Do you tend to take insurance providers for granted? After all, it’s a system we are so accustomed to, even if most of us often complain about it.
In this week’s episode, I challenge you to shift your perspective to realizing that cutting out middlemen will not result in a drop in your revenue, on the contrary. Boomcloud founder, Jordon Comstock, shares his expertise on how to get started and what to keep in mind.
- The dental insurance industry is deeply flawed, but there’s something else arising at the horizon
- Generating recurring revenue stream will increase the valuation of your practice
- Membership plans vs in-house financing
It all started with realizing that the dental insurance industry is deeply flawed
Jordon realized that many dentists in Utah, US, were complaining about dental insurance. He said to himself that there must be a better way to help dentists manage dental insurance.
One day he went into a dental practice and saw that they had an in-house membership plan. This happened right after he had read the book “The Automatic Customer”, which teaches business owners how to generate recurring revenue.
Jordon’s idea was just a side gig in the beginning and quickly expanded into a profitable business.
Would the concept of dental savings plans work for specialists?
Specialists cannot really have an in-house membership plan because they don’t have a regular flow of customers.
If you are a specialist, you basically have two options:
- Go for a discount plan. If you are interested in doing that, you should first check the regulations in your state. Discount plans work by having patients pay a monthly fee in order to get a percentage discount off your service.
- Go for in-house financing. The way this works is if a patient cannot afford a service, you can break out the payments, and then collect interest on these payments. This enables the patient to get treatment, and you get to increase your profit.
The idea is to generate recurring revenue stream
Boomcloud doesn’t currently have a credit check, but Jordon is looking at implementing that in the future. There are currently many third-party software that you can use.
Most dental practices choose to create a payment plan or a membership program. Jordon’s software allows bank transfers from the patient’s bank account to the practice through auto debit. Auto debit is not risky and it’s also quite cheap when it comes to merchant fees.
Jordon wants to help practices generate a recurring revenue stream through in-house financing or an in-house membership program.
If you are a dental practice owner, you should really look into this, because the larger recurrent revenue you can get, the more valuable your practice will become from a valuation standpoint.
Membership plans help increase the valuation of your practice
Generating recurrent revenue increases the valuation of your practice. This recurrent revenue can be valued at four to six times annual recurring revenue, instead of discounted.
When the time comes to sell your practice, you can easily tell the next buyer “This is the recurrent revenue stream that we’re generating. It’s predictable, we have a track record.” If you’re using the Boomcloud software, you also have a projection of cash flows on your dashboard.
If you prefer to keep your insurance system, you can try and renegotiate the terms in order to get a better deal.
Jordon’s colleague Ben Tuinei is the President of Veritas Dental Resources. Through Veritas, Ben helps practices negotiate insurance fees and get better rates.
If you’re a practice owner interested in either negotiating fees or separating yourself from your insurer, you should check out Jordon and Ben’s podcast, Say No To PPOs.
So we’ve convinced you to give membership plans a try. What should you do first?
If you are thinking of giving membership plans a try, you can first speak to your clients and see if they are happy with their dental insurance. Odds are most of them are not. Some may not even know which insurance they have because their employers purchased it for them.
You can then start creating an in-house membership program targeting uninsured patients. Nowadays uninsured clients are more numerous than insured ones. Together with Jordon you can develop a savings plan and start signing up uninsured patients.
The next thing you could do is to focus on an external marketing strategy to attract more patients to the membership program.
Don’t forget to check the regulations
So essentially what Boomcloud is doing is providing an in-house insurance program for the patient, rather than allowing the insurance company dictate its terms. They are cutting out the middleman.
It’s important to remember to check the regulations in your state. You can find many resources on Boomcloud’s website. Lately, Jordon has been working with attorneys in order to understand the laws that are out there. Together with his attorneys, he found a few laws that actually allow practitioners to bypass any type of insurance regulation with a legal agreement.
This agreement is typically called a medical retainer agreement, or a direct patient agreement. It’s a new movement happening in the US. The majority of the US states have so-called DPC (direct primary care) laws that allow dental or medical practitioners to bypass insurance regulations.
In the medical field, this practice is called concierge medicine. Dental practitioners call it a dental savings plan or a membership program. It’s basically the same thing.
The movement towards cutting out insurance companies in the medical industry, from dentistry to vets and optometrists, is growing larger and larger. It’s time to rethink your business plan and head for the future.
Want to receive our podcast on a weekly basis? Subscribe to our newsletter!