Jordon Comstock’s Recurring Revenue Solution – Episode 40

Jordon Comstock is founder of BoomCloud Apps, provider of in-house membership software for dental practices all over the country. Inspired by his deep knowledge of the dental industry, a passion for user interface design, and a book called The Automatic Customer, Jordon built a platform that allows practices to offer, manage, and track a variety of membership solutions for their patients. In this Dentist Money™ interview, Jordon explains how fee-for-service models can work alongside PPO plans to stabilize revenue, expand patient base, and improve retention.

Show notes:

http://boomcloudapps.com/

Podcast Transcript:

Reese Harper: Welcome to the Dentist Money Show, I am your host, Reese Harper. I’m here with a special guest to cover a very interesting subject. Mr. Jordan Comstock of Boomcloud is here to talk about in house membership programs and how you can navigate the fee for service world with a little bit more efficiency than you have done in the past using cool technology. Jordan, welcome to the show. Thanks for taking the time to be here.

Jordan Comstock: Thanks Reese, I’m excited to be here, this is a cool place.

Reese Harper: Thanks man, he is on site! We try to do as many of these as we can in the office because the audio quality is so much better.

Jordan Comstock: I agree.

Reese Harper: And I actually get to see somebody and get to meet them, so this is awesome. Define for people who are just getting started in the industry and don’t have a good idea of what an in house membership program is, let’s define that really quick. How does it differ from what they think it is?

Jordan Comstock: The simplest description that I use for it is, Amazon Prime for dental practices, or Costco membership for dental practices. A patient pays a monthly or yearly subscription and they get discounts and benefits to that office and that office only.

Reese Harper: Why would an office implement an in house membership program versus just working with PPO’s exclusively?

Jordan Comstock: That is a great question. PPO’s are known to discount or force their providers to discount deeply, and it is a joke. I am going to be upfront with you, right? These dental practices are getting squeezed to death from the insurance company. What is happening is the insurance company comes in and is in control of the practice from the fees to the quality of dentistry. There is a stat out there from the US surgeon general claiming that over 108 million people in the United States do not have dental insurance. There is a large market out there that doesn’t have insurance, so you can go the route and just accept a bunch of PPO’s, but there is still that other half of the market that doesn’t have a program or plan that they are paying for for dental care.

Reese Harper: Yes, and I have read a lot of statistics out there concerning the reasons people choose their particular dentist, and you probably know this, but it seems like the reason they mostly go to their dentist is because they are “in network” with my insurance. Isn’t that the primary reason why guys show up?

Jordan Comstock: Ya! Insurance encourages people to use the doctor in their network.

Reese Harper: I guess with that reality what is a step in the right direction I can take because if I just say I will not accept any of these PPO’s anymore I will be in trouble. They will have to phase something in. Is that something that is easy for a lot of people to do or is it a dead end when they try to start implementing something?

Jordan Comstock: They don’t want to cut out all of the PPO’s all at once. You can slowly phase them out and negotiate PPO fees with the good PPO providers and cut out the bad ones.

Reese Harper: So ultimately get some help to reduce your risk to the poor exposure you have and you are saying implementing an in house membership program just helps supplement the good PPO’s that you are working with.

Jordan Comstock: Yes, exactly, you can definitely do that. There are some practices out there that don’t accept PPO’s at all. Obviously though, the majority of the industry has a list of PPO’s they are working with.

Reese Harper: I guess is all of this legal and how do I stay within compliance of existing laws in my state when I am trying to implement an in home program?

Jordan Comstock: It is definitely legal, certain states have certain regulations. For example, California requires you to get a license from them and I have been working with that state on the process. I think so far, from what I understand, they are the most complicated. Certain states have different regulations, some of them require you to just have an agreement and not call it insurance. It cannot be called insurance. That is probably the biggest one. You just have to have an agreement. Those are the basics.

Reese Harper: Tell me about the benefits we didn’t hit on. We talked briefly about what it was, but I don’t think we’ve talked about the benefits of implementing this in the practice.

Jordan Comstock: There a are a lot of business benefits the first one I like to talk about is recurring revenue.

Reese Harper: You started on that, I got you down another tangent.

Jordan Comstock: Recurring revenue is great for any business. I am sure you as a finance guy can appreciate recurring revenue. A practice can generate either yearly or monthly recurring revenue. For example, there is a practice in North Carolina and his first year he signed up about 1,000 patients in his membership program. He generated close to $30,000 a month of predictable recurring revenue. I know a lot of these dentists out there they have very busy months and a few slow months. If you can stabilize your business like that it is a less stress load to run. The second benefit is that you are in control of your fees. The biggest problem that dentists have today is that they don’t have control of their fees. That essentially controls their business. By implementing an in house membership program they have control over their fees and then they don’t limit their patients with insurance right? They don’t have yearly maximums and their case acceptance is extremely high because they are in control. Those are a few benefits I see across the nation.

Reese Harper: In your company, you don’t really dive deep into helping set those fees as much right? Don’t you bring in other people to help with that? Boomcloud focuses mostly on the administration of the plan that an office designs, is that correct?

