Episode #344: Americans Spend 6 Trillion Dollars Annually on Discretionary Spending!

Naren Arulrajah: Hello everyone. Welcome to the Less Insurance Dependence podcast, the official podcast of the Reducing Insurance Dependence Academy, www.rid.academy. Membership to the academy is a gift from Gary and I in appreciation for your listenership. Visit rid.academy and do not forget to register. By registering, you will have access to all of our resources and a free pass to all of our events, including our annual summit.

I am Naren, your co-host. Today’s podcast is titled “Americans Spend $6 Trillion Annually on Discretionary Spending”.

Does Your Practice Model Benefit From This?

It’s a really, really interesting question, and I think, um, I’m so excited to get into it. Uh, six trillion pretty much is approximately 35% on average that people spend based on where they want to spend money on versus where they have to. So I’m really interested, you know, interested in looking into this.

But before I do that, I just have a quick announcement: delivering next-level patient care, creating positive experiences that keep patients coming back. Delivering next-level patient care, creating positive experiences that keep patients coming back.

Naren Arulrajah: This is an event we are doing on the 8th of July from 8:00 to 10:00 PM Eastern. It features Gary and myself, plus a lot of other experts in the industry. So it’s a two-hour event with two hours of CE, and it’s 8:00 to 10:00 PM on the 8th of July. And the link that you can go to register is thrivingdentist.com/events. So don’t forget to go to thrivingdentist.com/events and benefit from this.

So, um, Gary, what do you think about the 35% of the average income that people spend on things they want to? You know, I could buy the cheapest car or even a second-hand car, but I don’t. I buy the nice car that I want. You know, I could not go on vacations, but I go on vacations, right? I don’t need to buy the nice clothes, but I buy the nice clothes.

Naren Arulrajah: I don’t need to go to the nicest restaurants, but I do go to nice restaurants because I want to enjoy myself, right? We all do that. You do that. I do that. We spend money on things we want to spend money on. We don’t just, you know, drink the $1 coffee. We go to Starbucks instead and spend $4 on the same coffee, right? Uh, discretionary spending. So, you know, humans don’t behave one way for dentists and a different way on their vacation. We are the same humans, right? If we want something nice, we’re gonna spend it on something nice.

So what’s your take on this, Gary?

Gary Takacs: Yeah, I think it’s a fascinating question, and the data is absolutely fascinating. And, you know, I, um, have done a pretty deep study of dental history. And if you look at dental history, um, it wasn’t that long ago that the services that were available in a dental office were fairly limited. You know, they were the things that would take care of urgencies—you know, a toothache, restorative dentistry.

Restorative dentistry—um, you know, Dr. L.D. Pankey is considered by many the father of modern-day restorative dentistry. When Dr. Pankey started his career in the 1920s, a hundred years ago, dentistry was largely a profession of extraction. What were they doing there a hundred years ago? What was a dentist doing?

Naren Arulrajah: Yeah. Taking the teeth out.

Gary Takacs: Taking teeth out. They weren’t saving them. Yeah. They were taking ’em out. And over the last hundred years, we have really developed some very advanced ways to enhance people’s lives through quality dental care.

So, a hundred years ago, there was no discretionary spending on dentistry, right? Right. There were nice restaurants in 1920, right? You know, there were vacation spots in 1920. There were automobiles in 1920. You didn’t have to have a horse anymore, right? But dentistry was largely a necessary service.

And over the years, it’s really evolved into a very advanced area of healthcare where we can really enhance people’s lives. We help ’em keep their own teeth all their life. We can give ’em a second chance if they’ve lost teeth through things like dental implants.

So I think, if you’re thinking as a business person or thinking as a strategist in your practice, you would wanna have some mix of high-value services in addition to everyday general dentistry.

Gary Takacs: And if you’re a regular listener to the Less Insurance Dependence podcast, you’ve heard me say that I think the best practice model is a combination model that, as a base, has everyday general dentistry combined with hygiene—a really strong hygiene department. That’s your base. And then on top of it, the icing on the cake is high-value services. And it’s the high-value services that will attract people that have discretionary income, interested in spending it on themselves in terms of their health.

Now, let’s tie that in to how does that fit a PPO practice? Well, my perspective is—and my vantage point is—that most patients that come to you because you’re on their plan are only interested in things that are covered by their plan, right?

