As Senior Vice President, Mike Gilroy is responsible for leading LendingClub Patient Solutions which provides quality, responsible, and innovative financing for elective medical and dental procedures.
Mike brings over three decades of sales, marketing and business development experience to the company, with half of that experience in the patient financing industry. Mike was CEO and a cofounder of Springstone Financial, LLC, which became the country’s second largest provider of patient financing prior to its acquisition by LendingClub in 2014. Prior to Springstone, Mike was Executive Vice President of Sales, Marketing and Business Development at AmeriFee LLC, where he led its expansion into dental, lasik, fertility, and cosmetic financing. AmeriFee, at that point one of the nation’s largest providers of patient financing, was acquired by Capital One where Mike served as Director of Marketing and Business Development. Prior experience includes Dentsply International, where Mike served as Director of Sales and Marketing for the Caulk Division.
He holds a Bachelor of Science from the University of Notre Dame and a Master’s in Management from the Kellogg School of Management at Northwestern University.
VIDEO - DUwHF #942 - Mike Gilroy
AUDIO - DUwHF #942 - Mike Gilroy
Howard: It is just a huge honor for me today to be podcast interviewing Mike Gilroy with Lending Club Patient Solutions, it's lendingclub.com. He's a Senior Vice President and responsible for leading Lending Club Patient Solutions, which provides quality, reasonable and innovative financing for elective medical and dental procedures. Mike brings over three decades of sales, marketing and business development experience to the company, with half of that experience in the patient financing industry. Mike was CEO and a co-founder of Springstone Financial, which became the country's second-largest provider of patient financing prior to its acquisition by LendingClub in 2014. Prior to Springstone, Mike was Executive Vice President of Sales Marketing and Business Development at AmericaFee LLC, where he led its expansions into dental, Lasik, fertility and cosmetic financing. AmeriFee, at that point, one of the nation's largest providers of patient financing was acquired by Capital One where Mike served as Director of Marketing and Business Development. Prior experiences include Dentsply International where Mike served as Director of Sales and Marketing for the Caulk Division. He holds a Bachelor of Science from the University of Notre Dame and a Masters in Management from the Kellogg School of Management, Northwestern University. My God!, it's an honor to have you on the show today.
Mike: Thank you, Doctor.
Howard: So when you were at Dentsply, was that when the CEO was John Miles?.
Mike: Yes it was.
Howard: Oh my God I love John Miles. I started lecturing back in the 90's and he went to my seminar one time and we had dinner that night and we probably had dinner every couple of years for decades and that man was so amazingly brilliant.
Mike: Yes he really was, had an encyclopedic knowledge of dental materials.
Howard: So where is he now?
Mike: I know he was on the Board for a number of years and at this point, I couldn't tell.
Howard: Let me start this show by saying a couple of observations. Number one, last year 2017, America bought seventy million new cars and the average price was $35,000. Not one, what percent of those cars do you think were paid in cash versus finance?
Mike: It's a tiny percentage.
Howard: Almost nobody writes a check for thirty-five grand, they all finance it. Then you look at dentists in every single city in every single county and there is one dentist in town that every month sells a case about the cost of that average new car, $35,000 implants, bridges whatever and then the other 95% of the dentists in that town have never sold one in their entire life and they always say: “Well, you know, my patients don't have any money.” It's like: “Dude, there's a guy across the street from you that sells a average new car, $35,000 case every single month, and how many, what percent of your patients bought a new car one time for that average $35,000 price?” Probably 80% of their patients. And then, I'm Irish and we had our pedigree traced back and we're 100% Irish all the way back to the famine. And when those Irish came here, the only jobs were in textiles and there was about a hundred different sewing machine companies and they all went under way because the Singer, 'old man' Singer, he was the one who introduced financing and he sits there and he tells these Irish guys getting off boats with only the shirt on their backs, he said: “You don't have $50 for a sewing machine but I'll give you a sewing machine and you can get a job for $3 a week and when you get paid on Friday, you bring 'old man' Singer one of those $3.” And so since he started financing all the sewing machines, the only sewing machine your mom and grandma ever heard of was Singer. So financing is everything. So what have you learned being in the dental, Lasik, cosmetic surgery? What have you learned in dental financing in your decades of doing this?
Mike: Well, a number of things. Most importantly that it's critical to offer products that are attractive to your patients and it's critical not to make any assumptions about your patients. You basically want to develop a menu of payment options for your practice that works for the practice as well as the patients. The vast majority of patients are going to pay cash, credit card, check for their treatment. But there's a significant percentage, somewhere between 20 and 40%, who will be interested in an alternative, depending on the size of the case. And so it's important that we not assume anything about our patients when we're talking about financial arrangements. I often make the analogy that when you go into a restaurant, the waiter doesn't assume whether you want chicken, fish or beef, he just offers them to you, treats them all equally, doesn't give you an attitude about any one of the choices and lets you choose what you prefer. And we ought to really approach our financial arrangements in the same fashion. Lay them out, not try to guess who has cash and who doesn't, who's wealthy and who isn't, who's able to pay and who isn't. Just lay out the options, all of which work for both the practice and the patient, and let them choose which one their interest.
Howard: And when they do try to diagnose the patient, they get it exactly 100% wrong because, everyone I know that has money like my car is a 2004. I could buy a new one today, I could buy a Lamborghini today. Everyone I know that has $1,000,000 of cash in their bank account, pretty much looks like a homeless person. And when you see someone driving a Mercedes or all these things, they're leasing it, they're fake it till you make it. So you think that person, oh this person's got money. Hell, they're overextended broke but that poor man over there in the plaid pants and you sit there and think that he doesn't have a nickel. That's the guy that might have a $100,000 cash in his checking account (unclear 05:55).
Howard: So what is the average size of a finance case in Dentistry?
