Incremental Revenue – A Series – Part 5 – Financial Arrangements



This installment in the Incremental Revenue series will focus on the benefits and incremental revenue found by making dentistry affordable.  There are many options open to help patients pay for their dentistry other than discounting your fees.  We will be looking at those options as well as the psychographic factors that affect patients’ perceptions of the cost of their dentistry.


Did you know that 2 to 3 million Ontarians avoid trips to the dentist because of their perception of cost?  Looking at it from a different perspective, 22.4% of patients who might otherwise go to a dentist don’t go because of their concern about the cost.

Cost is the most significant patient impediment to proceeding with discretionary dentistry. Cost is a greater concern for most people than even pain. While it would seem that patients today have a good number of options when it comes to financing their dental work, there may not be as many options as you might think.  At the very least, patients may not perceive that they have as many options as we believe.

We propose that by using appropriate language and protocols, it is possible to make dentistry more affordable without discounting your fees.  Greater case acceptance will significantly increase incremental revenue.

Supporting Particulars

Let’s start by exploring the nature and perception of money. My dollar, your dollar, and any one of your patient’s dollars all buy the same amount of the same stuff. Would it surprise you to know that almost no one puts the same value on a dollar? The value that each person puts on a dollar is a function of three things;

  1. how many dollars they have
  2. how many dollars they need
  3. how easy it is to replace their dollars

Not everyone looks at these three factors rationally, which complicates the issue even further, resulting in the fact that likely no two people put the same value on a dollar. If you want to understand how your patients perceive your fees, it is important to understand these three principles.

The next thing we need to understand is how the three most financially active generations feel about credit. Understanding how the generations use credit will be key to understanding how to find incremental income by the effective use of financial arrangements.

We are talking about Baby Boomers, Gen Xers and Millennials.  Baby Boomers are well known for their use of credit and debit.  The use of credit and debt is one of the main things that differentiated them from Traditionalists.  Initially, it was thought the Gen Xers and Millennials were somewhat debt adverse; however, as it turns out, this is not correct.  According to CNBC “When it comes to debt, Americans who belong to Gen X (ages 39 to 54) are carrying the most.”  According to Experion, millennials (ages 25 to 40) are trying hard to catch up to their older siblings.  “The uptick in millennials’ credit use is seen in the growth of their credit card balances over the last five years.  Millennial credit card balances have risen 40% since 2015, the most rapid increase of any generation during that period.”  This tells us that the bulk of your patients are comfortable with debt and particularly credit card debt.  People who are comfortable with credit card debt tend to think in terms of how much things cost on a monthly basis.

Let’s try a thought exercise.  Ask someone how much they paid for their house and what determined the limit of their spending.   The answer for most people will have something to do with how much they could afford a month after making their down payment.  Given the availability of high ratio mortgages, the down payment for most buyers is not a problem.

Let’s assume that the decision is made that a $2M house is what the buyer can “afford.”  Using a five-year closed mortgage with a 25-year amortization at 2.4% and a 10% down payment, the monthly payments would be about $8,000.  After the buyer/owner makes the last mortgage payment, they will have spent about $2,600,000, not $2,00,000.  If you had asked them at the beginning of the process if they could afford to pay $2.6M for a house, they would have likely said, “No way.”  The point here being the final cost was not the deciding point; it was the monthly cost that was the deciding point.

How then does this relate to the dental office?  To begin with, what we are addressing are the fees for discretionary services, not insured services. The patient’s perception of insured services is that they either don’t pay or only pay a small co-pay for these.

No, we are addressing uninsured, usually discretionary service fees, which are typically expensive.  These are the fees that generally keep 2 to 3 million patients in Ontario at home.  The question then is how do we fix this?

The answer is by communicating about money in a way that the patient understands.  If your patient only spoke Greek and you only spoke English, your chance of closing a big case would be minimal.  So if your patients think in terms of monthly costs and you communicate in terms of the total cost, you are not communicating effectively.

Let me use an actual example that happened many years ago but is still relevant today.  We had a dentist contact us worried because he was losing patients.  This dentist was an excellent clinician, so we know it had nothing to do with the quality of his dentistry.  To find out what was going on, we surveyed several hundred patients.  We asked them about their experience, and we asked patients who had recently left the practice why they did.    There were lots of answers, but there was one that was virtually universal – “He’s too expensive.”

Our client was very surprised with this finding as he was about 10% below the current fee guide for uninsured services.

Why was he perceived as being expensive? 

He required full payment upon delivery of the service. 

He was communicating in terms of the total cost while his patients were thinking in terms of monthly costs.  We asked him to try something for six months.  Instead of presenting a case as a $2,400 service, we asked him to present it as a service that cost $200 for 12 months.  We also asked him to stop discounting his fees and charge the full current fee guide.  After about nine months, we re-surveyed his patients, even some who he had presented treatment for a second time.  The one new universal response was, “I like his office better now that he has reduced his fees.”   He hadn’t reduced his fees; he actually increased his fees.  What he did change is how his patients paid his fees.

However, the real difference to his patients was how they thought about his fees; after all, they could have used Visa or Master Card.  What the patients heard was not $2,400 but rather $200.

If you take an old paper bill (don’t try this with a new plastic bill – maybe try it on a fresh US bill) and crease it – fold it in half, and really crease it.  There is nothing you can do to get rid of that crease.  You can fold it back the other way, you can even iron it, but that crease will never come out.  The brain is somewhat the same.  If someone tells you that a service will be $2,400, that is the “crease” that will not come out.  They can tell you that you can pay for it over 12 months at $200 per month but what is first and foremost in your mind is $2,400.  On the other hand, if they tell you that you can have that service for only $200 a month, even after they tell you that there will be 12 payments, the amount that is first and foremost in your mind is $200.   Most people will find $200 easier to agree to than $2,400.  This is called the First Crease Theory, and it works.

Remember, it is not about what someone is actually going to pay; most people can multiply $200 by 12; it is about their perception of the cost.

Most moderately expensive things that are sold today, be they hot tubs, cars, vacations, almost anything on TV, are not sold based on the total cost but rather on how much it would cost monthly.   Someone has already figured out that 2 to 3 million people in Ontario don’t go to the dentist because they are concerned about cost.  An average discretionary appointment will be over $1,000, so let’s use that as a baseline, and we will use 2.5 million people as our other baseline.  Assuming 10,000 dentists in Ontario that works out to $250,000 of incremental income.   We have previously determined that 62.5% of incremental revenue goes directly to the bottom line.  This would be at least $150,000, which at a 5.5 times multiple would equal $825,000 of incremental practice value.


A lot of people do not go to the dentist because of a concern about cost.  The current bulk of patients are Baby Boomers, Gen Xers, and Millennials.  Studies have found that all three of these generations like to use credit.  Studies have also found that financial concerns are a more significant barrier to visiting the dentist than the fear of pain.  The good news is that with proper presentation strategies, financial worries can be largely mitigated.  The payoff to an average dentist could be as much as $825,000 of increased practice value, doubling the value of many practices.


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