio? Is it a growing…

Paul Lowry:
It’s pretty consistent. And again, just common sense. If you think about what I was saying. Let’s say you’re a scratch start, and you’re like, “Hey, I’m gonna accept PPO insurance patients. I need patients, I’m gonna accept PPOs, but I also really want fee-for-service and I want this pillar of my practice over here with uninsured patients.” Patients come in for different reasons as you’re marketing. Again, you look at the farm which is your hygiene, who is coming in regularly to your hygiene program? And I’ll tell you right now, if the retention is 60% to 70%, will pre-appoint and come back to your farm that have dental insurance, but only 10% of people that don’t have dental insurance come back to your farm. If you take your field and you plant 60% PPO and you plant 40% uninsured, but next year you do 70% PPO and 30%, run that experiment for 10 years and then scratch start is saying, “Men, I’m 95% PPO dependent.” Well, I’ll tell you why, you’re planting those types of seeds. If you plant corn and peach seeds and you expect to get apples and oranges, you’re stinking crazy, and that’s what…

[laughter]

Ryan Isaac:
Corn and peach seeds. I like that combo.

Paul Lowry:
Yeah. We go and meet this dentists and they’re like, “I hate freaking PPOs, I hate insurance, and I hate all this stuff,” and it’s like, well, let’s look at your farm. What are you farming? You’re farming PPO insurance patients. That’s the easy natural harvest you’re getting. Your fee-for-service side of your business that you have trickling in is all or a majority of it is hunting. Well, it’s expensive, and it’s exhausting. So in order to keep your fee-for-service pillar going, you have to hunt. All the time you’re hunting. Meanwhile your farm’s over here kicking off PPO insurance treatment and patients over and over, and it inundates you. And so if that’s who’s filling up the capacity… We did marketing, and you’d be like, “Hey, we just did a marketing campaign, and I had some fee-for-service patients call,” and you couldn’t get them into your farm, your cleaning farm for four months. “Why are you marketing?” “Well, I have an opening at 10:30 on Tuesdays.” Okay, well, guess what guys? When you go hunting, animals are out first thing in the morning, they’re not out at 10:30 on Tuesday, but you’re expecting that that’s how you’re gonna fill your hunting hole, basically.

Paul Lowry:
So you gotta look at your capacity in hygiene. You gotta look at who’s coming into your farm on a regular basis. And these plans should be designed to fill up your farm. And that kind of ties into that second question, what types of membership plans do you see in practices?

Ryan Isaac:
Okay. Yeah, I was gonna ask.

Paul Lowry:
I mean, this is kind of a flow here, but when we were doing our, all of our research and stuff, we’re like, why is this happening? Because we would go talk to offices and we’d say, “Well hey, how’s your membership plan going?” “Well, it’s going awesome. Everybody buys it.” And you’re like, “Okay, well, let’s look at your membership plan numbers. You’ve been between 80 and 90 membership patients for the last 10 years, but you’re telling me everybody buys it. So how do you sell two or three or five a month, but you’re still at 80 or 90? It never grows. What is going on with this? And by the way, these fee-for-service patients that bought your membership plan five years ago, they’re not even active in your practice. So like, what is going on with this? Do you care if we sit in here and we listen to Susie at the front desk? Do you care if we kind of monitor and see what’s going on? ‘Cause something’s broken.” There’s really two types of in-house benefits plans. There’s discount plans and there’s true membership continuity plans. So let’s get out of our head, again, I like to get out of dentistry because we’re all weird in dentistry.

Ryan Isaac:
Okay. I’m not commenting on that, but yeah, let’s do it. I’m weird. That’s fine. I’ll admit that.

Paul Lowry:
You’re weird.

[chuckle]

Ryan Isaac:
I’m very weird.

Paul Lowry:
So let’s think of like a discount plan outside of dentistry. You know, brainstorm some discount type of things. Like Groupon is a discount plan, or a discount benefit. You want to go to some sort of, you want to go to amusement park, you look up Groupon, you see if you can get a discount. So you purchase a Groupon to get a discount. Those high schoolers that come and knock on your door and say, “Hey, we’re doing a fundraiser for the football team.” What do they give you? They give you a little card. It’s 20 or 30 bucks. It has discounts to a whole bunch of places and restaurants. That’s a discount program. If you’re selling two exams, two cleanings, a set of x-rays and 20% off treatment for one year and then it expires, you’re selling a discount plan. You’re giving them a discount on treatment, a discount on cleanings, a discount on exams for $350 a year or whatever it is.

