Tips On Healthcare Pricing That Converts Patients

So the bulk of this session today, this final session before we wind up, is really gonna be Arianna, Ryan, and Colin, and they're gonna be doing the Million Dollar Consult. So this session that I'm gonna go over with you is actually 2 sessions. It's gonna be this set— this one right here, and then our first one tomorrow morning, because this is a very important topic and it takes a lot for me to cover it. So that's why we're gonna break it up into 2 sessions. The other thing is, please remember that we have cocktails afterwards. I'm Irish, okay? We provide cocktails no matter where we go. Anybody here ever been to an Irish wake?

No.

Oh, you have not lived until you've been to an Irish wake. There's a couple things you got to do in life. You got to go to an Italian wedding and you got to go to an Irish wake. They're the same, there's just a dead person there at the Irish wake, okay? They're exactly the same. There's bands, Music, crying, dancing. It's a blast. I grew up my entire life— I'm the 6th son, I'm a 2nd-generation Irish Catholic kid from Chicago, and we tell directions in Chicago by funeral homes. That's how you told directions. That was the Irish social scene. So, we're gonna have cocktails and hors d'oeuvres. You're gonna get an opportunity to talk to myself, talk to the staff. Some of you have asked about operations. Please talk to Catherine, our Chief Operating Officer. Please don't come to me and talk to me about operations. Because my answer is go see Catherine. Okay? She has extensive experience. She grew clinics, 7 locations in the chiropractic space. She's a phenomenal operator. She knows way more about this stuff than I do. If you have questions about employees, talk to Catherine. Okay? All right? That's, you know, one of the things is understanding that lane. So, and then we'll get started tomorrow morning at 8 o'clock. But let's dive into this because I got a lot I got to cover. Y'all ready? Y'all ready?

Yeah.

Okay, let's rock and roll. So we're gonna cover 2 sessions, and here we are. This is where we are. We're in the conversion step. Now here's the thing to understand about the stairway system. You can't skip a step. If you skip a step, it falls apart. What I'm about to share with you, because your conversion, if you are so focused on the front end of understanding who it is, what you stand for, and what you're doing, it makes selling a lot easier. If you have 17 different programs that your staff is trying to sell, then you have to have really highly trained salespeople. They're expensive, they're moody, and you need bail money. Okay? That was supposed to be funnier, folks. Come on, Ryan, laugh. You're— you guys are here to laugh. You're my slap track. Come on, Ryan and Colin, work with me here.

Okay?

Hahaha. Hahaha. Okay. At least I didn't say you needed cocaine and bail money. All right. So here's the number one thing that we hear. Matt, you don't understand. My patients won't pay cash for procedures. How many people believe that? Okay. Can we eliminate them? Can you take them out back and— okay. We've already asked and they say that it's too much money. I'm about ready to blow the doors off of that argument. You will not have a leg to stand on when I'm done.

Okay?

So here's my question for you. How did you all come up with your current pricing? How did you come up with your current pricing? Ask what your competitors are doing. How many people asked what their competitors are charging? Okay? How else? How else did you come up with your pricing? Made it up. Made it up. How many people made it up out of thin air? Okay, all right. How many of you went to a conference and you were talking to somebody and they go, well, you know, the kit cost me $250, so $750 sounds like a good number, I'll make $500 each time. How many people came up with your pricing like that? Okay, you're losing your ass. I'm gonna prove it to you scientifically. Okay, price is an ethereal construct. It is whatever you want it to be. Value is your own perception. Okay? So when Bob over here graciously says he asked his competitors about what they charge— so let me get this right. You asked a bunch of other dead broke doctors who know shit about pricing what to charge. They're the same doctors that can't make payroll. And you're gonna ask them about pricing? That's like asking me to look at your MRI. Okay? And you don't want me looking at your MRI. And you certainly don't want me doing an injection on you. Okay? And yet, this is how the industry does this. Someone, somewhere came up with this idea that PRP injections should be $750. And the joint, the second joint should be 50% off. What the hell is that? Like, I've rented— I don't know, Shay, how many rooms am I paying for here? Like 24? More? Right? I guarantee you they didn't give me a discount on the second one. Okay? And I'm curious, for those of you that think your people won't pay any money, what kind of cars are they driving?

Mercedes.

Teslas, right? BMWs. Some take the bus, okay? I guarantee you some of them got money. My mother took the bus. She died worth $6 million, okay? Where are they going on vacation? To Toledo? To the Holodome?

No.