Mike: In Dentistry overall, it's somewhere in the low four digits, three digits, four digits. What's interesting is that the average patient doesn't have $500 in cash lying around. So even those relatively modest cases can be a challenge for them, it can put a pinch for them. The more interesting cases though for every practice are when you get well into four figures and five figures. And for those cases, just as you mentioned earlier when you're buying a car, almost no one is going to be interested in paying cash. It's disruptive to most budgets, with the exception of your guy in plaid who has a $1,000,000 in the bank. Everyone else will be interested in smoothing that out a little, they might do that relatively short term with something like a no interest product. They may want to do it for eighty-four months. The important thing is not to make assumptions about the patient.
Howard: Yeah and I like that analogy of a waiter, (unclear 06:59). What I love about you, and by the way, I asked you to come on the show and you didn't know who I was, you didn't ask me. So when you're listening to this, these aren't commercials, these aren't sales pieces. I'm trying to find you the best information available, so I tracked down Mike. But one of the things I really like about the Lending Club is that when you qualify, you show them the amounts they qualify for, it's not like I'm sending in a treatment plan and then you say yay or nay. I send in my data and you tell me what I'm able to borrow
Mike: That's right...
Howard: And that...
Mike: We're really.
Howard: ..that could be a game changer, it might be grandma trying to get financing for a denture over two implants and then she sees she qualifies for $15,000 (unclear 07:45) might say, well hell then I want the six implant, I want (unclear 07:48).
Mike: It's a great point. We let the patient know and the practice, what they qualify for, what that monthly payment can be over a range of terms, give the exact APR that they would pay for that and practices find that as the size of the case goes up, patients start to read the fine print. There's a lot of patient financing options that are based on credit cards and they work okay within a certain case size. But as the cases get into high four figures and certainly into five figures, patients want to understand the interest rate, they want to understand if there's penalty rates, they want to understand if there's late fees. So, it's important to walk your patients through the program and get them comfortable with the options in front of them.
Howard: Well, you're talking to my dentists and my dentists want to read about root canals, fillings, and crowns. So, when you said APR, they don't even know what that means. So walk them through that. What is APR and what should they know about interest rates and dumb it down because these guys, they want to place implants, they don't want to figure out. Most dentists can't even reconcile their own bank statement from Chase, okay. So walk them through. What is APR? walk them through. What do they need to know on this?
Mike: As it relates to patient financing, APR is just a fancy way of saying interest rate and for all of the major programs, that's all you have to know, is it means interest rate.
Howard: But what does it stand for?
Mike: Annual Percentage Rate and what it does is capture the total cost. So if there's any upfront fees it translates those into an interest rate. Virtually none of the patient financing programs have those kind of fees, so it's not really applicable but that's why there's a distinction between the simple interest rate and the APR.
Howard: And what should the dentist know about this, when he's explaining this to the patient?
Mike: Well, the interesting thing that we see, because our program for paying over time with interest if you will, has a, what we call a risk-based interest rate. And by that I mean, the interest rate the patient gets is based on their credit profile, it's not the same for everyone. Most of the programs in the industry are one fixed interest rate, no matter who you are. The problem with that as you get into bigger cases is that patients don't accept that rate if a patient knows that they're very creditworthy and then they're going to expect a rate that reflects that. And so if they were offered a 14 or 16% rate, they're apt to say, I can do better than that I know, let me go elsewhere and find a rate. That's not good for the practice, we just soon move forward schedule treatment. The thing the Lending Club offers is a rate that can be as low as 3.99%, all the way on up to 24.99%. So those are all fixed rates that will never change and they're based on the consumer's credit. So it's really important in terms of larger cases where the patient gets very focused on things like the interest.
Howard: So what is the average interest rate now for these cases four digit versus ten digit?.
Mike: The average credit card rate is well into the teens. The average rate for our installment loans, where you pay over time with interest is closer to 11%. And that's a big difference. We see a steady decline in the acceptance rate by the patient, as the interest rate goes higher. So there's a fair amount of sensitivity and patients are roughly half as willing to move forward when they're presented with a rate in the teens, as they are with a rate that's closer to 10%.
Howard: So then what would my dentist have to do for her to be able to tell the patient, we can finance this interest-free?.
Mike: Well, that's one of the options and it ought to be alongside paying with cash and paying over time with interest. Those are all important options to offer. The difference is that for the no interest programs, the terms tend to be much shorter. As your doctors are probably aware, with the no interest programs the cost to the practice is a little higher, they are in essence paying the interest for the patient. And as a result, the terms tend to be shorter typically twenty-four months is about as long as any of the programs go. And the term has a lot to do with the affordability and everything starts out with affordability. The patient doesn't care about interest rates and other aspects until they decide to themselves, oh I can fit that into my budget. So the most important thing is to show the patient an option that they can grapple with in terms of their budget and their personal finances. And since you have no idea what that is, the important thing is to present that menu, chicken, fish or beef without any bias and let the patient indicate to you, which one that is. So if the patient has plenty of cash, they're not going to finance at all, there's no reason for them to fill out an application, they're going to pull out their credit card or they're going to write you a check. But if they're interested in those options, then things like no interest might appeal to them. However, the payment on a no interest option is going to be significantly higher, perhaps three times as high as their lowest payment on an extended plan.
Howard: Well, how do you make money on a no interest plan?
Mike: The money that we make is primarily from the fee that the practice is paying, the patients.
Howard: So the dentist takes a discount to offer a no interest?.
Howard: And what is that discount?
Mike: It varies, for no interest as short as six months, that may only be a 5% discount, when you get up to twelve months it's usually closer to 10, when you get into the 24 month, that can be as high as 15% of the case. Again if this is an incremental case, if it is a large case, it may be very profitable for the practice. Maybe that's okay from the practice's point of view but it's important not to oversell the no interest option. Many practices fall into this, quite honestly many Treatment Co-ordinators fall into this, where they promote that as if it was the answer to every financial question, and it really isn't. It's just fish, not everybody wants fish. And so you ought to lay out all the options. Some patients are much better off with a fixed interest rate that will never change, even if they're late and gives them a much lower payment, that is not going to cause them any problems. Any financial problems that the payment options create after the fact, are going to reflect on the practice. So it's very important for the practice to help the patient get into the right product for their situation.
