Are PPOs the Devil?

[Music] good evening everybody Welcome to De Solutions lab where we identify an issue in our industry and in our practices and with the help of some industry experts hopefully by the end of this hour that we have together we will maybe have some clarity to make better choices for our practice um or at least some information as we make our decisions moving forward I'm Dr Pam maragliano munes I'm the chief editor of dental economics and with me today I am so excited I love spending time

with you guys Mark cus and Jordan comto you guys thank you so much tonight well thank you for having us Dr Pam this is awesome I'm excited yeah I'm I'm rolling up my sleeves as we speak I'm getting ready to get get this is this is one of my favorite things about this event is that it is casual ual this is not a you know where's my C certificate kind of thing this is us as industry people as practice owners sitting down having a a chat

I've got my water with me and we're just going to have a conversation about what's going on in the industry so this is intended to be interactive so please you know throw questions into the chat raise your hand do what you need to do because you should get your questions answered because we've got some really great experts with us today so I'm not going to waste any more of your time Jordan and Dr Mark take it away all right Mark I'm gonna introduce you welcome everybody

our PPO the devil is what we be talking about today uh super pumped um when we planning this uh meeting Mark came up with the idea and I just I fell in love with it so um Mark let's let's introduce you so if you don't know Mark um where have you been uh Mark's The Host of the dental preneur uh podcast he's an international speaker he's a founder of dental success Institute you also do the dental success Summit which is super popular I've gone to it

every year I think you've started it um a CEO of dental success Network which I'll let you explain that at the end mark what it is and I've read your book pillars of dental success in fact I um when I onboard new employees I have them read your bookmark so they can get a better understanding of the dental industry so thank you for that but thanks bu ladies ladies and gentlemen Mark hello how's everybody doing thank you so much for having me Jordan this is a

great invite Dr Pam you're awesome I am thrilled to be here big crowd tonight this is fun and I will introduce Jordan comto Jordan comto he used to manage a lab in Salt Lake City that's that's how he got introduced to Dentistry um crazy what's happened with his career and the company that he founded since he's the founder of Boom Cloud um he's been over 15 years in dentistry he's the co-host of another podcast called the navigating Dental podcast uh dental insurance podcast um he's a

founder of boomcloud like I said he hates dental insurance but he loves guitars and he's helped over a thousand practices grow membership programs uh Jordan and I just has a little bit of a background we um we got to know each other years and years ago when we were both starting on the speaking circuit and it's funny when we when we look back about the the um the events that we used to speak at and the size of those events they were teeny and our companies

were teeny and we've kind of grown together and and evolved I guess as as uh speakers and business owners for sure absolutely yeah it's been fun to watch you like ways bro all right so I'm going to start I'm going to talk about why I think uh basically insurance companies are the devil um we're going to give you guys a strategies some strategies on um on on how to combat that Mark's going to go into a lot of numbers and and strategies that he sees helping

practices uh you know with his Consulting career helping well owning multiple locations and helping multiple locations so from my perspective insurance companies are really the worst Partners ever uh they attack your cash flow they hurt your profit margins and they jeopardize your patient exper experience if I had a employee or partner that did any of these things I'd fire their ass I'm just going to say it right there that's how I operate if they touch any of those things that's like sacred business uh principles U

so that's what they're doing and that's what you're doing when you when you sign the dot align with the PO contracts um from my experience in talking to practices um in addition to that we've got this awesome uh graphic here um that shows you you know you got insurance companies that are forcing you to Discount and they're you're making dollars off off of your backs these are some of the top CEOs in insurance companies and their yearly salaries right Mark yeah I mean just for the

people I'm used to talking to as you are to a podcast audience that's Audio Only and if you can't see what we're looking at here there's six CEOs of some of the biggest um po plans in the world we have the a CEO we'll call him David he's making $19.9 million per year human a CEO uh we don't even give his first name he's making $16.4 million per year U UHC CEO David again is also making $18 million a year the ETA CEO Larry is making

$23 million a year um The Anthem CEO Gail she's making $17.1 million a year and uh the Molina uh Molina CEO Joseph is making 17 .8 million per year and this is coming from companies that refuse to increase their fees that are getting more and more picky about the the types of procedures that we're allowed to do um they have their hands in our pockets um all the time yet the CEOs are making ridiculous amounts of money so um we are the pwns in their their

little chess game which is unfortunate but um I'm going to talk a little bit later about um some of the things that you need to do if you are accepting dental insurance and how to make sure that you remain profitable when accepting dental insurance so I will give the Counterpoint to Jordans get rid of it no matter what um under under all circumstances so I'll be the Counterpoint to that and and just you know my two sents it looks like the human CEO is probably the

biggest slacker out of the six yeah I mean I don't know how he makes a living how does he survive on only $16.4 million per year yeah so you know they're they're forcing you to take discounts and definitely profiting off the backs now I I am a capitalist you know I believe in everyone you know building their own wealth but with insurance it just seems like a a legal scam that's kind of how I explain it to my wife it's a legal scam yeah so kind

