The Final Lever To Business Success Revealed

All right, here we are live again. This is Matt Gallogly, and I'm gonna talk to you today about the final lever to your business success and owning a medical practice, cash-based medical practice, and that is monthly recurring revenue. In a moment, I'm gonna tell you what it is, how to generate it, and why it's so important to the long-term success of your practice, your mental health, less stress, you name it, all of it's gonna be covered today in today's podcast and videocast as well. Again, my name's Matt Galloglian with SRP Medical Marketing. If you'd like to learn more about what we do, I have a free gift for you. I'd like to give you a copy of my latest book, The Stairway, and it talks about how to implement the stairway system into our practice. And it's the book that I just released. In fact, let me find— I think I have a copy. Here we go. It's called The Anatomy of a 7-Figure Medical Practice, and this is the ultimate system for doctors and clinic owners to build a practice with more profits and less hassle. I want to give you a copy of that for free. All you have to do is go to srpmedicalmarketing.com/book. B-O-O-K. That's srpmedicalmarketing.com/book. Now let's go ahead and talk about your monthly recurring revenue. Right now you might be saying to yourself, uh, Matt, what is monthly recurring revenue? Well, there's a couple different types of revenue in a business. Okay, so there's the transaction-based. This is the bulk of what revenue is in businesses. Not so much today, uh, because this model is changing. Everybody's understanding the power of monthly recurring revenue. But let's just say up until about the year 2010, the model of transactional revenue was how most businesses Survived. They, every single morning, it was Groundhog's Day. They had to wake up, they, and they hoped and prayed that somebody would be coming in and that they would have a good day in business. And their attitude and their belief system or their confidence was all dependent upon whether or not they had a good day. If they had a lousy day, if people didn't show up and buy, then they were in a bad mood. If they had a great day, then they were in a good mood. And the problem is, is that creates this roller coaster of revenue and you want to get off the roller coaster of revenue. What you wanna do is, that's what I call an open system. And I've talked about this in prior videos. I'll talk about this again, but it creates this open system. Patients come in, they pay, they zoom back out. Patients come in, they pay, they zoom back out. What you wanna do is you wanna create a closed system. So when they come in, they stay in and they stay for 7 years. Now, I first discovered this running private golf clubs, and when we, uh, I learned this very early on. And that was the average lifetime of somebody being a member of a club is 7 years. So if they can get you past the first 90 days, then you're most likely going to stay for 7 years. This is a very important metric because it started to change the way that we looked at the business. And I want you to look at your practice exactly the same way. Your goal is to get somebody to stay in the practice For up to 7 years. The average time might be more like 3.5 to 4. We're still kind of working on some of those metrics, but it's going to create what's called a bigger lifetime value of the customer. Now, again, I don't want to get too far afield on this. I'm going to give you some of the basic concepts of this. Okay? So what we're going to be doing with monthly recurring revenue is this is revenue that generates each and every single month automatically via a credit card charge that you don't have to think about running. Okay. Now, if you think about this, this is exactly how health clubs work. This is exactly how, you know, I'm a member of CrossFit and I'm also a member of another gym and I'm a member of a golf club. And all of those things are set up on a monthly recurring revenue. The money just hits every single month. They have my credit card on file and it automatically drafts. That is what monthly recurring revenue is. And that's what you want to set up in your practice is that you want to create a monthly recurring revenue model. This is important because of a couple of things. One, you want to set it up so that your— if you were to take the, your, um, say the cost of your rent, your utilities, your, um, you know, any insurance payments, malpractice insurance payments, and eventually payroll, including your pay— your payment, your Your paycheck, you want to set it up so that your monthly recurring revenue is covering that nut. Okay, the cost of the medical supplies related to the procedures, those are paid for by the procedures. Okay, so for most practices, this is generating $25,000 a month in monthly recurring revenue. Okay. Now, we implemented this in our practices and I help doctors do it today. And generally it starts, you'll, for First couple of months, you'll be generating like $3,000, then $5,000, then $7,000, then $8,000, then $12,000. Before you know it, about 6 months, you can be at right at about $20,000 to anywhere between $20,000 to $25,000 a month. Now, how do you set this up and what is it? Well, it's, it's for services that are ongoing. One of my favorite things to do is to set up your HRT clients in a monthly recurring revenue model. So the, the model that exists for most practices today when it comes to HRT is patient comes in, they pay a fee that day, the— and the doctor is buying from like a third-party provider. So the doctor's only making like $75, $80 or something like that. They do the insertion, patient comes back 4 to 5 months later if it's a guy, 3 months later if it's a woman. The problem is, is that creates an uncertainty and you're dependent upon the patient's calendar and Holidays and weather and all that stuff. So what we do is we set it up differently. I'm gonna share that with you right now. What we do is we have our doctors charge an initiation fee, okay? Now that initiation fee, and I'm gonna use this from the model of men, so most men for their HRT are gonna be spending about $750 every 4 to half— 4 to 5 months, okay? So what we do in the cost involved with The HRT is gonna be around $300 to anywhere between, you know, $250 if you're doing sourcing it all yourself, sometimes a little bit lower, a little bit higher if you're using some of the other companies that provide a bunch of other things, might be as high as $350. Just kind of varies from, from situation to situation. So let's just use the number of $300. What my doctors do is they'll charge a $499 initiation fee to join the club. Okay? Then what they do is they charge the guy automatically either anywhere between $169 to $199 a month starting in 30 days. Now what that does is eventually what's happening is the patient is prepaying for future insertions. Now this doesn't include blood work, you know, blood— the whole conversation of blood work's a separate thing. And now just sending it out versus including it, just have them have their insurance pay for it. But anyway, so what happens is that this is, you're getting payment in the future and that way you have money coming in each and every single month versus the spikes, right? Now a lot of you depend, thanks, thanks, Weddy, appreciate