Howard: You keep going back to the waiter, saying that waiters not going to diagnose whether you went fish or chicken or beef. Dentists, they just, say 95% percent of dentists will never sell a $35,000 treatment plan in their entire life. Yet 80% of their patients will buy a brand new car in their lifetime. And last year Americans bought seventeen million new cars at a average price, $35,000. And you do. So this dentist that is listening right now, most of them are commuting to work but you're also big infertility, hair, bariatric. I'm surprised I'm not one of your clients, I qualify for all of those. But how much are people spending on fertility or bariatric or hair? What do those cases look like?
Mike: Sure. The average fertility case for IVF, In Vitro Fertilization, will run well over $14,000 dollars. Our average transaction for those markets is in that $13,000 $14,000 range. For hair restoration, for surgical hair replacement, you're looking right around $10,000. 20% of the cases that we finance with our extended plan are over $20,000, even in Dentistry. (unclear 15:53).
Howard: Say that, no say that again, repeat that.
Mike: 20% of the total volume of our financing is for cases in Dentistry that are over $20,000. We do a tremendous amount of the large case financing in dental and the reason is because we offer lines that are large enough and we offer those risk-based rates, those single digit in many cases interest rates that the patients willing to accept and go forward. Just as you don't tend to pay double-digit rates for a car loan, you really shouldn't be paying double-digit interest rates for a dental loan for $20,000 or $30,000 or $40,000.
Howard: So you're saying I'm saving myself $10,000 by sticking to my bald head?.
Mike: You are.
Howard: My God Ryan!, my bald head looks ever more beautiful to me now. And $14,000 infertility. What's the average bariatric case?
Mike: t varies quite a bit, based on insurance coverage. The total cost is often up into the $50,000; $60,000, $70,000 range. Often what's financed will be closer to $25,000 or $30,000.
Howard: And I want to say something else on than that. When that average American buys a car for $35,000 dollars. How long does that car actually last?.
Mike: Yeah, the quality of cars has gone up over time and those cars will be around for quite a while these days, a decade.
Howard: But how long? Okay, so you're saying ten years?.
Howard: Okay, bariatric surgery. I don't have a big sample size but of my patients who got the bariatric surgery, all of them lost a hundred pounds the first year and within three years they were all back to their starting weight. I don't (unclear 17:29). So these dentists, they'll do an implant case and then five, six, seven years later has got periodontitis and it starts to fail and they just beat themselves up. Your refrigerator isn't going to last ten years, your car isn't going to last ten years, bariatric surgery in my opinion only last a couple of years and dentists got to start feeling comfortable with saying, I've got a friend that does hips. I mean a hip surgeon, he'll look grandma in the eye and say, three years, if you're really lucky maybe ten. But dentists always think, well if I do this, you're going to take this case to heaven with you someday, you're going to have all these pretty Dentistry. Every single thing fails, everything fails. Hell this entire solar system is going to be sucked into a black hole someday. Everything fails and dentists need to start financing over terms and start talking to the patient, the satisfaction equals perception minus expectation. So the greatest way to raise satisfaction is lower their expectations. I do it with pain (unclear 18:38), I tell people all the time. My God! when this anesthetic wears off, you're probably going to want a gun or some rope. This is not going to be pretty. This tooth was abscessed, this extraction, this tooth had a hook on it. You're going to want to, you're probably just going to want to die in about three or four hours. So I set the expectation on the floor. And every time they come back (unclear 18:58) Dr. Farran, you're not going to believe it, it barely hurt. And the reason it barely hurt is because I set the expectation rock bottom. How long is this going to last?. Seriously, probably five years. If you were really really lucky it might last ten. So then when they're coming into your practice, my practice is thirty years old and people are coming in here all the time saying, Dr. Farran, you remember you told me this would only last five, ten if I was really lucky, that was twenty years ago. See you lower expectations and then you beat them. And it's the same thing why you don't put salespeople in charge of a company because salespeople by their nature, the dentist selling all the cases, they over promise and under deliver and you want a manager from Accounting or Engineering, you want someone that will under promise and over deliver. Now, by the way, let's back up a little bit. So talk about the Lending Club, when I got out of school thirty years ago, I don't remember a Lending Club. Is that, how new of a company is this?.
Mike: The Lending Club itself was founded back in 2007. It was really one of the first and today is by far the largest of the, what they call FinTech lenders, used to be referred to as peer-to-peer lenders. These days we tend to use the term credit marketplace. But I think of Lending Club as being really an eBay for loans if you will. We line up people that are looking for money, borrowers on one side of the platform, investors who have money and are interested in investing it on the other side and really create a marketplace for those two to come together. About a third of that is still individual investors, high net worth investors but that includes banks, family offices, registered investment advisors, hedge funds, all different types of money and appetites for risk and that gives you a really robust funding source, very diverse, very stable and that allows us to do a great job on the other side for borrowers.
Howard: Who are the other FinTech's?.
Mike: There's a number of them. Prosper is another one that folks may have heard of. SoFi is one that's straight out focussing on student lending.
Howard: I've noticed that Quicken is now trying to get into the mortgage business.
Mike: Yes, there's a lot of folks putting their toes in the water. Ten years in, now that Lending Club has pioneered the area, a lot of folks are starting to look at it more seriously.
Howard: That is amazing. I've read, is this true or false?. I've read, they taught me formally in MBA school, that in America if you pay over $1,000 for it, 90% of the time it's financed somehow.