Where are they going on vacation? Cabo, Hawaii, Arizona, Florida. How much are they spending on their daughter's wedding? $100,000. Okay. Oh, I just redid my kitchen. Can't afford $750 for PRP. That sounds expensive because we haven't presented it in the right way. How many people in here drive a Mercedes or equivalent? BMW, Tesla? Come on. Okay. Why? Why do you buy— why do you spend $120,000 on a Tesla? Please. What?

It's fast.

It's fast. Nobody ever says it's the environment, by the way. I've been doing this for years. No one's ever told me, I'm here to save the environment. No, they all say it's fast. Okay. Right. Okay. It's a fast car. What does it feel like when you accelerate and you— do you have the Plaid version where when you— yeah, okay. So he's got Plaid, right? Okay, so let's— y'all know what Plaid is? It goes from 0 to 60 in what?

1.9 seconds.

1.9 seconds. 'Cause you really gotta get there 2 seconds faster. Yes, you do. Okay, all right. And yet, We believe our patients won't pay any more money. Okay, so first, how— what we're going to do is we're going to— I'm going to talk to you about how you set pricing based on science and business. This is an important conversation for you to understand because you're not factoring in all of your costs. When you're charging $750 for a PRP injection, you're losing at least $300 on every single injection. But I make it up on volume, Matt, because we're going to serve as many patients as we possibly can. Right? That, by the way, that doesn't work. Again, you're not Walmart. You can't control the price of the kit. Well, Matt, I make my own kits. I have the homemade. Great. Now you're only losing $50, and I'm gonna prove it to you. Ready? Let's use the science of accounting and business to set your price. Does anybody know what the concept cost of goods sold is in business? Cost of goods sold is very simple. It's defined as the sum of all direct expenses associated with making or or delivering a product. Okay? In the world that I live in, the reality world of business, we don't talk about revenue, we don't talk about number of employees, we don't talk about number of customers, we talk about profit. And we don't talk about that ethereal profit, we talk about cash in the bank That is the only number that matters. If you are keeping score, if you are looking at a patient's— if you want to know a patient's vital signs, if you want to know a business's vital signs, I want to know how much cash they got in the bank. I want to know how much real profit they have. None of this EBITDA, which is known as earnings before interest, depreciation, taxes, and other bullshit. Okay? Charlie Munger, the other side of Berkshire Hathaway, said that EBITDA was bullshit.

What?

It was made up by a bunch of accountants, by a bunch of like Wall Street people. The only thing that matters is a thing called net operating income. And at a bare minimum, which is profit, at a bare minimum, you have to be making— dropping at least 20% to the bottom line, to the profit line. That means if you do $1 million, you should be netting $200,000 of the profit. That's after you pay you a salary of what it would be like to pay— if you had to replace yourself, what would you have to pay yourself? I talked to doctor after doctor. Well, I just pay myself the minimum for Social Security. Why? Well, you know, I don't want to have too much money in taxes. Yeah, yeah. Get a different accountant. There's lots of ways in this country to legally structure things to lower your tax burdens. I'm not gonna go into 'em. I'm not qualified to go into 'em. Get a better tax accountant. But you have to understand the concept of cost of goods sold, because if you aren't factoring in the cost of all the things in order to deliver the product, you're getting killed. And that's what I meant. And this other thing is that you have to factor in margin into your pricing. The name of the game is to make money. Not at the expense of the patient. Okay, we're gonna give great care to the patient. Please understand that. I will never, ever, ever put profit in front of the patient. Patient first, profits after that. So profit is the amount of profit you want after all the expenses, and a good number is 20%. That's where we want all of our clients to end up. A lot of our clients come to us and they're negative. They're losing. They don't even realize it. They're doing $1.5 million a year and they're spending $1.8. They just keep getting lines of credit. And they have $750,000 to $1 million line of credit. And within 18 months— I know, yes, I know, shake my head. I'm like— they're like, oh, I want to sell the practice for $4 million. I'm like, to who? Okay, it just makes no sense, right? So like I said, margin is not what you pay yourself.

Pay yourself.

Many people are like, well, I just wait until I have profit and then I pay myself. You have to pay yourself first. It's the whole reason why you created the damn business. Okay, so let's talk about the costs associated with an orthobiologics procedure. Ready? Let's take a look at these. So we got the kit, $250. Is that the only expense?

Nope.