that, buddy. You know, this is what makes the big change in the business, okay? Now if you're dependent on these spikes and this money coming in, this is gonna be a little bit of a transition period. I recommend that you start with new patients coming in in versus existing, and then you can eventually transition the existing. But this monthly recurring revenue model with HRT is one of the best things that you can do. Another thing that I like to do with my monthly recurring revenue models is I will also put them— I'll give them discounts on future procedures. I might give them 10% or 15%. I have clients that do nutraceuticals or supplements with HRT. That's an additional fee. I have clients that do IVs, they can get 2 IVs a month. I have clients that do some of these other models where, you know, it's ongoing maintenance with regards to Gainswave. They can come in and they can get up to 2 for seed, 2 additional a month, right? So like there's all these different models that you can do, and really what you're doing is you want to create a club-type environment in what you do. And I have one of my clients who generates in excess of $150,000 a month, $150,000 a month in monthly recurring revenue. She has 2 locations and she has her entire model on this, and it's about 45% of her monthly total revenue. All right, so put that into perspective. The monthly recurring revenue model begets future revenue from other things as well, because these are your best Customers when you launch something new, let's say you're going to be launching a new procedure. Let's say you're going to be getting a you know let's just use gains wave in as an example. Let's say you're treating mostly men. You're going to add gains wave into your practice. We're going to market that first and foremost to the people who are in your club, and you're going to give them a discount, right? This is one of the benefits of membership. This is so important that every business I have. must have a monthly recurring revenue component. I will not enter into a business model unless it has a monthly recurring revenue model where I control when the card is charged. Okay, state that again. Every business that I'm involved in must have a monthly recurring revenue model where I get to control, meaning the owners get to control when that credit card is charged. Now, it's very easy to set this up. You set this up on Stripe. Most of your merchant accounts are going to automatically have something that you can use to run the charges as for disclosures and things of that nature, you can create just a simple one-page thing that people, you know, one paragraph thing that people sign saying that they have to give you 30 days notice, that kind of stuff. This is pretty standard in the world. Here's why, here's some other reasons why I love monthly recurring revenue and you should too. So one, like I said, it should cover all of your base expenses and this should be a non-negotiable, okay? The purpose of this business Is to pay you, okay? The number one reason why this business exists is for you to make a living, okay? We do that by providing great services and great care to our patients. Clearly, that's— that is a— if I have to have that discussion, then for the love of God, don't ever follow me again or watch anything that I ever do, because if I have to have the discussion with you that the patient comes first, then you're in the wrong place because that's just a given in our world. Okay, we have to take great care of the patient. We have to provide great care. We have to provide great service. That's again non-negotiable. But beyond that, after that, the number one thing is to pay you. This is one of the ways that you get paid. You should not be sweating payroll each and every single week or every 2 weeks or every month, however you pay people. Okay, you shouldn't be sweating whether or not you're making your rent on time. Okay, this is how you do it. You set up monthly recurring revenue. It's going to start simple at first, $1,500, $2,000, $3,000, $5,000. But again, it's going to go very, very quickly. Okay. The second reason why this is so important is your peace of mind. My doctors that are taking 3-day weekends once a month, I have one doctor that is taking one week every 90 days off. I have another client that does, I think every 6 weeks she's gone for a week. It's because they have a great monthly recurring revenue model. These services that are in the monthly recurring revenue model, traditionally, I know that HRT cannot because you have to do the insertions unless you have a nurse practitioner or something like that, somebody can break the skin. But really what you want is these are things that the staff can handle whether you're there or not. That's another key component of monthly recurring revenue. But here's the other really great reason why I love this, is a monthly recurring revenue model will create a higher valuation for the day that you wanna sell your practice. Now, that might seem like you're hoping that you can just stay alive and stay open, but a monthly recurring revenue model will create an environment where you can get more for the practice. So most practices, most businesses are going to sell for somewhere in the neighborhood of, you know, 75% to 1x of the revenue stream. Okay. Or profit stream, it might be like 4 or 5x. They essentially come out to be the same. When you have a monthly recurring revenue model, you can get a valuation of 8, 9, up to 12x based on how much that monthly recurring revenue model is. So if you think about this, if you have, if you have, if you have $100,000, if you have $1 million a year, In revenue, of which $200,000 of that is monthly recurring revenue, you've taken your valuation— or $200,000 a year— you've taken your valuation from, say, $750,000 to $1.5 to $2 million a year. It's, it's, it's really one of the most amazing things in the world, and most people don't get it, especially doctors. It's why you see so many people running monthly recurring revenue model Models. Okay, so that's the monthly recurring revenue model. It is the sixth lever in your business. I think it's one of the most important, if not the most important, because it gives you leverage for the future. It's something that I work on extensively with my clients. All right, that's going to be it for today. Do not forget to go get your free book. That's srpmedicalmarketing.com/book. Folks, this is the entire system. I'm gonna tell you right now, you can read this book and you can get everything that you possibly need. Every concept, everything that you need is right here. I give it to you for free. I just ask you charge— pay me $7.95 for shipping and handling. They'll ship out within a couple of business days. You'll have it within 5 to 7 business days unless you live in Canada, and then it might take you 2 weeks to get through customs. That's another topic. Okay, get the book. Like to subscribe to the podcast. I appreciate it. In my next round of podcasts, we're going to be talking about coaching, why you need it, why it's important, and why the best always have it at a moment's notice. So have a great day. Matt Gallogly with SRP Medical Marketing. Have a great day. And as I always like to say, carpe diem, folks. Seize the day. Have a wonderful day. Bye.