Jordan Comstock: Yes, that is correct. We do have templates from successful practices that we have worked with and seen success with, so a lot of practices when they sign up we have a list of templates they can use for plans and most dentists use a business consultant or a practice management consultant that helps them with their fees. We don’t necessarily get into that. People will ask us, and we will give our advice, but we try not to dive into that.

Reese Harper: Talk to me about how you would market a membership program to your existing patient base or to the community when you are competing with all of these corporate dentists and the provider network that is on my existing PPO when I look at my provider list. When I look at it and see that Mr. Dentist is not on it am I going to go to the guy that’s in network or is there something that I can do as a competitor with an in house plan to incentivize a patient to come and see me? The fee schedule that I am going to have to pay out of pocket needs to be competitive or it needs to offer additional benefits?

Jordan Comstock: Exactly.

Reese Harper: In my experience as an entrepreneur you can always price higher, you can be more expensive as long as you have more value to add. How can they market this and differentiate this a little bit?

Jordan Comstock: What works out there is to first, start with your existing patients. I was at an office the other day telling them about this program. I asked them to pull up their data off their practice management system and they looked at people that had PPO insurance or just dental insurance versus those that didn’t. They had about 1,000 people in their practice that did not have dental insurance. That is a gold mine because they know you, they trust you. Start there and you can really roll out a membership program with the people within your practice that don’t have dental insurance. Look at the data, I know you can find it. I spoke to the doctor in North Carolina and what he did to grow his practice is he targeted retirees. The cool thing about that market from a dentist standpoint is that they lose their dental insurance when they retire.

Reese Harper: That’s the low hanging fruit right?

Jordan Comstock: Yes, so most retirees lose their dental benefits and they are the demographic that need dental care the most. They are getting older they want to enjoy their teeth because having no teeth is miserable.

Reese Harper: “Having no teeth is miserable.” I want that quote on the podcast cover for this episode.

Jordan Comstock: Yes, put that on there. That is a great market, people that are getting ready to retire because they don’t have a plan and they have disposable income.

Reese Harper: I have got low hanging fruit between my existing non insurance patients and then I can look at an older demographic or people that are out of the work force because they don’t have dental insurance. Those are two target groups, might not be 100% of your practice, but it could be a large chunk?

Jordan Comstock: That is the easiest thing to get started with.

Reese Harper: Any thoughts on how I would approach those people? How have your clients successfully approached those 1000 patients that are sitting there without dental insurance?

Jordan Comstock: Ya, a lot of practices have systems like Solutionreach or others that do text message reminders or email messaging. You can do an email or text blast out to those people in the practice, those patients I should say, you can contact them that way and then obviously flag them and contact them when they come into their appointments to educate them on the program. With retirees, if you are doing external marketing I would do a direct mail campaign and then another cool thing that I have heard is one of the doctors I have spoke with, he went to the community center and scheduled an event, brought food, because that brings everyone to events. He brought food, educated the group on dental care, and then said, “hey, you don’t have to have insurance to join my practice. We have this awesome program,” and he then he would educate. He did that every month.

Reese Harper: Interesting. Ultimately, do you have any perspective on what the patient is thinking when they get approached? They are currently just paying $600 here and $200 there, and then $1500, and they are used to paying big lump sums. What is the selling point of this membership that makes me as a patient feel like I want to sign up for that?

Jordan Comstock: There is a practice here in Utah that I speak with a lot because their main strategy is a membership program and basically how they sell it is, “well, it is a better deal than what you are getting in dental insurance.”

Reese Harper: Meaning, ok, there is no premium because it is not insurance. There is a membership fee that I pay which is less than what I would pay to buy dental insurance and I am going to get benefits that are greater than what I would get from the dental insurance company.

Jordan Comstock: That is true in most cases. Again, practices can control their own fees so it varies from office to office. But on a patient benefit perspective they don’t have to deal with the hassle of dental insurance.

Reese Harper: It is simpler.

Jordan Comstock: Yes, when you have dental insurance on a patient level you know you can choose any dentist in the network right? What if your doctor is not in the network? What if your job switches dental insurance companies and that doctor that you have been going to for years is suddenly not on the network? That is where an in house membership program can come into handy with that patient.

Reese Harper: It sounds like one of the primary challenges is just going to be determining the structure of the benefit plan that you want to deliver. That is something that you guys have several templates for. We will have some other guests on the show over the next month that will kind of dive into that in a little bit more detail as well. Start with the low hanging fruit, start with existing patient base, because there is a way to convert that into more recurring revenue and deliver an experience that you can control and price effectively. I think that is one of the biggest challenges for me when I look at it. Thinking that you don’t control your fees or what you get paid makes it very difficult to control the experience someone is going to have because I don’t know how to price what we can deliver if I am not sure what we are going to collect. It is intuitive to a lot of people that they should kind of go that route. What do you think the mistakes are as they try to implement this.