What about the malpractice insurance? Let's just say it's $100. Okay, what about the front desk person that checked them in? Let's just conservatively say that they spent an hour with that patient checking them in, getting files ready, talking— excuse me, talking to them on the phone, whatever. And they're $25 an hour, and that includes their taxes and insurance. Okay. Which, that'd be great if you could get a front desk person including your taxes and insurance that's only $25 an hour. That ain't gonna happen. All right. Not even in Wilmington. Okay, you've got marketing. Let's say that it's— you spent $150 per patient to come in. Even if you're not spending any money on marketing, you've got time of creating the videos and your time or someone's time on your team. Okay, and then you have your med tech who does the blood draw and spins it, and you've got you. What's your time worth? Is anybody in here worth $500 an hour? Anybody here worth $1,000 an hour? You better be thinking of yourself worth $2,500 an hour. Want to know what my hourly rate is? My hourly rate for you to spend an hour with me is $4,000. You want an hour of my time, it's 4 grand. I set the price, I create the value. Your price tells the patient everything they need to know about you and what you think of your skill set. Would you ever in a million years go to the cheapest attorney if you had a legal problem? Why? Because they're going to be crap. How many people in this room are smarter than attorneys? You should all raise your hands. Okay, they're not going to sue you. We've barred them. We don't allow them in the room. Okay. So your total cost just for a procedure is $1,050. So cost of goods sold, if we want to have a cost of goods sold, if I was making a shirt and the shirt cost me $1,050 to make, what would I charge to sell the shirt? What would I charge?

$2,100.

I would charge $2,100. You're absolutely correct. Based on basic accounting principles, this is the bare minimum that you should be charging for PRP. Now I know that there's been a study done and And the average price around the US is $1,200. And that study is flawed because they're talking to doctors that have not been here. We don't know what the ceiling is. I'm going to tell you right now, if Arianna can get $3,800—

$3,500.

$3,500 in Kalitucky— no offense to Kentucky, not because we're combining you, calling you Kalitucky. It's because we lumped you in with California. That was supposed to be funnier than it was. It took me a little while to get there. Okay. But if she can charge $3,500, what do you think you can charge in Columbus, Ohio? What do you think you can charge in northern New Jersey? What do you think you can charge in Wilmington? What do you think you can charge in Las Vegas? And you're at $2,750 for a PRP injection in Las Vegas, soon to go up.

Okay.

Way up. Yeah, the PA's over there going, we're gonna keep jacking the prices. Run it, bro. Right? Let's run it. Our average client charges 5. Okay, but remember, we're selling in the context of a signature solution. And by the way, I'm gonna tell you this right now. If I find out that any of you are discounting for the second joint, We're gonna have to have a talk.

Why?

Why? What dead-broke doctor told you that that was a good idea? Because in business, that's what we call slack adjuster. How many of your clients need a second injection, or an inject— they have another joint that can be injected when you're there? 40%? Bob, what do you think it is? Is it about 40% of your patients? If it's knees, it's at least 50%. If it's knees, it's at least 50%. And if you're taking— if you're giving them a 50% discount, and let's say he's doing 10 a month and he's taking $1,000 off of it, he's costing himself 10 grand. And Bob, you have a simple lifestyle, right? You don't have like a nice house or a nice car or anything like that? I knew the answer. That's why I was messing with you, right? Look, why? Roddy, when you tell people they're going to do a second joint and— are you discounting? Are you— what are you, like, only 20% off? And do they fight you at all? Never. They never fight. They go, okay. Are you a badass? How many people are badass doctors in this room? Charge like it. Okay? Act like it. You survived more than— again, remember, 99% of the American public said, I'd love to be a doctor. And they said, I don't want to do that. Y'all put your life in the 20s on hold. You delayed getting married. Some of you did. You delayed maybe having children, putting money aside, okay? And you sacrificed so much for this love of medicine and for our country, and yet you don't see what you've gone through? You don't take— you don't realize how much you've given and sacrificed and how talented and skilled you are? You're incredibly talented and skilled. Okay, so most of you, I just gave you a 2x raise. You go home tomorrow, on Monday, and when you see patients, just double your price from wherever you are. I promise you, you'll sell more. You will sell more. But Matt, what if there's a recession? I don't know if there's gonna be a recession, neither do you, but do you want to know what does really well during recessions? High-end services. During the Great Recession, GM went bankrupt, Ford was struggling, Chrysler went bankrupt, they needed government bailouts, right? Do you know what happened with Mercedes, BMW, and Lexus? Record years. Who's your target market? People who are in their 50s and have disposable income. During the recession, do you want to know what sold really, really well? High-end club-level seats at baseball and football games and basketball games. They had a hard time selling the cheap seats. In a recession, the middle gets taken out. And what either happens is you go real low end or you go high end. Now I don't know if we got a recession coming or not. Nobody knows. Okay? But here's what I can tell you. It's been a while. Okay? So prepare now. Charge like you are worth it. Okay? And Arianna did this, and so I want to, what I wanna do is I want to give this, I want you to give this breakdown, and then what we're gonna do is, We're gonna do Million Dollar Consult after this. Yes, you ready? Okay.