of interesting so in addition to insurance companies forcing discounts and really being complicated to work with um we've got inflation that's that's now kicking in uh for 2021 current inflation rate look at it this morning at 6.8% so you got your discounts your forc discounts on on PO discounts and inflation kind of squeezing the dental industry it's it's really interesting the uh Ada actually just sent a sent out like a warning letter uh I think it was December 1st uh earlier this month basically talking at

trying to convince insurance companies to be open to negotiating with dental practices and I know how hard it is to negotiate with an insurance company um they're well equipped legally uh and they know all the negotiate negotiating TCT tactics in the book but uh adaas I found that interesting reading that article earlier this month that they're talking about the issue that inflation is is kicking in and then the ppos are are really making it they're both making it worse so I want to bring that to

everyone's attention today because I I think it's really interesting the situation that we are in in the dental industry now and moving for for next year 2022 and I'll I'll say that that that number that you put out there Jordan is is you know for goods and services 6.8% they say that it affects certain categories more than others but I think that anybody that owns a dental practice or Works inside a dental practice understands the reality of what's happening with the actual job force and um

the amount of the increase that that we are all seeing in what people are um yeah wage inflation what people are demanding in order to stay on with your company uh hygiene you guys know that um a huge uh percentage of hygienists aren't coming back to the workforce as regular W2 employees and they're working for temp companies and and asking $60 an hour um you know your office manager just recently got a 20% raise in in order to keep her from going next door we're seeing

a lot of this stuff happening so 6.8% is bad news but we know that the reality is that that um just just to stay in business we're having to pay a lot more for operating expenses yeah I heard that wage inflation was like around 32% I don't um I read that briefly so I mean don't quote me on it but that's in the dental industry I think wage inflation is pretty pretty heavy I mean even in my own company wage inflation has taken a toll this

year with with people that I work with and I'm in the software industry you know so it's it's definitely time to be very uh conscious on what ppos are doing to the industry and to your practice on from a financial standpoint and a culture standpoint um and then uh in in in addition to that you know we got weird e economics happening with inflation and the recession last year covid it's been wild so I found that interesting and I wanted to share that with you all

if you if you want to go read the full article on Ada you can find it pretty easy there it's on their News website or their news page um so a couple tips uh quick tips from me um to combat inflation is one of the things we're goingon to be talking about is starting a membership plan that's my expertise in the industry that's what I've devoted all my time on um I'm the membership geek uh in the dental space um we're going to talk about focusing

on recurring revenue and how to increase the average revenue per patient I'm a that's probably the most important metric that we can talk about here in the industry GNA talk about you know how members become you know they buy more and we're gonna talk about it's very important to look at your raising your prices a lot of our practice right now at boomcloud are raising their prices January 1 and I think that's very a good practice to do every year um and then the big tip

is cut out ppos which next slide we're going to talk about our good buddy Ben T I have I'll have a show you guys a picture of him he's provided these tips for uh this event today um I actually do a course with Ben called fire the ppos and we go in depth in these These are these are the uh seven tips for cutting out ppos the first one is create an in-house membership plan and we'll go in depth here in a minute on that uh

you want to build your insurance profile I mean you got to diagnose your situation you got to know how many active patients are in each plan that you're in contract with what the revenue what revenue is coming in and is generated from each plan what is the forced discounts is what I I call enforc discounts um a good tip is also using fairhealth consumer.org you can type in your zip code and see uh the the current uh market pricing for your for all the services in

the in a demo practice it's a wonderful uh tool my team uses it every day help to help our practices with membership plans you got to understand how you are contracted and with whom there's a lot of umbrella networks out there Mark I don't know if you know anything about umbrella net networks but I think they're nasty my mute on and I've got my camera off so I'm just gonna it's Bob hi Bob I know Bob uh step four is identify which in which uh plans

have the best uh Network out of network benefits uh talk after talking to Ben T who does this all day every day uh He suggests that you look at Etna siga guardian and Met Life uh most of the time they have the best out a network fees so he recommends practices look at those and start there uh you want to train your team to scale up your membership plan and on the processes of cutting out ppos you want to scale your membership plan because we'll talk

about the benefits of reoccurring revenue and owning a revenue platform is what I call it um and then step seven you want to execute or rinse and repeat and fire as many ppos as you can so that's the quick tips that we have here at the end of this webinar I'll offer a free course that goes in depth uh with our good buddy here Mr Ben T he does a lot with dentl economics writes a lot uh for them as well wonderful resource okay so with

all that said uh we know that ppos are a problem they're attacking some pretty critical things in the business um and from my perspective and helping so many practices in the industry membership programs are the solution because they help you create Rec Revenue they drive and increase loyal patience and there's a membership effect um anyone here in the chat if you got Amazon Prime put Prime in the chat real quick uh once again if you've got Amazon Prime put Prime in the chat um I'm guilty

