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This Dental Specific Podcast is dedicated to the Dental "Entrepreneur" Michael Dinsio, Founder of Next Level Consultants, delivers #TRUTH when starting up a dental practice. From the very first step to getting the keys of a dental practice, Michael shares his raw & unscripted playbook with you. Not only does this podcast provide you with "What To Do" but more importantly "What Not To Do". With over over 15 years of experience & over 150 past clients, Michael delivers an educational and informative program in a real and genuine way. Start w/ Episode 01 - as we go through a STEP by STEP process.
Startup Unscripted.
The questions you have with
the truths you need to hear.
And now your host, Michael D'Anzio.
All right.
All right, guys.
Hey,
welcome back to another episode of
Startup Unscripted.
As you guys know,
my name is Michael D'Incio,
founder of Next Level Consultants.
And today we've got a great,
great topic because it's
one of those sleeper topics
and things that you need to
have dialed before you open.
And yet there's so much
mystery behind it because there's well,
I think the industry just
makes it that way.
And so we're talking all
things card processing,
merchant services.
And I always get those
proposals sent over.
And I got to be honest, I'm an ex-banker.
I don't know how the hell to read them.
So today we have an expert
and I'm super excited about
having him on the program,
the owner and manager of
Dental Card Services, Alex.
Welcome to the show, my friend.
How are you doing?
I'm doing great, Michael.
Really appreciate the
opportunity to be with you.
And look, let's face it,
startups are awesome, right?
Small independent businesses
are the backbone of this
great country we live in.
And I'm thrilled to have a
chance to talk with you and
your audience.
You know, over the last decade,
I've seen some just amazing
things transpiring dentistry more broadly,
but in merchant services.
And I just,
my only wish is I had an
opportunity to chat with folks early on.
and, you know,
hopefully share a little
perspective so they can
make the right decisions
for them and their business.
And this is that platform, Alex,
here you go, man.
So give us, this is it.
We,
who knows where we're going to go with
this.
It is totally unscripted.
I do want to cover mostly
merchant services, but Alex,
if you feel like taking
this a different direction, I'll, we can,
we can let you do that.
But, buddy,
give me a little bit about
dental card services.
And I, and I,
I always say we lose people
after about five minutes.
So don't,
Don't put us all to sleep on
a big sales pitch.
But I do want you to explain
your company and how your mission,
your vision, why you got into it.
Just give us the elevator pitch,
so to speak,
on you guys and how you help
doctors do what they do.
No, absolutely.
Look,
it was an accident like everything in
life that seems to go well, right?
It was never what you
intended or planned to do.
I was actually, oh gosh,
early two thousand, maybe five, six,
seven, eight, probably about eight,
was looking to buy a business in the,
a service business that
served the underbanked, right?
Those are people who don't
have a bank account or
can't get one in the United States.
And the financial systems
out there were designed to
really just hammer these poor folks who,
not poor, economically poor,
but these folks who weren't
banked and when they go to
cash their paycheck,
they get hammered with fees.
Well,
we were trying to buy a business that
provided a service to help
those individuals and those employers.
And that deal fell through.
But in the process,
I got exposed to this
credit card processing industry.
And it was learned all these
amazing terms.
And at the end of that project,
I was like,
wait a minute,
this entire industry seems
to be designed to confuse
the living heck out of everybody.
It's unregulated and it
makes no sense to me as a business owner.
So I decided I'm going to do
something really smart.
I'm going to go contact ten
of our dental friends and
we're going to say, hey, look,
you guys are awesome.
You have great businesses.
You have great financial wealth.
Your transactions are really riskless.
You have great relationships
with your customers.
This isn't like the diet
pills that are being sold
online and all this other junk.
I bet you're getting taken
care of like a super high
level by all your friends
and trusted advisors.
We did a survey of ten
practices and it was
absolutely mind blowing.
They were getting hammered.
They were paying more in
fees than businesses with higher risk,
lower credit.
None of it made sense.
You could not have thought
this would be possible.
And it drove us nuts.
And we're like, oh, my God.
this shouldn't happen.
And then we were like, well,
why is this happening?
So we said, you know what?
Forget this other idea we're going to do.
Let's start a business that
serves dentists.
But we're going to do it
completely different.
We're never going to
outspend the big banks and
their two hundred
salespeople and their
hundred million dollar marketing budgets.
We're going to give everyone
access to the same type of plan,
which was a truly transparent plan.
We get in this later.
We're getting the lowest
cost in the country.