Okay.

We'll give you the bulk of the time 'cause this is a fascinating thing to do. And then what we're going to do tomorrow is we will talk specifically about creating your signature solution. This is really about the premium pricing and getting your pricing set and getting it straight in your head. And if we— let's just dive into this. So again, let's take a look at this insurance model. If you want freedom, true freedom, less is more. Less is more. Less is more. Less is more. Less is more. If I had the ED clinics, I get asked a lot of questions. I get asked, well, Matt, you know, why did you sell the clinics? And I go, well, we just— we had a great opportunity. My partner and I really weren't getting along, so it just made sense for us to sell. That was the A big reason why, there was also that divorce that I was having, that was the other reason. She wanted some money apparently or something like that. But, you know, the whole point was is that if I were to, I get asked, well, you know, if you had an erectile dysfunction clinic today, what would you do? I would not do the exact same model, I would not generate a ton of leads and drive them into a phone call center. I would have a high-end exclusive male performance experience. I'd charge $25,000, $45,000, $50,000 a patient per year because I would need 4 patients a month in order to make $200,000. Okay, you think about that for a minute. Just think about that for a minute. What's the fastest way to make $1 million a year? Find one patient that's going to pay you $1 million. It's a concept called Occam's razor. And yet we believe that we should be busy because what do we say to our friends? I'm really busy. Oh, we're blowing and going. We're super busy. I like my friends when they ask me, so what are you doing? I'm like, playing golf, hanging out on the road. Okay, think differently about your business. Any Seinfeld fans in the room? Where are my Seinfeld fans? Okay. Do you remember the episode where George decided that he was going to start doing everything opposite? Instead of ordering tuna fish on wheat, he ordered chicken salad on rye. And then he met like this— he was out of work and he was living in his parents' basement. And he goes up to this woman and she's like— he's like, hi, how you doing? And she's like, oh, hey, I noticed you ordered chicken salad on rye or whatever. And he says to her, he goes, my name's George. I'm unemployed. I live with my parents and I don't have any money. And she's like, here's my number. And he started doing everything completely opposite of what he had done before, and everything started going his way. Got a job with the Yankees. He was dating beautiful women. This whole thing. That's how I want you to think about your business. I want you to do the complete opposite of everything that you've been doing for the last 25 years. Okay? Just do the complete opposite. Because here's how it looks: in insurance, 60 patients a day, 10 minutes with each patient. You get paid 50 bucks per appointment. That's $3,000 per day. You work 20 days a month. That's $60,000 a month. This is the typical pain management practice right here. I know because I see all your financials. All your financials look exactly the same because I've seen them all.

Okay?

That's $720,000 a year.

Woo!

That equals burnout. In the cash model, 6 new patient evaluations a day. That's 80 a month. You see patients 15 days a month, so you have every Friday off. How do you like 3-day weekends? I'm not talking about the Friday off where you still go in and you do a mountain of paperwork. That's not a day off. I'm not talking about the working vacation, you know, where you take like that big pile of paperwork and all that crap with you while your kids are out on the beach and your wife's like, are you gonna come out and hang out with me? Or your husband's like, you're gonna come out and hang out with me? I'm talking about the thing where there's no work involved. Okay, and you convert 40 patients into cash treatments. That's a 50% conversion rate at a $5,000 procedure. That's $200 grand a month. That's 2— that's, it's actually, I'm sorry, not $1.2 million a year. It's $2.4 million a year. And that's freedom. It's a simple way to get to $2.4 million a year. 10x your thought process. Tomorrow morning, what we're gonna do is we're gonna structure your, your signature solution. But you have to understand the concept of the premium pricing. And I am going to tell you right now, please don't come up to me and say, Matt, you don't understand, my patients won't pay. Because my answer back to you is gonna be very simple. You have— your belief system is off. You have limiting beliefs. Now, I appreciate the fact that you have PTSD about pricing and medicine, and I appreciate the fact that you've got this history of what you believe to be true, but it's not true. And I can show you case study after case study after case study after case study. The number one thing that we do that we can add— why we can add so much money to practices so fast— is we double your pricing. It's that simple. And the only reason why you don't do it is this: you have a limiting belief about what is possible. We all have them. Every single one of us have limiting beliefs. Okay? And most of them are founded in BS. And let's just say for— let's just say for argument's sake, let's just say that your patient base really is— really can't afford it and they really are broke. And you've been charging $750 for a PRP injection and you only sell 10 a month. That's $7,500. But let's just say, let's just say for argument's sake that you drive your prices to $2,000. And you sell 4 of them, how much is that? $8,000. Compared to the $7,500. Less patience, more time with them, and you just made more money. You can never, ever, ever discount yourself and discount your way to prosperity. It is statistically impossible. Can you flip on the iPad for a second? And I'm gonna show it to you. Here's how this works. Matt, it's actually not plugged in. Okay, so I want you to imagine that the iPad is showing up. This is part of the limiting beliefs. For those of you that can't imagine things, this is where we're gonna break through limiting beliefs. Okay, this is actually planned. Okay, so I'll try to— I'll try to paint the picture for you. The mistake that people make is they have to charge 10%. They think that in order to sell more, you have to charge 10% less. If you charge 10% less, you actually have to sell 25% more to make the same amount of money.

