Friday FINISH – March 6, 2020
We’ve all heard the story of the tortoise and the hare. Essentially the tortoise wins because he has the long-term, marathon mentality, while the hare is on a stop-go, unfocused, take-it-for granted run. Marketing legend Dan Kennedy says that people start quitting your business or lose interest the minute they start. Studies in psychology of buying have found that as buyers, our interest is highest right when we purchase something. Then it immediately begins to drop. Sometimes that act of going to buy or knowing what you are going to buy generates more “feel-goodness” than does the actual product or service that you receive.
For example, if you’re buying a new car, day one is the most exciting, and then it fades every day from there, until you either 1) begin to take it for granted, 2) get tired of it, or 3) feel you need to buy a new one. It’s how I’ve always felt about Christmas – meaning that Christmas Eve is the MOST exciting day of the season for me, because of all the excitement and anticipation (and knowing the holiday rush will soon be over).
So you have to keep things interesting, new and exciting, constantly building the relationship to bring your patients back for their next visit. The day of their checkup or new implant is THE most exciting day for your patient. It’s also the best time to help them accept more treatment and get them scheduled for their next visit, because the feel-good feelings are at their highest on that day.
How do you celebrate with them? What unexpected extras do you offer them?
This is why I believe most hygiene programs in our practices are underutilized. The perceived need of doctor treatment is higher: pain, broken teeth, bad breath, bleeding mouth, all of them feel more important to the average person, and therefore people will pay more and come in sooner to have these services done.
Where are the highest opportunity recurring collections (revenue) in your practice?
When it comes to prevention (a word that does not have any sizzle or excitement) people put it off, even though in fact everyone DOES NEED a checkup and cleaning periodically based on the needs of our mouths. Hygiene is also a huge source of recurring revenue, and with a trained hygienist and recare program, it is the closest thing to passive income you can gain in your practice if you are a solo doctor.
Here’s how Dropbox has done well with their recurring revenue program. “Dropbox makes file-sharing software that enables collaboration among work teams. Users pay a monthly fee for larger storage space. Thus, converting free users to paid accounts is a key growth driver. Of more than 600 million users, only 14.3 million were paying customers at the end of 2019. That’s up nearly 12% from 2018….One of the company’s main metrics is total annual recurring revenue, which is the key indicator of the trajectory of its business performance….It represents the amount of revenue Dropbox expects to recur, helps measure the progress of initiatives, and serves as an indicator of future growth. In the fourth quarter, total annual recurring revenue was $1.82 billion, up 3% from Q3 and about 20% from the year-ago period.” (-Juan Carlos Arancibia, March 2020 – investors.com)
Dropbox is a great example of how to build a recurring collections stream in your practice. Offer something valuable for people to join (for them a free basic plan) and then focus on creating a lifetime customer (or patient) who pays you monthly/annually and continually gets great value in the product or service.
Other ways to build recurring revenue into your practice include hiring associates, well trained assistants, and offering payment plans. Just ensure you have daily reports to track all of these metrics and hold the proper team members accountable to reporting back on them.
A great exercise this week is to break down your collections by the following:
- Hygiene collections by provider
- Doctor collections by provider
- 0-30 Accounts receivable, 31-60 accounts receivable, 61-90 accounts receivable, 90+ accounts receivable (90+ is what we call “bad AR” in the extreme danger zone, unless it’s part of a current payment plan)
- Over the counter collections (non insurance)
- Insurance collections
Average these out with 6-12 months of data, and you’ll soon see where your revenue (collections) really come from. This will help you make better decisions on things such as adding more providers, offering more or less payment plans, accepting or dropping insurance plans, etc. In my office I was pleasantly surprised years ago to see that nearly 2/3 of our payments come from patients, whether cash pay or copayment. For my practice philosophy, this means I’m not overly dependent on insurance which wouldn’t match our service model. Even though we are very insurance friendly in my practice, we don’t belive in making decisions solely based on insurance alone. But my office and yours are different, and so will your recipe be for success. You just need to make sure you have the right ingredients to flourish.
Have a great week!