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Power Hour Optometry
How Membership Plans Drive 4.5X Higher Patient Spend: Proven Strategies with Jordon Comstock
00:59:37
In the latest episode of Power Hour, Jordon Comstock discusses how membership plans can transform your optometry practice’s approach to patient care and revenue growth. With more than 100,000 patients already on membership plans in the dental world,...
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Foreign.
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Hi, everyone. Welcome to the Power Hour, Optometry's biggest and longest running show. I'm your host, Eugene Schottzman, and we've got a great show with a very interesting concept for you today. So let me ask you these questions. What is the solution to reducing dependence on managed care? Getting your patients to come back more often and generating more revenue per patient, according to my guest today. Okay, ready? It's membership plans in your optometry practice. So Jordan Comstock has built a whole company creating membership plans for dentists. And I got a chance to talk to him today about how this could potentially work in optometry. They currently manage membership plans for over 100,000 patients in dentistry. So he definitely piqued my interest and I wanted to see what could apply for us. So how would it work? Imagine this. Your patient pays you, not the managed care company, a monthly fee, call it 15 $25 a month, whatever, and you decide what the allowance looks like. Jordan gives us some sample plans during the, during the episode and that's basically the gist of it. But there's a lot more that we can discuss, including retention data. What's the revenue per patient increase? Implementation strategies, how do you attract patients to, to join your membership plan? Compatibility with other things like financing and other insurance plans. And the reason I did this is because I love learning what other industries are doing. So hopefully this is an eye opening episode for you. Quick Reminder, subscribe on YouTube, Spotify, Apple, wherever you get your podcasts. I love that I get to make these episodes relevant to our industry. And it's all based on your insights and feedback. So please reach out to me, Eugene Shotsman.com or on the Power Hour website. Give me your feedback, your insights. I'm always looking for ways to be the best possible resource for you. Again, that's Eugene Shotsman.com okay, and now on to today's show with Jordan Comstock. All right, Jordan, welcome to the Power Hour. Excited to have you on the show.
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Yeah, man, I'm super pumped to be on the show. How you doing?
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B
I'm doing great. And you know, we've got a lot to cover today and this topic of membership plans is going to be somewhat foreign to our industry, but it's not foreign to other industries. I think we're just going to kind of start right where it matters most. You've seen this in dental Talk about why practices are looking to reduce dependence on managed care.
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A
Yeah. So managed care and insurance, there's a lot of red tape. Every time I talk To a practice owner, there's a lot of frustrations around that. Lot of red tape and admin work to really be able to collect the revenue that you're supposed to collect. But lot of restrictions, a lot of changes and reduced profit margins, which is a big deal. Right. I often say there's really three things that insurance companies do to practices and they hurt your cash flow, they reduce your profit margins, and then they jeopardize your relationship between your patients. What does that mean? Well, patients are often confused. How does insurance work? We don't know. You signed up for your plan, we don't really know your plan. And there's a lot of confusions from the patient experience standpoint. So a lot of practices, both in dental and in uptown, are now beginning to realize they need to reduce dependence on these insurance or managed care plans. And they're creating their own membership plans to one, improve the patient experience and two, improve the margins, the profit margins of the practice. Which is my favorite thing to talk about.
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B
Well, and you know, I've had the former CEO of vsp.
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Sure.
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On the, on the show as well. And you know, he talks about how the relationship between the practice and the managed care provider shouldn't be one about, oh, hey, we're, we're bringing, we're bringing you dollars. It should be more about, hey, we're bringing you patients because we started with the patients and we're referring them to you. But I think you're talking about a completely different approach, which is that, you know, once the patient's in your office, they're yours. Right. And you can have your own marketing that brings those patients in. And once those patients are there, you know, let's talk about the opposite of your three things. Let's increase the margins, let's increase loyalty, and let's make sure that those patients are, and make sure those patients are spending what they need to be spending inside of your practice.
- [04:28]
A
Yes, exactly. Well, there's a cost to acquire new patients and often as practice owners, we don't understand that because it's coming from an insurance company. But the truth is when you're working with an insurance company or managed care plans, the cost comes in the form of, of a discount off of your services. Right. And often over a lifetime of a patient that's coming to your clinic or practice, they, you're, you're paying for that cost. And it's invisible in most cases because it's a write off. Right. Is what usually what we say on the dental side, it's a write Off. So you're writing off your, your, your fees in exchange for. So if you were to kind of reverse engineer that revenue mechanism for the, for the practice, it really costs a lot of money to be on these managed care plans in terms of the write offs. And if you were to kind of take a step back, create your own membership plan, use a great marketing company to attract new patients and get them onto your, onto your membership plan, those, those patients are more profitable, which is really important for any type of business. We want profit so that we can continue doing what we love doing, helping patients. And that's the whole gist of what I love to talk about, is, all right, let's rethink this model because managed care plans are great and they help a lot of people, but the truth is they're really challenging to work with for practice owners and office staff because of the admin costs and confusing for patients. So how can we reverse the business model that insurance companies have placed in so many industries? And how do we make it benefit, Benefit both the patient and the practice? A win win solution versus a win lose lose is kind of how.
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B
Yeah, right.
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A
I think of insurance.
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B
Let's talk about these membership plans and how they could potentially work because I think we're all a little bit fuzzy on this, but it might get real clear real fast. So maybe just start with the dental model as an example and then talk to me about some of the, some of the ways that you could potentially progress that to an optometry model.
