Netflix-Style Subscription Plans Come to Dentistry – Episode 308

Does your membership plan encourage patient retention? Maybe it’s time to consider a menu-driven alternative that empowers and excites uninsured patients. On this episode of the Dentist Money™ Show, Ryan welcomes Paul Lowry of Dental Menu. Netflix-type subscription plans enjoy wide acceptance and now you can use this popular payment option to attract and retain uninsured patients.

 

Show notes:
www.dentalmenu.com

 

 

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Podcast Transcript

Ryan Isaac:
Hey, everybody. Welcome back to another episode of the Dentist Money Show, brought to you by Dentist Advisors, a no commission, fiduciary, comprehensive financial advisor, just for dentists all over the country. Check us out at dentistadvisors.com

Ryan Isaac:
Today on the show I interview, Paul Lowry from The Dental Menu. We’re talking membership plans, profitability, income, practice growth, and a few common mistakes and pitfalls when people have their own DIY membership plan and what to do about it. Really great interview, tons of good information. My thanks to Paul being on the show, sharing his knowledge and expertise. If you have any questions for us, hit us up in the Dentist Advisors discussion group on Facebook. Post a question. We’ll post an answer, or go directly to our website, dentistadvisor.com. Click the book free consultation link. Let’s have a friendly chat and thanks for being here. Thanks for tuning in. Enjoy the show.

Announcer:
Consultant 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 dentist make smart financial decisions and avoid the bad ones along the way. I’m your host, Ryan Isaac. And today on the show, we have a friend of ours, Mr. Paul Lowry from The Dental Menu. Thanks for being here, man. How you doing today?

Paul Lowry:
Doing great. Thanks for having me, Ryan.

Ryan Isaac:
Yeah, thanks for joining us. The dental man, I’ll let you do the intro. I always think it’s awkward when people do intros for each other. You can explain yourself and your business better than I can, but let’s tell everybody, we have some really interesting things to talk about today in regards of flow of revenue and the subscription plans and patients returning back to offices and common mistakes and just this whole growth.

Ryan Isaac:
One thing I’ll just say really quick, I’m always surprised when people want to grow their dental practice, how many ways there are to grow revenue without necessarily going out and finding new people to come to the practice. There’s ways to bring existing patients who aren’t showing up, accepting treatment, paying for stuff and growing, not only revenue, but profitability quite a bit. And this is always a big one that when I’ve looked at it and seen it implemented in clients’ offices, this is a big one. So tell us about The Dental Menu. And part of it, I’m interested. I mean, we’re a show for entrepreneurs, right? Small business entrepreneurs. So tell us a little bit about how you guys were born. where did The Dental Menu start? Do you have any little battle stories from the ground up building like a lot of dentists do it. Yeah. Who’s The Dental Menu?

Paul Lowry:
Yeah. Well, definitely we have battle stories.

Ryan Isaac:
Some scars, some wounds.

Paul Lowry:
We’re still battling.

Ryan Isaac:
Yeah. We all are, man.

Paul Lowry:
Until we’ve made it. We’re trying to solve this problem.

Ryan Isaac:
Yeah, for sure.

Paul Lowry:
Yeah. I mean how we started, I was doing marketing for dentists and a lot of new patient generation. And so we recorded all those phone calls. And so new patients call in, within the first two minutes of the call, it’s always, hey, do you accept my insurance? Yes, we do. Then the entire conversation is really around this insurance. If they don’t have insurance within the first 60, 90 seconds, it’s always how much. How much does it cost? I want to know how much it is. And it was so poorly done for so long. And it was so varied. Like, well, I don’t know. Well, it’s this much. Well, do I need x-rays? Well, it depends. Do you want buy these?

Ryan Isaac:
Everything depends. Yeah. That’s the whole medical and industry in general. It’s one of the funniest. So I just went to the hospital a few times over the last few weeks. Everything’s fine. But I walked away every time thinking, what a weird industry. It’s very expensive, but you just don’t know what you are spending money on and until you leave and it’s two weeks later, you’re like, “Oh, I didn’t, that wasn’t worth it.”

Paul Lowry:
Yeah. Thank you.

Ryan Isaac:
Or I wish I would’ve had known that and I could’ve considered other options because that was a lot more money. It’s just a funny industry how that works.

Paul Lowry:
Yeah. And so medicals made people scared to death of things. I mean, we had same thing. Some goes in for stitches, ER you pay $3,000 and then a year later something shows up on your credit for 25 bucks and get paid. And you’re like, “What the heck?”

Ryan Isaac:
You’re like, “What? Come on, man.”

Paul Lowry:
Out of 50 for 25. I paid you three grands.

Ryan Isaac:
Yeah. Or I would’ve just gone to the urgent care clinic and paid 500 bucks instead of three grand. Oh yeah. But there’s no way that you… okay. Sorry to derail that, but that’s what is happening in these conversations because there’s no way to really know and the right answer when you’re trying to do anything clinically for people is also, it depends heavily on the outcome of different tests and diagnostics, and we got to see first, which is a tough answer.

