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The $30,000 Recurring Revenue Strategy Every Doctor Should Understand | Membership Plans at Scale
00:56:54
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- [00:00]
A
Foreign. Welcome to the Power Hour, Optometry's biggest and longest running show. I'm your host, Eugene Shotsman. And today's episode is about something that has been getting a lot of attention and I think is going to continue getting more and more attention over the next few months and years. Membership plans. My guest today is Cody Tomasic from Direct od. And Cody comes from a very practical side. This is not an idea that was built on a spreadsheet or a boardroom or in a software thing somewhere outside the industry. This whole idea that he is going to share with you was built in a real optometry practice with real patients, real frustrations, and especially around vision plans, cash pay, patients retention, and just the pressure that practices are feeling to protect profitability. And that is exactly why I wanted to have this conversation now. Because between rising costs, reimbursement pressure, patients shopping differently in practices looking for new ways to create predictable revenue, membership plans are starting to feel less like a fringe idea that's kind of out there and more like a serious strategic option that every practice owner should really be aware of. So in this episode, Cody and I talk through what a membership plan actually is, how it compares to traditional vision plans, what the flexibility looks like, what the math really looks like, and how compelling it is, and where these plans fit. From routine care and eyewear to dry eye aesthetics, myopia management, second pair reactivation, even local employer relationships. You can't get the spark notes on the entire thing. And what I really enjoyed about this conversation is that it's not just theory. We get into the psychology of why patients buy, how practices can present these plans without feeling salesy at all, and how something as simple as a monthly membership can change the way that patients think about value, loyalty. And coming back to your office, I think you're really going to enjoy this one. Before we jump in, quick reminder to make sure that you're subscribed on YouTube, Spotify, Apple Podcasts, or wherever you get your shows so that every time that we have a new episode, you. You're alerted. And as always, I'd love to hear from you. Go to Eugene Shotsman.com or the power Hour website, send me your questions, feedback, episode ideas, or anything that you want to reach out about. And now here's my conversation with Cody Tomasic. Cody, welcome to the Power Hour. Excited to have you on the show.
- [02:17]
B
Thank you for having me.
- [02:19]
A
Yeah, so here's the thing. We're going to get into the backstory in a little bit. The reality is I brought you on the show because I see practices using your tools to get massive roi, like thousand plus percent roi. And I think I want to dive deeper into this topic of membership programs. And for some of us it's going to be a deeper level of education and a better understanding of what a membership level, what a membership program is. So that's where I want to start. Just give me a quick explanation of what a membership program is, how it's even relevant for an eye care practice. And then we're going to go and uncover, we're going to go deeper and deeper, layer by layer for sure.
- [03:06]
B
So I always go back to, I love starting at those basics. So really with practices and patients being acclimated to the idea of insurance, that's the common comparison. So we always start at that point of what are really benefits and how can we apply that to a practice? In office we give practices the ability to make their own benefits list where they can now go, hey, let's have that one to one relationship. Let's build out these benefits. Let's give a patient an option that's directly through you where now those patients are paying into your pocket monthly, receiving those discounts, credits, allowances, et cetera. And they're part of an amazing program that can foster those relationships further.
- [03:51]
A
Okay, so this is an, so it's in the eyes of the patient. This falls into the category of, you know, VSP or iMed or whatever insurance company they do or do not have. So instead of paying a monthly payment to the insurance company, they're paying a monthly payment to the practice. Right, to ABC Eye Care. If from the perspective of the practice, you get to build a benefits package that ultimately that, that allows you to kind of get an economic advantage over, I guess what would be considered a standard vision plan. Is that right?
- [04:34]
B
Correct. So we, so fundamentally how I mean we looked at it in our practices was right now we're kind of forced to give these benefits. We accept X insurances and we have to give those benefits irregardless. But we have a third party dictating our flow of revenue. Why do we have to have a third party dictating that flow of revenue? Whenever we could have those, we could still provide those patients the same or better benefits and increase our cash flow. It just kind of made common sense
- [05:05]
A
to us and maybe give a little bit of background here. So when you say your practices, what do you mean?
- [05:12]
B
So my, my father has been an OD for 40 plus years, has an independent practice, my sister is also an od. That's recently started practicing, but has. We have practices in West Virginia and Kentucky.
- [05:26]
A
Got it. And so you've deployed this. Was it in collaboration with them that you guys built this?
- [05:34]
B
Yeah, it was in a lot of. It was kind of, that it was a very, very big convenience to be in that space and kind of understand and be part of those conversations. Whenever you, you see the common frustrations in practice, you see the patient flow, you see the scheduling and you see all of the issues compile especially tied back to insurance. And if you're a part of those conversations and you have the resources and the ability to build out a potential, potential solution and test out a solution, that's really what we aimed for. Later became direct OD and was able to be a scalable system that with the potential to go. There's a lot of practices that have had similar ideas or similar goals in mind. Can we be that entity that came from ICARE that can facilitate that for these practices?
- [06:22]
A
Yeah, and I love any solution that starts in the practice with the need in mind. I always, I always give special, special attention to that because you're solving a real problem that real people have. So I know that industry average and I'm thinking about our clients industry average is something like 18 to 20% of patients don't have insurance or don't have a vision plan. And when they're, when they're calling in practice, is it true or is it similar in the practices that you guys have deployed in already? And is it just for those patients or is, could it, could, could, could, could this plan be adapted further?