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A
Yeah, yeah. We've got tons of optometry practices that we help, so I have, I have actual plans that I'll, I'll share. But you got, you think of it like this. Think, think like Amazon Prime. Right. Everyone has a Prime subscription. I'm guessing you do, Eugene.
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B
I do. And in fact, like 97% of the shopping in my house happens on Amazon Prime.
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Yes. I would imagine you're getting a package on the porch every day. Like, like me.
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Yeah.
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Yeah, right. So Amazon and Costco, all these, all these, these large organizations that have a membership program found this out a long time ago. Amazon launched their, their membership plan years ago. It is a multibillion dollar membership plan. As you can imagine, they're huge and they, they serve a lot of people. And a membership plan in this context helps create loyalty with customers. But then we found, we just both mentioned we get a package on the porch every day from Amazon. What does that mean? Well, it means that members spend more, which we do the stats for Amazon prime. Members spend like Six times more than non prime members. And we found the same thing happening both in dental and in optometry. So what we've seen when, when you offer a membership plan, and I'll get into the nuances of what they look like, think patients pay you a monthly or yearly subscription in exchange for some type of benefit and savings to the practice. Very similar to Amazon, right. When you join Amazon prime, you get benefits and savings on, on the shipping and all that fun stuff. Right? It's very similar, but we find that members typically spend more on the dental side. We see the data that we have, we see that membership patients spend four and a half times more than insurance or managed care patients.
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No way. Over what period of time? 4 and a half times.
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That's within a year. Yeah, so that's within a year. So in dental they have a lot more restorative care, like crowns and all that fun stuff they do. With the case study, I have insurance patients spend about $500 a year on, on the dental side and, but when they become a member, they spend almost $2,200 in a year's time. So it is an expansion. I, I call it a revenue expansion strategy for practice owners. Often insurance limits what we can do for patients. And even patients have a limited mindset, they'll say, well, I'll, I will only do what my patient cover. Well, we know that both in dental and vision plans, it's not a lot and it doesn't, it's not a very good benefit for the practice. Right. Or the patient. And if you think about it, the example that or the explanation I hear from providers and practice owners are it's like a paid coupon that's not really a good coupon. Right. You're paying the subscription to insurance companies and they're limiting what you can get discounts on. It's kind of silly. And then they're throwing all this red tape, both on the practice and the patient of what they can get. So it just really complicates things. So membership plans and membership patients number one, it's really important when you have a managed care plan patient, they have a very limited mindset and scope of what they can receive when they go to the optometrist. When you have a membership patient, they're opened up. They're actually a little bit more, they're a lot more committed to their care than a general insurance managed care patient. We're seeing this both on the dental side and optometry. And I've often will instruct practice owners to understand the differences of the mindset and why it's so critical for growing and maintaining a practice, we have something, what we call the ideal patient profile. Right. When we understand our ideal patients, those are patients that come in and they say yes to what they need to get done and they purchase frames, for example, and other things that your clinic may be offering. An ideal patient profile is a patient that really is invested in their healthcare and managing themselves the right way. Where PPO or insurance patients or managed care plan patients, they're very discount driven and they don't, they don't really, they're not really committed a lot of the times, I'm not saying that for everybody. Right. A lot of the times a good percentage of them are, are not very committed to their, their eye care and just managing their healthcare in general. We found with membership patients, they're way more committed and, and end up spending way more, a lot. You know, on the dental side, it's four and a half times more. Which is incredible from, from a revenue optimization standpoint, which, to look at your practice. I look at revenue per patient as a really important metric to understand if you're running a practice. And once again, I will talk a lot about revenue. Revenue is a byproduct of our, of the, of the value and service a provider gives. Right. It's not always about revenue, but it is a byproduct and is an important piece of, of running a business. But average revenue per patient, if it is low, the smartest thing a practice owner can do is increase average revenue per patient because there are, like I said at the beginning of this episode, there are costs to acquire patients and if you don't cover those costs, they can get less profitable over time. And there's so many marketing strategies you can do today for a practice. And if you don't really understand the costs and the average revenue per patient, you could be spending way too much to get a new, a new patient.
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B
So Jordan, I want to zoom in on that.
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Yeah.
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And again, my, our listeners have talked, have heard me talk a lot about the lifetime value of a patient.
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Great. Yeah.
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Acquisition costs, you know, what you're spending to acquire that patient. And I agree with you. You know, managed care is definitely a mechanism of patient acquisition that has a cost, but possibly a long term cost because that patient is going to come back and use that plan every single time and you know, potentially limit themselves and what they're.
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It is a cost that never leaves.
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So I want to. Do you have any data in the optometry space so far on revenue per patient in terms of what, what people are spending. And it's okay if not, because I wonder if, you know, we, you, you mentioned the dental piece. Revenue per patient being four times more. Let's talk through the mechanics and let's also talk about how these plans actually work. Like, you know. Yeah, let's think about some sample plans.
