What do Led Zeppelin and Cardi B have to do with the economics of a dental office?
A lot, it turns out.
Here’s how. Stay with me for a minute before I get to the dental part.
The music industry was tanking a decade ago. Nobody was buying CDs anymore, and music execs struggled to see a light at the end of the tunnel.
Now, in 2020, we find that Warner Music has increased its value 4-fold over the past decade. From the depths of despair, it is now a rising company.
You see, the music industry figured out something that dentists are just starting to catch on to.
Subscriptions. Music is now a subscription-based service. And dentistry is starting to become one as well, to the great benefit of dentists.
A typical office has some cash patients and some insurance patients. We love the cash patients, as they are easy to deal with. We treat the insurance patients, but struggle with the unbalanced relationship we have with insurers. Insurance companies generally pay less, and they can be a pain to deal with.
With a subscription membership program, you can treat your cash patients well, and generate stable, reliable income throughout the year. You can even convert insured patients to members. With a well-run membership program, a big chunk of your revenue can be stable month to month.
This is great for several reasons. First, having reliable income makes things easier for a practice. You can match recurring monthly expenses with the recurring income. How great would it be to know that your rent, electric and other stable expenses are taken care of each month. Matching fixed expenses to fixed income is a great practice, and it helps you sleep better at night.
Second, the recurring revenue means that your office is less subject to changes in the business cycle. If the economy is roaring, you get paid. If there’s a recession, you get paid. You see, a well-designed membership program sets the subscription fees at a level most patients can handle in any economy.
Third, banks, investors and financial analysts see recurring revenue as somewhat of a golden goose. They love it when you can demonstrate that month after month, the business has a stable source of income that can sustain some bumps in the economy. You may be able to secure a lower interest rate with your bank if you can show them that the loan payments will be covered by predictable income you already have coming in.
There are a lot of different ways to manage a membership program. We recommend hiring a third-party service to handle the nuts and bolts. A good one will automate much of the process and charge a low fee. Check out Cirrus Dental for a platform that offers both.