So we researched everybody
out there who had
national program a regional
program that was
standardized okay and we're
going to be less than that
and then third we were
going to do away with the
um we were going to do away
with the certain
complexities in the
industry that eliminated
doctor choices and
flexibility term long-term
contracts leased equipment
all that nonsense so yeah
at the end of the day if we
didn't provide you value
You could leave.
There was no downside, right?
And so you go to a startup mentality,
you're like,
what's the greatest
flexibility for a startup?
It's their ability to make a
different decision when the
other decision is no longer
providing them what they need.
That's right.
Yeah, I hate long contracts.
And there's a lot of that.
So we're going to probably get into that.
So basically-
you saw a need,
you cut out all the
bullshit and you started
this company saying, hey,
let's offer this to dentists.
Why dentistry?
Why not just go after the
whole world with that same model?
Well, you could.
The problem is, how do I put it this way?
If I called you up, called your office,
right?
Yeah.
First of all,
I'm going to get screened out
by your front desk,
ninety nine point nine nine
percent of the time.
You're not going to believe
me because if you've been
in business more than a few years,
you've probably already
been taken advantage of no
less than ten times.
Yeah.
You got a little you got a
little thickness on your skin now.
Yeah.
So and most people,
what they do is they have
these large sales forces.
Well, if sales forces aren't free,
so you have to charge a lot
to pay for your sales force.
Right.
So they have these sales
forces go out there making
tons of calls and then merchant services,
which is also credit card processing.
It's the same.
thing okay yeah yeah an
average merchant services
firm has to make a hundred
phone calls to get one
client dental card services
never makes a cold call
because because we refer
you well yeah no but
literally since inception
well not since like the
first year yes I called on
some people okay but
literally for our life yeah
ninety-nine percent of
everybody calls us because
of customer referrals yeah
yeah because someone had an experience
They're not paid to do this.
They had an experience and
they shared with their peers,
either on a form or through
another trusted advisor, right?
So we convert where they
might have to do a hundred
phone calls to get one and
a half customers.
We get on average right now, this year,
I looked the other day,
it's like sixty customers
per hundred phone calls.
And you go, how is that possible?
Well,
it's possible back to what I just said.
We've been doing it for over a decade.
Everyone qualifies for the
same transparent pricing.
Our pricing is in our brochure.
None of this BS.
Hey,
show me how bad you're getting taken
care of.
I'm going to charge you a little bit less.
I know.
And I'm going to pocket the rest.
And you're going to switch.
Alex,
hold on on that because I want to get
into that.
Let's do it.
I so want to get into that.
So I love the vision.
I love just the unscripted
style you got going on.
Folks, audience,
you're on my side right now.
Let's get as much as we can
out of Alex as possible
because he's just going to
give us all the goods right now.
So I, I, I'm saying that as a joke, but,
but seriously,
like there's no transparency is the key.
And, and, and,
and it's why I do refer you guys.
So let's just,
before we get into any of
that kind of stuff,
I do want to go there.
Let's just hit what is
merchant services just in general,
you call it credit card
processing merchant services.
Is there a deeper, deeper, deeper,
way of saying, Hey,
just processing money
through credit cards or, um,
that's a way we can get
into flow charts and who holds risk.
Where's the risk allocated, but there's a,
there's a couple of
fundamental principles, right?
When you sign a merchant account,
you're basically as a business owner,
you're signing up for the
privilege of having people
come into your business and
pay via credit card.
And it is a privilege
because when they pay by that credit card,
that money,
as long as you're set up correctly,
most likely will be in your bank account.
Cash will be in your bank
account the following day.
Now, people go, well, who cares?
Well, that's not that big a deal.
Well,
it's kind of a big deal because let
me give you an example.
Let's say I ran a travel
company and I sold four
thousand reservations on a cruise,
four thousand person cruise.
And I took all your money today.
you a big cruise guy by the
way you do no I've never
been on one right I'm just
using it as an example
because oh all right sorry
sorry sorry distracted all
right so you're traveling
you're a travel agent
you're collecting money for
all these I'm the business
owner and I I just sold
four thousand reservations
on my thing okay I just
pocketed a thousand dollars
per the four hundred
deposited in the business
business owner's account
that business goes bankrupt
the next day nobody went on their cruise
Every single one of us is a
consumer and it's our
favorite thing as a consumer, right?
Man, I just got screwed.
Yeah, right.
I called my bank.
I need to do a charge back.
Yeah.
The bank goes, what happened?
I paid for a service I didn't get.
They go, we got you.
They click a button.
They click two buttons.
Your money is back in your
account tomorrow.
However, the business is gone.
Right.