Paul Lowry:
They’re buying it one time for a discount. Most of the time those sales go like this, “Hey Ryan, you got a treatment plan of $4,000.” “Oh yeah, I got a… That’s so expensive.” You know? Well, we can actually give you 20% off of that treatment. You’re gonna save $800 if you buy our in-house benefits plan or our in-house discount plan. We have that designed for patients without insurance. So it’s gonna cost you $300, but you’re gonna save $800. Do you want to do it? It’s like you don’t have to be a mathematician. So if I pay 300, I save 800. Sweet, let’s do it. Fast forward to day 366, “Ryan, do you wanna renew this discount plan?” It’s like, “I will when I wanna come back.”

Ryan Isaac:
Yeah. I’ll let you know when I need something.

Paul Lowry:
Yeah. So I always use this analogy too because everybody is so hard to trust, especially the front desk, “Man, our discount plan’s amazing. Everyone buys it.” If you go into an ice cream shop, you and your wife and two kids, there’s four of you, right? And you’re gonna spend five bucks a pop, it’s gonna be $20 to buy ice cream for your family. You walk in, you’re sitting in front of the flavors with four of you and there’s a sign right there that says, “Hey, if you wanna buy our discount plan, it’s $5 and you can get ice cream for 50% off.” And you’re like, “Well, I’m gonna spend $20 today, or I can spend $5 and then another 10 on the ice cream today.” Like, what are you gonna do?

Ryan Isaac:
Get that ice cream.

Paul Lowry:
Well, it’s stupid because you already got the patient in your practice.

Ryan Isaac:
Yeah.

Paul Lowry:
And you’re using the discount plan to close treatment, which I’m not saying that’s a bad idea. I’m just saying realize what it is. It’s getting the patient that has a $3000 treatment plan to accept treatment because your UCRs are jacked so high because you’re over here fighting insurance companies. So if your UCRs aren’t set at the 70th, 80th percentile, you’re losing out on insurance reimbursements and different things over here. That’s not realistic of what you’re trying to charge for your services. But if you drop your UCRs to where it’s realistic for fee-for-service, it’s hurting your practice in other areas with insurance companies.

Ryan Isaac:
Yeah, exactly.

Paul Lowry:
And so it’s this conundrum where you’re like, well, I’ve gotta sell a discount plan to make my fees reasonable for my uninsured patients without screwing me on insurance.

Ryan Isaac:
Totally.

Paul Lowry:
So I’m not saying discount plans are bad. What I’m saying is recognize what it is. It’s a better gun to go hunting for fee-for-service patients. It’s a better technique to kill on the hunt is what it is. It’s not farming. It’s a discount plan to help you hunt more efficiently.

Ryan Isaac:
Yeah. And is that like the, maybe just the teams or just the, I don’t know, the knee jerk easy reaction for uninsured patients is just the discount? It’s easier to do that because like you said, the person in pain, let’s just get this thing done.

Paul Lowry:
So easy. They’re easier to manage. I’ll tell you right now, and I’m happy to have a totally honest conversation with any of your listeners. If you’re running a discount plan, you do not need a third party membership software company, including us.

Ryan Isaac:
Oh, if it’s just discount.

Paul Lowry:
I’ll be on a demo with you right now and I’ll show you how to manage it this quick. And this is why a lot of your listeners might be confused. You get on Facebook forums, you get on different things and you have half the dentist being like, you’re an idiot if you use a third party software, just do it yourself. I’ll show you how private message me, I’ll show you exactly how to run it and blah, blah blah. And they’re actually correct because what they’re talking about is a discount plan. And so it’s confusing because you have people over here saying, no, you’ve gotta use a third party software. They’ve really helped me, all this stuff. And then you have other people saying, run it yourself. You’re a moron, just do it yourself. Well, again, it’s because there’s different styles. So if you’re running a discount plan, you don’t need a third party software.