- [07:09]
B
So it, it's interesting because we see a. Probably that anywhere in that range from 10 to 20% of patients are caf paying in practice. So you, you have this group that I've always, I've always been kind of nervous about cash pays and I think that's been a demographic that's been reducing year after year. I've always told our staff at least a cash pay patient's one insurance email away from being an insurance patient. There's really not a, there's not a lot of market indication that I know that patient's going to come back to me year after year after year. Which that was kind of problem number one. Problem number two was there was a study done. I forget where the study came from, but it was about. Roughly 70% of patients aren't seeking eye care in your localized marketplace because they don't have a plan and they, they've seen the pitch that it's not going to be an Affordable option. So you have kind of these two coinciding verticals that you're trying to battle for. One, keeping your patients. Because that, I guess dilemma of patient loyalty has kind of subsided over the course of part of the past decade. And it's more become, there's more economic indicators as to is that patient going to come back to your practice or not versus and then you see that tie over to the other side that you have patients that aren't even seeking that annual cycle of care because they don't want to get on insurance, but they also don't want to be a cash pay. So where's that option that meets in the middle?
- [08:41]
A
Yeah, and that's interesting because let's talk about some applications and maybe get into some concrete examples of some of these benefits before we start thinking about their broader, broader relevance. So let's start with an example plan. You got one in mind that's like a common plan across the locations that direct OD serves.
- [09:04]
B
So I would say vast majority of practices are going to start on like a, they'll have a basic and a comprehensive option. I would say 80 plus percent of the practices we work with launch out two options. So your basic is going to be that say 15 to $25. That's going to have X credit towards comprehensive eye exam, maybe an imaging allowance or credit, you're going to have a credit towards frame and lenses potential add ons. One of my favorite benefits that we always drive practices to do is a same day second pair and a general second pair benefit because we want to see increase in sales volume. I mean the core of it is if I can, if I can take a patient and get them into two pairs, that's more volume for my practice and that's more profitability. So that's more on your basic side. Now building out those next steps up, it's just increasing a lot of the value and a lot of those discounts and benefits. So you might now include your eye exam in your 30 to $45 option. So now the patient, they come in, they get their exam, they have no out of pocket cost. Now they might have a higher allowance or credit towards frames, higher allowance credit towards lenses, they might have a contact lens credit. So you, you kind of, you're building out these tiers of value for these patients to give them different options that might fit their budget. But then you're driving, driving home. The fact that once this patient enrolls, I have irregardless of if that patient comes through my doors or not, that recurring Revenue is coming in. Plus you typically see out of pocket spend still happen on these plans. So you have two profitability verticals when it comes to a patient that is actively enrolled.
- [10:52]
A
Yeah. And I imagine retention is much higher. But the patient that's paying you a monthly fee then. And that patient's more likely to come back more often and pay for and engage with the practice more often. But let's. So let's play this out for a second. So let's do the $30. Like, I want to kind of get all the math out on the table. So let's say we got a $35 plan. Right. So, you know, as I'm thinking about this, that's being charged to the patient. Yes. So the patient is paying the full $35. So that over the course of the year, that's $420 that the patient just paid at 35 bucks a month. Okay. That $420 goes to the, to the practice. Okay. So then after that $420, I got to include a free eye exam in there, which what would VSP have paid me for an eye exam?
- [11:51]
B
At least from what we see, we typically get about 45, $47 for that.
- [11:57]
A
Let's be generous. Let's be generous and say, okay, I got 50 bucks that I would have gotten from BSP for that. Okay, so right now it's 420 versus 50. Okay. And then in that same $35 a month, what do you recommend practices give as, like a frame allowance? What? Or frame and lens allowance? Like what. What do you guys typically do?
- [12:19]
B
So in that case, I mean, what's beautiful was you have so much margin in practice on a pair of frames. So I've seen some practices go, we have our luxury frame lines that we separate. That's a different allowance. And we have our more standard frame lines. Not separate allowance, but just to group it all together, say you gave $200 credit towards frames and say that was a pair, even if that's on the luxury side, that might cost out of pocket for the practice, $75. And that might be a three, $400 frame in that case, all of a sudden, now you've got $125 of profit on that frame after giving that allowance.
- [13:08]
A
Right. So now, and we haven't even touched the lens. But at this point, I'm up 500 bucks on one end and on the other, on the VSP side, I would have had to give an allowance. I would have had. So I probably would have gotten maybe 200ish, right.
- [13:28]
B
Well, they, they have a crystal ball somewhere and I haven't quite figured out where that is, but it's averages out to be about 200, $250 a patient for BSP for the whole workup. So I mean just looking at it from that perspective, it's, I mean you're already, I mean you're already significantly ahead of the game.
- [13:51]
A
Well, yeah, so in, and then you got lenses and then you, you're talk to me about that second pair thing that you just said.