How do—yes, we hear that all the time.

Naren Arulrajah: Absolutely.

Gary Takacs: You present something—“Is that covered by my insurance?” That’s the phrase that every dentist cringes when they hear it, because we don’t have—unfortunately, your dental insurance was only meant to cover the most basic things. And what we’re talking about here is not basic.

“Oh, okay. Then I don’t want it.”

So if you’ve got a PPO-dependent practice, are you capturing those discretionary dollars?

Naren Arulrajah: No, you’re not. I think the challenge also with PPO—like, humans are creatures of habit. And PPO trains you to ask the question, “Is it covered? Is it covered? Is it covered?” So the challenge is that even somebody who can afford, you know, discretionary spending—the same person who takes nice vacations, the same person who drives a nice car—they’re just trained to think of dentistry as, “Oh, is it covered?” Right?

So even though there’s money on the table, you’re not able to get it. And partly, you—the team—also kind of get institutionalized, where you’re used to hearing that question. You assume, like, everyone is only going to do the things that are free, meaning covered by insurance, versus what they really want, right? The human being who’s driving the nice car, or wearing that nice, you know, suit, or, you know, carrying that expensive handbag—why are they any different?

You know, what’s different about dentistry is that they won’t get the best—they won’t get what they want—versus just bare minimum, you know, what’s covered?

Gary Takacs: Necessity. You know, just what’s necessary.

Naren Arulrajah: Right?

Gary Takacs: And, you know, I do believe that in every practice, doing some necessary dentistry, you’re being of service to people. You’re helping them. You’re helping ’em get out of pain. You’re helping cover very basic necessities. And those are the kind of things that are covered to some degree with insurance.

Naren Arulrajah: Let me ask you a question, Gary. How do you think of the mindset? Do you think if I’m a practice owner in 2025, and I know one third of the money that the average person has, he or she’s spending on things they want—not they need—right?

Like, in other words, rent is something you need. If you don’t pay the rent, you’re gonna get kicked out. But they’re not doing that. They’re spending one third of their money, or 35%, on things they want.

So how would I create a practice that obviously provides a necessary service, which we both agree, but on top of that goes after that inner discretionary spending? Well…

Gary Takacs: It goes to your expertise now, which is marketing. You gotta fish in the right pond, right? Uh, you gotta, you know, think of that analogy—you gotta fish in the right pond. And if you’re fishing in the PPO pond, you’re gonna get a very thick skin on your forehead, ’cause you’re gonna bang your head against the wall with people that only want what’s covered by their insurance.

And do you think insurance executives are having executive meetings to talk about how do we cover discretionary expenses in dentistry? No, they’re not. They aren’t having those conversations because they know that employers aren’t necessarily willing to fund that, and they’ll see their revenue go down because their customer—remember this at all times—the insurance company’s customer is not you, doctor. It’s not your patient.

Gary Takacs: It’s the employer that buys the policy. And do they want to cover discretionary benefits? No. No, they don’t. They don’t need to.

So you’re fishing in the wrong pond. Now, I’m not saying you couldn’t get a good patient who has Delta, and they find your office, and they discover what you could do for them, and they’re interested in having those things done. That can happen. It’s happened—it’s happened in every PPO practice, I can confidently say.

But it’s less likely because you’re already, you know, bucking the trend. They aren’t as open to that. They aren’t seeking you out for that. And I would rather invest in a comprehensive marketing plan where they’re seeking you out for those things—where they’re literally looking at “How can dentistry enhance the quality of my life?” Not “What’s covered by my insurance?”

Gary Takacs: How can dentistry enhance the quality of my life? And when you have people—I think every doctor listening to this would love to have a patient, a new patient—imagine this, Naren: a new patient that comes into the practice and the patient says, "You know, Doc, I’ve really been on a wellness and health journey over the last number of years, and I’ve done a lot of things to help become as healthy as I can. And I’m still improving, I’ve got work to do yet, but I’m also interested in being a patient of yours and partnering with you to help keep my teeth and my mouth as healthy as they can be."

Do you think every dentist on the planet would love hearing that come out of a patient’s mouth?