Ryan Isaac:
That’s interesting. Do you find that people don’t know the difference between those two commonly or it’s just easily to just muddy those up and kind of think they’re the same thing?

Paul Lowry:
Yeah. Most people don’t even think about it this way. They just… An in-house discount plan. I’ll tell you right now, your front office team, they’re gonna love a discount plan because, again, all they have to do in Dentrix, Open Dental, Eaglesoft, whatever, they’ve gotta take a singular adjustment code to any of the fee-for-service discount patients, and they apply that when they treatment plan, everybody pays them at that time. The ledger is up to date, it’s super easy and nobody has to ever chase anything because when that discount plan expires, nobody does anything. They wait until the patient comes to the water hole again and they’re already in the ice cream shop. They’re already in your place of business. So of course it’s easy to sell it. The front desk is the hero. “Oh, hey Ryan, we love you as a patient. Let me show you how we can give you 20% off.” There’s no marketing continuity to this. It’s just, you know, it’s like saying, “Hey, if you want to go hunting, you can either go hunt really hard or what you can do is you can pay a place and they’ll tie up the animal to the fence and you can go in and hunt.”

Ryan Isaac:
Jurassic Park style. Yeah. So is part of this maybe confusion or just preference to do the easier discount plan more commonly, does it have to do with the complexities of tracking revenue? I think that was one of our questions too, or like, the ways that practices should be tracking revenue through all this stuff. Is that part of it that makes it a little bit more difficult?

Paul Lowry:
Absolutely. Tracking revenue, it’s a whole different really process. And so you’ve gotta decide, again, if you look at our early people before they moved into agricultural and stuff, it’s a different thing to be able to just drag your tent around and chase the herd and be nomad. You don’t need to own land. You don’t have to set up machinery, you don’t have to… I mean, if you’re farming right now in today’s day and age and you don’t have a tractor and you don’t have the right kind of irrigation and all this kind of stuff, you’re not gonna compete in the farming world today…

Ryan Isaac:
Yep.

Paul Lowry:
By just like having a horse and a plow and you’re planting some seeds, you know?

Ryan Isaac:
Yeah, yes.

Paul Lowry:
So, continuity programs, if we think of true continuity programs outside of dentistry, Netflix, you pay a monthly fee. You have access to their content whenever you want to have access to it. If you look at Amazon Prime, you have access to these services. If you look at Netflix, they don’t come to you and they don’t say, “Hey Ryan, it’s been a year. Have you enjoyed our content? Do you want to renew for another year?”

Ryan Isaac:
Yeah. They just keep serving you content and they expect you to just keep paying.

[overlapping conversation]

Paul Lowry:
Throwing you content whether you’re through it or not. If they came to you and said, “Hey, do you wanna renew and commit for another year?” And you’re like, “You know what? I haven’t even turned on the TV for three months.” I know it’s there when I need it, but I’m gonna let it cancel. In three or four or six months when I wanna watch a show with my wife, I’ll buy it at that point and I’ll turn it back on. You know, that’s a discount on stuff. Gym memberships are my favorite example for a good continuity program that tie into what a membership plan should be. You’ve got the spa, you’ve got the elliptical, you’ve got all this equipment and you’re paying to have access to that equipment. If you decide not to use that equipment, you’re not near as healthy. If you don’t use it for three or four months, can you go work out tomorrow? Can you decide to work out tomorrow? Yes you can. When you go in to work out tomorrow, do you say, “Hey, you know what, I haven’t worked out ’cause I’ve been kind of lazy the last four months. Will you give me a refund for my four months?” It’s like, “What? No.” You don’t even think that way, you just keep paying.

Ryan Isaac:
You just Keep going. Yeah.

Paul Lowry:
You keep going and you hope to work out. So membership plans should be an amount of money, monthly or annual, we can talk about that. But you have access to cleanings at intervals. You have access to exams at intervals. You have access to x-ray equipment, maybe emergency services, whatever these are. You have teeth, you need services on a regular basis your entire life. It’s not a one and done. And it really shouldn’t even be a ancillary, do I want ice cream today or not? Well, that doesn’t matter. You can decide to go skydiving or not. We’re talking about oral hygiene and oral health that, you want to geek out. That’s an important product for people’s health. One of the reasons I’m in the space doing it here versus another, I do believe in preventative dentistry, it’s a fantastic product.