Mike: I think that's a fair statement. As I said earlier the average American does not have more than about $500 of free cash available to them. The other thing that's interesting is a number of recent surveys have really illustrated that both on the expense side and the income side, the average American family is seeing a couple months a year with a dramatic surprise or fluctuation. And so that idea of spreading things out and de-risking an expenditure is really appealing to a lot of families as they try to juggle, in many cases paycheck to paycheck. And yet to your point, they're out buying Ford F-150's every year and they're spending and making the commitments but they need a way to do it comfortably that fits into their cash flow.
Howard: And you know how much that Ford F-150 cost?.
Mike: Boy, it starts out at the levels you're talking about, it can be $60,000 or $70,000 by (unclear 22:38).
Howard: I have a patient who got the full deluxe $98,000.
Mike: Wow, yeah.
Howard: He had to walk me around the parking lot and show me and it's like, okay this guy just (unclear 22:48) $100,000 into a truck. And then he's going to cry crocodile tears when I tell him that root canal and crown is going to cost $2,000. And the problem is the young dentist under thirty, they buy into all this. They buy into that they should feel sorry and they should just patch it and they should just do the minimum treatment and all this stuff and you have to realize that it's kind of your job as a dentist to know that the better money is spent saving your teeth and oral health. And if you don't get their money for oral health they're going to take that money and spend it on iPhone's and F-150's and trips to Disneyland. How many.
I love some of these stats off your website. Seventy-four million Americans reported they had no dental coverage in 2016. That's more than the population of California and Texas combined. Six in ten Americans don't have enough money in savings to cover a $500 or $1,000 unplanned expense. Which is a broken tooth, a toothache, you've got to finance it. 32% of Americans say they skipped or put off dental care because of cost.
The website, when you land on dental websites, I have podcasted probably the twenty-five smartest people in dental website, marketing, SEO, all that stuff. They say the bounce rate is 95%, that when someone lands on your website, 95% bounce off, only 5% will call your office. When they call the office, three people have to call before your untrained Receptionists can convert one of those three to come in and then when three people come in with a cavity, that dentist only converts one to treatment. So you could fix so much on this funnel. So if half of America is afraid of the dentist and half of America is afraid of cost, when you go to my website, the first thing you see is a one minute YouTube video of me saying, "Are you afraid of the dentist?" Oh, come on that's why I went to school. I love to be able to do Dentistry and you say"Oh my God!, I didn't feel that shot", "this didn't hurt", "raise your hand and I'll stop". We have nitrous oxide, laughing gas. It's my favorite challenge, is if you're afraid of the dentist and do it in a minute. And then Dawn, who' been my Office Manager for twenty years. The other half of the market is afraid of cost. In fact, I wish you would do me a huge favor. My dental website is todaysdental.com, you've got more experience (unclear 25:10) I wish you would watch my Office Manager (unclear 25:132) the title of the video is "Are you afraid of the costs of Dentistry?" and watch that video because Ryan and I can reshoot that video in a minute. Because I think if half the people are afraid of the dentist and all you have on your website is a mugshot of you, looks like your arrest mugshot when you got a DUI. That doesn't make me feel anything. Why do people like scary movies they want to feel something? Why do they like roller coasters, they want to feel something?. A mugshot of a dentist doesn't make me feel anything. I got to see something that makes me secrete dopamine, serotonin, oxytocin that's what a video is for. And the other half are afraid of the cost and I would really like you to watch that video on my dental office website, todaysdental.com, maybe we need to reshoot it because you've got to tell these people that you're afraid of the cost and you don't have $500 or $1,000 and we're going to work with you on that. And I want to point out one, I should not be giving you any feedback but I'm going to give you feedback on my observation, okay.
Howard: This is Dentistry Uncensored. There's only three publicly traded dental companies on earth. Two of them are in Australia, 1300 Smiles, and Pacific Smiles Group and then in Singapore, it's Q & M. And you know what all three of those figured out about patient financing?. You put all your terms in months and you start saying the plan, it's this much a month, this much a month. They all put it in weeks and said that if you say on your website and advertising, that no matter what you need, we'll fix it for $98 dollars a month, that that doubles their close rate because if $98 a month is actually, $98 a month. Let me get that, exactly. I mean $98 a week, $98 times four is $392, well $392, that's a lot of money. But $98, everybody in America spent $98 foolishly this week. Maybe it was going out for a Mexican restaurant, maybe it was going out for sushi. When you start saying $98, how much does a girl spend, when she go gets her hair done or colored or extensions? Everybody in the twenty richest countries in the world think, well I got $98 a week, shit this, I spent $98 on extensions this week. Last week I went out and ate sushi with Charlene and that was $90 and when they start seeing $98. But when you switch it to monthly and you start saying $392, they start putting their emotional brakes on and saying, whoa!, that's a lot of money. What do you what do you think of that?.
Mike: I think it's a fair point. It's important to speak to the patient in the terms that they're thinking of and people who are living week to week, certainly are going to want to translate it to a weekly payment. So the point well taken.
Howard: Yeah and what percent of Americans do you think foolishly blew $98 last week?
Mike: A pretty high percentage.
Howard: Yeah, there's so many of them. You have so many good stats. 16.7% is the national average for a credit card APR. Four out of five times Lending Club has a lower APR. 50% of offers have an APR of under 10%, 9.99% or lower. That is just amazing. I want to ask you, on these cases where 20% of the case is over $20,000. Is there any demographic to those dentists?. Are they more likely to be oral surgeons and periodontists at a general dentist?. Are they more likely to live in California as opposed to Kansas?. Is there any demographic mining and anything you find in those numbers?.
Mike: There's certainly some correlation with specialties, I think part of the reason is that the specialists tend to get more comfortable presenting larger cases than the GP's. But it's interesting, geographically there really isn't. It's amazing. There are doctors around the country in the most obscure places who appreciate this notion of presenting flexible options to patient and do quite a few large cases. So it is not limited to major cities, it's not limited to specialists by any means. It's really just limited by a willingness to present optimal care without blinking and a wide range of payment options to go with it.