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A
Yeah, let's start with sample plans just so people can get their heads around your listeners can get your heads around what we're talking about. Like what. What is the offering? And I'm sure a lot of the listeners will start really thinking creatively as we go through this. So this is a practice. This is a clinic. Total vision centers. These guys are here in Utah. He. So this is what they do. They charge. They have a gold plan is what they call this one the TVC Total Vision center gold plan. They got three plans. But we'll start with the gold plan because that's what typically everyone buys the middle plan. We see that. So in their plan they're offering, it's over $450 of value is what they're saying that some of the benefits the patient gets is a free annual exam worth $115 value. In this practice's language. They do a $10 retinal screening. 120 frame. $100 $120 frame or contact lens allowance, $75 single vision lens allowance, $150 no line or line bifocal allowance. I don't know what that is. That's new to me. And 20% off of additional lenses or add ons. Lens add ons. Excuse me. And 30% off of additional pair of frames and lenses. That's unlimited. Right. So they can buy as many frames and lenses as they want. $25 contact fit evaluation benefit and a $5 discount on in office supplies is what this practice does. They charge $25 a month or I think 250 a year is what they. You can charge yearly or monthly for patients. I like both. That is a question we get all the time is is it better to charge a membership plan on a monthly recurring basis or yearly offer? Both. There's benefits to both and there's cons to both. Right. If you were to ask me, I, I like the evergreen model. So I like monthly. And we have data that monthly patients, when they're paying on a monthly membership, they actually stay longer for the. With the practice because it's what I call under the radar payments. A 25 payment is under the Radar. It's not a very.
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B
I don't have to think about renewing every. Every year. Yep.
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And that payment comes out. It comes out around Christmas time. It's not a huge deal. Now, if a yearly payment comes around Christmas time, it's a big deal to most patients. So I would offer both because you're going to have patients that the, the 250 or sometimes they're three $350 a year. Those payments aren't a big deal to certain types. And certainly when we look in health practices with this strategy, we do look at their income, that the median income demographics of their local area of patients they're targeting. And we do craft a plan with that data point in mind. It's really, really critical to understand the income demographics of where your practice is serving so that you can tailor the pricing and the offering to your demographic. Right. Often, practices will charge too high or too little. If it's too high, you don't get adoption of patients. Right. And if it's too little, then you're not profitable. We want to make sure you're profitable. That's how you keep the doors open and you serve more patients. So.
- [16:53]
B
So is that the sweet spot, about 25 bucks a month?
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A
Yeah, that's the typical sweet spot. Now, it all depends on the offering. Right. I have another one. Let me look at this one. Well, I don't think these guys show their pricing right off of their website, but 25 to $35 a month seems to be the sweet spot, depending on your income demographics. Now, if the income demographics of an area a clinic is serving, you can then certainly increase the price, the monthly price point. But that seems to be the range for. On the optometry side? No, I just have. For this other plan, I just have the benefits they offer. So $10 for retinal screening, I would imagine they're very similar. You don't see too many plans that are like, oh, wow, this one's like night and day different from the other. It's a basic offering that allows patients to easily understand how to work with your practice.
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B
So from a patient perspective, this is, you know, it's similar to what they might pay for vision insurance or maybe a little bit more, a little bit less, depending on which plan they pick for.
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Yeah, it just depends.
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How does a practice, you know, I'm thinking about this. How does a practice present this to a patient? And what have you found that works when having the conversation with a patient about it?
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Yeah. So here's a stat. Over half the United States doesn't have vision insurance. It's a big deal. Like it's the same on the dental side. Over half the United States, they don't, they just don't get dental insurance. Same with vision. So there's a large market, a large population of people that just simply don't have a plan. And it's silly. It's interesting to me and somewhat silly that both dental and optometry we're looking at working with these vision manage these managed plans, right. It's like, well, that's only a segment of the market. It's a lot bigger success stories for practices that have launched a membership plan. They target small business owners and their employees. So I'm a great example of that. I own a company and all my employees, we go to Dr. Anderson, dentist down the street. I pay a membership plan for all my employees as one of their benefits. They all go to him. Same thing with this total Vision Centers. We're just getting ready to sign up for their vision plan for all my employees. So that is, it's like, I believe in this product, right? Believe in this concept. So attracting small business owners and their employees is one way to present it to new patients. Right. And maybe you have patients that are existing business owners that you can ask them, hey, what do you do for your employees? You offer them a vision plan. And if they say no, it's like, oh, let me talk to you about our, our vision plan for our practice that you can offer your employees. Right? So that's one way people that lose their dental, their, their insurance benefits both on dental and vision are 55 and up, the age is 55 and up that are getting ready to retire. Those communities are really. Well, you can often find, in any neighborhood, in any city, you can find a 55 and up neighborhood or community. And they often need the most type of care. Right. This is the same on the dental side. Their eyes are wearing out, they're having more problems. I think one of my employees, she's in that range of age and she has a whole lot of eye issues. Needing, she's needing more eye care, right?
- [20:30]
B
Well, at the very least those patients are presbyopic, so they're going to spend more money on lenses. So that, yes, at the very least that's, that's always the case. And then obviously the disease management starts somewhere around that age as well.
- [20:44]
A
So.
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B
Yeah. Which could potentially. I guess there's a question about how all this works with medical insurance too, which we'll come back to. But sure, let's so let's keep going. So, okay, so small business owners, we get, you know, practice talks to small business owners. How else do you let people know that you, that you have this membership?
- [21:07]
A
Yeah, some of our best practices, they all, they all have some type of marketing agency that they're working with the, our top practices. That is a trend that we're, that we're seeing that they understand the importance of marketing their own practice. So getting new patients through their marketing channels. Right. Existing patients is always the easiest, low hanging fruit because they already have an existing relationship with, with the practice. Right. Typically we will look and find the existing uninsured patients in the practice and we start there. That is the low hanging fruit. That's what you, you, your, your staff is able to speak to those patients a lot easier than new patients because love the relationship. So you want to start with existing uninsured patients within your practice. That's the easiest way to get this launched. And then I would even look at the existing inactive patients. What, what range in optometry do you guys look at? Like 18 months and is that inactive or what's in the.