So someone now has to pay
for that business because
the business took money and went out,
right?
So
dentistry none of that
happens but that's what
drives a lot of the nuance
so long story short
merchant services is the
ability for you to take
payment via credit card
from your consumer yes and
it's the process that
governs how you do it when
you get the money and what
type of fees you pay which
we can get into later
because it depends on what
kind of plan you're on
That's really cool.
That's really cool the way
you described that, because you're right.
Unless you step back as an
employer or a consumer,
I don't think I don't think
people do realize that that
that's a service.
I mean, it's twenty twenty three.
Like we're all so accustomed to just like,
you know,
using your watch to pay for
coffee and stuff.
Like, it's just such the way it is.
But it is a service and it
does cost money for that service.
And there are guarantees.
Everybody talks about we use
your credit card so that
there's no risk that
someone's going to screw you.
And that's built into the
system is what you're saying.
That's pretty cool.
It is.
And there's different risks.
Right.
And that's why my passion.
We talked about dentistry.
Dennis, it's very riskless, not risk-free,
but it has less risk, right?
Usually you're paying for the procedure,
not nine months in advance, right?
It's after it was performed.
And there are shenanigans that take place,
but it's usually not on the owner's side.
It's on a patient claiming,
I didn't get the dentistry I wanted.
And it's like, are you kidding me?
You were in the chair.
They had you in the chair.
Right.
Right.
I agree.
Yeah.
Yeah.
Exactly.
Well,
I've never really had anybody break
that down so eloquently.
And that actually leads us
really nicely into the next
piece of this because
There is risk.
There is risk in how people process
like process using the watch,
hand keying the numbers and
using the credit card.
I think when I tell people, Hey guys,
there's a lot to look at
here when you're looking at
merchant services.
And I feel none.
I don't feel like I am
telling you there are some predatory,
there's some predatory shit
out there where merchant
service companies are
They just there's a lot of
smoke and mirrors and they
make it very complex to understand.
And but the truth is,
is there's lots of
different ways to charge
you as the business owner
for the different types of processing.
And Alex,
I want to kind of defunct that or
whatever, decode that, because.
It's just, we could talk about cloud.
We could talk about all
kinds of things because
cloud software is really taking off.
But let's just go with the
real basic stuff here of
the different types of ways.
Let's go through that.
And let me just hit one very
overarching comment because
it'll flow through as we dig deeper.
Love it.
Merchant processing is one
of the few industries where
you never get a bill.
That's true.
It's not a bill.
It's a statement and they've
already taken your money out.
So what happens?
Wouldn't that be nice in dentistry,
by the way?
You do a crown and there's no statement.
And I get excited, right?
So I just want to make sure
you understand the place I'm coming from.
Nothing I'm saying is meant
to be critical about any operational.
However,
what often happens is when an
office engages in something new.
The first time that
statement or bill hits the team's desk,
the team goes,
I don't recognize this on
the bank statement or I
don't recognize this on the
credit card statement.
And they go to the owner or
the chief principal party and they say,
what is this XYZ company,
seventy four dollars?
And the business owner says, oh,
that's XYZ.
Office goes great.
They put a big giant
checkmark next to that the next month.
That number may be different
on what you were billed,
but it's the same company.
And they go, great, check.
I know where to put that.
Why is it?
Why is it?
Eighty two dollars.
Yeah.
Oh, that's the merchant.
Yeah, that's the merchant services, right?
Because not like the statement says, hey,
this is what your XYZ has
done over time and you're
now paying thirty percent
more per transaction.
But don't worry about that.
That doesn't go on your statement.
Right.
So so that's my my first point.
Now, let's just put that to the side.
OK.
Merchant services, fundamentally,
there's two elements.
There's an element of what do things cost,
which can and cannot have
anything to do with what
you're being billed as a business owner.
They don't correlate.
In dentistry, they don't correlate.
Ninety seven percent of the time.
Right now.
when I say the true cost, right?
So here's what typically happens.
And there's been,
if you and I had this chat,
we would have had slightly
different numbers and it
may have been a different mix.
So we probably would have
been talking about the
wonderful world of pandemic, right?
Now it's evolved today.
There's typically
fundamentally four types of plants.
Okay.
All right.
But there's variations of
them and there's some
really nasty stuff going on
that I'll highlight.
Okay.
But let me just, for the listeners,
let's just put in four.
There is surcharge.
OK, surcharges plan.
Have you ever been in one of
the big box stores and like
we have merchant processing
for one point three nine
percent and ten cents?
I'm going to tell you this.
If your total cost was one
point three nine percent and ten cents,
you'd be the happiest
business owner I know in the country.
