Dr. Howard Farran and Jazz Imaging’s
Rick Henriksen discuss a new subscription
model for intraoral sensors
Dentaltown founder Dr. Howard Farran has known Rick Henriksen, Jazz Imaging’s vice president of sales and marketing (pictured left), for more than 20 years, and has followed his leadership as the decades passed. In the 1990s, Henriksen joined Dexis and established its model as a new standard in best practices; in 2005, he led the team through the sale of the company to Danaher, then took on leadership of Gendex and Imaging Sciences (iCat), building the No. 1 imaging business in the world.
In 2017, Henriksen joined Jazz Imaging, a dental disruptor that offers its Solo sensor not just for sale but also via an innovative “Jazz Club” subscription service that eliminates high upfront costs and offers its members the sensor with all-inclusive lifetime, no-deductible warranty support and software upgrades.
“We make this kind of a no-brainer,” says Henriksen, who joined a recent Dentistry Uncensored with Howard Farran podcast. “Why would you spend $10,000 when you could spend $2,000, and if you’ve got to pay for a warranty anyway, why not just have it on a subscription and not worry about it?”
An edited excerpt of their conversation follows.
Rick Henriksen: We launched [Jazz Imaging] about 2½ years ago. The sensor market had been pretty stale for a long time—digital X-ray technology has been around since the late 1980s, and the price point has hovered in that $8,000–$10,000 range for 20, 25 years even as the technology itself has been largely homogenized. The market’s changed, but the digital X-ray space has all but stayed the same.
I left Danaher in 2010 to try some other startup opportunities. Fairchild Imaging was actually the founder of digital radiography technology—it invented the first Trophy sensor back in the late ’80s, it made the Sirona sensor, the Dexis Classic and Dexis Platinum and Gendex sensors. [Fairchild] had been around a long time, making sensors for dentistry as well as imaging devices for deep-space impact, like the Hubble telescope. That business sold in 2012 and we had some unique patents on the Dexis sensor at the time, which began to expire in 2014. Todd Miller, who was the project manager at Fairchild at the time, was tracking these patents and had a great idea about a subscription option for sensor replacement or additional sensors.
Over the next several years, they began to develop a next-generation Dexis, with things like single-size rounded corners, angled cable—all things that made the product great—and did a few things to improve on it, such as about 10% more active area. But the big deal was a subscription model, so instead of paying $10,000 for a sensor, plus warranties every year, it’s $1,999 and a subscription [with no minimum contract limits]—we send you the sensor and everything you need to get going. We’ve changed the economic model with the return back to an operating expense, versus that big capital expense.
Dr. Howard Farran: What would you say the median cost is for other sensors?
RH: Between the three primary players—Dexis, Schick and Carestream—the median is about $8,500. When we were doing cost analysis and market mapping before getting into this new business, it was crazy to see how close they had all hovered around that protected price.
HF: Those three companies probably make up 80% of the U.S. X-ray market. Where did you get the cojones to compete with the biggest 400-pound gorillas in all of dentistry?
RH: The vast majority of the dental market—85%—uses digital X-rays of some shape or form. They paid $20,000–$30,000 to get their system installed, then they paid for warranties for several years that were $1,500–$2,500 a year, but they didn’t need replacements, they didn’t get software updates and they never called support, so they asked themselves, “Why am I paying all this money?” Then the sensor fails after they’ve dropped the warranty, and they realize why they paid the money—because now they’re looking at another $8,000–$10,000 bill. This model is prevalent throughout the market, so they’re frustrated by the money they’re spending. They know that the parts to this sensor cost $1,000, not $10, and the markup may be exorbitant.
We know how to make sensors and we don’t have to ship out all that work—we do it all in-house in San Jose, California—so we knew we could construct a model that didn’t have those layers of cost. … We don’t have huge operating and overhead expenses, which gives us the ability to price down.
The idea behind the subscription is that the idea of sensor ownership is an illusion. I’ll get into this discussion often with doctors who want to talk about whether this arrangement is a lease. I tell them, “I get it, I like to buy my cars—the difference is, when I’m done paying for my car and my extended warranties come to an end, if something fails with the car, I can have someone get it fixed for a relatively inexpensive price.” That’s not the case with digital X-ray sensors: Once they’re dead, they’re dead.
Across the industry, dental offices are starting to realize, “I’d much prefer a low investment and I never have to worry about sensors again.” It’s kind of like when you bought film: You didn’t know how much you bought, but you knew it had to have it, and it was a consumable with a per-patient kind of cost.
Now, instead of your capital expenditure dollars going toward sensors, why not spend them on real capital expense items and let us handle your sensors? We plug right into every major software—we know dental offices don’t want to change their software—so you could literally call us up, give us $1,999 and we send you the sensor, the key software, we log in, we do all the installation and calibration so you maximize your image quality.
We make this kind of a no-brainer: Why would you spend $10,000 when you could spend $2,000, and if you’ve got to pay for a warranty anyway, why not just have it on a subscription and not worry about it?
HF: Wall Street is just in love with subscription models. I mean, they were valuing Netflix the same as Disney just because it had that guaranteed monthly subscription; now Amazon does it yearly. So, there’s a $1,999 one-time setup fee—then how much a month?
RH: It’s $139 a month. During that term, they get phone support, updates, and sensors replaced if they fail. There’s no deductible or additional warranty fee, because they’re on a subscription, so at the end of the subscription if they’re not into it, they can send it back and move on—they’re not into it for $20,000, so it doesn’t feel that painful if something else game-changing presents itself. And if they want to stay on the subscription, they simply continue the automatic payments.
We’ve solved a couple of issues. One, offices are tired of spending that kind of money on sensors. We have some practices with sensors calling us now, saying, “Should I keep my warranty, or should I just wait and call you when it dies?” But often, the cost of the warranty alone on many sensors is more than setting up a new one from us.
Another involves the importance of expanding chairs to open up space for new patients. If you’ve got three hygienists and two doctors but only two sensors, someone’s always going to be waiting—and it’s a silly wait, because it’s only $139 a month to take the wait off the table. No more waiting 5–10 minutes to get your hands on the only sensor. Adding just a little more technology makes that workflow smoother.
HF: Talk about the diagnostic quality of your images.
RH: The best evidence is when we plug it in side by side with the sensor that a dentist already has. One of the ways that we’ve helped eliminate this concern—you know as well as I do that if I’m on a trade show floor and I’m looking at X-rays, I’m looking at the best X-rays they’ve ever taken—is by providing a 100% money-back performance guarantee [for 30 days]. Just sign up, let us ship you one, we’ll plug it in, you’ll see for yourself. Use it for two weeks: If you love it, you keep it, and if you don’t, I give you all your money back and you’re out nothing