- [13:59]
B
So I think, and in most practices I would hope would agree with me with this is you have a lot of patients that will come in and they go, I love these two pairs of glasses, I love these two frames. Well, why can't I make it affordable to get them in two pairs if that I would rather at least in my situation have a patient go out tell all of their friends and family that man, this practice genuinely took care of me. I love these two pairs of glasses. I've got two pairs now. They spent more, but they saved more. So I, I then I was talking to a doctor last week about this where we were joking around about the whole Kohl's cash dilemma where for some reason I, I'll go into Kohl's and I've got $10 Coles cash or Dick's Foreign Goods. They'll give me a ten dollar coupon and I walk out with $120 worth of stuff. But I saved my ten.
- [14:54]
A
Yeah, right.
- [14:55]
B
I'm still happy to say I'm, I'm more focused on the 10 versus what I'm actually spending. And you see those same exact kind of retail situations happen when you apply these to these plans. So that's kind of that driving force that I'm, we're trying to enact where if one of the common things I see is practices will go, but let me give you 20% discount because you are cash pay but you're just, you're giving something with no real expectation of return versus if I have, I could give that patient the same 20% but then tie that to $10 a month. That patient wants to now beat that $10 a month in terms of value. So they will spend and keep trying to save 20% after 20% to equate to I want in the scenario.
- [15:42]
A
Yep, that's, that's a really interesting point about consumer psychology is that once I've committed and it's like this little foot in the door technique, but I've committed and now that I've committed, I Want to, I want to maximize that savings. And that's a really, really interesting point. And so. Okay, so I think the math works out and it's interesting. It's going into the practices, kind of into the practices coffer rather than, and that's how that works. Right? You pay, the practice gets paid directly. Right. It doesn't go into your, and into your coffers and then you guys like pay the practice out and the patient comes in. Or is it.
- [16:24]
B
We, we don't reimburse. They get paid every month that patient pays, that practice is being paid. So you're genuinely building out this foundational recurring revenue that starts to scale and grow and compound or. I mean, our, our inevitable goal is, I mean, this is what I've laid out for most practices is if I could take a $25 plan, which is, and I could get two patients a week to tell me yes, which in most cases that's a very low number of patients. Over a 50 week working year, I have a hundred patients, I'm making $2,500 a month, I have $30,000 of revenue. And that's often just 100 patients. And then we take that to scale, which is really the beautiful thing in this situation is if you have a practice that's seeing 5,000 patients, what is a hundred of those patients? What could a practice in that situation do in terms of scaling that recurring revenue?
- [17:20]
A
Yeah, yeah. And that's. So let's keep going because my, my impression, and I don't know if you have any data to back this yet, but my impression is that that patient that is paying the monthly fee is way more likely to come back at the 12 month mark than the 18 month mark or whatever the industry average is. I think it's 18 to 22 months based off of some of our data. But you know, depending on your recall reactivation, maybe you do a lot of, a little bit better, maybe you do a lot better. But still very few practices are better than 14 months for returning patients. And also that patient's way less likely to drop off. Right. This is a cash patient that you turn into a retention play where, you know, I agree with your point that you made earlier in the show, which is that I believe that those cash patients feel like they have choice, whereas insurance patients feel like they're kind of like bound to whoever takes their insurance. And finding somebody else who takes their insurance is harder work than like, I'm a cash patient, I can go anywhere. I'm, you know, I got real, real credit cards in My pocket. And, but here you've, you've tied me to you for a long time. And you're right. Like in just $25 a patient per month, you're right. I can get 100 patient 2500 dollars a month plus a retention stream. That's fantastic. Now the thing is, and I've, I've thought about this too, is I. We have clients that have added esthetic businesses to their, To. To their. To. To. To their optometric practices. And almost always when we build out the strategy for those, we advise that like you have to have a membership plan in your, in your aesthetic business because you know that patient needs, usually it's tox plus needs Botox and something else on a, on a clear frequency. And so you are grossly underserving yourself and that patient if you don't put them on a membership plan because you can give them a discount on their tox. But then they also get, you know, 50% off facial and 20% off this and whatever percent off whatever, which are all high margin services. So could we apply the same logic of using your membership program not just for exam and exam and eyewear, but could we apply that to like higher value services? Do any practices do that?
- [19:55]
B
Oh, 100%. And to touch on just the aesthetic side, I think one of the suggestions I always make is recurring revenue. I've always looked at it. It's kind of a, it's kind of a game and it's a really fun game because you're dealing with kind of that consumer psychology and that consumer frequency. So if I was an aesthetics practice doing Botox and I put, hey, you pay X number of dollars per month and per quarter we're going to give you X treatments of Botox. Now I can cover my costs, but per that contract on my plan, you get X treatments per quarter. What if the patient misses a quarter? They lost that benefit for that quarter. Now they're into the new quarter, they get X treatments. So you have this ability and I mean we're all susceptible to this is like, I mean, I could pull up probably my credit card statement and see there's Amazon prime, hbo, Netflix, all of these different things. And I'm like, I haven't watched that one for months, but I still pay for it. So if we can apply that in the same situation where now we're simply creating the door to access the practice and giving the patient the option. We know in just patient trends how patients don't stick to this really strict cycle. So if we could apply that to specialty services such as Botox. Now the practice has the ability to not only stay the same, but get ahead from patients. Not like, I would rather have a patient on a plan that goes, hey, you have X treatments of Botox. If you don't show up, I make, I'm still making revenue. If you do show up, you get what's in your plan. And that keeps rolling over and over. We see that with dry eye. We see that with neural lens. We see that with.