It's not true.
What they're saying is we're
going to charge every
single one of your
transactions one point
three nine percent and ten cents.
Oh, by the way, in the footnotes,
it says qualified transactions.
And that begs the question, well,
if it's not qualified, what is the rate?
What is it when it's not qualified?
Exactly.
And then they'll have some
very fancy language that
says surcharges or mid-qual
or this or that.
And when you call up
complaining that you
thought you were going to
be at one point three nine
percent and ten cents and
your office is like,
we're at two point eight percent.
The very astute customer
service rep is going to say, Dr. Tenzio,
you have to understand
those Visa and MasterCard
transactions you're taking
with those big rewards cards,
those cost a lot more.
So that's the difference for
Visa and MasterCard.
Do you really believe that a
hundred percent of that
difference is what they're
paying to Visa and
MasterCard for that transaction?
I don't think our client, I don't think,
I don't know.
I definitely don't think my
clients are even digging in on this level,
Alex.
No.
Over fifty percent of
dentistry has this type of plan today.
They're on surcharge pricing.
Surcharge pricing.
Okay.
That's one of the four.
One of the four.
Surcharge.
And I can go, Mike, what are you paying?
I'm paying one point four
percent and ten cents.
Yeah,
that's what they say to me all the time.
But no, you're not.
It's true.
It's true.
And actually,
that kind of plays into some of the cloud,
the cloud BS, Alex, because
If you go with,
I'm not going to name any
names because I don't want
to start any fights with anybody,
but like go with one of the
cloud services, do they sell that type?
The number one type that I'm
talking about?
They have different types, right?
Okay.
They have different types.
And it's not really, to me,
it's not really where it's
cloud or not cloud.
But let's go through the
other three types and we'll
come back to that.
That's okay.
So one is surcharge, right?
You just hit surcharge.
Second is what I call tiered plans.
A tier plan, you would see qualified rate,
mid-qualified rate, non-qualified rate.
Now, why do they do that?
Well,
because they get to decide how the
transactions go and what
buckets they go into.
Well, who decides that?
The processor who sets up your plan.
Oh, okay.
It's their choice.
There's no qualified, mid-qualified,
non-qualified allocation.
It's what they choose.
Now, how is it typically done?
Well,
if you understand how the true costs are,
and we'll go to that second,
what kind of card is used?
Yes.
Is it a credit card?
Is it debit card?
Is it used in person?
Okay.
Or is it over the phone or card?
Not prep, basically card,
not present or tap on the.
Yeah.
So in person card, not present.
Basically what it means is
the card physically
rendered for that transaction,
or is it manually?
Right now, if it's manually entered,
That card may be prompted
for what's your street number?
What's your CVV?
What's your zip code?
All these other ways of
verifying that it's you, right?
Which in theory is reducing risk.
Then there's rewards, right?
Look, we all love our free points,
don't we?
Oh, I do.
I love them.
Well, yeah.
You know who pays for them.
You do.
The business owner who took
the credit card.
Oh, the business owner does.
That's where this funds.
That's where interchange these,
how these cards get rated
because they fund benefits.
I'm part of the problem.
I didn't realize it.
We all are.
We all are.
And we love it, right?
We love it as a consumer and
we hate it as a business owner.
There's no two ways about it, right?
The only way we might like
it as a business owner,
other than the protection,
when we do something and somebody,
maybe is unkind to us and we need help,
is it's great because you
just pay everyone by credit
card and then you don't
have to issue all the tax
forms at the end of the year.
So that's tiered plans, okay?
And there's some other nuances in there,
but let's keep it a high level.
The third is what I call,
I like to always call it
the Vegas plan because I like Vegas,
but let's just call it flat rate, okay?
You do kind of strike me as
a guy that knows his way around Vegas.
I like the craps tables.
Folks, if you aren't getting into YouTube,
you should be because this
guy has probably the most impressive,
elaborate background that
I'm so jealous of right now.
And are you just a whiskey?
Is that bourbon?
It's probably eighty five percent bourbon.
There's some good scotch as
well and some Irish whiskey.
I got to go to Alex's house.
I enjoy collecting.
Okay.
So sorry.
So I digress.
I call us the flat rate plan.
You call it the Vegas plan.
Here's how it works.
Okay.
Mike, this is too complicated.
All you really want to know
is how much credit card
processing is going to cost
you every each month.
I'm going to make it really
simple for you.
It's just going to be two
point eight percent and ten cents.
Just straight up.
Just done and done.
And you go, hey, great.