- [22:08]
B
Yeah, I think typically you'll, you'll go two years out, becomes inactive. But I would, I actually encourage my clients to reactivate all the way back to 60 months. So this would be a perfect, perfect way to potentially reactivate those patients.
- [22:23]
A
Yes. So yeah, this access. So you want, you want to invite your uninsured, existing uninsured patients first. You want to invite your inactive patients because oftentimes inactive patients don't have any type of insurance or managed care. So they get, they get a little lazy and they forget or they think in their mind, well, I can only go to, to the eye doctor if I have insurance. That is a common mindset between patients. So it's like the truth is we know that's, that's not true. They can go see any service provider for any industry for whatever service they need. Right. But insurance for some reason has gotten into the patient mindset both on dental and even medical. It's like the truth is you can go see a service provider if you don't have insurance. Doesn't matter. If you need a service, go get it. But for some reason, insurance has distorted patient mindsets around that. So inactive patients often may not have insurance and maybe in the, I don't know if you call them practice management systems, but the practice management system doesn't automatically know when a patient loses insurance or managed vision plans. Right. So often you've got to market to your Existing patient base to educate them about a membership plan and get them on board. So that's the two lowest hanging fruits is existing uninsured and existing inactive. From there you want to make sure that you've got an external marketing strategy around your membership plan. So it's got to be on your website so people can, potential patients can read and understand the plans. All of our, the clients that we work with, it's always on their website so patients can read it and they can click a button and sign up just like, just like Amazon Prime.
- [24:11]
B
Do you think that, do you call them membership plans in front of patients or do we call them something else?
- [24:18]
A
Yeah, so some. There's a very various amounts of words. I like membership plans because it's like a club and you're part, you're a member of our office. Right. I personally like that. But this practice that I, that I showed you first, I believe they call theirs the like a savings plan. That's a common a word to use. Sometimes they call them vision clubs. Right. This is our club. Welcome to our club. But membership plans are pretty common. That's the most common. Membership plans. Discount clubs, Savings clubs, savings plan.
- [24:56]
B
Those are in house something.
- [24:59]
A
Yeah. In house plan. You don't want to call it, hey, join our insurance plan because it's not insurance. Insurance is a risk bearing model. This is not a risk bearing model. This is a direct pay model. And that's often when you label it as insurance, when it's not insurance. You just don't want to, you don't want to play that game. You don't want to get into insurance regulation territory because it's not, it is a direct pay model. It's a efficient cash paying model if you will that allows it a practice to generate predictable recurring revenue and patient loyalty.
- [25:33]
B
So what have you found? The patients that are, and I'm sure it's a little bit different in dental because I don't think it's. I think we in optometry have a little bit of an envy of the dental model because somehow dentists have convinced patients that you really just got to be there every six months or your teeth are going to fall out or something.
- [25:53]
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Yes, they've done a good job there.
- [25:55]
B
We have not been able to, to, to convince patients that your eyeballs are going to fall out if you're not back and you're not going to get.
- [26:01]
A
Cavities in the eyeballs.
- [26:02]
B
Nope. Right. So we've got a little bit of ways to go there anyway. But my, on the, on the Side of, what have you seen in terms of, I guess, the variability with patients who come back if they don't have a membership plan versus patients who come back, if they do have a membership plan, what's the likelihood that that patient's going to come back in each one of those cases?
- [26:28]
A
Typically when a patient commits, I always say this. When a patient commits with their wallet, they're most likely to come back. Right? Because like I mentioned earlier, the ideal patient profile, like the ideal patient is going to subscribe or commit a subscription to a clinic, right. So they're taking their healthcare a little bit more seriously than the average patient. We can say it nicely like that, right. But yeah, patient loyalty is one of the biggest benefits of a membership plan. When a patient joins any type of membership plan, whether it's a dental or a vision plan, they're saying to the office, I am financially committing to, to my health care and you guys are my providers. Right. Most of the time these plans will have like an, they will have an annual contract, right. That's part of what we call the retainer agreement. So even though they're pay, they may be paying monthly. Most practices will have a year, like a year plan. All right. This is, you're locked into the year. But you see on the, on the membership side, I ran a data point several months, several months ago on this monthly membership. Patients stay way longer. I think they stay like double the time of a yearly patient, where a yearly subscription patient will stay maybe the first year and the second year. But then they bounce sometimes they bounce in and out more often than a, than a monthly membership. Which is interesting to me because a lot of, a lot of practice owners, like, well, I want all the, I want all the cash up front in a yearly subscription, which logically makes sense from a cashless standpoint, I would do. But when it comes to the patient mindset, they go in and out like, I'm not going to go see the, the, the, the doctor this, this year or whatever, this month.
- [28:19]
B
Right. I'll come back, I'll come back and I'll renew.
- [28:22]
A
Yeah. Which is why I like the monthly because it's the evergreen model where monthly patients just stay on like twice as long as yearly patients. Because of that under the radar payment, it just doesn't hurt as much. Right? Like, oh, yeah, I have this. I'll go, I'll go utilize my benefits this month oftentimes. And you can do. What I would do is look at the cohort of, once you start building up a membership program for the practice, you can look at the cohort of those patients and be like, hey, these guys are already committed to us. We need to fill. We need to get some patients in this month because it's a little light. We can go market to that cohort and say, hey, you got these benefits. Come on in. Right. And it's a lot easier to market to them and remind them that they have those benefits. And if you need to fill, you know, appointments, if you're light for a month, you know, I, I would imagine that in, in dental there's some feast and famine months. They have a month that's called suck temper is what they call it. I don't know if optometry has something like that.