- [21:42]
A
So let's, let's talk about how you see that with dry eye. So how do, how do dry eye plans work?
- [21:48]
B
So dry eye, it works varies a lot. I mean, it's all dependent upon what the practice actually has. I mean, I've seen it all the way from practices putting it, putting dry eye benefits and more comprehensive options is more or less a leader into the space. Or you see patients that are more. They actually genuinely need those services. And you see a lot of these practices that they'll have, okay, let me cover my costs with the upfront cost of the plan. But then my profitability is on the recurring level. So if it cost me $500 to actually get whatever dry eye treatment or that's where I needed to be, that might be instead of charging the patient $2,500 up front, I made 500 bucks. Now I might add a hundred dollars a month on a plan where a patient now has kind of this hybrid option of a more attractive upfront cost with a recurring option. And then typically those plans tie in other benefits. So then we can elongate that membership relationship.
- [22:46]
A
Yeah. So like I'm imagining. And then my marketer, you know, my, like my marketer light bulb is going off, but I imagine saying, hey, Cody, you seem like you have some dry eye. I can help you with your itchy, scratchy, irritated eyes. I have all this great technology. Step one, you need to join my plan, which is going to be $100 a month. Step two is that's going to give you 40% off your first treatment. So it already pays for itself, you know, for the. Over and over. But it's going to, it's going to give you 40% off your first treatment, is going to give you 20% off your second treatment, and also it's going to give you a free face mask every, you know, we're going to send you a. Well, you can come pick up some sort of eye wellness kit every once in a while. And also will. I'm just imagining what this, what this looks like, but it becomes A discount offer you don't need. But on the other side I can see and I don't know if practices do this. I can say, hey Cody, $300 a month. And now it's a financing mechanism for a really advanced plan. And I'm going to, you know, we're going to do treatments every, I don't know, let's call it six to eight weeks. But it's a financing option now for X number of treatments for, for your full year of dry eye service. And also see this work with, you know, anything myopia management. Right. You could do the problem with things like myopia management has got you, you've got a high upfront cost to the practice. Right. If you're lenses or, or something. So what happens if a patient drops off the plan? Is that a good candidate or, or is it better to do it where you have to provide continuous service?
- [24:36]
B
Well, my, my whole goal with any, quite literally anything specialty related, I'm always, I always trend on the side of safety of going if, if there is a cost to the practice for service or goods, charge that as the upfront cost for your plan. Because we absolutely want to keep practices always in the green. Now whenever you look at the profitability, so if say X lens cost the practice $300, I need that patient to pay $300 upfront. Now I can add in my profitability after. And I think it also triggers a unique mechanism where I would rather a patient have access to a specialty plan that fundamentally rolls into more or less of a comprehensive option, keeping that cost, that recurring cost lower. Because at the end of the day I want that patient to be on there for the next five years. I don't want that. You did a 12 month term and after that 12 months, month term, now you're off my plan. So can I tie into a specialty service on more of a hybrid level but then roll that patient over to. You still have your more general benefits which overall increases the value of that plan in general, but adds a lot of options on the table. And it, I mean it really is unique to see some of these practices come up with different options and those different pricing structures. But we always push them towards that side of security and that's kind of part of our review process of putting, putting eyes on things and being able to factor out that. Matt.
- [26:08]
A
Yeah. Okay. I, I'm loving this conversation. I think that it's so interesting. I'd like my, as I said, my light bulb, my marketer light bulb is going off. My patient experience Light bulb is going off. So here's what we're going to do. We're going to take a quick break and after we come back from break, we're going to talk about how you actually implement this in a practice. Because this is new, right? There's some change management that needs to happen. So I want to hear what you've learned, where it goes poorly, where it goes well. And we'll be right back on the Power Hour. Hey there, it's Eugene and I want to let you in on something. So you've been to conferences before. You come home fired up and then Monday morning hits and it's back to the grind. The ideas don't stick, the plan never gets made, and six months later you're practicing practices in the same place. So I know that pain. I've been to those conferences with you and that is not happening. At this new event called I Care Boss Live. You've heard the story of ICARE Boss and now there's an event, I Care Boss Live. It's September 16th through 18th in Cleveland. Two and a half days. We're bringing together 200 of the best practice owners in eye care for a one of a kind event that combines speakers, peer learning, mastermind groups and industry innovation, all designed around one goal. You leave with a 90 day plan and you can actually execute it and get stuff done. And we're going to tackle some real stuff. Exam only rates, revenue per patient, people problems, leadership, AI and technology, specialty growth, the things that keep people up at night. We're going after it and we're doing it in a room full of practice owners that are just as serious about growth as you are. This is not a conference, it's not a seminar. It's something different. There are only 200 spots. So if you want to be in on this, this is not publicly announced, just on this podcast. Go to thepowerpractice.com click events, click apply now. This is invite only. It's not for everybody. So you have to apply. We'll ask you a few questions and if it's a fit, we'll invite you to register this event. ICARE Boss Live is going to sell out. Do not sit on it. I invite you to apply right now. All right, we're back in the power hour having a fascinating conversation about the possible implementation of membership plans inside of eye care practices. And the reality is that this being a homegrown solution to eye care, like built in eye care and being eye care grown, is really, I think, adding a lot of interesting color to this conversation because I now want to know what I, where I want to go next is. Okay, fine. Eugene Optometry decides that we're going to do membership plans. I'm going to call you, you're going to help me build my first few plans. Maybe I got my $25 a month for my, you know, for, for some patients. I got my $50 a month for, you know, like my really high end plan. And maybe I even built myself a hundred dollar a month for something specialty related. Okay, cool. Now what? Like how do I get this operationalized? Because obviously this is, you know, I think the reality is that I now want to get patients on this plan. I want to let people know that this thing exists. Like what, what are some best practices? What's worked in your practices, what's worked in some of the clients that are most successful with this.