Paul Lowry:
Well, so then it’s hard because so it’s like, all right, Paul, I want new patients. And ideally I want patients without dental insurance because I’m sick of insurance and I don’t even want to get into all the crap with insurance, that’s been done to death. But essentially it’s, okay. We’re going to come up with some offer, right. Free exam and x-rays. $99 exam cleaning X-ray special, $500 off wisdom teeth. Four on four for X amount. I mean, you name the offers and it’s like, okay, you’re trying to get them in the chair, but then what do you have now conversion wise to get them to stick long term? We looked at 250,000 patients, Ryan across a bunch of offices, we looked at their birth date if you will, the first visit date into the practice as a new patient, then we fast forwarded five years, and then we looked to see how active they were in the practice. So really we were just looking how many of them had been to that practice within the last two years?

Paul Lowry:
And 68% of them that had dental insurance had been back, only 12% that didn’t have dental insurance had been back.

Ryan Isaac:
Okay. So you’re sifting through the sales calls and then you’re going through the data. This is still early in The Dental Menu’s…

Paul Lowry:
Yeah, this was five, six years ago.

Ryan Isaac:
Okay, cool.

Paul Lowry:
We were doing coaching and transitions and marketing, your typical mix. And so what we did is we said, okay, most of these offices had a membership plan, a do it yourself membership plan. Four, four and a half years ago we-

Ryan Isaac:
Wait, I’m going to stop you right there. You found that most people at least had some do it yourself plan?

Paul Lowry:
Yeah.

Ryan Isaac:
It was really common?

Paul Lowry:
Yeah. And that’s what shocked us because we were like-

Ryan Isaac:
Oh yeah.

Paul Lowry:
… 12%, what’s going on? So what was going on was all these plans they were charging annually. And so we actually went and listened to how these plans were presented. These were clients that we’d had for 15, 20 years that we knew well like, “Hey,”

Ryan Isaac:
Yeah, sure.

Paul Lowry:
…”Do you care if we hear and see how Becky at the front is presenting this membership plan, because something’s broken.” You have this mechanism in place to solve the problem. But the data is showing that you’re not solving the problem long term.

Ryan Isaac:
Yeah. 88% of those uninsured people are not coming back. Even though the majority of offices had membership plans. That’s really interesting.

Paul Lowry:
So what was happening is new patient would come in. They hadn’t been in for a while. Right? The marketing’s working, they’re saying, “Hey, Ryan, you’ve got all this work. You have $3,000 worth of treatment that you need, but you don’t have dental insurance. So tell you what, we’ve got this great in-house plan. It’s $300 a year. You get 20% off your treatment plan. You get exams and cleanings for the year. And so you’re okay. $3,000 treatment plan, I’m going to save $600 by signing up for this plan. And it’s only $300 so that the acceptance rate on the plan really high. But guess what happened in 12 months. They didn’t renew the plan. Why would they? They’re going to wait again. It didn’t solve the long term problem. It was more of a, hey here’s a way to get treatment acceptance. So your plan’s working. But these people are sitting at the same number of membership patients that they’ve had for years and years because they sign up new ones and then existing ones-

Ryan Isaac:
Yeah, just cycles. So people were signing for the plans, letting them lapse, and still not coming into the practice.

Paul Lowry:
Yeah. And they may re-buy the plan, but it was two years down the road when they wanted to come back in, then they’d buy the plan.

Ryan Isaac:
When there was an emergency to deal with.

Paul Lowry:
Yeah. When to deal was, so it made sense.

Ryan Isaac:
Interesting. Okay. So you’re going through all this in the early days of Dental Menu and you’re just like, how? I mean, man. Yeah. What was the problem?

Paul Lowry:
We’re going to solve this. The problem is number one, is their product itself. Their plan was stinky. It’s like, okay-

Ryan Isaac:
For the patient or for the office or both?

Paul Lowry:
… usually for the patient. But sometimes both. Sometimes it was crazy because they hated insurance so bad, a lot of these clients. But then we were asking, them, “Hey, you’re charging a membership plan. You’re charging $150 for exam cleaning. X-rays twice a year. You’re making substantially less than you are on your PPO plans. Do you realize that?” “Well, that’s all the market can bear.” And it’s like, “Well, you might as well just accept more insurance plans because you’re giving-

Ryan Isaac:
They don’t it. Yeah. Well, I was going to say on the DIY stuff, I was just talking to clients over the years who have had quite a bit of feedback of people running their own plan and severely miscalculating things where it was not a good situation. After a year they’re like, “Oh we lost a lot of money, crap.”

Paul Lowry:
… well, and a lot of offices were like, “Hey, we only use this as a last resort.” So we tell our team members, to put it another way, it’s like, “Hey, Ryan, we’re running a promotion. But if you’re a sucker and you don’t ask me for a discount and you’re an easy sell, I’m not going to give you the better deal.” But the next guy down the road, if he’s a hard sell and the only way I can get him is I’ll give him this promotion, I will, that’s pretty crappy. It’s like…

Ryan Isaac:
Yeah, I hate that stuff.