I think I got like 10 packages in the office today it's Christmas it gets really it gets really crazy here um okay those of you that have Prime put multiple dollar signs in the chat if you if you've noticed that you spend more with Amazon so if you use Amazon Prime and you like I get a package on the porch every day put oh look at that Mark Mark is a big spend did do did I do that out loud yeah yeah d i I spend

so much with Amazon the average Amazon Prime memb spends I think like 1,800 bucks a year um with or 1,500 bucks a year with Amazon and and uh we've done similar case studies in dentistry where patients spend three times more with practices when they become members compared to non-members so very interesting so there's there's my uh every day is Christmas Jodie at my house too it totally is so um with that mindset that that I call that the effect uh we we live in a subscription

economy uh it seems like every industry is coming out with a subscription plan I I pay for a car wash plan I paid for uh the the Netflix and all the all the all that fun stuff I used to have a list of all the stuff I paid it's kind of gross but um I think the reason why it works is because it's budget budget friendly it's convenient and it's very useful and valuable especially when you talk about you know Dental membership plans which I'll show

you you guys here in a little a little bit you know what those plans look like but we're seeing in the industry that there's several buckets of practices you know your the heavy ppos some of the problems that they're dealing with is is the the force discount Mark is going to talk about if if you can't get out of all ppos uh he's going to give you guys some strategies and some tips on on how to work with them but I do suggest getting rid of

as many as you can the feif for service practices is interesting because it's everyone's dream to become the feif for Service practice as long as I've been in dentistry everyone's always talked about Bec FSS right um and they've got problems too it's called retention problems and uh you know I'm in Utah where every practice seems to sign up with every po Under the Sun um and you know ad a network patient can go down the street and get a discount in in Network office right uh

so retention and loyalty is something that you need to focus on and a membership program will help you with that and then you got your existing people that may do like cash discount plans or even manually managing membership plans the issues they may have is is scalability and automation we'll talk about how you can do that uh because when you have a membership Pro program to help you combat uh insurance and cutting out ppos it is a volume game it's not it's not going to work

if you're G to get 20 30 50 patients on it's got to be hundreds to thousands and I'll show you how practice are doing that U but before we go too deep into that Mark I'm going to pass the slides over to you so you can talk about if they can't get out of insurance and and uh what what they can do and some of your what you see in the industry because I think what you see is way more in depth than what I see

yeah well I I have the privilege of working you know DSN has about 1100 um members inside um uh inside our ranks and then we have a a private coaching group with which is just under 200 members so I get to see behind the scenes um behind the curtain of a lot of different Dental practices I'm looking at pnls all day every day we're looking at profit margins iida um we're looking to decrease overhead increase profitability every way that we can and this is for dental

practices that are you know heavy po like Jordan was talking about completely feif for service and then what we call the hybrid uh model which is a little bit of mix of both which is I think most dental practices out there are some level of hybrid but you know to your point Jordan know in Salt Lake in in really um competitive markets I would say some some dental practices are 80% plus of their revenue would come from a PO and then maybe 20% would come from

a fif for service model so there's always room to to redistribute those percentages in one way or the other obviously the the the ideal unicorn perfect scenario would be 100% fee for service and to get you know 50 new patients per month 20 per dock um that that is that is something that is becoming more and more rare in the world but not impossible all right so um I want to just talk about if you are going to accept ppos there's a right way to accept

ppos there's a right way to analyze whether or not you're profitable on these ppos and there's also a logical and stepwise way to start eliminating the the underperforming or the the lower fee ppos and how to analyze that so I'll just go over really quick uh just kind of the way that we analyze different Dental practices we put them in in specific buckets we talk about um uh we have a black belt uh black belt brown belt blue belt and white belt categorization um so we

do it just like just like martial arts um and they they go along with these phases phase zero one two three and four um if you are uh the typical practice in the United States you have an overhead of 68 to 72% that's excluding doctor wages so if you add another 30% to doctor wages then you're looking at 2% profit to negative -2% profit for the average dental practice in the United States which is not very good um you might as well be an associate at

that point especially if you're losing 2% in profitability every single month so it is our contention that you know if you are producing the Dentistry you should have the lowest overhead possible and you should um maximize your your profitability um in order to make it worth all the aggravation of of being a dental practice owner and the risk and and uh the liability and everything that comes along with being a dental practice owner so if we're looking at our phases a phase zero would be greater

than 60% overhead um and that would be at least 50% of the practices in the United States so the median is uh 68 to 72% as far as the most recent statistics that I've seen a phase one practice in our organization would be around 60% over head and you see these these uh categories 30 30 30 10 30 is payroll 30 is fixed in variable expense 30 is Doctor compensation with 10% left over for the doc as far as profitability now right away I know that