- [29:36]
B
So it, it's really, really interesting. This is kind of like the sweet spot of what I mean our original focus was five plus years ago because I mean we looked at our practices, Practices is equal. I mean you don't want an absolute disruption to that workflow and you don't, you don't want something to flip your world upside down. Whenever you're trying to make improvements. I mean there's always minimal changes in anything that you do. But how do we make it easy and not that sales pitch easy, that genuinely this is something that's not very difficult to do and that's really where we tied in systems with kind of that co management into what a practice does. So kind of the first step of that whole process is what does the practice actually get with us? So we built out a hyper comprehensive system that allows you to actually manage all those patients that do enroll. And that's kind of that home based piece. So whenever I'm staffed within the practice and I'm trying to see who is on my plan, how do I enroll patients, all those fundamental steps, that's where you go. And that's probably the biggest piece of the puzzle that practices are in every single day. Now when it really comes down to obviously any plan that you launch, the big goal of it is enrollment. And that's by far the most important piece of our puzzle. And we give practices multiple options. So probably the biggest option is, I call it kind of our miniature website, our enrollment process or our link that we give to practices. Every practice has their own custom enrollment process. They can brand it, it ties in their practice's information, it even Google Maps and where that practice is located. So you have that familiarity with patients, where those patients can go to go to your enrollment, view your plans, actually do some due diligence, understand. And that has enough depth to it because I know just from at least what I personally do. When I'm looking at different options in any marketplace, I want to be able to read, I want to be able to go, let me click here, let me read more, let me see these different details and options that the practice might be presenting. Now. What practices do with these links is, it's, it's pretty amazing because they have it integrated to pages in their website. They, I've seen practices run PPC marketing off of just their plans because again, tying back to that 70% of potentially that consumer base in their area. Can, can I go out and now potentially bring new patients into my practice? I mean what we do is we, we put, whenever patients book an appointment with us, almost every practice does this, but they get those appointment confirmations. The next email they're getting is, hey, we want to introduce our new in office options. So every single patient, we're trying to take that in simple terms that cold lead and warm them up before they even come through our doors. So then whenever we have a staff member that broaches that conversation and goes, hey, did, did you see the email about our plans? Patients can have two different reactions, oh no, I didn't see it, but now I have a lead in to continue that conversation or they're going to go, yeah, I did see it, it was interesting. I didn't, I might not have taken too deep of a dive on it, but I also have kind of this roadmap to a conversation. So we're always suggesting practices to maneuver this piece in a couple different directions. That makes it easy to introduce because one of the, I guess big dilemmas that goes around eye care is because it's such a retail dominated space, you have a lot of practices that don't want to emphasize on sales but still have to do sales. So how can we make it a very light, light touch point sales process to be able to get your plans to patients and obviously the relationship of that patient being a patient that's coming to see you helps enormously. But so you have kind of starting off, you have your core system that's kind of your database in a sense of where do patients that are enrolled go? You have your enrollment process that's custom, that can be dropped fundamentally anywhere you can enroll patients directly through that system. Again, we see a lot of Medicare age patients that go, if you give me a QR code. There's no way I'm about to scan this and go do this myself. So we have to have options for them. And then kind of the cherry on top is we have a phenomenal invite process where we, we've always wanted to nurture interest, and that's been one of our fundamental goals. Because you have a lot of patience that'll go, I love what you guys are doing. This is really interesting. I need to think about it. And the standard practice reaction would be, well, give us a call whenever you have thought about it. Yep, I want something in their inbox. I want something that I can actually build in messaging to, that can give them the appropriate reminders to go, hey, click on this link, take a look at it, actually divulge that information. And let's, let's potentially get the ball rolling. So those are kind of our core three pieces in terms of enrollment that really, really fundamentally work together to create some pretty positive situations for those practices. So it's.