Paul Lowry:
So your best patients you’re going to fleece? I go, “What? That’s not a good way to do business.”

Ryan Isaac:
Yeah. Interesting man.

Paul Lowry:
What we did is we said, okay, we created a minimal viable product. We spent some money, we created a software, we put 20 of our offices on it and we ran it for two years. our initial software did monthly payments. It matched, it gave you a membership roster. It’s very similar to most the competitors in the space, where it’s like, “Hey yeah, we have at a membership software and you could sign people up online and it’ll process payments and it’ll kick out some financial reports and-”

Ryan Isaac:
Just the convenience of the logistics, running things.

Paul Lowry:
Sure. Yeah. And it worked and it was fine. We got people signed up, but we discovered some real problems. And that’s what we were trying to figure out as well. What are the real issues? One issue was when we did these onboardings with doctors, just take perio maintenance for instance. When we asked the hygienist and the doctors, “Do you want your plan to include perio maintenance where they get it every three months? Or should they get perio maintenance every four months?” And it was always, “I don’t know what I want my plan to include.” And half of them went three months, half of them went four months, they didn’t know what to do. And then, take fluoride. “Do you want your plan to include fluoride?” “Well, I don’t know. Some of them are well, no, we don’t want it to, oh yes. That’s our standard level of care.” We started offering some premium plans. Do you want offer bleaching? Do you want to offer nitrous? And every single time it was like, we don’t know. And well, if we include too much-

Ryan Isaac:
They just guess, right? Yeah. If it’s too much, then it’s too much money.

Paul Lowry:
Exactly.

Ryan Isaac:
Yeah. But you got to have some perks in there. Yeah. But it’s a huge crap shoot. Right?

Paul Lowry:
Yeah. And then we started researching patients and well, big surprise, patients all want different stuff. We started testing pricing, Ryan where we took, we would go to a practice. We’d talk to a whole bunch of patients and we’d say, “Hey, here’s the plan? What do you guys think about paying $25 a month?” And guess what patients said, “Oh, that’s way too much. I’d never buy it.” Other patients said, “That’s awesome. I’ll buy it.” Other patients said, “Wow, that’s super cheap. I’ll buy it all day long because I would’ve paid double for it.”

Ryan Isaac:
I would’ve paid double. Yeah.

Paul Lowry:
And so we started going, okay. The reason we’re Dental Menu, we rebranded when we launched our new software is imagine going into a restaurant and first off they say, well, I need to do an interview with you before you order. And then after they interview you-

Ryan Isaac:
I would like that. I’m an overly analytical person. So I would actually dig that like yeah, let’s dig into this.

Paul Lowry:
… So imagine though, after they interview you and your wife and your kids, they’re like, “Okay, well, we offer chicken pop pie,” and you’re like, “Well, I like that.”

Ryan Isaac:
You don’t like the outcome of the interview. Oh, that’s true. Yeah.

Paul Lowry:
It’s like, well, we got this one size fits all meal for you. That’s what we’re offering and buy it. It’s like what? So we started looking at how do we offer plans more in a customized way? And so what you can do with the platform is you can offer different frequencies of how often patients get benefits. So you can have a perio plan that’s every three months or every four months, your hygienist can basically look at the patient and say, “Based on what I’m seeing, you need to come every three months for perio maintenance.” Boom. They hit that.

Paul Lowry:
You can have plans. Kids that are in braces, they need to come in more often than six months. So why not offer a frequency where they get a cleaning every four months it’s only six or eight bucks more.

Paul Lowry:
We also talked to patients that said, “I don’t care how cheap it is. I’m not coming in every six months. I hate going to the dentist.”

Ryan Isaac:
Yeah, sure.

Paul Lowry:
I think it’s a bunch of crap. I don’t believe in it, whatever. Yeah. Or I’m trying to save money. I don’t have 30 bucks a month for me and my wife and two kids, that’s too much. So some of our offices will even offer an every nine month or 12 month frequency where they get that once a year. So now you’re marketing,

Ryan Isaac:
Which is probably, I mean, those patients, that’s probably still more than they would have otherwise if they didn’t have this kind of an option.

Paul Lowry:
Oh, yeah. Because they’ll come in every five years when something hurts.

Ryan Isaac:
Yeah. When something really is wrong. Totally.

Paul Lowry:
And the problem is, when something hurts, you don’t want them shopping around. You want them coming to you. You don’t want, them looking for the next deal. You don’t want them going to Google. You don’t want them looking at the corporate.

Ryan Isaac:
Well, waiting for money mailers to show up, to fix a severe problem. Yeah.

Paul Lowry:
So you can offer different frequencies. And then what we did is we created additional add-on benefits where patients can customize their plan. And this is really where we’re killing it. Ryan is, and you can do this some on your own, if you don’t go too crazy, but just take fluoride. I don’t have dental insurance. Every time I go to the office and I get a cleaning, the hygienist says, actually, I shouldn’t say every time, half the time they don’t ever even offer to upsell me.

Ryan Isaac:
Yeah. Right.