Howard: Who do you think, older guys like me, every time we went to?. I noticed that your Lending Club Patient Solutions is AGD PACE accredited. The old guys always, we went to conventions and the millennials they watch it on their iPhone. We, on the Dentaltown app, sixty thousand dentists downloaded the Dentaltown app. We have four hundred online courses there, they've been viewed almost a million times. Who do you think is the best person to teach my homies how to present treatment with financial arrangement options?.
Mike: That's a good question. There's an awful lot of consultants out there and for the most part, the advice they give is pretty similar. So I think more important than any one person talking about it, is just thinking about how to actually implement that in a practice. That's typically where things go awry.
Howard: Well I think the best marketing you could do, besides my podcast, is to create a, (unclear 30:46) because it costs zero and you always get what you pay for. So if you get one set of business on this, you've made a return. But no, I think we should, you and I should try to find the world’s greatest treatment plan presenter and I wouldn't even care if they came from, it'd be nice if they came from Dentistry but they could come from hair, fertility, bariatric, but we need to get someone because again, the dentist went to eight years of college, no business. The Hygienist went to four years of college, no business. The Dental Assistants and the receptionist, they didn't have any training. Most all of them didn't have any training and the next thing you know, some dentist who got A's in Physics and Chemistry, tells Charlene to go present this $5,000 case to a patient and they don't have any training. So, then they just start assuming that nobody has any money because they're not standing out there in the parking lot, watching them pull up in $35,000 cars and they weren't with them last week when they went and got hair extensions and hair color and bariatric and fertility. So we should really make an online CE course about how to present dental treatment. In fact, if you're listening to this, I always like it when my homies send me an email, firstname.lastname@example.org. I'm always blown away by who's sending me, they're usually always young, they're almost always under thirty. But yesterday, this is Wednesday. Is it today Wednesday? Tuesday? I would say Friday, Saturday, Sunday and Monday, every single email was from Australia or New Zealand. Isn't that amazing? So they're from all over. But if you know someone that you think is a great treatment plan presenter, I wanna make an online CE course and you should look around too. You got a lot of dental connections. But let's try to put our heads together, so that this Dental Assistant with no training, this receptionist who was hired off the street. I mean half of my receptionists I stole from Chase Bank in my parking lot and so they have a love-hate relationship with me. I've been banking with them for thirty years, but I've stole a couple of their best people and they just come into Dentistry and there's no training. But when my son, I remember when he was in high school, he got a job for Subway. He had to watch eight one hour videos, at home, on his own dime and pass these ten questions on each video before he could even start. And I 'm like, isn't that amazing and he's going to make a turkey sandwich. But you're going to come work with me and do root canals, fillings and crowns and present $5,000 treatments and there's no training for you.
Mike: It is surprising, isn't it?
Howard: It is. So what bariatric specialist would you recommend for me in Phoenix, Arizona? Which one do you like the most?
Mike: I'll have to get back to you with a recommendation.
Howard: You'll have to get back to me on that one.
Mike: Sounds like you would rather keep the status quo.
Howard: I'm going to stay with being short, fat and bald (unclear 33:48) dentist. And that fertility thing, I would have to pay, I don't know what a vasectomy reversal would cost but is that. But yeah, it's amazing these fertility people. I have friends that have almost gone to borrowing everything they had, three different times to make a baby. And I'm sitting here, I've got four sons, I'm like I'll give you three of my four. Here, Ryan's sitting right here, take Ryan. But it's amazing that people will always find money for, if they want it.
Howard: If they want that smile makeover, they want to have a Hollywood smile. If they really, really want it, they'll find the money. So in dentistry, and then a lot of dentists they don't want to sell dentistry. And I always say: “Then get out of dentistry and go work in an industry that you're proud of that you want to sell. I am honored to get you out of pain, I am honored to take a tooth that should be extracted and fix it up. I am honored. I just feel like you're, that we're both having so much fun because you came in here in pain, you came with a broken tooth, you came with crooked teeth and you're leaving with a $1,000,000 smile and the reason they don't want it is because you're not loving it, you're not making those patients feel the enthusiasm.” And so I'd really like to get. And I'll tell you another experience that I've seen twice firsthand.
A Dental Assistant came and worked for a dental office doing the average which is $750,000 a year in collections, taking home $175. She presented the treatment plan, they immediately went to $1,500,000. After two or three years she said, well why do I get $20 an hour and the Hygienist gets $40? I should at least make as much as a Hygienist, I want $40 an hour and the dentist said no way. So she quit and went across the street. His office went from $1,500,000 back to $750,000 and the office across the street went from $750,000 to $1,500,000. I know both dentists, I know the assistant and I know this in two different cities.
Mike: That's absolutely what we see every day.
Howard: And it's like. So someone adds $750,000 of business to your year and she doesn't deserve $40 an hour. And that's part of this mindset, they have the mindset that the patients don't have money. They have the mindset, that the treatment plan coordinator should only be paid you know in Bitcoin.
I love the fact that they love Dentistry. If I was going to go to a doctor, I'd really want that doctor to really passionately love their craft. But that my job as a leader is to try to stick their nose into the business side which they don't want to learn, the accounting side. They don't know the return asset, they don't know return equity, they don't know their overhead numbers. Even if they tell you any of their overhead numbers, they never check out right. And my job is to try to get these kids that I love, that are passionate about Dentistry to be passionate about business. And that's where you come in and man you've served so many years in Dentistry. My God!, what else have you?. What other business principles have you picked up in Dentistry over the years?.
Mike: Well, I think you're touching on the key ones. If the goal is to get a patient to optimal care, there's really only two ways to do it. You can do all the care now and help them pay for it over time or you can spread the care out. And I don't think I've ever heard a doctor agree that spreading the care out was optimal for the patient, in most cases nothing good comes from delaying things. And so if you have the option to help the patient get things taken care of now and gets optimal care, that's really what the profession is all about.