- [34:57]
A
Yeah. So listen, I. As I'm hearing you talk, so more practice management ideas are going off in my head. So. And I think fundamentally the unlock for me in my mind is that this isn't just a fringe thing for some patients who don't have insurance or something like that. That I would, as a provider, I have to agree that I would rather put a patient on a membership plan than have the patient be part of any other, we'll call it benefit structure, which, you know, could be managed vision care with that in mind. So, like, I now think that way. With that in mind, I want to let everyone know that I have this, even my VSP patients, even my iMed patients, even whatever, like, but of course I want someone who has, you know, let's call it one of the crappy reimbursed plans who I'm thinking of dropping anyway. Of course I want them to convert to my own membership plan. So there's a psychology in structuring these membership plans. And I was like, we, if we have time, I want to come back to the psychology a little bit more because it's such a fascinating human, like, consumer choice element. But let, let's just keep going with the, with this train of thought, which is that there's psychology to structuring these plans in a way that makes it really attractive to patients who don't have insurance, but also to patients who do have benefits and they like, oh, I can maybe stack my benefits or do something. Right. So then you get into this mindset of how can I Let patients know. So based off of what you just said, I. I wrote some things down and then I, like, added a couple of my own. So number one, you said, okay, I can let patients know when they're doing research. So to me, that means, you know, paid marketing. Like you said, ppc. But like, we talk about ehr connected Google Ad. Like, I'm like, man, I really want to try to put this on a landing page on a. On a Google Ads landing page and see if this drives conversion up or down. Like, I now literally want to run this test almost like next week or something. We got to get one of our clients and your plans or we probably have some clients who are already on your plan. So let's. I definitely want to test this out because for optometry, price transparency has always been an issue. Right. How much is an eye exam? Well, I'm not going to put that on my website because I don't want to drive people away, right? Because I'm not two for 99 or whatever, you know, whatever cheapo corporate is doing. But I could have. This is an optional lever for price transparency because I could say, hey, I've got a plan for where for 20 bucks a month you get an eye exam, plus you get frame benefits, plus you get this. And all of a sudden it's like, well, that price transparency feels pretty good. These guys really want to take care of me as a patient. Okay, so this is at the patient acquisition model, where you can test it with Google Ads, you could test it with SEO, you could test it as just an element on your website or on your Google business property. Okay, interesting. Second, I think that this is a patient acquisition module. At the point of the phone call too. We didn't talk about this, but I think about how many. How many new patient phone calls end up getting not booked. And like, I go on this freaking platform and this is my little stump speech all the time is like, this is the leakiest part of the bucket in optometry is the phone capture rate. And the fact that we as an industry are booking 15% of new patient opportunities into our schedule and letting 85% of those patient opportunities just be money that we set on fire is ridiculous. Oftentimes. The reason we set those on fire. I literally just listened to a bunch of calls with a client last week. How much is an eye exam? Well, it's 179. And then if you have contact lenses, it's another 59. And then. And all of a sudden the patient like, wait, so that's like 250 bucks. Okay, bye. Like, no. How much is an eye exam? Oh, do you have any? Well, would you like to hear about our, our in house plans? Because typically we, we can include an eye exam starting at $20 a month. And you're like, oh, well, that's different, right? Like that's a, that's an interesting, that's an interesting option. Even though that whole 20 bucks a month ends up at $240. Like to me, 20 bucks a month sounds pretty good. Okay, so I feel like it's a phone conversation conversion tool, but it's also like you let everybody know on the phone whether they have vision plans or not. It is like, hey, if you want I can send you some additional information about, about our in house. Our in house membership plan or in house VIP plan or something like that, which includes a ton of benefits for. And it starts with 20 bucks a month. Would you like me to send you that information? I don't care if they say yes or no. I'm still sending it to them after they book the appointment. But maybe if they don't book the appointment, I'd like to send it to them anyway. So, so then you said at the point of confirmation. That makes sense. So I'm letting people know and again, even if they have managed vision care, I might have a, I might have a special, a membership plan for a specialty so that if you become, if it becomes evident that you need help with dry eye or maybe headach or you know, whatever your kids myopia, we have solutions that might be, that started that. We have a membership plan that helps you with that and here's everything that includes and you know, you make it sound like a great VIP package and then you do it at the point of sale. Right? So your optician needs to be really good at it. Maybe you're a welcome person when you will first walk in too. Like, hey, did you, did your practices do videos about this? What if the doctor recorded a video that explained how, you know, they, they've answered the call for. You know, a lot of patients ask about this and a lot of patients want to know how can they get the most out of, out of their visit to ABC Optometry. And so one of the things we've done is we've developed, we've developed a membership plan where our patients can or a VIP plan where our patients can be VIPs starts at 20 bucks a month and you can have a massive number of benefits. So like I can see like, you know, this is A welcome at the point of confirmation. And then the last part is, which I don't think you said, but this one was like it's the first one that ended and that, that started my mind is the reactivation. Right. Think of all of the thousands of patients that most practices have that are 13 months to call it 60 or 72 months since last exam. Wouldn't it be great to let them know because nobody else is sending them an email even if they've gone to another office, even if they're doing whatever, nobody else is sending them an email telling them that they have amazing options starting at $20 a month. This is a subscription based economy. I am telling you. Like especially when you're talking about millennials down right? Millennials, Gen Z, Gen Alpha. This is a subscription based economy. Everything is on subscription. And if you can, if you can appeal to that segment of the, of the population, it's not just about saving, it's not just about like financing, so to speak, the cost. But it's also I think about maximizing the psychology and the benefits. So to me like what you just said about like how do you, how do you get the patient aware that is like there are so many different points along the patient journey where that makes so much sense to do.