Ryan Isaac:
Yep.

Paul Lowry:
And we can argue about the best way to do crown or should they need a crown or a forced surface filling or all this stuff, which is way out of my pay grade, but in terms of arguing whether people should come in regularly for a cleaning or perio maintenance and an exam and some x-rays, like pretty much universally, people should come in on a regular basis for those services to maintain oral health. And so we’ll use, I don’t wanna say any means necessary, but let’s do the best job we can to get our patients to come in to our farm on a regular basis to get that preventative maintenance so that we can keep them healthy. And that’s really the passion that we have is how do we get them to do that? What’s the best way to structure these plans to get them in regularly into hygiene?

Ryan Isaac:
Patients have to be taught about this in the right way. I can see how it might be not explained correctly or not understood correctly. How do you guys work on that with teams to make sure that they’re educating patients the right way and even in a broader marketing sense outside of the patient base, just for marketing to say to your community, “Hey, this is an option if you don’t have insurance.”?

Paul Lowry:
Well, we build a landing page pretty… A pretty robust landing page. It has a lot of education on it that you can send people to. So front desk is… Your front office and back office, they aren’t salespeople and they don’t want to be.

Ryan Isaac:
Totally, totally.

Paul Lowry:
We built a pretty robust landing page with some videos and the way we structure the plans and stuff are set up as a continuity program. They go there, they sign up and those things just run, again, our software, we’re the only ones in the space that keep track of benefit usage and benefit eligibility. So you can run it as a true continuity program, but you can also see the metrics of how profitable you are running it this way versus just a discount.

Ryan Isaac:
Cool. What about, you had posed this question, and I’m glad you did because it’s just, right now it feels like the question in practice is, which is everything costs so much money right now. Inflation has really, I think, hit hard in people costs especially. And I’m glad you brought this up because, do you have any ideas on how to help people increase revenue and how do they… What can they do to get ahead from this angle and perspective? And I just wanna throw in too, I’ve always been surprised when I’ve seen how well this works, like implemented the right way. I’ve been surprised how people are able to grow revenue and profitability without even bringing a single new person that’s never been there into the practice. Like you can do so much without a new person, more chairs, second locations, associates. There’s so much you can do first. And this feels like a big one of those things.

Paul Lowry:
Yeah. Yeah. So along that lines of making more money. So when you switch from the discount plan to the continuity plan, you increase the amount of money you make substantially. And here’s why Ryan, when you sell two exams, two cleanings, a set of x-rays for an annual amount, there’s a couple things that happen, the renewal process, which your front desk is always gonna tell you, “Nope, we renew everybody,” most of the time the renewal process happens when they come back to your ice cream parlor because they feel like getting ice cream.

Ryan Isaac:
Yeah. It’s time for new ice cream. Yeah.

Paul Lowry:
So there’s always a lapse. They buy it for a year, they don’t have it for 2, 3, 4, 5, 6 months a year, then they buy it again for a year and then they lapse again. It’s always in the patient’s favor financially when you set it up as a discount plan. And the other thing that happens is when they buy two cleanings, they get their first cleaning and then instead of coming in right on time for their second one, they wait and then they come in month 13 or 14 and they say, “Hey, I want my second cleaning.” And you’re like, “Well, your membership plan is not active,” and you’re like, “Yeah, but I bought two of them. I never got to… I want my second cleaning.” And I’ve talked to a lot of front office and doctors where they’re like, “Okay, at that point you have two options. One is give them their second cleaning they already bought, or two, piss the patient off and say you have to spend another 350 bucks or you don’t get your second cleaning.” It’s like, “What the heck? I bought two of them.” And it’s like, “Well, it expired. See right here in our fine print? It says it’s only valid for 12 months and it’s been past 12 months.”

Ryan Isaac:
Does that happen a lot? It seems like that would happen a lot.