a lot of you guys that have that have been um been uh with other Dental Consultants or coaches or have read articles they like to say that payroll should come in between 20 and 25 % I'm not arguing that point but in this particular phase we're focused on making the dentist more business savvy and allowing them to overpay a little bit in the payroll area because human capital is the most important thing so before we start um you know slashing payroll we're going to work on

fixed and variable expenses first okay that's the lwh hanging fruit and then as we ramp and then as we ramp up Revenue in phase two three and four um that that uh payroll is going to go down Naturally by increasing the revenue uh phase two would be 30% goes to payroll 25% goes to fixed and variable expense 30% still goes to doctor compensation but now we're seeing a 15% uh profitability things are starting to look good that's an overall 55% um overhead practice and this is

what this phase three practice is what the dsos and the private Equity companies are looking for when they're looking to buy practices roll them up those are significantly profitable practices 20% iida here um for this phase three practice we have 25% would be allocated to payroll 25% to fixed and variable expense 30% goes to doctor compensation 20% comes back to the owner as as as uh as profitability so in just rough numbers if this particular practice was a million dollar practice 20% iida that would be

$200,000 to the owner without having to pick up a handpiece piece okay and then a phase four practice is the so the phase three practice would be a black belt practice the phase four practice would be like the samurai right this is like a black belt and two stripes these and and we have a handful of these uh more than a handful in in our coaching ranks where the overhead is hovering between the high 30s and the the the mid 40s we call those phase four

practices that is when the iida gets to 25% to % and it's getting it's it's getting really really profitable so uh practices like this you know you'll see a million-dollar practice spitting off 300 to $350,000 in profit and that's if the doctor's not even picking up a handpiece that's just strictly profit and then you you you know you you build a mega practice where it's two three four million do or you have several of these phase four practices that's when things start to get really fun

uh in the multiple practice or or big practice world so those are the categories that we use for um for uh for well well those are the those are the ways that we categorize different Dental practices according to the numbers alone right on you want me to move to the next slide I think I I think I have control so I'm your I'm your little helper yep yep thank you um so you know calculating Supply and material cost I think is really important and this is

where we're talking about whether or not you're a feif for Service practice or you are accepting ppos obviously the stakes are much higher if you're accepting ppos and it's really interesting to me when I'm talking to a dentist about um their profitability and why they've decided to accept a certain po one or another a lot of times they don't know why they just know that they need to fill chairs and they don't even know if they're profitable accepting certain certain ppos at that particular fee schedule

say it's 30% off their usual and customary they don't even know if they're profitable at that level because they don't know where they are as far as profitability and overhead to begin with so that that can really Compound on itself when somebody isn't a sophisticated enough business owner to say okay my overhead is this here is my cost procedure here's exactly how much it cost for me to produce this crown or this extraction or this implant unless you know those exact numbers there's no way for

you to be able to make an intelligent and business-wise decision on whether or not to accept a PP or not it's very simple to say I just don't want to accept any ppos because I don't want to Discount my my uh my fee schedule um I'm worth $1,200 or $1,400 or $1,600 per crown and I'm not willing to take another penny less and I respect that 100% if you can get the patient flow and you can get the PE people to pay that money um sure

by all means do it but the reality is some people have to take ppos for one reason or another I like to see a mix of like maybe two or three ppos that uh that they accept usually um associated with a major employer in town um an Air Force Base or an army base or something like that or just you know a segment of the population that you want to serve like you know um the police and fire departments in town we accept their insurance the

teachers union we accept their insurance there's certain types of populations that we just enjoy servicing and and we will um except those insurances even if we're taking a little bit of a hit but I will say that we know exactly how much it costs to produce our production so you can go off to the to the next slide there Jordan there you go buddy so here are the types of of charts and um uh Excel spreadsheets that we utilize in our practices I know it's impossible

for you guys to see but there are a certain number of things that you guys have to calculate as far as calculating cost per procedure right so cost per procedure is how much it costs to produce something in your dental practice so we know exactly that this particular Crown prep the disposables on this Crown prep are going to cost me what $24. 34 that's my total supply cost but then I also have a lab fee in in our case we we get huge bulk discounts uh

because I uh I am affiliated with a large um Network in DSN and lab fee for this particular lab is $39 right so we have $24 in disposables $39 for a lab fee and then I have to calculate how much it costs to support that that that operatory for that period of time so if it takes 45 minutes to prep this Crown I need to know that it's going to cost 45 minutes for that particular um that particular assistant to man that room uh the front

desk has to support that with you know um uh scheduling appointments and getting people back um there is Heating and Cooling for that room for that 45 minutes so all of those things are calculated based on division right so you're going to take the total overhead for um for the for the the power bill you're going to divide that by the number of days of the month that you're actually working and the then you're going to divide that again by the the amount of time that

it takes to um to do this particular procedure so we know very very accurately how much it costs to do you know a root canal per Canal we know very very very accurately how much it it costs to produce a crown an implant how much it cost to break down a room that's a level of sophistication that you must have particularly if you are accepting ppos because the profit margin is going to be less than it is if you are a fif for Service practice now