Naren Arulrajah: Absolutely, Gary. Because, you know—absolutely. Yeah, I mean, that’s why they go to dental school, right? To change people’s lives. They get extra training. They are passionate about dentistry and certain parts of dentistry. So a hundred percent.

Gary Takacs: Yeah. And now, if you’re fishing in that pond, you would do that through a very strategic marketing plan, which, Naren, I’m happy to say—you do that extremely well. I’ve experienced that myself as a client, but also experienced it in the work you’ve done with our coaching clients, attracting those kind of people.

So it’s about fishing in the right pond. And by the way, that pond—$6 trillion—it’s not a pond. It’s an ocean. It’s an ocean. It’s an ocean.

Naren Arulrajah: Exactly. Um…

Gary Takacs: I mean, it’s crazy, ’cause if—but I think what happens, Naren, there’s a bit of psychology, practical psychology here, and it really is an element of practice psychology. When you’re bucking the trend, when you hear “no” enough, you stop presenting it. Right?

It’s just human nature. It’s like—it’s like touching the hot stove as a child. Right? You’re not gonna keep touching the hot stove.

Naren Arulrajah: A hundred percent.

Gary Takacs: You know, you probably won’t even touch it the second time.

Naren Arulrajah: And PPO practices have, you know, have that hot stove syndrome, right? Like hot stove—somebody says no, so they don’t want to present ideal care. They just stop presenting it.

Gary Takacs: Yeah. And I mean, I’ve heard from doctors, you know, “Hey, tell me a little bit about the mix of your practice.” “Well, it’s just everyday general dentistry. That’s all they want.” Right?

“Do you find patients that have complex needs?” “Oh, all the time. But I don’t present. I don’t present complex treatment plans to ’em, because they’re just gonna say no.” Right?

And I want to say, well, Wayne Gretzky said, “You miss every shot you don’t take.” So start presenting it. But they are convinced, right? Like, we could attach a polygraph to their wrist and say, “Do you believe your patients would accept ideal care?”

Naren Arulrajah: And they’ll say, no.

Gary Takacs: And they’re gonna say no. And they’re gonna pass the polygraph test.

Naren Arulrajah: And they believe in it.

Gary Takacs: They believe it.

Naren Arulrajah: And I think—

Gary Takacs: This is about fishing in the wrong pond.

Naren Arulrajah: And it’s because we never remember the good things that happen to us, but we never forget one bad thing that happened to us. So that one person who said no will be, like, in our mind—and the way they said it, and they were, like, upset, and whatever it is, right?

And we just—so we have to understand it’s a human—you know, that’s one of those incorrect wirings we have in our brains that works against us.

Gary Takacs: Oh, it is. You’re absolutely correct. And the thing is—and I’ll counter that, though—for those that are open-minded to this: yes, the population has never been more interested in health than right now.

Naren Arulrajah: Exactly. And it gets it—they’re more interested in health and more interested… I remember Bill Gates saying something where people are so into health that, you know, they’ll start taking care of their health more and more. I mean, they’re watching things, they’re eating healthier, they’re running, they’re walking, they’re taking—like, they’re so into health today, you know, compared to any time in history.

Gary Takacs: Yeah. Yeah, I mean, it’s profound. And it’s evident in everything—every, you know, food labels.

Naren Arulrajah: I mean, I’m conscious—

Gary Takacs: Of imaginable.

Naren Arulrajah: I’m conscious of microplastics. You know, like, I don’t—I, like, I don’t drink water from a plastic bottle. Either I will, okay, forgo that water, or—because, you know, supposedly there are microplastics, and yeah, this water is going all over the place and gets heated up and blah, blah, blah. And so I didn’t know that, right? It’s because of the information we have at our fingertips, and we see all this knowledge just passed on to us about—

Gary Takacs: There’s a term that you and I—we’ve bounced around, we’ve talked privately. There’s a term that is becoming more embraced now in society, and it’s “health span.”

Naren Arulrajah: Yes.

Gary Takacs: Lifespan is what we, you know, our parents used to think about—“What’s your lifespan?” How long you live, right? Health span is—I’m not getting the exact description, but here’s how I describe it in my mind. I credit Peter Attia, by the way, the MD that wrote the book Outlive.

Naren Arulrajah: Outlive, yeah. I read that book.