Paul Lowry:
They don’t even say anything. I have to raise my hand and say, “Hey, I want fluoride.” Because I know better. And so they say, “Do you want fluoride?” Next question is, how much does it cost? And what are the benefits? I’ve had that conversation 15 times in last five, six years. And so it’s, “Oh, well it’s $30 or $25. And here’s the benefits.” Well, if there’s me and my wife and a couple kids, I’m making $120 buying decision and been guilty where I’m like, I don’t know, I’ll put it on my kids and not me. I had a bad month, my car [inaudible 00:15:15].

Ryan Isaac:
Exactly. Yep. You start rationalizing, this is like $20 here, $20 there.

Paul Lowry:
Yeah. And you feel like… and then half the time they forget to ask me, they lose out on the revenue. Because hygienists don’t want to sell, nobody in the office wants to sell. Right?

Ryan Isaac:
Totally. Yeah.

Paul Lowry:
So we started creating these add-ons where it’s like, “Look, offer fluoride for three, four, five bucks a month. Offer access to nitrous, emergency exams, bleaching, these types of things, upgraded imaging. Do you know we would go talk to back office. Right. And this is what happens a lot of times, doctor, you don’t have insurance. Doctor says, “Hey, we need to do a pano on this patient, because I need to see what’s going on because they’ve got treatment.” So they go and talk to the patient and the back office is like, “Well crap, do I tell the patients it’s $300 for a pano?”

Paul Lowry:
Some of them do other ones are like, “I’m just going to take the images and let Susie at the front desk deal with it.” And then front office is like, “I hate it. They keep sending me this. And then I have to tell the patient, well, we did these x-rays and we did this. So I either have to tell the patients it’s 300 bucks and they’re pissed at me. Yep. Or I write it off and then in our weekly meetings the doctor is at me because I didn’t fill for the x-rays.”

Paul Lowry:
It puts these providers pitted against each other because they want to do what’s best for the patient, but they don’t have a good way to do it. So why not just say, “Look, patient, you need a pano. But if you want to add our emergency package, that includes all x-rays it’s 10 bucks a month and then you’ll have access to any x-rays that you ever need in our office. Even emergency ones.” So you’re like, sweet, they sign up, they’re paying you an extra $10 a month. Where are they going to go? When they break a tooth?

Ryan Isaac:
Oh yeah. They’re not going to shop around they’ll end up here.

Paul Lowry:
That’s where you make the money. You make money on treatment. Not on a stupid x-ray. But doctors know this, when you give away the x-rays and you always write it off, which a lot of them do, you’re cheapening your services as well. So you, as a provider, you get caught in this conundrum where you’re like, well, if I write it off for this guy, then I feel bad because I’m charging Ryan, but I’m not charging Paul. But at some point I got to make money too. And so these subscriptions work. I’ve got an office in Houston, they have a whitening only plan for $10 a month. They give him bleach, gel every time they come in for a cleaning. They have over a hundred people paying them 10 bucks a month. And all they do is a bleach gel when they come in for their cleaning, that’s a thousand bucks a month, and the cost on bleach gel is peanuts.

Ryan Isaac:
It’s not a thousand bucks a month. Yeah. Okay.

Paul Lowry:
What happens is if you offer a once a year cleaning, and you can charge whatever you want, but let’s say you’re charging $12 a month. That’s still $144 a year to do a profit once a year. Now you have a plan that’s $12 a month for your cheap skate patients. and then you have a six month plan with a bunch of add-ons that equals all the way to 60, $70 a month. You’re talking eight, $900 a year that you’re getting for your plan. Now you’ve got price points, just like any other business has, price points so that you can do what’s best for the patient and get them connected to your practice at some level. But you’re not leaving money on the table. You’re not pricing people out.

Ryan Isaac:
Yeah. That’s really cool. So you found when you started rolling this out, did those statistics change, the 12% and the people not coming back? What did you notice with the habits changing?

Paul Lowry:
Yeah, for sure. And it still, a lot of it depended on the office, but it absolutely change because when it’s a set up, forget it, that’s the other key is you don’t sell on a monthly plan for 12 months. A lot of doctors think like, well, I don’t want to finance this plan. Instead of $300 a year, it’s $25 a month. Don’t think about it that way. You got to think about it just like Netflix. Netflix doesn’t come and say, “Do you want to buy Netflix for a year? It’s 12 bucks a month month. They say, do you want to pay 12 bucks a month to have access to this content? You can cancel it whenever you want.” You got to think of it that same way of you, want to pay an extra five bucks a month. You have access to nitrous when treatment is needed.

Paul Lowry:
They turn it off whenever you want. But if you want access to nitrous…

Ryan Isaac:
Pay for it. Yep. Let’s get it.

Paul Lowry:
Pay five a month. And so when you set it and forget it on the monthly, the renewals went way up because you’re only selling it one time. You don’t want to have a sales conversation. My company included, think of every SAS software that dentists buy. They don’t get a call every month saying, “Hey, did you use your QuickBooks online this month? Was it valuable? Do you want to buy it again?

Ryan Isaac:
Yeah. You’ll pay next month.