if you mix a a primarily feif for Service practice um or you're only accepting two or three ppos and you are this sophisticated as far as calculating um you know your overhead and controlling controlling your profitability that's when really really great things happen that's when you get to the black belt status and the master ship status so um you know it's it's tedious and it's laborious especially in the beginning to calculate all this stuff but once you once you calculate it you have this data forever

and then you can start making really sophisticated decisions when it comes to which ppos you're going to accept which ones you have to drop which ones you're actually losing money on which we've done the analysis and a lot of these you know lower um compensating ppos you're actually losing money for every patient that comes through the door but until you get this level of sophistication about your dental practice you'll never be able to make those high level decisions as a CEO of your dental practice I'd

like to add something there too so back in the days Mark when I uh managed my dad's dental lab the number one question I asked whenever we did like a crown for a practice I I would always ask hey hey dude dad whatever um Dad dude hey hey father what how much money do we make when we sell a crown to a dentist and he's like I don't know maybe like X number and I'm like what did you just say maybe like um and I did

this exact same exercise that Mark is talking about right now and that changed everything for the dentl lab we understood just everything we did and we we we approached things um you know with with all this data in our heads and we made better decisions yeah and we found out that we were losing money on certain clients too every time we did a crown I'm like you can't if you scale that what happens well you get more losses you don't get more Revenue oh don't worry

don't you'll make up for it in volume no it doesn't it doesn't work that way I mean it definitely scales but it goes negative yeah so no I I love this Mark I I couldn't agree with more and I I remember doing this exercise at the dental lab you know and and it was just so it was it was awesome my dad's like oh my gosh that's what that's what we're doing Oh I thought it was like maybe like yeah it's interesting though because it you

know we we weren't taught this stuff in dental school we barely had enough time to to learn you know the basics of of preclinical and clinical stuff we get out and we're expected to you know manage these million to multi-million dollar operations and we were never taught this stuff it's it's a lot of kind of figuring out as we go along but the bottom line is the difference between the average dental practice 68 to 72% where people are actually losing money they don't even know they're

losing money they don't know that they'd be making more as an associate down the street than they than they are owning a dental practice um the difference between those people and the people that are black belt level and our organization are people that just take the time to learn um and educate themselves and learn how to run a sophisticated business that's that's all it is just it could be a dental lab Jordan it could be um you know mersh a membership software company it could be

it could be any company you need to know exactly how much it costs to do business oh absolutely I I posted a book in the chat it's called my personal NBA go get that it's a quick uh book on all all the stuff that we're talking about here all the all the details sweet brother I just switched the screen there mark yep just more examples composite we know we know how much it costs roughly to do a composite per surface how much it cost it cost

a161 to break down a room uh cost to deliver a crown it cost $86 um we we pretty much know how much it costs to do everything in the dental practice based on the disposables the amount of time the overhead for the room for that period of time um I mean we even took the time to like count how many drops were in you know the bonding agent and um we know how much it costs for a drop of bonding agent for the particular bonding agent

that we use for composit so like I said it's it's tedious but it it pays off dividends for for the life of your practice if you do the exercise so know your numbers it helps you get the make the right decisions is this another example here Mark yeah yeah non- hygiene exam 24 bucks yeah real detailed oriented yep definitely love it uh oh you have was that what all you wanted to go through yeah back to you brother so okay so really know your numbers that's

how you're going to make the best decisions to cut out ppos and and really the website Craig I've mentioned just ask a question hi Craig oh Craig what's up Craig um Craig website was I think it's fairhealth consumer.org um I'll make sure we send an email blast about that too um I think it's very really helpful there to understand you know what what the going rates are but do what Mark said that's the backend version of of fair consumer health so you know your your profitability

per procedure and all that stuff it's I don't know maybe I'm just geeking out but I love I love doing stuff like that so yeah shifting shifting gears um as you're cutting out ppos uh the number one tip from Mr Ben T and um is starting a membership plan uh every practice that comes to me in our company of the industry their number one goal is to reduce dependence on dental insurance or fire dental insurance or whatever whatever verb they want to use you know it

is really interesting because uh we're obviously seeing a lot of practices become hybrids Mark um where they're building strong membership uh patients and they're still using a few po plans because like I said you you can't fully exit I mean you you can but depending on your Market there's a lot of variables there we see variables all over but let me tell you about this opportunity to grow a membership program uh over 150 a million Americans lack dental insurance just last year 2020 fourth quarter there

was 28 more million Americans that retired because of the pandemic they I think it was 20% higher than what we normally normally see when people retire they lose their dental benefits and we both know Mark and Pam that when we age we need more dental care I saw it all the time I think 20 million of those Americans were hygienists it feels like it you know and office managers yeah so we talk about you know some of the ratios of of maybe 80% poo 20% fee