- [42:50]
B
Yeah, a hundred percent. And I mean tying into that subscription economy, I mean I give, I do give insurance credit. I mean they identified that 30 years ago and they said hey there's, we're, we're going to implement these plans, we're going to build them recurring and we want that out of sight, out of mind. Where now whenever a patient goes in, they know they have benefits. But one, one point that kind of gives me a good laugh every once in a while whenever I at least think about it is one of, in almost every single practice I would say that listens to this will have a similar situation where patient comes into practice and goes hey, I'm thinking about jumping on a vision plan. What's the best one out there? And every single doctor will sit there and they'll bite their tongue and be like I, I don't, I don't want you to be on any of I. But, but how many of those doctors have an alternative option? What's, what is your alternative option? Well we can give you 20% off, but please stay a cash pay. That, that's not a good pitch. If you go, wait a minute staff, we're no longer suggesting out, we're only suggesting to our own programs. So any of those patients that are looking for options and literally talk to a practice on Monday or Tuesday that was like I had a cash pay patient that was a cash pay for five consecutive years and purchased eyewear and came back in super excited that they had gotten on a vision plan and we had a detailed conversation about well, why, why did they do that? And it all kind of circulated back to. There's, I think there's a lack of awareness of realizing that when a patient does come in and spends say $1,200 just for number's sake, the patient's not skipping and jumping out of the practice excited that they spent twelve hundred dollars. They, they in a lot of situations are like, shoot, now if I come back in for my eye exam next year, I spent 1200 the year before on eyewear, maybe I'd use the same frame or I do something else, but I don't want to spend that again. So now you're leaking profitability. So I mean there's a million situations and even one of the things that we've seen kind of become a trend to a degree is looking at even the insurance patients that might not have the greatest plans. I know we get the question all the time with what about, what about patients that are on a plan through their employer? And I'm like, well, if we look at what the employer psychology is on actually getting the plan, the employer isn't sitting there going, I need to get the greatest plan on earth for my employees. They're looking at it more on a cost structure. So what makes most sense for the business that I can still count it as, here's a benefit I give my employees. So you see a lot of these employees come in and their plans, for one, they don't know what their plan even offers, which is another frustration I could dive into. But they don't have a good plan. So can we subsidize and give them an additional option? Maybe an add on, let's do a warranty program. Maybe if you needed an extra allowance, but you wanted to do $10 or $15 more a month, can we have this option that maybe subsidizes because maybe that patient's in progressives and their plan through their employer isn't, isn't going to cut it. So you see a lot of this maneuverability to really, I mean, tailor things to what patients needs actually are and what you can identify in your area. And that's from your more urban areas all the way down to your more rural areas. Every single, every single practice could pick out 10 different situations that could Very easily be solved by having more options on the table for these patients.
- [46:36]
A
Yeah. You know, it's so, so interesting when you say that is, and even the employer comment, why wouldn't we go to an employer who doesn't have a vision benefit and then in the area and why don't we train practices to go do a tiny bit of business development? And you could send the most, the friendliest person in your office to go to email a few employers in your area. And I would say like, you know, small to medium sized employers and then say, listen, I'd like to give your office an elective vision plan. You know, you just pay, you, you can pay $10 a month and you could, it could be the crappy plan, but at least it's going to the practice. But it's $10 a month that includes, you know, some version of an eye exam. And it includes, you know, and you can customize it. Right. Like there are some employers who want safety eyewear, whose safety eyewear is required. Right. And if you think about industrial employee, okay, great, we'll give them 50% off of safety eyewear as part of this. And then there are some employers who, you know, they're, there may be, I don't know, like a law firm or something like that where all you're doing is you're saying, hey, I'm going to get them in the door. Because I know that those employees are more likely to spend money because they're white collar jobs. And so I'm going to give them, I can tailor the discounts to what their demographic is going to look like. I can tailor the deal, so to speak, that they're really excited about to, to their demographic.
- [48:13]
B
Well, we actually, I mean we have a full scale like when a practice comes and works with us, they not only have their patient plans, but they also have access to a whole business plan side. And that was one of those things that came up In I think 20, 25 a lot. There's like this big boom within our clientele of like I need to go talk to every small business. And it was intriguing because we, we looked at it as what is the most appropriate pathway to kind of cater to every need. So one of our things back, going back to kind of sales friction is when you build out a business plan, it's fundamentally the same exact process but you're, you're still making the same recurring revenue. Typically you see those plans be more generalized. So because again you're looking at patients that are going to opt for that plan. They might not have ever came into your practice before. So giving them some crazy package isn't going to be as attractive. We're going for the patients that are, hey, this, this is what I'm can get through my employer. So let me go to this practice. But the neat thing of how we did it was we left it where the employer can create an account completely free. And that was probably one of, I think one of our wisest decisions because we wanted it frictionless. We wanted to create another marketing engine where if I go to an employer, say it's local coffee shop and they have five or 10 employees. If I approach that business owner and I go, hey, we have another option in our practice, love for you to just get an account. That employer goes, yeah, why wouldn't I get an account? Does it cost anything? Just give this, give this enrollment to your employees. Now. Now I'm, now I have this layer of marketing where now I'm. Not only am I establishing a relationship with a local small business that might potentially go, hey, can I put some rack cards at your POS system about my practice? Because we already kind of work together, but now half of your employees are also on my plan and they get great benefits because now the employees themselves, rather the employer can opt to go pay for the plan for the employees or the employees themselves can go, hey, I want this as an option.