Paul Lowry:
… Why would you do that?

Ryan Isaac:
Netflix is calling like, did you binge anything because your Bill’s coming up. Should you pay again?

Paul Lowry:
Well, actually I didn’t watch it this month. I’m going to [inaudible 00:20:04]off.

Ryan Isaac:
Hey, you don’t want to remind people of that.

Paul Lowry:
It definitely solved the problem. The other area IT solved the problem is they’re advertising instead of a $99 exam cleaning x-ray special, they’re advertising that same type of a deal, but it covers an enrollment fee in the first month of service, first month to the membership, they get all those services that day. But now they’re set up for ongoing care. It’s not just [inaudible 00:20:31] done.

Paul Lowry:
The other thing that’s really cool, we’re doing, and you could do this on your own, Ryan is traditional insurance has a thousand or $1,500 towards treatment. These membership plans don’t have anything towards treatment. And so what we’re doing is every time a patient comes in and gets a cleaning, they’re earning 25, 50, a $100 towards treatment that may be needed in the future, in the form of rewards. So as long as their membership is active, they keep those rewards. And most offices let families combine those. So for me and my wife and four kids, the office I go to, we bought a premium package. We bought a bunch of upgrades. They’re giving us a $100 of rewards every time we get our cleaning as an individual and we can combine them as a family.

Ryan Isaac:
Cool.

Paul Lowry:
So I’m getting $600 every six months for my family, $1,200 a year. And I can use it for whatever I want and it doesn’t expire. I just used it for vivos, for one of my kids. We had rewards, we needed vivos, which isn’t cheap. And it’s like, “Hey, let’s use our rewards.” And I know it’s very profitable for the dentist that’s offering us vivos. But we’re on premium plan, so I’m paying 250 bucks a month to this dentist. So, I mean, he’s getting three grand a year. I’m getting 1200 of it back in the form of rewards. But if those rewards aren’t good at any other office, and if I cancel my plan, those rewards go away-

Ryan Isaac:
And they go away. Yeah.

Paul Lowry:
… my treatment acceptance even for me, I’ve noticed it goes up. Like, “Hey, you know what? We need to replace this silver filling.” I’m like, “Oh, I don’t know how much is that going to cost.” “It’s $250, but you have $400 rewards.” And you’re like-

Ryan Isaac:
You’re like, use it. Yeah. It’s like when I log into Amazon and there’s, you have credit card rewards, do you want to spend those? I’m like, yes I do. This was free today. Yeah. That’s awesome. I’ve never-

Paul Lowry:
… those rewards are really cool.

Ryan Isaac:
… yeah. I have seen it.

Paul Lowry:
A lot of offices instead of going so hard on your discount on UCRs, some offices say, well, I’m going to give a 30, 35% discount on UCRs because I’m taking a 40% ride off with insurance and I hate insurance. Right?

Ryan Isaac:
Yeah.

Paul Lowry:
Well, you’d be better off doing less of a discount on the UCRs and going heavier on rewards because that’s a perceived value. It really is a discount. But how much more perceived value is it that you’re like, dude, my dentist gave me $200 of rewards.

Ryan Isaac:
Oh, yeah. Or annually when you’re like, yeah. There’s a few feelings I got to get and they’re covered by rewards.

Paul Lowry:
Yeah. So we’re doing the plans differently. Well then it gets into how to price these plans and we’re doing that very differently as well on the onboarding. We have a pretty-

Ryan Isaac:
I was going to ask about that because I’ve seen people mess that up and not realize it until 6, 8, 12 months has gone by and then they see the huge drop in revenue and they’re like, oh, crap.

Paul Lowry:
… you’ve got to have a conversation. And we do that with our clients all the time. The way to do it is stop throwing darts at the pricing board. What you want to do is you want to look at your UCR fees. You want to look at your average insurance reimbursement fees from your top insurance companies on your exam cleaning x-rays. These things are included. What are you getting reimbursed for a cleaning from this PPO plan?

Paul Lowry:
And then what you want to do is look at your UCRs and look at that. And then you need to decide how much do you want to get paid from your own in-house benefits plan, is really what you need to look at. Once you know that, what our algorithms do is for simple math, let’s say you want to get paid $60 for a cleaning, well, if you’re going to offer that cleaning every six months, you better be charging 10 bucks a month for that cleaning so that they pay 10 bucks, 10 bucks, 10 bucks, they’ve paid 60 bucks after six months, there’s actually revenue there to cover that.

Ryan Isaac:
Yeah. Okay.

Paul Lowry:
And so we put all these different services in the backend in an the algorithm, and once we’ve done that, it actually kicks out the price. And if dentists want to lower the price, if they say that’s too expensive, then we need to have a conversation. Okay. Are you willing to do an exam for less? Are you willing to… do you really need to get paid that much for x-rays? You already covered your machine, maybe you don’t need to get as much, but that’s what should lower the pricing, is you being willing to make less on procedures. If you’re not willing to make less on procedures, it is what it is with the pricing. And at the end of the day, if you say, “Well, I need to charge this much, really high for my membership plan.” Maybe you do need to take a hard look. Maybe the reimbursement rates for insurance, because you’re in Alaska is like, maybe just take insurances. I’m not anti insurance. I’m pro making money.