So, we just are honored to be able to be a small part of that. And the thing that Lending Club brings that's unique to the situation, is that we offer more patient-friendly products. So a practice that's interested in growth, what we offer as products, the patient is going to be able to say yes to more easily. With our no interest product that we talked about a few minutes ago. Our products are very different than what's out there, in that we are a true no interest product. And by that I mean the product works the way the patient assumes that it will work. And what we mean is, that if they pay, let's say twenty-four month no interest. And maybe they miss a payment or two along the way. And so maybe a few hundred dollars rolls over into that twenty-fifth or twenty-sixth month. With our true no interest product, they'll only pay interest on whatever went past twenty-four months. All the other programs in the industries, go back to day one and charge interest on the entire amount, even though it's already been paid. That tends to upset patients and the patients often are not happy with the person that introduced the program to them in the first place, that would be the practice. So if word of mouth is one of the most powerful marketing tools for most practices, having a patient-friendly set of financing options is really really important to that growth and that reputation in the community.
Howard: I want to talk more about patient and financing because a lot of these millennials were very confused by people like Bernie Sanders running around saying that Healthcare should be free, but they don't really explain it. How would Healthcare be free? Would you arrest all the physicians and dentists and chain them up in their offices and tell them to (unclear 39:12) and then they'd say, "Oh no, that's not what we mean. We meant we'd send the IRS to your house and confiscate more of your money or you'll go to jail to pay these (unclear 39:22) ". And I have very mixed feelings about that because in Arizona where you have, take the Indian reservations, where they get free Dentistry. They have a 50% cancellation, no-show rate. So when humans don't have any skin in the game, they don't value it. And whenever you give someone something free, like go to Medicaid clinic. So then you go into Phoenix and you go into any practice that just basically only does Medicaid Dentistry, the same thing 50% of their patients don't show. They're coming in there, these dentists are doing Dentistry at less than half the price. That Medicaid is a very slow payer. It's very difficult to run that business. And what's the, and how big is the reward. Half of your patients don't even show up. So they're always saying to me, "Well how do you schedule, should we double book everything?". Because then what happens when, at that time, at that hour they all show up and it's funny because as you get to the very high fee for service dentistry, bariatric surgery, hair transplants and all that stuff, your no-show cancellation rate almost goes to zilch.
Mike: That's true.
Howard: And it's human nature. If I don't have any skin in this game. It's the same thing with housing. For years Government made low-income housing and what did the people do to that low-income housing? Spray graffiti, treat it like crap. If you'd have taken that same money and bought them their own trailer and put them in a trailer park, where you said okay, you're going to own this, this is your trailer. They wouldn't have broken out all the windows and stole the copper piping and sprayed graffiti all over that stuff. You need to learn how to manage humans and humans want to own their own land, they want to have skin in the game, they want to make their own decisions, they don't like checks and balances, they don't like transparency, they don't like anybody else watching them. And when you're in Dentistry, you just feel guilty that, "Oh my God, how am I going to tell Mike Gilroy that he has nine cavities?". You didn't cause the nine cavities. Mike Gilroy's the one who showed up with a Mountain Dew in his right hand and Funyuns in his left hand and only flosses his teeth, whenever a Hygienist does it in a dental office. This is not my problem. So when you're young, Mike's the one who grew nine cavities and if Mike wants to get these nine cavities, I want him to have skin in the game and the more skin in the game, the more (unclear 41:44). And by the way, if I go into that Medicaid clinic and I give some poor kid nine free fillings, what's the chance he's going to go home and take care of them versus if he came in and he had to pay out of his own allowance, $10 for every one of those fillings and he gave 'old man' Dentist $90, that he could have bought an Xbox with. What do you think the chance is that he's going to go home and brush them and floss them and take care of them. It's just simple human beings, so. And the reason I'm preaching on this is because people that tend to end up in Government and Healthcare always think that everyone's a victim, nobody's responsible for their own behavior. Everything should be free. And that is just not how you manage or motivate people. Look what those coaches do to those kids after school, motivating them in football and soccer and basketball, making them run until they have to puke. And then you can't even get your patients to floss and you think their Dentistry should be free?. Come on man!. Be a dental hygiene coach, don't be a dental hygiene mechanic. And feel proud that you have a $10,000 case to present to this person and if they got skin in the game and they're going to pay for that and you give him $10,000 worth of Dentistry, they're going to go home and brush it and floss it and take care of it.
Mike: Absolutely and if they have those nine cavities, that's really not fair, not to talk about correcting all nine at once. Stretching it out, who would think of doing that and yet, how many dollars of treatment are sitting in dental files all over the country that have been presented.
Howard: Okay, the only data I have on hundreds of millions of insurance claims processed. I'm just talking about a cavity that you can see on a bitewing radiograph. They only drill, fill and bill 38%. So they don't even do two out of every three and we're talking cavities, not bleaching, bonding, veneers, hair transplants and bariatric surgery. We're talking about just a simple routine cavity. They can only get one out of three done and then inside that building, I could drive you around Phoenix all day long (unclear 43:48) will have four, six, eight dentists in one and you'll see seven guys doing $750,000 and they're doing that 38% close rate and then there's one guy at the end of the hall and he convinces two out of three to get the cavity done and he's doing $1,500,000. And then you go to those other seven dentists and say well, what's wrong with you? Oh, it's never the man in the mirror. It's the President, it's the economy, it's Putin, it's North Korea, it's everything but the man in the mirror. Which is my favorite Michael Jackson song. Because in my opinion the people who spend more time judging others, backseat driving the Government, they've got the answers to the United Nations, Washington D.C. and then I'm like, Dude, look in the mirror. Look at your own house, look at everything that's wrong in your life and you spend all your time trying to give advice to how to manage North Korea. You haven't helped your own kid do its homework one time this year and you got advice for Putin. Really, why don't you unpack your kid's backpack when he walks home and pull out all the trash and the gum wrappers and find his homework and get him. Why don't you manage your kid and stop trying to manage Putin? So again it's just simple (unclear 45:03). So what else?. What do you think? We talked about those other areas, my dentist they know Dentistry. What do you think they could learn from the bariatric surgery, hair transplant and fertility doctors?. What do you think?. Do any of those do more financing than the dentist or is dentist number one?. Where do we fall on those four?.