Paul Lowry:
Most of my guys are, and I mean most dentists are smart enough not to lose the patients so they give them the second cleaning. But again, what happens is you got $300 or $350 from a patient now for 14 months or 16 months. And so when you change to a continuity program, what happens is patients look at your data, patients do not come in 180 days every single time for their cleanings. It’s really too hard to match up your schedule and their schedule right on time. So how many of your listeners right now are saying, hey, have you heard this before? “Hey, I’m calling, my appointment is scheduled for this day, but I actually am going on vacation or I gotta travel for work,” or, you know, “I gotta kick my appointment out. Can can we move it?” And you’re like, “Yeah, we can.”

Ryan Isaac:
I’m just laughing because I have one coming up this week and I’m wondering if I should really go, so…

Paul Lowry:
Exactly.

Ryan Isaac:
Exactly. Yes.

Paul Lowry:
And I had one… My dad passed away. I had my appointment scheduled, he passed away. It was… His funeral was, I mean, it was all that happening. My family’s coming in, it’s like, I’m not going to the dentist, you know? [chuckle] So I go to call and move my appointment and guess what? Between their schedule and my schedule, again, they might have an opening here or there, but I had to kick it out about six weeks. So when you’re on this continuity program and they’re paying you 30 bucks a month every month and they move that appointment out seven weeks, six weeks, guess what you still get? You get another $30, now you got $30 times seven and a half or eight months instead of six months, you just made an extra $60 on that cleaning.

Ryan Isaac:
Yeah, totally.

Paul Lowry:
But it’s very patient centric too because you’re saying, “Hey, yeah, sure you can’t come in, we’re very happy to kick your appointment,” instead of like, “You moved your appointment, that’s gonna be a $50 fee because you screwed up my schedule,” you know? It’s like, “No, we’re happy to accommodate, when’s the best for you? Oh, it’s eight months? We’ll see you at eight months.” We don’t care. They have access to those services, when they come in at eight months, their eligibility kicks out six more months. They don’t get two a year, they get access to it every six months. So now it’s like, well, same thing if you came in at eight months, do you really want to come back for a cleaning in four months? You’re like, “I just came in, I’m not coming back anyways.” Right? So with this inflation and everything that’s hitting, if you set up as a continuity program, you’re gonna make substantially more.

Paul Lowry:
Let’s say you have 10 grand a month coming in on your membership plan. And on average what we’re seeing in the data is patients are about seven, seven and a half months. And so you essentially make four to six weeks in breakage. If you’ve got 10 grand a month coming in, that equates to $10,000 to $15,000 every year that goes straight to your bottom line without adding any overhead, any associates, any more hygiene time, any anything. You’re not open anymore. You just ran it a different way and now you got an extra 10 K to put into an investment. We’re dental advisors, invest that money.

Ryan Isaac:
There you go. Yeah. There’s the plug. That’s the one I’ve been waiting for this whole time. Invest your money folks.

Paul Lowry:
And joking aside, not as a plug, we teach that of, hey, how would you like to generate 15K more to put in your 401k doing nothing different?

Ryan Isaac:
Yeah. Here, I was just gonna do this. I love this math. All right. So let’s just say you got someone an extra, is $10,000 extra a month, that’s a pretty like…

Paul Lowry:
Well, so take 200 patients and times it by 30 bucks a month.

Ryan Isaac:
Okay.

Paul Lowry:
What is that, six grand?

Ryan Isaac:
Yeah.

Paul Lowry:
I mean, that’s not hard.

Ryan Isaac:
Okay. So let’s just say someone’s got a 20-year career and they do that and they invest their extra little tiny chunk of revenue that didn’t even know they were missing.

Paul Lowry:
Six grand a year would be pretty easy for breakage.

Ryan Isaac:
Yeah. I mean, you’re talking about like, I’m just running my cute little financial cal… I love thinking about this stuff. You’re talking about like… It’s a lot of money. It’s like hundreds and hundreds of thousands of dollars down the road just from… And this is what I’m talking about how such a small tweak on stuff you’re already doing, these are people already coming in, they’re already your patients, you don’t need new people, new chairs, new associates, new locations…

Paul Lowry:
Yeah. No more overhead, no more…

Ryan Isaac:
No, no. You just need them to come in, pay, accept treatment, and be consistent and continuous. And it literally can make multiple six figure differences to your wealth down the line. And that’s a huge difference, man.