for service the market is out there it does require some marketing and getting to know and attracting you know uninsured but the market is out there um you know the the stats do not lie uh definition my definition of a membership program uh membership plan is alternative to dental insurance it's not Insurance never call insurance it's managed by your practice where patients pay an automated subscription monthly or yearly to get access to certain benefits and savings to your office my best example is Amazon Prime we

all kind of did our vote but for your your patient's teeth right so Amazon Prime but for dental care think of it that way um this is an example of what a membership plan is this is one of the best ways to combat um and attract more uninsured patients but combat the ppos by building uh you know some of the benefits that a membership program brings to the table which I'll go into the detail but this is example plan for a preventative mark you do a

unique plan that actually is more and more practices are doing it I call it a a discount only membership plan where um patients pay a yearly or even a monthly subscription and they get uh discounts on all procedures uh there's no there's no like exams included it's this is Discount which works very well in certain demographics um but I would say that uh based off of you know what I'm seeing in Industry this is the most popular type of membership plan um we call call them

preventative care membership plans or proy plans um so those are those the cool thing about a membership plan you I would recommend you offer a monthly and a yearly subscription I'm big fans for both they both have really amazing benefits if you're doing monthly uh subscriptions um which in this example here it's 30 bucks a month that's what I call under the radar payments um or when Jordan comto pays $30 for 10 years to a gym he doesn't go to type plan um so that's a

lot of people do that under the radar payments uh think about it it's almost Christmas A lot of people are spending money if you're doing a yearly subscription plan they may see that in their bank statement be like oh we can't get Little Billy is bike right um so I that's why I like monthly but yearly is amazing too because it's a cash there's a lot of cash flow benefits you get it up front um also from my stats though we see a lot of a

higher turn or cancellations with memberships when they are yearly compared to monthly which is really fascinating it's hard to grab that it's hard to grab that um that person again you have to resell it almost right yeah you kind of have to resell it where when I a monthly subscription is an evergreen or an evergreen model right is what John warlo talks about it um meaning it's under the radar it continues on and on and on and on like that gym that Jordan doesn't go too

um I do go to a gym but I still pay for the other one um okay so pricing um will will depend on your demographics we have some interesting trends that we're finding here at boomcloud that the most successful practices look at the median income in their city or their multiple cities that they're working in and their their membership programs and this is I think happened naturally but we're we're you know looking at the data um most most membership programs you look at the median income

like an example here we got Palm Beach Gardens Florida average over the median income is 87K a year um and their membership program they're they're charging between 26 or $263 a year all the way up to 492 and uh that percentage is0 30% to 0.56% of the medium income so it's really important to understand the demographics in in your area when you're structuring membership programs we had a practice that had was in a high poverty area low population and they wanted to do what what the

the average National practice was doing which was like $400 a year and in in his particular situation there's no way they're going to adopt that membership program and patients are going to say yes to right so it's really important to know your demographics very simple exercise uh my team will works with all of our our practices on understanding these numbers so that we can price your membership program appropriately so they can get adopted by patients and and really help you with these practice benefits right here

that we're going to rock talk about one of my favorite benefits to creating a membership a dental membership program is it helps you create a robust patient loyalty system which every business needs no matter what industry you're in you need some type of loyalty program or to keep people loyal Costco Amazon Prime a lot of companies understand the importance of this so let's replicate what successful companies are doing and Implement into our practices my favorite benefit is that it generates predictable recurring Revenue um this that

is revenue that comes in whether you do Dentistry or not whether you're in Hawaii or not whether there's a pandemic or not it comes in uh every month and it's a it's a cash flow strategy too which is extremely important in our industry because when you have good cash flow it can help you smooth out the feast and famine months we all know that there's September um at least when I was at the dent lab that's what we called it September Mark I don't know is

that what people call it still September still sucks still Su okay another cool thing about recurring revenue and what membership plans do long term is it helps uh increase the valuation of your business R it helps you give you a platform to help cut out ppos and still have that cash flow coming in and a way to move the people that are that you're cutting from ppos over to a membership plan um I've talked about this a couple of times members buy three times more than

non-members we looked at practices Across the Nation and it's the Amazon Prime effect or the membership effect that we all just admitted to right we all Rose our hands and said we get the daily packages on the porch uh over the the pandemic or the covid recession whatever we're calling it these days I don't even know um membership programs can act as a Recession Proof strategy we saw practices that went through the covid shutdowns um they they still had healthy recurring Revenue coming to their practice

a lot of practices started membership programs and they still were able to sell um membership plans uh to their patients and generate cash flow and then in this case it it could be an inflation strategy as well because when you get people on a revenue platform is what we call that meaning they're all signing up and paying subscriptions yearly or monthly if you needed to increase pricing you could do that pretty pretty easily in fact a lot of our practices right now are planning for uh

raising their memberships and their uh Service pricing in q1 January of 2022 and it's almost like a flip of a switch when you have a membership program you can increase the membership fees and almost the next month or most likely the next month you see an influx of of Revenue into your your practice so I I'm big believer in making sure you have a revenue platform and that's what a membership program does to help combat inflation some homework I know we're running quick on time some