Jordan Comstock: I have seen a lot of mistakes. The biggest one that I see is practices don’t automate payments. They have their staff manually run the cards every month. If it is a monthly membership program, one of my friends, she is an office manager, they have a program in their office and she is like, “I am so sick of running the cards every month.” These days, we live in the 21st century you can use computers to automate payments and all of that stuff. Another one is not doing auto renewals. I spoke to another practice a couple of months ago. Their biggest issue was that they were all excited about the membership program they had heard about it from some conference. Basically what they did was signed up about 100 patients on a yearly plan. What happened is at the end of the year they didn’t think about the future, they didn’t think about auto renewing those patients, so the staff had to go and call 100 patients to try to re-sale them on this program. I like to think about Amazon Prime. If you think about how they manage the program, they automate it every year. It automatically comes out of your account. That is how they do it. You have got to have auto renewals or else it is going to be really hard to grow it. You don’t want to resell again and again to the same person. You want to sale it once, give them great benefits, and then have them be customers for life. That is more of a long term strategy. Some of the other mistakes are people using google docs to store financial data. That is a huge problem because google docs can get hacked. In fact, my gmail got hacked a couple of months ago and if I had had financial data on that I would have been in big trouble. There are PCI compliance laws out there. They are like HIPAA but for credit cards. Those are a few of the biggest problems I see.

Reese Harper: Storing data in a safe location. What does it cost? I know that BoomCloud has developed a product that helps do this for people? What is the cost of that product and what things does it do that makes it easier for me to implement this?

Jordan Comstock: Currently our pricing model for the product is around $199.00 a month. We have some set up fees, our software integrates to the website so patients can sign up for the practices plans online. We have some set up fees, we will typically wave them during a promotion.

Reese Harper: That helps me get to the point where I can track all of this stuff compliantly. I can get my renewals set up on an automated basis. I can kind of see information about the plan that people have signed up for and there might be different plans that I offer, and I can keep track of which type of plan people have signed up for.

Jordan Comstock: Yes, you can create unlimited plans if you want to, I don’t know why you would, but the software would manage it so you don’t have to.

Reese Harper: Is it generally recommended to have between 2-3 options?

Jordan Comstock: Yes, that is what I recommend to have 2-3 options.

Reese Harper: One option is probably not ideal.

Jordan Comstock: Yes, what I recommend when people set up their plans is to have a low, middle, and high option and see what people bite on. I was speaking to a doctor in Chicago and he wanted to just focus on the high one. I had to tell him, “hey, create a couple of plans and see what works for your market.” You have got to create a variety of plans and then see which ones work for your practice, that is what I recommend.

Reese Harper: One of the things as a dentist that I am thinking about when I am looking to implement this is obviously, “I have got to have a way to track it,” and that is what your product does. I think some of our listeners are probably wondering if there are other people out there that do this? Who else is doing this? How do I compare your product to the competition?

Jordan Comstock: There are a couple others out there. I think Illumi Trek is one?

Reese Harper: How do you differentiate from other providers?

Jordan Comstock: Basically how we differentiate is that we are always adding new things to our software. A lot of software companies out there will create something and then they sit on it. At least the ones I know of that are doing the same thing we are doing. They sit on it and don’t change it and improve.

Reese Harper: You guys are focused on user feedback?

Jordan Comstock: Yes! In our software we have a section where they can submit ideas. We basically take those ideas and then do a poll with all of our customers and basically we have our customers vote on what they want to be added next. That is one thing that we do that most others don’t.

Reese Harper: That is great.

Jordan Comstock: That is probably the biggest difference right there.

Reese Harper: This has been really helpful, man. Ultimately the plan would be to determine how many patients I currently have that are not on insurance. Look at my patient base and analyze that, get someone to help me with that. Second, determine a benefits package or some kind of plan that I am going to deliver. You guys have templates, and I can reach out to various practice management consultants who can help me do the same thing. Third, find a way to keep track of this stuff so that it is not a mess and that it is sustainable. You guys have created a product that allows people to do it in a really efficient way.

Jordan Comstock: Yes, and I didn’t mention this before, but I am really big on creating processes and systems. A dental practice is one that definitely needs systems to make anything successful. You can look at different aspects of the business end and clinical end and there are systems in place that make you successful as a dentist.

Reese Harper: I think that is really true, man. Our listeners and clients have heard us talk about that a lot. How to attack things in a really precise way, if you are going to do it do it the right way, and if you are going to do something, do it with discipline and order. Sometimes that requires a little bit of staff cost, little bit of your time, cost in software and products to kind of make it scalable. This has been a great interview. Gives people a lot to think about. Anything you would like to leave with our listeners before we let them go.

Jordan Comstock: Yes, if you are really thinking about doing an in house membership program there are plenty of resources on and off line about in house programs. The biggest problem I see is people who think about doing it, love the idea, but they just don’t do anything. Just start, start talking to your patients about your ideas with a membership program and start implementing it. It is not that hard to do. It is a simple strategy but it can do wonders for your practice.

Reese Harper: Thanks Jordan, I really appreciate you taking the time to come in and share your wisdom and insight on this. You have put a ton of hard work into putting a product together that makes this possible for dentists.

Jordan Comstock: Awesome, thanks Reese.

Reese Harper: Congrats, good work man, we look forward to having you back!

Jordan Comstock: Sweet.

Income