The Power Of DMA Recurring Revenue

“The DMA membership concept has taken partner dental practices from the universe of uncertainty into the realm of steady, flowing income.” –Dr Safa Souzani, Springfield Lakes

The recurring revenue concept is revolutionising how dentists build their practices both in Australia and overseas. With this proven approach, dentists are suddenly finding they have greater control over their destiny, greater certainty of income and a much more stable base of regular patients. An increase in annual revenue of over 50% across the first three years of introducing a recurring revenue program is quite common.

In every type of business, recurring revenue is highly valued – it is the portion of your income you can count on receiving from month to month, with some degree of certainty. It creates a stable cash flow and is the foundation of sustainable growth. In Australia, Dental Members Australia (DMA) has developed and pioneered a comprehensive program that is helping dentists plug into the power of recurring revenue. It delivers regular income, improved patient outcomes and stronger bottom lines. All types of dental practices are finding it contributes to patient retention, increases the patient base, leads to regular appointments and opens up new income opportunities. Partner practices introducing the DMA program have achieved impressive gains, including:

• An increase in the amount of recurring revenue as a percentage of overall revenue from 5% (at the 12 month mark) to 30% by the 30th month point – and rising

• Typically 25% of the monthly revenue is predictable and secured by direct debit through DMA after three years

• A large jump in weekly appointments – a 75% increase in 30 months is quite achievable

• Annual revenue increases of over 50% across three years.

As founding dentist, Dr Safa Souzani says, “The DMA membership concept has taken partner dental practices from the universe of uncertainty into the realm of steady, flowing income.”

In the current dental industry environment with a large number of competing dentists and a pay-by-the-visit check-up model, there is little incentive for new patients to stay loyal – they have neither emotional nor financial commitment to a practice and next time there may be another new dentist or cheaper alternative to try. DMA memberships give dentists an effective way to encourage patients to commit to a longer-term dental care perspective and to return every six months. The DMA Care Plan covers an examination, clean and x-rays twice a year on an affordable monthly payment program.

The inbuilt flexibility of the program means dentists structure the charges and discounts to suit their practice and local environment, plus they can brand it with their own name to further cement loyalty. As a typical example, 1300SMILES introduced a $14.99/fortnight or the $1 a day concept for their membership program, giving a clear marketing hook and an easy way to encourage patients to begin a regular practice of attending every six months.

The member discounts on treatment as well as preventative care mean patients have every reason to stay with the dentist whose program they have signed up to.

Pricing it right

Dentists who are most successful with the DMA program price their Care Plan carefully. That means applying a method to pricing the membership rather than simply coming up with a gut-feel cost. The objective is a substantial number of reasonably priced memberships not a handful at a premium cost.

A good way to determine a figure is to analyse the usual charge for examination, clean and fluoride twice a year plus two X-rays, then reduce this price to offer a worthwhile member saving and divide it by 12. Obviously, this isn’t an exact science and other factors will influence an effective cost structure. What is the competition doing? If the recently renovated dental practice next door is offering $99 examination and cleans, a $50 per month charge will not look very attractive!

Introducing new charging structures may also require a review of how the practice dentists are paid. If they are currently paid on production, the pay structure may need to focus on collection rather than production.

Tapping into the limitless possibilities

A study by the Australian Dental Association in 2011 showed that almost 70% of Australians don’t attend a dentist regularly. Any dental practice that can tap into this group of patients will naturally grow its business. Every dental practice can get a better understanding of its current potential by analysing the attendance of existing patients and categorise them as either low, medium or high attendance. As a rough guide:

• Low attendance patients have preventative care twice every two years or less

• Medium attendance patients attend three times in two years for preventative care

• High attendance patients have four or more preventative care appointments over two years.

Any that are not attending regularly are an obvious first target for activities to help build a practice membership program for better oral health.

The most successful DMA member dentists are making the most of the DMA training team for support, setting targets for staff and being proactive in marketing the membership option. Jeff from Rochedale Dental explains how he introduced the program “During the first month, I sent two emails to all existing patients, slowly introducing the idea of moving up to the monthly membership. I sent a personal letter describing the benefits of regular dental check-ups with a monthly sign-up form attached, and I also had a treatment co-ordinator call everyone once during the month.”

One thing that has become very clear is that the DMA Care Plan sells better if its presented to patients at multiple touch points: over the telephone, when they arrive at the practice and again before they leave. With a typical monthly sign-up goal creating a stable monthly income stream of $1800 and boosting annual guaranteed revenue by $21,600, it easy to see why dentists are keen to be part of DMA and to discover the power of recurring revenue to give sustainable business growth and certainty of funds for future planning.

About DMA

In 2010 DMA began developing the software that underpins the membership program. The Care Plan was piloted in a small number of practices in Brisbane in July 2011 and, since then has been expanding through selected practices. 1300SMILES partnered with DMA early in the process and has introduced the $1/day 1300SMILES Care Plan with a huge amount of success.