Paul Lowry:
Instead of saying, I hate insurances, we’re going to do anything. No, I just I’m like Mr. Krabs on SpongeBob. I like money, so let’s just make money. What’s the best way to make money while we’re taking care of the patients? Right? We want to do what’s best for the patients. What’s best for the practice.

Ryan Isaac:
This is an important announcement from the Dentist Money Show Podcast system, go to dentistadvisors.com and click the big green, book free consultation button. Schedule a time for your free consultation and save your financial future.

Matt Mulcock:
I mean, Ryan, don’t you think it’s a bit much?

Ryan Isaac:
Yeah, it was probably a little bit much, but I think some of our listeners might find getting a consultation should be more like an emergency.

Matt Mulcock:
They probably should. I mean, we are saving financial lives.

Ryan Isaac:
You were telling me earlier about some common pitfalls. It sounds like in just the logistics of running these plans, of booking the revenue, of just organizing everything. What are some of the problems you’re trying to tackle on that front?

Paul Lowry:
Yeah. So what we did first is okay, let’s figure out what’s best for patients, what they’re going to buy, and that’s this whole front end, right. That we’ve been talking about. Then it’s like, okay, if we have 300 patients on 300 custom subscriptions, how do we make sure my front desk doesn’t kill me?

Ryan Isaac:
Oh, yeah.

Paul Lowry:
Like, wait a second. What do we do with this?

Ryan Isaac:
Oh yeah.

Paul Lowry:
And so the issue is Ryan, and anybody who’s listening. I’m assuming if they’re running a plan, they’ve run into this issue somewhat. If a patient pays money for a membership plan, how do we record that revenue on the patient ledger in our practice management software? So if they’re paying annual, the biggest reason dentists like charging annually it’s for two reasons, one is they think, well, I get paid all that money up front. So I’m not worried about patients, “stiffing me.”

Paul Lowry:
We’re seeing a very low “stiff rate,” if you will. You look at businesses outside of dentistry, they’re not worried about getting stiffed because they build that into their model. I’ve got dentists on my platform and I’ve got bad clients. I get one out of 50 that I lose money on but I’m not going to penalize my other 49 out 50 just because I’ve got one guy that it didn’t work out for, and I “lost money.” Right?

Ryan Isaac:
Mm-hmm (affirmative)-hmm.

Paul Lowry:
The other reason that they charge annually is it’s really easy to take a $300 once a year payment and apply that to the patient ledger and zero it out. There’s not a lot of accounting. So there’s two issues. One is when people are paying 30 bucks a month for a subscription, how do I put that on the ledger for that patient?

Paul Lowry:
So some offices put a $30 credit onto the ledger and they have $30 credit, $30 credit, $30 credit. And after six months, when patient comes in for the cleaning exam x-rays, there’s a credit built up and they apply the production to it. And that’s what zeros it out. If anybody’s doing that, don’t do that. That’s a major, major problem. Because first off, it’s not a credit, it’s a membership style plan. You don’t owe them money. It’s not a credit on their account. They can’t turn around and use that for a filling, which is what happens.

Paul Lowry:
Second off, I’ve seen people sell a practice. When you sell a practice, you take all the credits and you take off the sales price, it messes up because you have all these credits. So where’s the cash for those credits? It’s a liability when you sell.

Ryan Isaac:
Interesting.

Paul Lowry:
because the cash has already been received and spent so to speak, but there’s a liability of all these credits and there shouldn’t be. The other thing is a lot of people have automated triggers when there’s so much credit and it’s been so long, it actually kicks out a check back to the patient as a rebate. So don’t do it as a credit. The second-

Ryan Isaac:
Because that’s the most common thing that people they’re booking is credit, is that pretty common?

Paul Lowry:
That’s not as common as the receivable. More common is, I’m going to put a receivable on Paul’s ledger for $300. And then every time he pays $25, his receivable go from 300 to 275 to 250.

Ryan Isaac:
Oh, okay.

Paul Lowry:
To 225. And then once he’s paid 12 times, we’re going to automatically reset the receivable in another year’s worth. And then so on. Right? Again, that’s bad because what happens when you run a report for your receivables and most of these problems I’m talking about, don’t matter when you have 10 patients, but imagine having a 100, 200, 300, you run a report on your receivables, they look out of control it’s like… and again, what happens when you transition and you show a whole bunch of receivables that haven’t been collected?

Ryan Isaac:
Yep.

Paul Lowry:
It’s not accurate.

Ryan Isaac:
Yeah, interesting.

Paul Lowry:
The most common way, what people are doing most of the time and what most of the competitors teach, and we did this on our MVP and it still is a good way to do it. If you’re a single owner practice, you own everything. You don’t pay your hygienist on any production. You don’t bonus them on production. You don’t have associates to worry about. You’re just really self-contained.

Ryan Isaac:
Pretty simple.