- [29:18]
B
You would know more than suck timber.
- [29:20]
A
Yeah. In, in dental, it's the nickname. They call it Suck Timber it September.
- [29:24]
B
Well, I got that, I think. Yeah. That's interesting. Yep. I didn't know that. And when you're talking about the numbers, I mean, you guys have tens of thousands of patients on the dental side where you're, you can get some of these data points. What else are you seeing from a data standpoint in terms of patients who are on membership plans versus patients who are not.
- [29:51]
A
Yeah. So the biggest one is just members spend more. Right. And that's the platform wide is what we look at that I can get some reports that show specifically for optometry members just simply spend more and they're more loyal. Right. That's probably the two biggest things. The second biggest thing that benefits the practice from a data point would be, well, okay, if I launch one of these membership programs, you know, as it matures, what is the average monthly recurring revenue? Because what, what we haven't talked about yet is that on the business model side is that predictable recurring revenue is probably one of the most powerful revenue streams or revenue strategies for any type of business, no matter what industry you're in. Right. Even, even managed care plans have a recurring revenue model. It's often why they have biggest buildings in the states that they operate in. Right. Is because they have predictable recurring revenue. Some of our largest practices, now there is on the dental side, but I have some optometry sets. Some of our largest practices are generating millions of dollars in predictable recurring revenue every year just from the membership fees. Right. That's not including the, the four to five times spend, you know, within the, within the clinic. So on average we see about practices that are generating six figures a year, like smaller practices in recurring revenue. What does that mean? Well, it's revenue that Comes in whether you're practicing or not. You could be on vacation with your family and your practice is still generating predictable recurring revenue. You could be, maybe you're stressed out one month because you got to make payroll. You can create the membership program. So you get cash infusions on the 1st and the 15th of each month right before payroll dates. Right. Depending on your dates. Right. It's just an example, but those are some of the benefits. So predictable recurring revenue and cash flow management is, is no matter what business you're in, is such a critical component. Especially like when we, when we saw practices go through the COVID recession and shut down, all of the practices that had mature membership programs were like, okay, we're so glad we have that membership plan because we got that predictable recurring revenue coming in whether we're practicing or not. And yeah, of course we're going to service those patients still, but maybe the few months that they're closed down in that example of COVID they still were able to thrive and make it through. Right. Same thing with any type of economic downturn. Whether it's a personal economic downturn or a nationwide economic downturn, this business model helps practice owners sleep better at night.
- [32:42]
B
Well, and it's actually interesting to me because you could, and I talk about this from a perspective of value innovation. When you do have an economic downturn or a patient who's less likely to spend money or come in on time to their appointments or whatever, this actually could be a way to create a, I mean, you could even have a marketing plan around the fact that we've created this thing, we've value engineered this thing, which is a, which is essentially our in house plan to support our patients and to provide our patients more value. Right. And yeah, and it is, you know, 25 bucks a month. It probably gets you more than you were going to get with BSP if you design it correctly. Yes. So that's where I wanted to go next is plan design. So, you know, what does a typical. So it sounds like, you know, the plan you read, you know, that it's got to, it's got an exam benefit, it's got a benefit for, you know, frames and lenses, it's got a benefit for discount. It sounds like it's got a lot of value for the patient, but what does it actually cost the practice to deliver that?
- [33:49]
A
Yeah. Oh, like the cost of all the details of payroll and things like that.
- [33:54]
B
Well, right. I guess it would be the, you know, what are we actually providing for that and where, where have we seen From a cost standpoint, you know, maybe this is on the dental side, is that, you know, if I'm collecting, let's just call it 300 bucks a year, 25amonth, what's it actually cost me to deliver that benefit?
- [34:14]
A
Oh sure. From, yeah. On the optometry side you'd be the better expert there than me. Right now you guys are in the weeds of that more than I would be. You got to look at it as like within economies of scale. Most, most patients, 100% of patients are going to use their membership plan every year. Right.
- [34:36]
B
What percentage of patients do?
- [34:37]
A
On the dental side, we see about, about 50 ish percent, 52% of patients fully utilize their membership plan.
- [34:46]
B
Meaning they, they don't just come in for cleanings.
- [34:50]
A
Yes. Yeah, they don't come in just for cleanings. If on the dental side they get discounts on restorative care like a crown. So about half of half of the patients are utilizing all the line item benefits in the plan. In optometry we could look and see that there's the same trend there because.
- [35:12]
B
Well, actually I would argue that we would want our patients to use that. Yeah. On dental.
- [35:19]
A
On the dental side they do too. Right. Because it goes, it all boils down to the first metric I taught, I spoke about earlier is the average revenue per patient. So if the membership plan and they do increases patient spend like it does on, on dental and optometry, we're seeing this now, that will increase the average revenue per patient. That's all this, this business model aids with, for practice owners. So. Yeah, but the truth is not every, not 100% of people are going to expand and say yes to everything. Right. That's just the truth. I call that sales math. I know a lot of practice owners may not like the word sales, but that sells math like.
- [36:02]
B
Well, yeah, and I mean you're, it's unlikely that your capture rate and your practice is 100%. So you're going to have a, you're going to have a lower than 100% capture rate. And so some percentage of patients are going to walk out the door without buying something and then you still got the, the benefit, so to speak. Now my guess is that if they have the benefit, if, if they paid for a membership plan, they're probably thinking about using it. So I actually think the capture rate is going to go up substantially with those, those patients. My other thought is that, you know, if you think through it intelligently, you could also think about specialty services that practices have. So whether it's your dry eye treatment, whether it's your myopia management treatment, whether it's your scleral lenses, the things that are high margin, high value in your practice and you could offer some sort of, you can sneak in some sort of offer in there that could potentially introduce your patients to a service they would have never even thought about, or maybe a service that you're having trouble getting pickup on.