Thanks, Alex.
your statement at the end of
the month and whether it's
two point eight usually
it's not that low on a flat
rate but all they're going
to show you is mike you
process this much money two
point eight percent times
this this number of
transactions times that
here's your total bill just
math you know hey great the
problem is let me ask you a
question do you think the
people who offer those
plans up know more about
your business than you yeah
they're put yeah yeah do
you think they're on the
ones that are really low
risk they're making a killing
And the ones that are high risk,
they're somehow,
you're probably paying for
high risk on every time.
Yeah.
So I call it a basket, right?
So they know, for example, hey,
an average dental practice,
maybe they have bed tables,
does twenty five,
fifty percent debit cards.
On average,
it's eighty percent card not present,
twenty percent card present.
There might be some rewards in.
So, hey,
the real cost should be somewhere
around one point six percent.
But I might have some
transactions I have to pay
over three percent.
We want to make a killing off this anyway.
So we're going to we're
going to put in extra protection.
Yeah.
Or profit.
Yes.
And they make good money doing it.
Right.
Got it.
So I call this betting against the house.
You're betting against the house.
One size fits all without
under really standing your company,
but it's easy.
It's easy to figure out what
the fee should be,
but you're probably being
taken advantage of.
Got it.
Okay.
I would just generally say
you have no way of knowing
how much you're really,
how much you're paying in
profit on top of the true costs.
Yeah.
Not only that,
you don't have a statement
that breaks down the details.
You have no way of figuring out, Hey,
I can tell you right now,
if you're a hundred percent debit card,
yeah, that process is in card present.
That process is making over
a percent or more off of you.
Maybe you guys, guys, that's what I want.
That's what I want to talk about this,
this last one for,
but that's what I wanted
this episode to be about is
to understand that when you
are negotiating with the
Sarah crap or the,
the Pano rep or the bank or the,
even the seller,
if you're buying a practice,
it doesn't matter.
Contractors,
you're negotiating all this
stuff and you're trying to
figure out what's a fair
deal and profit centers and
all of that stuff.
Merchant services is no different.
It's just so damn confusing.
I'm already a little confused,
to be honest with you,
but it's so damn confusing.
How are you even to...
know what their actual
profit is and so that
that's what we're doing
right now is now you got it
right and I'm going to boil
it down to just like one
thing you actually have to
know at the end of all this
nonsense okay so all right
so so four there's three
the fourth one is what is
truly called interchange
cost plus and what that
means is you're going to be
charged the actual real
cost for the visa
mastercard discover interchange tables
for that card, for that transaction,
how it was processed based
on the dollar amount, period.
That flows a hundred percent
through to you with no shenanigans,
no hidden markups.
And by the way, I say no,
because they're doing it
now under a new hybrid one.
And it flows through the market.
What's that one called?
What's that fourth one called?
The fourth one is called
interchange cost plus.
And I'm, I'm going to, I might, uh, uh,
trademark the phrase called
true interchange cost plus,
because there's some shenanigans, right?
So for the last ten years,
I've been preaching from the,
I can't say this, I've been very vocal on,
you need to go on interchange cost plus,
because if you do,
you'll at least know what
your true costs are.
Then you can see how much
markup your provider,
but you'll get a statement
that's transparent.
You'll be able to tell it, right?
So there's a couple of things.
The other side of it is the
plus is the markup.
So that let's just pretend
they had a markup of ten
cents and thirty basis points.
OK,
thirty basis points is zero point three
percent in written form.
That's the equivalent of
thirty dollars on ten thousand.
OK.
Ten cents, obviously, is per transaction.
Right.
So at the end of the day,
and the reason I say this
is we've been doing
interchange cost plus since inception.
Right.
And I've had people over the
years call up and go, hey,
I got to talk to you.
So-and-so said I could save
six hundred dollars a month
or four hundred dollars a month.
I'm like, you should sign up with them.
And they're like, well, what can you do?
And I say, well,
they're going to lose three
hundred and seventy four or
five dollars a month.
He goes, how's that possible?
I said,
they're offering you a number
that's lower than the true
cost of that transaction.
Not even forget profit.
It's negative.
And they're like, oh,
so you're telling me they're full.
And I said, I'm not telling you anything.
I'm just saying if they're
willing to put that in
writing and lock it down, man,
hit the bid.
But if you do, just remember,
they can probably change
your price in six months.
So those are the four types.
But I want to just step way above this,
right?
At the end of the day,
the only number that
matters is what's the total
amount of money they're
taking out of your bank
account that month divided
by the total dollar volume
that you process in that month.
That is your effective rate.