Paul Lowry:
Yeah. And along those same lines, one of the things we do with our platform is you have the ability to sell add-on benefits. So patients can customize their plan. So right now I’ll tell you, no one buys your plan because it includes fluoride. Right? You know, most of the guys on these discount plans, they throw in fluoride, they throw in emergency exams, people aren’t buying it because it includes that. And so if you pull fluoride out, you keep your pricing the exact same, you pull fluoride out and you charge three bucks a month for fluoride, that’s another 36 bucks a year. You can get the majority of patients to add that. So you didn’t increase your price. They chose to buy an ancillary service to add it on. They chose to put chocolate fudge and caramel on because they like both those. So you didn’t force them, you didn’t raise the price of your ice cream, you just added some services. If they want to add those in, they can.

Ryan Isaac:
Yeah.

Paul Lowry:
So pay power is to the patient, they choose to add fluoride or they choose to add a worry-free package that includes nitrous, emergency exams, emergency x-rays, things like those. We have people that do bleaching. So, hey, do you want bleaching for 10 bucks a month? How much does bleach gel cost you? I mean, the margins are like 90%. I’ve got guys that do Botox as add-ons that are getting into cosmetic in every interval. I had a guy the other day that said, “Well, we just started Botox. Do you have any tips on how to tactfully say like, “Hey Ryan, you need Botox, man.”? And so…

Ryan Isaac:
Well, I know a tip. Just turn on a front facing camera on your iPhone on your face in some some striking sunlight, and you’ll be like, “Oh, man.”

Paul Lowry:
You can definitely do that.

Ryan Isaac:
I do that daily.

Paul Lowry:
So on our landing pages and marketing materials, when we have Botox pulled out as a separate add-on, then yeah, you can look at the iPhone with your face, but then right there it’s saying, hey Botox, it’s this much in our membership plan and you get it so often. That’s an easy way to kind of present it without presenting it because it’s just cool as an add-on. So again, the add-ons, if you take your 200 patients and you can increase the add, we’re seeing about 30% of patients will buy some add-ons. So let’s say you get 30% of those patients, you get 75 of them to spend another $15 a month in your office, what is that, 75 times 15? What are you, a hundred and…

Ryan Isaac:
Yeah, 75 times 15. 1125.

Paul Lowry:
Okay. So you times that by 12, you’re 12, 13 grand.

Ryan Isaac:
Yep 13.5.

Paul Lowry:
And your profit margin on a lot of these add-ons are so ancillary. You should be in the 80th, 90th percent profit margin on those. And again, you didn’t add more capacity, you didn’t add more overhead, you didn’t have to expand, and boom, you just picked up another eight, $9,000 that you added to your six or seven a breakage. You just dropped… You got 15, 16 grand to invest every year into some of the vehicles you guys are trying to own. Again, without having to cut your take home pay and not go jet skiing and not go to Cancun. You know, your lifestyle stays the same, your overhead stays the same, but you’re running things a little bit smarter. And so now boom, you got 10, 15 grand a year to invest and ’cause it’s growing an investment, it’s gonna make a big difference.

Ryan Isaac:
So I’m trying to think of this with people listening who are not doing a membership plan, or maybe they are but it’s not working the way that you’re describing it. You know, maybe they’re trying…

Paul Lowry:
They’re running a discount plan. We have a lot of offices… I’d say the majority, Ryan, of over 50% of the people are using either a competitor or they’re doing it themselves and it’s just not set up and working…

Ryan Isaac:
Yeah.

Paul Lowry:
____ like to, and so yeah, come on over. What’s…

Ryan Isaac:
Yeah, I was just gonna ask, what can they do? What would be like a good next step, a first step in the process for someone who’s listening to this and be like, “Ah, this doesn’t seem like it’s working the way that he’s describing. I want it to be better.”? Just like a free chat, a consult, what’s out for…

Paul Lowry:
Yeah, and we’ve got… It’s in your library too, and it’s on our website. We’ve got five free educational modules. They’re like 10 to 20 minutes. They’re totally free. You don’t even have to put in your email address or anything, you know? We’re not even trading it for data, you know? Just, if you go watch those, it’ll give you a good flavor and we’re very open. If there’s some techniques in there and you want to try to do it yourself, that’s okay. I do.