Mike: It's interesting, in a lot of ways patient financing is probably more mature and more established and more widespread in Dentistry than it is in most other areas of elective healthcare. That being said, the interesting thing about Dentistry is that it's relatively easy to break a large dental case into smaller cases. And so there's an awful lot more presentation of partial cases if you will, in Dentistry. If you're going to do In Vitro Fertilization, you either do it or you don't do it. For the most part, if you're going to do hair restoration, you're presenting about the same cost. So, a lot of these other elective specialties, I think skip past that issue of whether I should present the entire treatment that I could provide, so they don't really have any alternative. In Dentistry, I think there's a lot of different materials, a lot of different techniques. There's a lot of different variables and so the actual treatment plan can vary quite a bit and then you layer on whether financing is presented well, on top of that in terms of creating affordability and you just see a much wider range. To your point the $750,000 versus the $1,500,000. You see a lot more variation in what the practices actually produce, in situations that really aren't all that different, to begin with.
Howard: Okay, this is Dentistry Uncensored. So I've been nice to you for a long time now, it's time to toughen up a little bit and start asking you the uncomfortable questions. Because I know what my homies are thinking, they're thinking well I already have CareCredit. What's the difference between CareCredit and Lending Club? You got one, you got them all or are they different?
Mike: No, Lending Club is pretty dramatically different. As I say more patient-friendly. And if you're thinking in terms of your brand as a practice, word of mouth is a key marketing tool. I think that really matters. So I already talked about are true no interest product. We don't have what we refer to as retroactive interest. We don't charge you if you go one month past the twenty-four all the way back to the $1. So that's a much better patient experience with that product. With our extended plan, where you pay over time with interest. The big difference there is that we give you the interest rate you've earned through your past behavior. If you go with CareCredit, you'll be charged the same interest rate regardless of whether you have an eight hundred FICO score or a five hundred FICO score, because everyone gets the same interest. And the problem with that is that for small cases, maybe people don't care but when you get into large cases, people are sensitive to that rate and if it isn't the rate they've earned, they're going to think about it and go elsewhere, postpone a decision and not schedule. Which ultimately is really where we'd like to see them.
Howard: Yeah and that's another thing, that's so crazy. So you go into of these medical (unclear 48:13) buildings with a dozen dentists in there and the dentist will always say, well we'll just numb up this side or just this one quadrant and we'll just do the two fillings over here. And then next door is an oral surgeon, who every single patient numbs up all four quadrants and takes out all four wisdom teeth. So if a dentist can just, if you can just get them to stop saying, well let's do half, let's do the right side this time. Like my next doctor appointment is a Colonoscopy. I wouldn't want to go in there and have him go half the way up one time and then come back in a week and he goes the other half of the way. Just go in, I want him to go where no man has ever gone before and just get her done. And if I had to go to the dentist, I would much rather have my whole mouth numbed up and the whole thing done, than to have it broken up in two or three or four different trips to the dentist. God! just getting them to go. And the reason I keep saying so many of these lessons is, a quarter of my viewers are still in dental school and the rest of them are pretty much all under thirty. They email me email@example.com. Maybe it's because the fifty-year-olds don't know how to e-mail, I don't know, maybe they're older than e-mail. But the bottom line is, if you can just get them to go from quadrant to right side, you'll double their business. If you can get them to go for just full mouth. I just assume, I just say, well the easiest thing to do, let's just numb up, let's schedule a nice two-hour appointment, numb everything up and just get her all done. And what does almost everyone say, that sounds awesome. No one says. Well, I'd like to break it up into four different appointments. I haven't heard that in thirty years. Now they might want to break it up because of finances but they don't want to...
Howard: ...break it up as far as the Dentistry is done. So you need to just start presenting, don't go in there and say, well the crown is $650 and the root canal is $995 and you itemize out this (unclear 50:05] Omer Reed's when he taught me how to present Dentistry. He goes, you go in there and you tell them the number. Just go in there and tell them. Okay, to do what we want to do, to do everything we talked about is going to be $5,000. How would you like to pay for that?. That was Omer's deal. And then you go across the street and say, well tooth number three, is going to need a MOD composite and tooth number four is going to need a DL composite and the insurance will pay. What does the insurance pay, $1,000 max?. So your treatments $5,000, insurance will pay $1,000. How would you like to take care of that $4,000? Do you have $4,000?. Do you have it in, do you want to put on a credit card? Do you want me to go see if you're approved for financing with Lending Club? And the more confident and quicker, faster, succinct you say it, more humans and Americans want yes. Who doesn't want to have all their teeth fixed up?.
Mike: No, that's absolutely right and to be honest in our experience, I think a quick very standardized twenty or thirty-second spiel along those lines is the right way to do it. We're not looking to make the patient feel bad about themselves, we're not looking to embarrass them, we're not looking to shame anybody. And yet that's often what happens in these financial conversations. So if you take Omer's advice and say it's going to be $6,000 but we have a number of affordable payment options. You can start with no money down and as little as this much per month. We, also have no interest options, the payment on that would be this. Or we take cash and credit cards naturally. If you do that that way we could offer you a discount, that could save you this much money. Which of those would work best for you? A script along those lines lays out chicken, fish or beef. I didn't make any judgments. I've offered you, pay me in full and maybe save some money. I've offered you, pay with no interest but spread it out a bit and I've offered you, pay it over quite a few months at a really low attractive affordable payment. One of those is going to fit the circumstances of almost every patient. We didn't judge anybody, we didn't presume, we didn't steer them and yet we've offered a wide range of menu options, that are going to get you most of those patients the ability to move forward and say yes to treatment.