- [37:04]
A
Yeah. Oftentimes, like on the dental side, they'll do things like that. They have like perio maintenance, which is like gum disease that they're dealing with, which I would probably compare that to. What was the word you used? The dry eye. The dry eye. Was it myopia management?
- [37:19]
B
Yeah, yeah, yeah.
- [37:20]
A
I would, I would compare that to the perio plans on the dental side, where it's often undiagnosed, but it has high margins. So a lot of practices will put that service included, whether it's a discount or included in some way in their plan so that they can offer it more to patients, you know, and it allows, it also allows practices to educate patients on their services in a very simple, concise way.
- [37:50]
B
Yeah, well, and it makes perfect sense because I'm going to look at all of the benefits and I may, and this may be easier to talk to patients about it and say, oh, you know, your plan includes a 25% discount on or a 50% off discount on, on a first dry eye treatment. Did you want me to schedule that for you?
- [38:14]
A
Yeah.
- [38:14]
B
And then all of a sudden, you know, that's the first of five. And then the patient ends up spending $2,000 on dry eye.
- [38:21]
A
Yeah. So if you, if you think about a membership plan from, from the revenue business model of any practice, but in this case optometry, a membership plan will helps you attract new patients, retain new patients and expand existing and new patients. Right. Back to your point of saying, oh, you got this benefit, let's use it. That's an expansion or average revenue expansion per patient strategy, which is great because you're helping the patient and you're helping the practice.
- [38:51]
B
Right.
- [38:51]
A
It's always a win win with membership plans. It's never a win lose lose like it is with managed care plans.
- [38:57]
B
Yeah. Right. Well, let's go back to the, to the idea that if patients are more invested in their care. Yes. Then you have patients naturally. Now, I'm curious what this does to potential, just potential cash patients. If a patient, straight up, if a patient was going to spend, is going to walk in and spend $1,000, but they're on the, quote, discount plan, they're spending 300 bucks to get, we'll call it $500 worth of benefit in some capacity. Are we, are we in a situation where the practice, I'm just trying to play devil's advocate and say is there a world in which the practice could ever lose with a membership plan?
- [39:46]
A
This is a very normal question, so I'm glad you're asking it. All the dental side, they think about this too especially they call them the fee for service practices. I don't know if that's a term on optometry side. The cash paying practices. Here's how I look at this. You, you run a practice, you're in the long, you're in the long game of, of patient relationships, right? This is, this is typically what happens with membership patients. They versus like cash only patients. Membership patients bring a concept called predictable recurring revenue to the practice where cash patients are, that they're one off transactional payments which are great and fun and make for a fun weekend, I guess, if you get a bunch of those in a week. But predictable recurring revenue is way more strategic for the practice because it increases the cash flow, increases the valuation of any business when you have predictable recurring revenue. But back back to our point of, well, patients do spend more when they become a membership plan. It's the same thing that happens to us with Amazon. We could be cash paying patients for Amazon, but Amazon data says that membership patients spend six times more than their cash patients. Right. It's the same concept in dental, same concept in optometry. Membership patients just are way more committed and they're able to say yes more. And it really goes back down to your example of oh, hey Mr. Patient on the plan. We, you can, you, you got the, what was it, the dry socket, Dry eye, Dry eye, dry. I'm still learning. You got the dry eye situation here. Let's, we can give you a 50 discount on that today. And it allows them just to spend more. Right? Where cash patients are, are, they kind of come in and come out and they're not as loyal, they're not as predictable. And the whole concept of, of this business model is to create mass amounts of predict, predictability for a practice so that they have a platform or a system where patients are coming in and they, they present the treatment that they need and then onto the next level of care and payment. So that's kind of how I look at it. But yeah, if you were to look at this analogy or look at it from another industry, cash patients don't Pay nearly as much as membership patients. And you can see that in Amazon if you go to Costco. I guarantee if you go to Costco and you're like, oh, I need this. One or two things from Costco you got, you remember, right. To Costco, you're going to leave spending 500 bucks. It's just, it's impossible. And their stores designed that way. We, I think we could spend a whole episode on how Costco designs their membership plan and their store to expand revenue per customer. Right. It's the same.
- [42:40]
B
The waters in the back. Yeah.
- [42:44]
A
The milk and the waters in the back and you're like, oh, chocolates. Yeah, yeah, yeah. So it's, it's the same concept on checkout, you know, when, when a patient's, you know, checking out of the, the office. It's the same concept. Oh, you got this on your plan. You want to get this taken care of today. It's the same concept. So members spend more.
- [43:04]
B
Fair point. Okay, so let's, let's think about how this works with medical insurance.
- [43:12]
A
Yeah.
- [43:13]
B
Because I think there's a world in which, you know, there are some, some practices that take managed vision care, some practices that, so that some patients are going to be cash, some patients are going to be managed vision care, and then there's going to be some patients that, you know, have medical, medical things that.
- [43:32]
A
It's the same at dental. Dental does the same. Okay.
- [43:35]
B
Yep. Okay.
- [43:36]
A
Yeah.
- [43:36]
B
So how does it work?
- [43:38]
A
Yeah.
- [43:39]
B
Can I use it for my copay?