That is the one note,
whether you use dental card or not.
I mean, no offense.
I'd love to have everyone, right?
But like life's not that easy.
Just know that number for
the rest of your life
because the travesties I've
seen is when folks didn't
know that number.
And when I mean know it,
I mean you go calculate it.
Once a month, it takes two minutes or less,
right?
My total bill divided by my
total volume equals what percent.
If that ever gets out a wonky level,
you know you have something
you need to look at.
It may go wonky for a very good reason.
It may go wonky for several bad reasons.
And there's bad reasons out there, right?
As new business owners,
you guys are going to be
approached with a lot of great stuff.
People who lend you money
are going to tell you how
important it is for you to
sign up for their provider
that's affiliated with that bank.
You do not have to do so.
They will tell you often
you're going to get a better deal.
That's great.
Stay on top of it because
here's what we typically see.
If you do something like that,
you're going to be told, hey,
I got this really fancy,
nice terminal that is
probably like killing a
gnat with a bazooka instead
of a fly swatter.
That terminal is probably
eight hundred to nine hundred bucks,
but they're going to give
it to you for a really cheap price.
Maybe a rental memory lease.
Maybe they'll subsidize it.
Guys,
this is the machine that you use to
push the credit cards in.
And there's some really
fancy devices and stuff.
So I've been seeing a lot of that.
Yes.
So, Mike,
have you ever met a consumer anywhere?
He said, man,
I go to that business because
they got the nicest machine
I've ever paid.
No, no, it is.
Yeah, it is nice that.
that they can accept a tap to pay.
But other than that, other than that.
No, you want the flexibility.
But where I'm going is what
traditionally happens is
the banks have partnered
with one merchant services provider.
It's kind of like your cloud question,
but we'll go to that later.
The bank rep who is really
taking good care of your
relationship person,
they're not a merchant services person.
They get a nice pat on the
back and a thank you
internally for referring
someone to their provider.
Once you're in their ecosystem,
you're not typically in
your relationship provider's camp.
So what do we typically see
in startups who go this route?
At some point, six months, year,
year and a half, two years,
all of a sudden what they
thought they were going to
be paying has changed.
And it's a lot more.
So that gets me to my two points.
One first is know what
you're paying as a percent.
In total, I will tell you as a startup,
it's not going to be that
meaningful because your
volume's not that large.
It will become meaningful longer, right?
So there can be some wonky
analysis initially.
Second is if you don't have
the ability to fire them
without paying a fee to
leave and you're not stuck
with an eight hundred pound
paperweight that you cannot
reprogram or use at any
other processor because it
is proprietary to only that
bank in your account.
yeah then you have maximum
freedom and freedom is your
greatest asset as a
business owner yeah and
that goes for any really
contract that you're
looking at as a startup
because the the truth is is
half of the stuff you're
not sure if either if any
of these are the best
decisions but you're trying
you're going through the
process if you don't have a
consultant like myself or
or others that are kind of weighing in.
That's why some of these
Facebook forums and stuff are nice.
But just locking in with
anybody for a year or even more,
that's not a good idea just in general,
because you're making the
best decisions you can.
But one of the very first
things right out of your mouth should be,
hey, what's the commitment level?
How long am I stuck here?
Because if you make a mistake,
You just need to be able to get out of it.
Or if they lied to you.
Let's be clear.
You just busted your butt in
school for a long time to
become a clinician.
You're now having an
opportunity to own a business.
Look, I'm a cost guy by heart.
I don't want anyone to pay
more for things that they
shouldn't have to pay.
I'm all about the
independent business owner.
Keep your money,
invest your money where you want to do it,
whether in your practice,
whether personally,
whether paying down student debt.
I'm all for that,
but true value creation in dentistry,
true long-term wealth is
created by increasing your
production hour, what you earn per hour,
clinically and in hygiene.
Spending a ton of time
having to measure the
microns of some of these
areas is not a good use of your time.
That's why I'm like, keep it simple.
Do I have the ability to
leave if I'm unhappy?
And what am I paying on average?
As long as you have those
two relationships and you
know what's going on,
you can choose to engage or
not engage when it suits you.
Now,
there are some things to watch out for
that five years ago
probably wasn't that big a
deal for some of you new folks,
is this concept,
and I'm just going to hit this one, Mike,
because it's a massive pet peeve of mine.
Okay.
It's called virtual credit cards.
So, Mike,
how many of your clients love virtual?
The discount they take on
their fee schedules for the
benefit of accepting that
insurance provider in their office.