Ryan Isaac:
Yeah. Got it. Yeah.

Paul Lowry:
Go for it. But they can watch those modules. They might get some ideas of how to run things a little bit better. Obviously they can schedule time with us, schedule a demo. We’ll go through some of this and look at their plan and figure out how we can make it better. But those modules are pretty good. Just educate yourself.

Ryan Isaac:
What’s the website directly?

Paul Lowry:
Just dentalmenu.com.

Ryan Isaac:
Okay, dentalmenu.com. We do have those on our education library from dentistadvisors.com. Just go to dentalmenu.com and then…

Paul Lowry:
And then there’s a little thing at the top says education, or you can go to dentalmenu.com/education. But on the homepage, it’s right at the top, it says education. Just click on that. You can watch the modules.

Ryan Isaac:
And then I assume easy to chat with someone if they have questions and kind of wanna push it a little further and figure out.

Paul Lowry:
Yeah. And I’ll give you my content too, you know, my direct email and direct line. You’re welcome to give that and they can email me directly. I’m happy to chat with them.

Ryan Isaac:
You’re like, you’re gonna make an announcement of it right now or…

Paul Lowry:
Yes, it’s just paul@dentalmenu.com is my email address.

Ryan Isaac:
Okay.

Paul Lowry:
So shoot me an email and happy to engage with you.

Ryan Isaac:
Yeah. Well, I appreciate it, man. Like I was telling you before, we get a lot of feedback on services our clients engage in and just like, they’re honest about it because we’re not providing those services. So that’s also what they think. Just like they probably tell people what they think of us. That’s, you know, they’re not talking to us, but we get a lot of feedback on it, man. And people consistently tell me how impressed they are with your company and the service and the difference they feel in your process, systems, technology, methodology, education compared to a lot of other places they’ve tried and worked on. And that means a lot to people, especially these days, like we talked about, people are getting squeezed with costs and prices of things. And so thanks for coming on again and being part of the show.

Paul Lowry:
Yeah, yeah. Appreciate it.

Ryan Isaac:
Yeah, I’m sure we got more content coming up throughout this year and everything, and you’re all over the place, man. You’re at conferences and you’re speaking… I feel like you’re just everywhere all the time.

[laughter]

Paul Lowry:
I don’t know, there’s so many demos.

Ryan Isaac:
I hope you’re resting.

[laughter]

Paul Lowry:
Yeah, we’re doing good. It’s a lot of fun getting out there educating, and there is one too on that educational module. You know, we didn’t have time today. We gotta wrap up, but there is one on the accounting side of things.

Ryan Isaac:
Oh. Okay.

Paul Lowry:
And that’s, like you were saying, one of the reasons people don’t run it as a continuity program is it can mess up your ledger because you’ve got membership patients coming in, there’s no production being done and so you end up with a lot of adjustments or write-offs which screw up your ledger and your books, screws it up when you transition. So we do a lot on that side of things. Your front desk team, if you don’t set that up properly, they’re not gonna wanna run it like this. ’cause they’re having to deal with the entry of these payments and stuff on the ledger in the practice management software. And so if you don’t have a good solve for that, the front desk is gonna say I want to charge annually for a discount style plan because it makes her job easier, ’cause it’s better for your practice or your patients. It’s better for her.

Ryan Isaac:
It’s a lot of moving pieces. Okay. Yeah. Everyone reach out. Dentalmenu.com, email Paul directly. Email him a lot of emails constantly, flood his inbox.

[laughter]

Ryan Isaac:
He threw down the gauntlet.

[overlapping conversation]

Paul Lowry:
I’ll forward the tough ones. [0:46:24.0] ____ paul@dentalmenu.com.

Ryan Isaac:
You threw it down man.

Paul Lowry:
Yeah, that’s fine. We love to chat with…

Ryan Isaac:
Yeah, you guys are really awesome. Well, thanks for spending some time. Appreciate it man. We’ll do this again soon. And thanks to everyone for tuning in and we’ll catch you next time on another episode of The Dentist Money Show. Thanks Paul. Thanks everybody.

Paul Lowry:
Bye. Sounds good. Thanks.

Practice Management