homework I have for you get this book it's called the automatic customer uh it's by John warlo one of my favorite authors in The Entrepreneur Space uh he was recently on Mark's show I'm really jealous because like I've followed John forever in fact this book I read this when I was at the dental lab and this is the inspiration that helped me create boom Cloud so um that's one of the reasons why I like making everybody read it because you get a little piece of my

journey but it's actually super valuable and go listen to the the podcast episode on on Mark's Show what episode is that Mark do you know by heart I don't I I wish I would have a you're fine you're fine I know we'll we'll email it out to everybody um yeah one of my favorite quotes from that book which is true because I've managed a dental lab during a recession and a software company with recuring Revenue in recession and big differen is one of the best parts

about creating automatic customers through subscriptions is that you insulate yourself from the worst of a potential recession uh that is very true I've seen both ends of that with the companies that I've managed and I've seen practices during challenging recession times go through that um and even in personal recessions as you're cutting out P ppos maybe this this could be a different good strategy all right I'm going to shift gears here um and then me and Mark have a lot of free things we want to

give you guys I want to talk about some case studies of what practices are practices are doing to increase their membership programs and give them a a solid platform to cut out ppos in the practice with reoccurring Revenue so this first practice uh started in the pandemic in California uh within two months we took this snapshot this is a this is our dashboard of of Boom Cloud um we help you track and monitor your membership program and help you scale it um this particular practice signed

up I've just had the 300 practices during covid um in California with like some of the tightest restrictions um and in two two and a half two two and a half months they generated 7K just under 7K in recurring revenue for the practice and they did not have a membership program uh in place be before coming to Boom quad they utilized uh their uninsured patients and then just new patients coming in they educated them on their membership program uh this next one here you can see

generating uh 26 over $26,000 in monthly recurring Revenue whether they do Dentistry or not uh over a thousand active membership patients um to their membership program once again all these practices I'm showing you are Solo practitioners um they uh didn't have a membership program before and scaled up with within one to two years um these guys used Facebook demographics to Target 55 and up communities in their local area and and they educated them on their membership program and and signed them up as well as their

existing uninsured and existing inactive patients I would say that's the lowest hanging fruit in the office you want to reactivate the inactive patients and get the uninsured patients to come back in and generate a recurring Revenue stream from them and then uh back to Ben's seven tips of cutting out ppos once you get a good membership program in place and your practi is has good practice signing up patients with that then you can start looking at ppos uh cutting ppos and then converting those those patients

over um to the membership plan uh last case study here that we're seeing here in the industry this is a practice that this is I think the two-year Mark when they uh started growing their membership programs they just under two I think they're over 2,000 now but from this snapshot they they got just under 2,000 active membership patients generating just under $50,000 in monthly recurring revenue or over a half a million dollars in annual recurring Revenue that now this is just fees from membership plans this

doesn't count revenue from treatment and with what we've been tracking in the industry that patients spend three times more so from my perspective managing businesses one metric that I think is very important for practices to understand is the average Revenue per patient and what you can do to increase that because that means you don't have to find new patients but you can increase the revenue you get from your existing patients one of the most powerful levers you have as business owners and practice managers is the

average revenue per uh patient and being able to optimize and increase that once you do that you can generate more Revenue with the same amount of patients and then as you cut out ppos it's same thing generate more Revenue with same amount of patients I call it Revenue optimization um so this practice used Direct Mail marketing to attract local businesses local small businesses to a membership program and uh 55 and up communities and they they brought them in in addition to their uninsured uh uninsured patients

which is once again the loow hanging fruit um one thing that I do here at boomcloud for all my employees like I said in the or like Mark said in my my intro slide I hate in dental insurance all of my employees when they join we we have a practice down the street here that uses boomcloud and we join his membership plan as a as one of his corporate members um and all my employees as their Ben they get dental membership plans is is one of

their benefits for being employed with boomcloud a lot of Industries and and small businesses are doing that that's a wonderful way to um uh get a lot of of new patients signing up to your membership program as your you're cutting out ppos it's you know you may be uh looking you may be you may have uh patients that have that are business owners and have employees you can start with with them and switch them over to a membership program as you're cutting out ppos um or

the devil you're cutting out the devil um we need to use that more um but these are some examples of what practices are doing and what can be done um you know for your practice it's a simple strategy but it does take a lot of effort and focus but it can be done I see practices achieve SE success with growing membership programs and cutting out ppos every day here at boomcloud it's one of my favorite things to see when a practice calls me and said we

just cut out cut out another Po and we're growing the membership program I think it's one of the best strategies you can do for that and who doesn't want to go to Hawaii and have Revenue coming into the bank accounts right Mark yeah that's a lot of trips to Hawaii for 46 GS a month yeah that's right talking about right or Florida or or or Co Costa Rica wherever whatever you like right it's I say Hawaii because I like Hawaii free stuff I got some free