- [43:41]
A
No copay. Typically, practices don't use a copay mechanism with a membership plan. What they typically do, if a patient has medical insurance and it's covering certain things most of the time, you know, preventative care. Yes. Right. If their medical insurance is covering preventative care, like they're just not a fit. Right. Put them on the, leave them on medical care unless they're not getting a good deal out of it, then you can switch them over. Right. Often, though, on, on, on the dental side, if, for example, if a patient needs a surgery or something, they will still be a part of the membership plan, get a discount, and then sometimes they'll even give, get another discount because of the medical side. Right. It's not common. There is definitely a cohort of patients that will go through that process. But I would, I would suggest most practices look at their uninsured patients and those, the small business owners that cohort of patients and tailored to those first before you even start getting into the medical realm. Because medical realm can get pretty complicated. But I Know on the dental side they can still submit if, if there's a, for example, if there's a membership patient on the dental side and they needed to get there's a procedure on the dental side that's called an all on four and that there are implants. Right. They can still bill that to the implant company and still be on the preventative membership plan. Right. Membership plans are mostly for preventative care and maintenance and if there's anything big then you can utilize insurance or even financing. Right. Financing is a huge deal if patients need, especially membership patients because they do spend more finance like a financing plan like, like, like CareCredit or there's a million of them now. Those are a great pair to aid patients with memberships plus financing.
- [45:45]
B
I see. Yeah, interesting. So Jordan, talk about a practice on the dental side or a couple practices that are just fricking killing it with membership plans. Like what percentage of their patients are on memberships? What have they seen as they've adopted memberships? What, what's the, what's the experience been like for them?
- [46:04]
A
Yeah, some of the most successful practices are multi location. So they're more business oriented type practices on the dental side. And in optometry we're seeing that the same patterns, right? Oh, we got these multilocation practice owners or groups that, that get this business model and are adopting it and scaling it across their locations. So some of our biggest practices on the dental side generate you know like multi million dollars a year just from their membership fees. Right. If you apply the four times the four and a half x on treatment. I know, I know the data more on, on the dental side with treatment plans and things like that, they're generating a lot from that cohort of patients because the average membership patient on the, on the dental side spending $2,200 a year. Right. So you times that by the magnet the quantity of membership patients and it's, it's pretty incredible what these practices are doing. But they're all multi location. We've, we've spoken to a lot of multi location in optometry and that seems to be the best kind of cohort or mature single locations, meaning no startups. It's really hard for a startup to, to do a lot of things. But mature practices that get marketing and multi locations that can incorporate in every location they do really well and they're able to scale it better than most of the smaller practices. But we're seeing multi million dollar membership plans within those types of practices. A lot of them have like two doctors on the dental side like two dentists and the average patient per doctor on the dentist side is like 1500 ish. So if they're a two doctor location, they're doing 3000 active patients. So they can be pretty large. Right? I don't know what it looks like on optometry. You guys are going to know way more than that than me because you're in the weeds. What is like an average optometry office? Active patients look like.
- [48:14]
B
Well, you know, if you got a single doctor, I got 2, 200, 300amonth. Let's just call it 200 patients a month and that's single doctor office.
- [48:29]
A
So 2,400 patients a year roughly is what they're seeing. Yeah, that's pretty good. You can see about 30 to 40% of those patients turn into membership patients right now. There's some nuance to that. With every, with every practice. Maybe the practice is signed up with too many managed care plans and they can't get the patients to switch over. That could be a problem. Or maybe their staff doesn't know how to speak about membership plans and the benefits. There's some nuance there, right? Little coaching always helps on that side of things. But yeah, we see about 30 to 40% right now on the dental side is the data I have that are patients that are turning into members. And the interesting thing is, like I said earlier, over half the United States doesn't have dental or vision insurance. It's, it's, it's a large market and there's still a lot of work to do from a marketing perspective to educate patients on these types of, of, of programs both on the dental side and the optometry side. But we are, we are seeing, I am seeing like we've done a, like a Google search analysis analysis on, on people searching for patient membership plans and those numbers are going up like year over year. You're seeing more and more patients understanding that this is an option. And you'll see this in optometry is dental is a few years ahead of ahead in this regard. In this model you'll see that nobody talks about it much from a patient perspective. But over the next few years you're going to see patient membership programs being something that patients request more and more because it's going to, it's going to get adopted. We're seeing, we're already seeing more and more patients just, or practices searching for it on their, on their own and finding our solution. Right. This will change in the next call. Three to four years in optometry this will change the business model and the patient's mindset because there's so many patients that don't have insurance that could really benefit. So you'll start seeing how hard.
- [50:35]
B
Final question for you, Jordan. How hard is it to implement something like this? And I, and I know your solution kind of does it, but yeah, it's.
- [50:44]
A
Like you're doing it on your own.
- [50:46]
B
Well, yeah. So what are you doing on your own? And then if you had help, what does it look like?