Okay.

It's actually 23.3%. If you raise your price 10%, what we found is that you're going to convert the same number of patients. In fact, as your price goes up, your conversions will go up. We have clients that convert 80% of the people that they talk to about orthobiologics into $5,000+ programs. Let's go back to the Tesla. What made you buy your first Tesla? Can we get the box? Where's the box? Here we go. Throw it to him. Come on, Shay, you can do it. You're a pro. Okay. Grant, where are you based? Where do you live?

Los Angeles.

Los Angeles. I'm sorry. Okay, so wait, this is going to cost you 30% more, this conversation.

Okay.

Okay. All right. Okay. All right. What made you buy a Tesla?

Bought my first one in 2013. Just the, the new tech.

The new tech. And what did you pay for your first new one? For the new one?

$120,000.

Okay. What kind of car did you have before that?

BMW 750.

Which at that time was $80 grand or something like that?

Yeah.

Something like that? Okay. And what was the test drive like for the Tesla? Do you remember?

Yes.

What was it? Walk everybody through it.

It was quiet. It was quick. It was immediate response. No delays. It handled well, and I just had so much more visibility with all of the, the tech that was available.

Okay. Did they make you put it in park and then put it into drive and then stomp on it to go really fast? Did they make you do that? Did they make you experience the, the speed?

Yes, they offered it. They said, feel free.

So this is what Tesla does on the test drive. A friend of mine, Ryan Deiss, they pull off to the side and they go, okay, I want you to stop. Now what I want you to do is I want you to push the throttle, the accelerator, just stomp it right down to the ground. And so Ryan gradually puts it on and the sales rep goes, stop!

Stop!

And Ryan doesn't stop. The guy said, stop! Ryan stops. He goes, I told you that you're to floor it. I want you to stomp the accelerator down. And so Ryan— OK, fine— backs it up. And he does it a little bit faster. The rep goes, stop! If you aren't going to do exactly what I tell you to do, this test drive is over, and I will not sell you this Tesla.

OK.

So he goes, all right. Wham! They stop. Ryan goes, I'll take it. Okay? He's not a conservationist. Okay? He bought the car, paid an obscene amount of money for a car. It's an obscene amount of money for a car.

It is.

Yeah.

Why?

So your perception that Tesla is the best car?

Getting better.

It's getting better. Well, you've had it since 2013. You've had how many? Yeah. So you're in your second one?

My third.

He's on his third. He's on his third Tesla. Okay. How much did you pay for the third one? The Plaid?

Less.

Yes.

$90,000.

$90,000 for the Plaid. Yeah. The prices are dropping, by the way.

Okay?

More of an, you know, probably because of they are getting some economies of scale. I can promise you their margins are the same. Okay? But this is the lesson. He wouldn't have noticed the Tesla unless it was over $100,000 plus, probably. It's a pretty good chance. Yeah? No? Yes? It's the best experience. And you have to think about your procedures like this. What is it that you can do to make your procedure the most amazing day of their life? How can you make a 10-star patient experience? You can't make a 10-star patient experience if you're shoving people through like cattle. And in order to create that, you need the cash in order to create that environment. I can— there are very— there's a couple things I can guarantee in life: death, taxes, and I can guarantee that if you go back and double your prices, you will convert more people. And I don't make guarantees lightly because I do not want you to not trust me, okay? Because I understand that trust is earned, and when it's lost, it's lost. That's how confident I am, every single one of you. That right there, for some of you, isn't $25,000. It's not $50,000. It's another million dollars to you this year. The only thing you have to do is change your limiting beliefs up here, and that's it. Whatever you believe to be true is true. So why not believe something that's gonna make you a lot more money and give you a lot more freedom and is not gonna compromise your values?