They raise you up and go, Mike,
I'm thrilled with ABC
Insurance because I'm only
taking a twenty eight
percent deduction on my
regular fee schedule.
Specifically with Delta Dental.
They love they love them.
I'm not going to use names.
All I'm going to say is you
are already giving a massive discount.
Right.
For your, in some cases, massive.
Some people have different philosophies.
Right, right, right.
Just whatever.
Taking a drop from your standard.
You're taking a fee for their marketing,
their great support, all this stuff.
That's fine.
Yeah.
But what you don't understand is years ago,
some really smart people went to and said,
hey, I got an idea.
You know what?
These insurance companies,
they write a lot of checks, don't they?
I'm going to convince them to issue,
instead of a check,
a piece of paper with a
virtual credit card number on it.
We talked about this today
at our other podcast.
Literally went live earlier today.
Oh, no.
This is horrible.
They're sending debit cards
to process in office.
No, no.
So here's what you don't know.
Right?
So there's a bank behind
that who issues that version.
There's always a bank behind
something like this, right?
So what you're saying is
anytime a banker is involved, be careful.
I know.
I mean, I'm just making a point.
Anytime you have a card,
whether it be physical or virtual,
someone,
and you probably need to gray out
my card numbers.
I just flashed.
But somebody needs to issue that.
It's an issuing bank.
okay right yeah right so
that gets rated they put it
in with visa mastercard
well the true interchange
costs on let's say a one of
those cards for for um for
one of those virtual credit
cards might be two point
eight nine percent and ten
cents so you say well why
does that matter to a
practice well mike we just
had a discussion that the
true cost of what it is and
what I pay as a practice
aren't necessarily the same thing
So if I was on a true
interchange cost plus plan,
which less than ten percent
of the dentists in this country are on,
that transaction would cost
me two point eight nine and
ten cents plus the markup.
Okay.
Yeah.
However, if I was on a surcharge plan,
if I was on a tiered plan, oh, well,
on surcharge, what's the surcharge?
On tiered, is that mid-qual or non-qual?
It's card not present.
I have seen people paying north of four,
five, six percent here.
I literally had a doctor the other day say,
I don't understand.
We're on one of these
low-cost interchange plans
and my rates are now through the roof.
And I looked, I said, doctor,
your markup hasn't changed.
I'll tell you what's changed.
You see this interchange thing?
This is why transparency matters.
Doctor, I'm willing to bet you lunch.
that your team has decided
to start accepting
insurance payments via
virtual credit card because
it's efficient.
Because there's forums out
there telling you this is
how good it is for you.
No,
it is an absolute goldmine for everyone
involved in that space.
And often now the carrier
replaced the cost center
some kind of profit center
yeah right now now I'm
taking a twenty percent hit
on my fee schedule oh and
by the way on the seventy
two percent I hit now I'm
also taking another four to
five percent off that thank
you guys big big picture uh
essentially is something as
simple as getting your reimbursements
from the insurance company
through a debit card
because they they're now
sending debit cards to make payments.
And then and then running
that through the processor
is just another discount is
ultimately to really water that down.
That it's absolutely right.
You have to think
about the flow of money in
your practice and each
layer and how many kind of
little layers there are,
merchant services is no different.
So Alex,
to kind of get to the finale of
our episode today,
leave us with the last couple,
maybe red flags or last
minute kind of value adds
here that are going to help
our listeners make better
decisions with processing.
I would say, first of all,
know your number.
What's your effective rate?
Second,
make sure that you have the
flexibility to leave in
writing without any
penalties because that's
your greatest freedom.
Those two things,
you will eventually find a good home.
And when you find a good home, stay.
There's a lot of good people out there.
Everyone in this industry
has the ability to treat you right today.
My biggest thing is this.
The industry lives this way.
Doctor,
Send me your current
statement so I can see how
much I can save you.
That is BS.
That is code for doctor.
Let me see how bad you're
getting taken care of and
I'll keep the rest.
Get the pricing up front and
you can learn everything
you want about that person.
You can learn,
did they recommend the right
plan type up front?
Did they take away all the BS up front?
Did they give you their best
effort up front?
That means gold, right?
So those are my three generic things,
right?
Guys, doesn't that make sense?
Let's rewind that.
I mean, don't provide people information.
Don't negotiate against yourself.
If they don't have the
information that they think
they need to offer you something,
then make an offer and
we'll shop them to the rest.
But
absolutely giving that just
providing that information.
It's basically going into a
poker game and just having
your cards just laid on the
table for everybody to see
a hundred percent.
Yeah.
Yeah.
So the last two elements I
would say is one, everyone likes, Oh,
I'm going to get so-and-so
to price match.