- [50:52]
A
Yeah. So practices that do it on their own, it can, it can get really tedious because you're dealing with micro payments like $25 a month. So what I've seen on the dental side, when this was really new on the dental side and a lot of practices were really getting this started and manually managing it, it becomes really tedious after like 50 active patients. Because what most practices do is they'll at least what I've seen in the past, they'll start out with like a binder system, like oh, these are our patients on a binder, our membership patients in a binder. And then they'll manually run their cards each, each month or each year and set a reminder or sticky notes. Pretty, pretty non scalable. So if they're managing on their own, they, they got to think about all the payments they got to track and it's just not about payments. There's declined cards. How do you manage that? When you get, when you start getting 100, like 100 more 50 or more active patients, your membership plan, how do you start managing? It becomes a collections issue if you, if you can't stay on top of it. Right. And that can compound over time because of, it's all micro payments. They're not like these thousand dollar payments that you're, oh, we got to get that in so we can, so we can pay the bills. It's 25 bucks a month right on, on average. So you see a lot of practices that will document it in like a binder, which is super old school and not very scalable. As mentioned. Sometimes I've seen them use like Google Sheets to like document who they're, who their membership patients are. I highly encourage you not to do that because I've seen practices put credit card information in Google Sheets. It's not secure. Don't do that. It doesn't, it's not, it's not secure. So people can find that data and that's not really, really HIPAA compliant or, or PCI compliant. So that, that becomes the, the, the challenge Right. When you're managing it manually is most practice management systems are not designed for members, they're designed for insurance patients. And sometimes you'll get into the software and they'll create like a pseudo insurance plan in the practice management software and label patients under that. That can work, but it gets really hard to track as you start adding more patients. How many active patients are they, Are they really active? Are they paying? You know, can you log in and see how much recurring revenue that cohort of patients? What are they paying? Most of the time, practices struggle with that because there's just no real solution in the practice management system or in a Google spreadsheet or in a binder. Right. Those are the kind of the three ways I see practices doing it themselves. And a truly managed membership program through the practice should be scalable and easy. It shouldn't be so nuanced and complicated because then it's like, oh, is this, is this easier than insurance? Or, or should we just stay with insurance? So where my company comes in, you know, we have a software platform specifically for patient membership plans. That's all we focus on and all we specialize in. And patient. Our software allows them to set up the plans. We even have templates for both dental and optometry, proven templates that are gaining success. They click, I want to add this template in our optometry template base. They click add. And they simply can now integrate our enrollment page into their website. We have like a landing page that's created that patients can read and see all the plan options and choose click and buy. Just like signing up for Amazon prime or it's really that easy, right? There's like a three step process that patients will go choose their plan, add their members. Right? Let's say they're adding all their family members and add their payment information and boom, they're an active member. The practice owner or the office manager can log in. We've got a beautiful dashboard that shows how many patients are active, how many, what's the recurring revenue, how many patients came in last 90 days? What's the, what's the next 90 day renewals look like? What's the cash flow coming in? Who are the patients that had declined cards and what is this software doing to manage that? We have an integration between all the credit card companies that pings their APIs. That's a geek word that pings the. Not the insurance companies, the credit card companies, APIs and says, hey, this patient has a subscription on this membership plan, but their card was declined. Is it did you send a new card? If yes, send us the details. Right. So we have that type of integration with the credit card companies, Visa, MasterCard, which helps a lot because the last thing we want to see is, is office staff and practice owners being like, wow, this is so hard to manage compared to insurance. And insurance is hard to manage. So it's like, no, we want to keep this simple. Right. So dashboard to help keep all the metrics in line so you know the health of your membership plan, who's on it, what when the next renewal is, how many family members they have on it. We have a benefit tracker as well. They can track the benefits and the usage, a way to integrate it into the practices website. So the, the, the, the user experience for the patient is seamless and simple and it's super easy. Right. That's kind of the, the gist of our platform. We do a lot more than that, but that's. If I were to do it from a high level, that's kind of how I would explain it. But think of our technology as just a way to. It's like if you were to have an employee manage your membership plan automatically, that's what our software does. So that's great.
- [56:50]
B
Yeah, so it makes sense. So you've learned a lot from managing for. Managing memberships for over a thousand patients. Sorry, over a hundred thousand patients.
- [57:00]
A
Yes.
- [57:01]
B
In, in the dental space. You guys are getting yourselves started in optometry. I love the idea. I personally think that it's an interesting way to add, add a retention tool to the practice. Right. We always talk about so important growing in three ways, more patients, and this could potentially help you attract more patients. Getting your patients to spend more with this could help you do that and getting your patients to come back more often and this could help you do that. So I appreciate you sharing some of your wisdom with us, Jordan. I'm looking forward to seeing some practices try this out and, you know, hopefully we have you back on the show. Thanks so much for joining us in the Power Hour today.
- [57:39]
A
Thanks.
- [57:40]
B
If you're enjoying the Power Hour, you might be asking yourself, what can I do today in my practice that's going to make an impact? So, over the years, the practice coaches and consultants at the Power Practice have helped thousands of practices improve. And they often start with one thing, and that's a proprietary methodology called the Practice Profitability audit. For about $2,400, they look at all of your practice numbers and they stack them up against where a practice of your size could and should be. It Takes about a week for them to do. And because they're so experienced, they know what your potential looks like. And they're often able to take that $2400, multiply it several times over and hand it right back to you. And found profits in your practice in months, not years in months. But you get to keep the much more profitable practice for years afterwards. But here's the best news. I'm going to tell you how you can have the practice profitability audit completely free. See, we're really trying to get people onto the show website, which is, by the way, powerpractice.com and then you click the Power Hour podcast button. The reason we want you there is because I want the audience participation, I want to hear your feedback and I want to know how to make the show better for you so you can interact with us, send us your feedback, offer your suggestions, and for a limited time when you go there, you can also request a practice profitability audit for free. Right? We're going to cover 100% of the cost, but only for five people per month. And five people per month is all we really have capacity for because this is a resource intensive audit and the practice power practice coaches are generally busy serving their clients, but for five people a month and they've agreed to cover 100% of the cost. So it's totally free to you. So again, take action immediately in your practice. Go to powerpractice.com click on the power Hour podcast, interact with us, but also request a practice profitability audit today.