Gary Takacs: He kind of coined that term “health span.” It means living well, long.

Naren Arulrajah: Yes, yes.

Gary Takacs: Yes. So it’s not just living, you know, being 90 years old and being—

Naren Arulrajah: Yeah, like, you know, my mom—she was sick. She couldn’t walk, knee pain, et cetera the last 10 years. So that’s not what he means by—

Gary Takacs: No. What he means is being active, being able to—in your nineties, and now they’re saying in your, you know, past 100 years old—yes. That taking care of yourself, you can still live a quality of life with the right care and attention. And there’s never been more interest in this stuff than now.

I mean, it’s a New York Times bestseller. Just—if you haven’t read it, read the book Outlive. Right? How to Live Long, Well. And my point is that people know the mouth is connected to that. They want to eat anything they can eat, you know, into their late years—not be, you know, constrained to a blender diet. 

Naren Arulrajah: And the other thing that just comes to mind is, I remember you used the phrase, you know, "going to the salt mine," right? Imagine running a practice where you help people live healthier. Imagine running a practice where you have conversations about creating the ideal smile—the smile of their dreams. Won’t you jump out of bed every morning and want to get to work?

Gary Takacs: You know what I look at in there—and this will be an awkward analogy, but it just hit me, ’cause we talked about it a little earlier—you know what I think our listeners of the Less Insurance Dependence podcast are?

I think our listeners are the equivalent of brilliant chefs. Right? They’re well-trained. They have tremendous diversity—if they were a chef—of being able to prepare meals. And the only thing their customer wants is a basic, you know, a basic food staple.

But they’re a very accomplished chef that could provide so much more. But the customer—the patient—only wants the basic food staple, not the five-star, you know, menu items that they can prepare.

And that’s why I think maybe we’ll close on this point.

Gary Takacs: That’s why I think so many dentists live quiet lives of desperation, right? They’ve got all these skills, they have the capability, they have the passion around it, and yet their patient only wants what they could have provided as, you know, as a 15-year-old chef. You know? And I think that’s what leads to so much frustration.

But you can change it. You can change it. And how many patients do you need to have a world-class practice? I mean, if you’re a solo dentist, Naren, if we had 1,500 patients, you know what that practice could be in terms of numbers, in terms of everything?

Naren Arulrajah: That’s like a—you know, could—

Gary Takacs: Be a phenomenal practice.

Naren Arulrajah: And the other thing I would like to encourage people to think about is—we have kind of a folly in our, again, our thinking, our wiring, or the way we are. Think—we set a target, let’s say 2 million. What are we gonna—

Gary Takacs: Well, and the great news is, you don’t have to continue this way. How many patients do you need to have a world-class, thriving practice that provides personal, professional, and financial satisfaction? And can you find those? We don’t need all of ’em. We just need those.

Well, when there’s $6 trillion being spent—to bring it back full circle to the topic—when there’s $6 trillion being spent on discretionary spending, and the truth is, much of high-value dentistry is discretionary. Not all of it, but much of it is.

They don’t have to have implants, right? They don’t have to have straight teeth. They don’t have to have a beautiful, sparkling smile. That’s discretionary, right?

But when $6 trillion in the United States is being spent on discretionary spending, I hope that that has you all optimistic about what you could do about that in your practice.

Well, one thing we know about our listeners is they take action. If you haven’t taken action already, I’ve got two suggestions for you. Number one, I would schedule a marketing strategy meeting with Ekwa. Learn how you can start fishing in the right pond. Naren, what’s the URL for our listeners? It’s…

Naren Arulrajah: It’s—the URL you can go to is ekwa.com/msm. That’s ekwa.com/msm for a marketing strategy meeting.

Gary Takacs: And my second recommendation is—if you’d like very specific coaching to help evolve your office to get some of that discretionary spending—set up a coaching strategy meeting with me. Go to thrivingdentist.com/csm—stands for Coaching Strategy Meeting. I’ll meet with you one-on-one, and we’ll talk about what your future could be.

Well, this has been fun, Naren. Thanks for digging up that stat and suggesting this topic. I think it was a great one.

I want to close by thanking all of our listeners for the privilege of their time. Naren and I look forward to connecting with you on the next Less Insurance Dependence podcast.