Paul Lowry:
Pretty simple. You just take that revenue. You just accept it. A lot of times they’ll create a patient with a 9,000 code called membership. And they’ll just record that revenue every month on that dummy patient, if you will. And then in their practice management software, they set up the fee schedule to have the exam cleaning and x-ray to have it be free. It’s a zero. It’s a write off.

Ryan Isaac:
Got it. Okay.

Paul Lowry:
So Ryan comes in, front desk checks him out, and then the fee scheduled either they either apply an adjustment so it zeros out the exam cleaning x-ray. So it shows that they owe zero. And that’s actually a really good way to do it. And that’s what I’d recommend. If you’re a single owner, you’re not worried about keeping track of revenue per patient. You’re not worried about how much production, how well are you producing and hygiene and all that. You’re not worried about that, just do that. Just create a 9,000 code. Revenue comes in your bank account, apply it once a month and zero out the fees for your providers.

Paul Lowry:
We started talking to hygienists and a lot of the hygienists hated membership plans that were being bonused on production. It affects the hygienists the most.

Ryan Isaac:
Oh yeah.

Paul Lowry:
Associate doctors are okay writing off an exam because if they do as an exam, they’re probably going to get some treatment. Right. But hygienists a lot of them are like, we work with different groups that are trying to push hygiene production up, imagine doing a super nasty SRPs. And then you’re doing this maintenance, and you’re getting zero credit on your books for it because it’s free. It’s included in the perio membership. Really, I just did three perio maintenances today and I got zeros recorded in the ledger towards my bonus.

Ryan Isaac:
And especially like you said earlier, if it’s spread across hundreds of patients like this, that’s a big problem.

Paul Lowry:
Yeah. So the hygienist in the back office should be promoting and really selling land more than anybody else. It’s a hygiene product. Well, a lot of the hygienists, which you got to realize, you’re a hygienist, the patients know, like, and trust the hygienist a lot of times more than anyone in the office, more than the doctor. The doctor is expensive. And he hurts me. My hygienist talks to me for a whole hour and knows everything about me. And so when they don’t like your plan and they don’t want to promote your plan, it’s broken.

Ryan Isaac:
Yeah. It dies right there in the back.

Paul Lowry:
We talked to a lot of hygienists that said I would rather do cleanings on PPO patients because I make more money than I would on our own membership plan. I mean, imagine what they’re telling you guys, if you own a practice and your hygienist would rather work on PPO insurance patients, and you’re taking a 40% write off on your production than on your own in-house membership plan-

Ryan Isaac:
And it’s still better than your own plan. Yeah. Then there is an issue. That’s a problem.

Paul Lowry:
There is an issue. And then it blows up when you start offering more options. Like, so you have one singular plan. You’re trying to keep track of it. Now you have three plans. You’re trying to keep track of it. Now you have add-ons and all this extra stuff. And you’re like, well, how are you going to keep track of all that stuff? What we do with people that want to keep track of it down to a patient level, if you think about everybody rips on insurances, but let’s talk about what insurance does do for you as a practice owner, they keep track of all the patient’s payments. Right? The insurance company collects the revenue, the premiums from the patient and they hold all that revenue and they keep track of it. You’re not worried about recording any stuff into your books.

Paul Lowry:
Then they keep track of benefit eligibility. And then when you provide services, you file a claim to the insurance company and then assuming they’re eligible and we won’t get into all the garbage, but in theory, they’re supposed to send you a payment on behalf of the patient for those services. And they’ll send you a payment and they’ll send an EOB report, an explanation of benefits. So you’ll get $5,000 dropped into your bank account from XYZ insurance company. And then they’re going to tell you, “Hey, you need to record a $100 on the ledger for Paul Lowry’s cleaning. You need to put $50 on for x-rays. You need to put this much for Ryan for his. And so you’re actually inputting a payment on a ledger from the insurance company. That’s what zeros out the production. So when you run your provider reports, there’s actually revenue being attributed to the provider for benefits received.

Paul Lowry:
So if you have three different hygienists, they should be compensated on the work they do on the membership plan, not just like willy nilly notes. If you run multiple practices, you have two practices. You’ve got one in Phoenix and you’ve got one in Mesa. And don’t you think that the office that actually performs the services, don’t you think that revenue should follow?

Ryan Isaac:
Oh yeah. There should be organization. I mean, there should be meticulous organization especially the more complex the business structure becomes. Oh yeah.

Paul Lowry:
Exactly. So imagine selling a membership plan, the revenue goes to a centralized location. They could go to any locations they want. That’s what insurance is. Right? I buy XYZ insurance. I can go to any providers I want. And then they pay that provider depending. I could go to a different provider every single cleaning, if I want to, and the revenue will follow it. Well, so we’ve set up a similar structure to where that revenue, the monthly, it doesn’t matter, monthly, annual, semi-annual. You can charge whatever you want. That revenue actually will go and get held. We set up basically a holding account for these offices that revenue goes and sits there. It’s still their money. They can access it whenever they want. They can use it however they want. But just for accounting purposes, we have it. It’s unearned revenue, right? It’s a prepayment essentially.