I can't tell you the number
of times we had an office
that came to us.
We did an analysis.
We showed them how much they
say the team decided, Oh,
we're going to keep it simple.
We're just going to let the
current provider who, by the way,
was overcharging us,
Keep our business that they
so well earned by having them match.
The number of times two or
three years later,
that office then contacts us.
Hey,
things feel a little bit different again.
Will you look?
And it's back to where it
was or it's worse.
So don't fall victim to that.
And my final thing is you
create value on the
clinical side doing dentistry.
And savings are important.
And I always like to think
of it's your business,
it's your decision.
And I always love to put a
number into a production equivalent.
It's your business, right?
When someone says, oh,
it's not worth two thousand
dollars a year for me to make a change.
That's fine if you're saying it,
because you know how much
dentistry you need to do to
generate that two thousand
dollars of profit.
If you're in a ten percent EBITDA business,
that's twenty thousand
dollars in production.
How many MEDs is that?
How many hygiene visits?
Right.
For profit.
Right.
So I tend to like to think
like I love efficiency.
I love I've written about lean in my life.
I had a background in aerospace defense.
I love integration.
I love reducing waste.
But fundamentally,
every decision you make has a cost to it.
And is the value I'm getting
worth that investment?
Amen.
Yeah.
Everything needs to be
attached to some kind of ROI.
And if you choose to invest
and make those decisions,
you have to get your ROI out of it.
Otherwise, it was just a bad decision.
We're all going to make bad decisions.
The ability to spot them
early and get out of them
as quickly as possible is huge.
Isn't that huge, Alex?
You own your company.
I own my company.
We've made bad decisions.
It's identifying where those decisions are,
quickly pivoting, but just knowing.
Knowing is half the battle.
Closing your eyes and going
through this world in
dentistry and business and being just,
frankly,
with the insurance reimbursements
and everything,
Dentists coming into markets.
It's more saturated than
ever in certain areas with inflation.
Cost of bread's high right
now in this very moment.
All kinds of pressure.
you know is it's hard enough
quote unquote but but just
to kind of make cavalier
decisions and not
understand how to get your
roi out of it I mean and
not not really owning your
businesses you honestly
cannot afford to do that
anymore in this day and I
think splitting what you
spend time on right
merchant services is not a
ten hour exercise right now
this is a five minute five
minute exercise contact someone reputable
First of all,
calculate your effective rate.
Then contact some people who
are reputable.
If you want us to be one of those people,
great.
If not, that's okay.
You're still going to get value out of it.
You'll find the reputable firms,
ask them to make proposals.
Then after you have the proposal,
see who you like,
and then have them do the
analysis for you based on
that proposal and what your detail shows,
because you already have
their pricing and plan, and see it.
Then you'll say, oh,
do I have an opportunity to save?
Yes or no.
Is that number worth my time?
Yes or no?
That's a five minute exercise.
Here's the problem.
We had an office the other day.
The savings were six figures,
single location,
one hundred twenty five thousand dollars.
And they didn't they didn't
they didn't move forward.
Well, they had just recently sold.
So the buyer saw it.
The buyer.
Nice.
Well, yeah.
But what do you think that cost the owner,
doctor?
Oh.
Ten years of one hundred
twenty five thousand
dollars in cash flow.
A million bucks.
Six times EBITDA multiple.
My point is this,
like don't like in you
don't have to be overly precise.
Taking action now has
massive consequences.
Right.
So figure out where you can
spend five to ten minutes a
day or a week tackling some
of these because waiting five years could
I mean,
it literally could be the
difference in millions of dollars,
but you don't know.
Yeah.
So love it.
That's my, that's my passion.
So I really appreciate it.
I can see your passion.
Thank you.
This, this was,
I learned some stuff every
time I talk to someone that
knows more about merchant
services than I do, which is a lot.
I learned something.
And in this case, I learned a ton.
Guys,
I hope you I hope you take advantage
of of this this this knowledge center.
And Alex, check out dental card services.
They're on they're on every
single next level service.
coach's mouth because we
know that the prices will
be right and that the
contracts will be short.
And that's an easy referral for us.
But there's a lot of others out there too.
And hopefully some of these
things resonate with you.
So Alex, thank you so much for your time,
brother.
It took a minute to get you
on this and time is an
investment and you just
invested in us and the audience.
So thank you so much, brother.
I appreciate your time.
I'm thrilled to do it.
And thanks for what you're
doing for the docs out there.
It's important.
Thanks, brother.
All right.
We'll talk to you soon.
Thanks again.