Howard: Where do you think that comes from? Again, you only see it in Healthcare and Government, where there's a lot of shaming, making you feel guilty, condescending. Just every time someone on, one of the parties will say something, the other party only addresses it that it was bad and shameful and how could he say that and I'm sitting there thinking, okay well if that one guy said that, and there's three hundred and twenty-three million Americans, at least a million people think this. So why don't you go in and address the actual statement?. Why do you think Healthcare and Government has so much of this shaming, judgmental. So many patients have told me over thirty years, they switched offices because the last Hygienist talked down to them or the dentist was very condescending or they always felt like they were getting scolded. Where do you think that comes from? And do you believe that it's more likely to be coming from Healthcare than Apple computer or Amazon?
Mike: Well I think in business, a lot of folks address the issue of affordability head on and almost assume that some kind of affordable option is going to be most appealing to the purchaser. I think unfortunately in Healthcare, oftentimes because of our own lack of comfort with the fee that we're suggesting, there's an awkwardness that really doesn't need to be there. To your point about the Subway sandwich videos, a little bit of practice and a little bit of planning can go an awful long way in improving the system. And so you need to have a skilled patient or treatment coordinator who's got good communication skills, that is comfortable talking about the kinds of case sizes that you aspire to. If they've had bad financial experiences personally, it's going to be very hard for them to conduct the conversation the way you'd like them to. You need to think through your menu of payment options. You need to be okay with it.
I can't tell you how many doctors send nonverbal signals to their team that they really hate paying that fee for the financing. And when they do that, the staff is very attentive to what the doctor wants of course and they shy away from offering those options because they know the doctor grumbles a bit when he has to pay that fee. Is that a good business decision?. It's better to make that with your business management head-on, that when you're walking down the hallway in the practice. And so it's very important to be thoughtful about the menu of payment options. If you don't want to offer fish, don't offer it but make a good business decision about it. Get your menu in shape, so it works for the practice as well as the patients. Find someone who can present it to the patients in an articulate, simple, standardized way without attitude, without judgment, without presumption and case acceptance will go up.
Howard: Yeah and that same dentist who says: “Well, I don't want to pay that fee to the Lending Club or whatever.” Same guy cannot even tell me what his close rate is. “So dude for 2017, what was your close rate?. What was your close rate of people offered financing versus people not offered financing. You don't know any of your numbers. (unclear 55:23) and you go, I've got a gut feeling I don't like it.” Yeah well guts are filled with fecal matter and crap. I want to know what your close rate is and if you don't know your close rate is for 2017 and it's already 16 days into 2018, you're not a very good businessman. And you should be because Dentistry is a tough job. It's a tough job, the patients are tough, the staff is tough, learning how to do all the fancy dentistry is tough. And you should get compensated for it and if you love doing dentistry, like I love you doing dentistry, you're gonna do a hell of a lot more dentistry if you finance these big cases.
Mike: And empty chair time doesn't make revenue.
Howard: Yeah. So, my gosh! I can't believe that we've been talking about patient financing for an hour. So I want to end on this. What will my homies find if they go to your website lendingclubcorporation.com?. Is it lendingclub.com? It says...
Mike: ...and lendingclub.com/providers and (unclear 56:22).
Howard: Is it /providers? Okay, so I got the lendingclub.com/providers.
Mike: And they'll find the basic information on how to get set up with our program. Most practices these days are registered with multiple programs. I would not think in terms of just one. But I would take a hard look at the products that those programs offer and whether they align with your practice's philosophy about patient care. I think you'll find if you take a close look at Lending Club's products, they're just better products to offer your patients. Your patient's relying on you as someone who deals with patient financing every day, to guide them and to be consultants to them on the products and the choice of the vendor. So we partner with our practices and our goal is to be an extension of those practices, where our goal is to be a good reflection on the practice, we take care of patients the way the practice does. And I think that's the thing to look for in any partner that the practice chooses and if, take a close look at that with Lending Club, I think you'll like what you see.
Howard: If you could also do me another favor, on Dentaltown, there's two hundred and seventy thousand dentists from every country on earth and they've posted five million times. There's a search button and I typed in Lending Club and there's a bunch of threads popping up, asking questions about that. I wish you'd go in there and answer them. And they'd love it too. The dentists absolutely love it when you're practicing in Salina, Kansas and someone's asking about Lending Club and then you come on there and say: “Hey, I actually work at Lending Club.” I mean that's true customer service. I think the best marketing is not something you buy anymore, it spending time. You didn't pay money to market today, you spent an hour of your time talking to me and my homie's going to hear it on their iPhone in their car for free. And I think going in on Dentaltown and spending some time, just do a search for Lending Club. And we have fifty categories, root canals, fillings, crowns and one of them is patient finance and then hopefully me and you can brainstorm and maybe we'll find someone to put a patient treatment plan financial coordinator presentation together. If you're listening and you know someone or you've heard someone you think's great, email me firstname.lastname@example.org and tell me who's the best person to talk about presenting treatment because it's it's everything.
Mike: Sounds great. Really appreciate the time.
Howard: Mike, no worries. And what is Gilroy? Is that, it sounds Gaelic. Is that Irish? Gilroy.
Mike: It absolutely is...
Mike: ...(unclear 58:54) we've gotten a little blended along the way but I think three quarters are better, so.
Howard: Well, Mike, it was an honor to have someone with your background and your prestige to come on the show today, for an hour to talk to my homies. Thank you so much for coming on the show.
Mike: Appreciate it, Doctor, thanks so much.