Paul Lowry:
And then we’ve got integrations with open dental legal, soft and Dentrix. When you check that patient out in your practice management software, it’ll API. First off all that data will get recorded in Dental Menu. And then it’ll API, ping that account. And that account is going to actually send a payment for those services rendered so you can actually enter in a payment for those services. What’s really cool with the team and the front desk, they’re used to dealing with insurance, we’ve set up the exact same flow where look-

Ryan Isaac:
That makes sense.

Paul Lowry:
… You’ve set it up in Dentrix as an insurance plan. You check the patient out patient. The patient amount due is zero, but then it shows that there’s a balance owed from essentially the own in-house membership plan. The revenue comes across, you’re matching up your revenue that gets deposited into your account with your bank statement, it’s going to match up perfectly with your ledger. Everything matches up. There’s not these willy nilly crap we got to write stuff off. We got to do this, we got to do that.

Ryan Isaac:
Like Santam patients or yeah, write offs. Yeah, exactly. That makes a lot of sense. Thanks for going through all this. I feel like there’s probably a lot. We could like keep going on this. How about tell everyone, I mean, is this a thing that’s hard to get started or hard to implement in a practice? I mean, is there a reason why people just won’t do this?

Paul Lowry:
If you’re looking at, hey, how do I get some additional revenue? How do I solve this problem? I want to take my membership plan the next level, and really take it, then it’s pretty painless. We don’t have any contracts. We don’t charge anything up front. We can do all that onboarding and stuff. We got a couple different packages. They’re pretty affordable I don’t want this to turn into a sales call. I really want to add some value to what’s going on, but it’s very affordable.

Ryan Isaac:
Yeah. It’s approachable. It’s affordable. There’s something for everyone to get started with. And I like what… we were just saying this in the beginning, just I’m always surprised at how many ways there are to grow without trying to go out and find new patients. And you probably have the data on a new patient acquisition cost versus a patient that’s already in the practice to just come back and accept treatment.

Paul Lowry:
Yeah, way cheaper.

Ryan Isaac:
Way cheaper. And the rapport is already there. The trust is already there. You just got to make it easier for them to show up. And we said that in the beginning, I’m always surprised at how many creative ways there are to grow revenue and profitability, which is income to the dentist that have nothing to do with a brand new patient that’s never been there before. And this is like, feels like a no-brainer to me.

Paul Lowry:
What you’ve got to do though is imagine everybody is doing reactivation, emails, texts, and whatever, but your message to that uninsured patients is like, “Hey, we haven’t seen you in a while. Come back in.” Okay.

Ryan Isaac:
Well, why I still can’t afford it.

Paul Lowry:
How much is it the cost? What’s in it for me and whatever. Same thing with treatment acceptance. We’ve had offices with these rewards. Let’s say you’re slow in September. You could actually look at patients that have treatment plans, but also have rewards. And we’ve had-

Ryan Isaac:
And match them up.

Paul Lowry:
… where it’s like double rewards month.

Ryan Isaac:
Oh, jeez.

Paul Lowry:
If you get your treatment done in September, you’ve got a $100 rewards. We’ll double that for you.

Ryan Isaac:
Gosh, man. It’s such creative marketing to people who are already in the practice. And it does-

Paul Lowry:
Instead of discounting, get away from discount.

Ryan Isaac:
… yeah. Man, that is so cool. Okay. Well, where do people find you? How can they each out and get in touch?

Paul Lowry:
Yeah. I mean, I don’t know if you have anywhere you post stuff. Our website is dentalmenu.com. Just how it’s spelled. You can schedule a demo on there. If you’d like, I’m happy to chat with you.

Ryan Isaac:
Cool.

Paul Lowry:
Ryan, you got my information, wherever you post that on your side.

Ryan Isaac:
Yeah. We will. Well, we can post that in the show notes and links and when the episodes come out in the description comments and everything.

Paul Lowry:
We’re happy to chat. I mean, we’re happy to chat with you and if you want to take some things away and do it on your own, we’re totally fine with that too. We want people to improve their plans and get patients.

Ryan Isaac:
I like the philosophy. Let’s just figure out a way to make some money. Let’s be some greedy capitalists. I like it.

Paul Lowry:
Yeah. That’s right. Well, and being greed is going to be best for your patients too.

Ryan Isaac:
Yeah, it will. Well, man, Paul, thank you for spending some time and going through this, I thought this was an interesting take on a solution that’s out there. I think it’s a huge help and a no brain here to implement the right way. It’s worth doing the right way. Like you said, just keep everything clean and organized, I’m just a big fan of that.

Ryan Isaac:
So anyway, thanks for spending time. Thanks for being with us here. And everyone thanks for tuning in and listening to show. And if you have any questions for Paul and his team, just reach out at dentalmenu.com, give them a shout. They’re nice people and they’re really smart. They know they’re doing to help you out.

Ryan Isaac:
Paul thanks for being here. Everyone thanks for tuning in, catch you next time. Bye-bye.

Paul Lowry:
All right. I appreciate and thanks Ryan.

 

Practice Management