stuff for everybody for for hanging out with us uh for an hour today uh you can download the fire the P's uh course it's a detail course that Ben and I go into on our website go to boomcloud apps.com that's the long link here let me uh I'll send it in an email but go to boomcloud apps.com there's a resource section on our website you can find it there uh what you're going to get with that is a cut out the Poo's checklist fire the Poo's

course it's about an hour long um a PO termination letter template a poo termination Target list how to create your own membership program all the details that we talked about here and and strategies to grow your membership program we'll uh we're putting the boomcloud university which is a business course all about about the concept of subscription revenue and memberships it's like totally geeked out it's awesome and then uh We've we have a verb a verbal training course on how to talk to patients about joining membership

plans and cutting out ppos and going out a network a lot of resources there just in this little tool kit here so make sure you get that it's completely free um and then we got one thing for Mark here Mark you want to talk about your little free gift everybody yeah if you guys if any of the stuff interested you that I spoke about for like 10 12 minutes this is a much more in-depth presentation um I was live on stage somewhere giving a keynote and

we were able to put together um a a fairly long case study and presentation um it's about this guy named Dr Steve real guy uh he was able to Triple his take-home income in 12 months utilizing some of the strategies that I talked about just really quickly um earlier so if you guys want a free uh link to this video it's all about overhead uh controlling overhead uh tracking practice analytics maximizing CEO time and developing leadership skills and leveraging the power of community for business and

personal growth just go to dental success Network which is my company.com triple and uh you can get that link for free and enjoy the uh the video yeah baby and then uh I'm going to say this last uh in addition to the the course I'm giving uh I men you go chat with our team schedule a demo look at our platform what we're doing in in the industry and get a a customized plan on how you can start and grow a membership program to help you

combat uh the evil empire of ppos that star warsy right the evil empire of P that was good like so Pam thanks for letting us chill today and thanam yeah this has been fun well I couldn't be happier to to have you guys here this was really interesting I was like writing down feverishly as you guys were talking um there was a great question that came in I know we have just a couple minutes left together how does a membership plan affect your practice valuation um

great question so I didn't go too much in depth on that I mean I you can spend days on a lot of this content that both Mark and I have um maybe months years let's see let out years um so according to John warlo in his book um the monthly recurring Revenue can be valued at I think like 25 times of the monthly recurring Revenue um so you're you're dealing with uh multipliers versus discounted cash flow valuations I don't know if you're too familiar with the

the valuation methods uh one of the reasons why I have everyone get that book because it does go into detail talking about uh how recurring Revenue can can increase the value but let me let me say in simple terms here what is more valuable one-time transactions or predictable recurring transactions that automatically come into your bank account that's I think that's all you need to know what I would rather have reoccurring Revenue I think salaries versus like one-time projects uh that's why recuring revenue is more valuable

from a PE perspective investor perspectives uh I live here in Utah where there's a lot of software companies that use the the subscription Revenue models and valuation are crazy because of that and if you're speaking from just a like a valuation standpoint of a dental practice Yeah if you have a mechanism that's going to allow you to convert more treatment plans um and people are buying more of your service that's going to increase your Revenue obviously there's only two ways really two main ways to valuate

a dental practice that's some given percentage of gross revenue um or a factor or a multiple of iida so if you're going to increase your revenue and control your overhead that's going to increase uh that's going to increase that uh that that eida number and that's going to increase the the multiple that that PE or private buyer is willing to pay so that's going to increase the valuation for sure I have a question for Mark you mentioned a PPO um maybe considering a PO in your

community say the teachers the police the firen ETC um it's not necessarily because they have quality ppos it's that you're willing to kind of take a hit for that demog graic of person is that correct it's true it's true because I mean we love our veterans we do tons of of veterans Outreach programs uh in all of my practices and you know typically the the the armed services uh don't do a great job with their ppos uh particularly for their for their veterans but we'll still

accept it because that's doing a service that's providing a service for them also for our police and fire and teachers as well not always always the best ppos but yes we're willing to take a hit because we want to service that population so for those of you um whove been with us the whole time thank you so much um this was a great de Solutions lab this is actually our last de Solutions lab for the rest of 2021 so this was a great way to end

the year as far as I'm concerned um we've got a great lineup next year so please H keep an eye out for us yes you will be able to watch this video again it will be on the dental economics website Dental economics.com and then there's a bar across the top says Solutions lab and you'll be able to find that there I know there's a few people that joined on just at the end they probably just finished with patience and rushed on but don't worry this will

be available to you online so don't worry about that Jordan Mark you guys are awesome thank you so much for spending this time tonight I think that this was really helpful and educational and of course your energy is infectious thank you well thanks thanks Dr Pam you're awesome too have a great Christmas everybody rock and roll everyone happy holidays everybody have a wonderful New Year make your goals keep your goals and we will see you next year and cut out those ppos and that [Music] too