- [50:21]
A
That's a great point, is a lot of small businesses want to say we offer vision without having to quote, offer vision and pay for it. So you can say we offer vision benefits. You just, you know, it's through ABC Eye care and it's direct to them. And here's the plan you sign up for and if you want. And it can be literally any, like, it costs them nothing. It costs. So that's a really, really smart point. And so you guys have like a whole portal where the employer can jump in and do that particular thing.
- [50:52]
B
Yeah. And they, they have, they get their own. Every business gets their own enrollment process. You can even curate it down to. If you had a specific business that you needed to do a very specific built out plan for, you publicly would never have to show that plan anywhere else. But that plan could be built for say, X manufacturing company that you work X deal out with where now you're getting into. Just, I mean, you're opening a huge door for some of these practices. And what's even funnier is you had, we had a lot of situations from clients where they launched their patient plans and then next thing you know, they have local Small business owners that were already patients going, I love this. Like, I want to enroll me and my family. Do you guys do anything for the business side? Because I'd love to be able to bring this, bring this in. I mean it just, it's very, it's very open ended and we left it that way to give the most flexibility so it's not as rigid. Imagine the time it saves for a business to be able to go, Let me just get this. I'm, I'm a small business. I'm not trying to get locked into anything crazy with some major vcp. I'm just going to be able to go, hey, here's a practice I trust. Me and my family go to. Go to them. We worked out this deal. You guys could get this plan for 10 bucks a month and you're going to get X benefits. And you, you guys, my employees that I care about, you guys can get benefits at the same practice I trust. Creates a pretty amazing dilemma.
- [52:18]
A
Yeah, that's great. I love that. You know, there's, there's so many marketing angles because I, I just wanted to go back to what's inside the plan. What are some of like the cool extras that you've seen practices put in? I'm going to, While you think about that, I'll tell you that right now. I am thinking that everybody who has a membership plan should also include in the plan a $50 gift card to gift to or a month free of the plan to gift to anybody else in their family or their friends. So basically like the plan includes in itself up to three free months of plan for friends and family so that I can immediately refer everybody, everybody I care about, but only three times a year because you don't want to get more than three referrals for patients. You get the psychology trick. But the, the idea would be like, just put that in there.
- [53:20]
B
What's the worst that could happen?
- [53:21]
A
They, they do it and then you have to, you know, give them a free month and somebody else signs up and your patients are referring other patients.
- [53:29]
B
Well, to your point, what I've, what I've seen very, very similar to that is you'll see practices put in a benefit. It might say bring, bring friends or family. They get 20% flat, 20% off. And what's, what's funny about it is most practices, we're already going to give a cash pay discount 25. But just having that in there where they're like, oh, that's an angle. Let, let me get, let me add this, let me, let Me bring. Let me tell my friend about it. And then it opens the door. If we can just get that conversation to happen where it's like, oh, yeah, I saved. Look. Look what I saved on my eyewear. You, you should probably also get on this. I mean, the amount of patients that we see that come in that are like, yeah, my friend told me about this. So I just enrolled off of your website. And I came in because they said that they got X hundreds of dollars off of eyewear. And we're like, great, like, welcome to our practice. You're a completely new patient that we've never spoken to before that booked just off of that intent. So. And we see that benefit. I've also seen, seen like team practices throwing contact lens solution. We've seen another kind of funny one that I kind of call as fluff is see a lot of practices put free cleanings, free adjustments. These are a lot of things that practices are already doing. But it's, it's just, let's put it on paper where it has value, value in time that, hey, we, we're going to take care of you. I've even seen practices go, hey, I set aside X time slots in my schedule and we'll move things around if we need to. But you have, you're kind of our vip and we want if, if you needed an appointment this week, we'll shift things around to get you an appointment this week.
- [55:11]
A
Do they call them in house plans, membership plans, VIP plans? Like, what's the, what's the terminology that you've seen work?
- [55:19]
B
I've, I've always seen a lot of membership plans. I've seen then. Well, every plan has its own name, so a lot of times they'll be like, yeah, this is our membership program, but it's our VIP plan. So it's. I mean, it very, very depends kind of the terminology the practice originally picks up. But it's. I see a lot on just membership programs or membership plans.
- [55:45]
A
Yeah. Cody, this is freaking great. I know that interest in this is growing again. Why I wanted to do this episode is because I see a lot of my clients asking questions about this or our, our team's clients asking questions about this. And I think you've answered a lot of those questions. I think this is great information. Thank you for sharing. If people want to get a hold of you, if people want to learn more about what you do, how do they reach you?
- [56:13]
B
Go to directod.com and there's a ton of different booking links that you guys. Practices can book an appointment with us. They can reach out to our team. There's tons of different ways they can get a hold of us, contact us on any of our social medias. We'll have somebody get a hold of you.
- [56:31]
A
All right. We'll put the link in the show notes so it's directod.com. thank you so much, Cody, for sharing some of your wisdom and some of your experience. And thanks for what you're doing for the industry.
- [56:43]
B
Thank you, Eugene.