We are joined again by Matt Huey, PT, MPT, Dip MDT, CCI, CMTPT — today on a concerning trend in the profession of MLMs, otherwise known as pyramid selling, network marketing, referral marketing, and affiliate programs — not that all titled as such is automatically a scheme, it’s good to be aware and to be discerning. You can connect with Matt on Linked In, Instagram, and Twitter.
There has been an interesting trend creeping into the healthcare world. It has nothing to do with insurance companies or patients, but with providers being tricked. They are not being tricked by their employers but instead by other providers. With changes coming from insurance companies in terms of decreased payments and employers pushing productivity standards, many providers feel burned out. These providers start looking for jobs elsewhere and may become desperate for another source of revenue. That is when a salesperson with a multi-level marketing company (MLM) may step in, stating you can work on your own terms and make the same amount or even more money. You may think this could not be true, but sadly it is.
There are several social media groups dedicated to providing information on healthcare providers finding either jobs or sources of income from places other than a job directly in healthcare. Some are great resources to connect to others in different fields or gain information on how to do it, but others are places where these MLM’s lurk and the administrators do nothing to control it. How could healthcare providers fall for this? They are highly educated and smart so why don’t they just see right through it? Unfortunately, the tactics used are sneaky and the providers are desperate.
Let us first give a little background to what an MLM company does. These companies sell a good or service, but the sale of these goods or services come from non-salaried people doing the selling. The compensation many times comes from two streams – one is commission from the actual sale of the product or service, and the other comes from commissions from individuals those sellers have recruited. The company will not only push the salespeople to sell the product but also recruit people under them as to generate more revenue (usually called a downline). So the higher you are in the hierarchy the more money you get from the people under you.
Some of the things that you are not told before you sign up are that there is an upfront cost. This is either a joining fee or you having to purchase the products that you must sell. These fees can be recurring monthly or yearly but they sometimes are waived if you recruit a certain number of people per month. You can also get roped into long term contracts that can be nearly impossible to get out of.
So why do providers fall for this? In these social media groups, there are a large number of people who are unhappy with their current job and want something else. They are in a vulnerable spot and do not feel they can get out. Once you start working life catches up with you. You have expenses every month that are not going away and are the driving force to why someone goes to a job they despise every day. While it can be hard to deal with the headache of a job, it is far scarier to be without any income and debt collectors start calling.
Secondly the person that starts selling you on this company is a provider as well. They tell you, “I was in the same situation just six months ago. I was at a job I hated then I found X company. Now doing this I have a steady stream of money that pays my student loans (or insert some common expenses) and I’m able to set the money I was spending on my loans for a trip I have always dreamed of.” They project themselves onto you and you picture yourself as them. You are are unhappy (like them), you are in a job you hate (like them) and if you sign up with this company, you can make money just like them! This person is usually pretty charming and is a smooth talker. Bonus points if you can find their social media page they use for their sales business and it has pictures of them in flashy clothes or on grand vacations. Additional points if they are holding a large wad of money.
I have seen many of these over the years so recognizing them is fairly easy. Here are some ways to tell.
Sales Pitch
When you meet this person, they are going to ask you if they can show you their business. In the past, this pitch would occur at a hotel conference room or even at someone’s home. With technology, they can bring the sales pitch to you in your home via a webinar. You get the offer to schedule this webinar on your time. It is easier and more convenient for you so there is a smaller chance you will say no because you cannot attend a talk on their time.
They all start out the same, no matter what the product or service might be. They talk about how this business started,how great the product/service is and how so many people will benefit from it. The presentation is pretty elaborate and streamlined because you will not buy from someone who stumbles over words or if the product does not look good. The talk will go on quite a while so you are not able to really interject at any point.
A normal business may give you a “sales pitch” if you are being recruited. Companies want to show potential employees how great the are to work for so they will sell you on the company. I have not heard of many companies doing webinars to recruit new employees unless the potential employee lives too far away. Even then, the company will usually do whatever they can to bring the employee on site.
Cost
After the sales pitch about how great the company is to work with, they will put the cost in there. You have already sat through this and know it is most likely coming. Many MLM’s have an upfront membership or joining fee. Some even have different levels of membership in the company. This fee can sometimes be yearly or a monthly fee with a stipulation that it can be waived if you sign up a certain number of people each month. You can get hit with another set of costs due to purchasing the start up kit. The kit can include the products you are intended to sell or if it is a service, some sales/coach training that the company wants you to complete. If you sign up with this company you may end up paying several hundreds, if not thousands, of dollars.
An argument that is made is that, as a physical therapist, I am already spending money on my license and continuing education every year. That is true; to maintain your license, you do spend money on continuing education courses and to your state board for renewal fees. Having a license means that you have the required training, knowledge and experience to work in the field. Many licensing boards require that you perform continuing education coursework to keep your knowledge and skills current. Both of these are at a cost; however, I can take these with me to another job. With my license, I can leave my employer and work for another employer within my state. Likewise, the knowledge and/or certifications that I gain from continuing education coursework go with me as well. For example, having a certification in vestibular rehabilitation would look much better to an employer compared to sales training with XYZ company, unless you are looking at applying for a sales position.
Contracts
Many MLMs have you sign contracts with them prior to starting. This binds you to make a certain number of sales per month or pay them a certain amount per month. They can be pretty confusing and very hard to get out of. If you get into selling a product but find after a few months that it is going nowhere – and you are just losing money. You can be stuck with a house full of the product and no way to get them to stop. Read through that contract carefully if you are going to proceed.
Company Focus
A reputable company has the focus of getting their product or service to as many potential customers as possible. They believe they have a great product or service and it will provide a benefit to anyone who uses it. An MLM company can go one of two ways. A good one will want you to sell their product or service. There is just the focus on getting it out there. One that is more shady will instead have you focus on signing up more people. This ultimately cannot continue indefinitely because you will run out of people. But for the short term they are making money just from the sign up fees.
Legality
This can be a hazy area because practice acts vary state to state. You are always whatever your profession happens to be, so if you are a physical therapist, you are always wearing that physical therapist hat. If you are a nurse, you are always wearing your nurse hat. So be aware of what you are promoting with an MLM company. Make sure to review your state’s practice act for your profession to determine if there is any possible conflict. For example, if your state’s practice act limits the ability of your profession in giving nutritional advice or designing diets, then you may want to avoid promoting selling supplements or specific diet plans. Even if the company falls outside of the medical or healthcare realm still be aware of how your state’s practice act defines what you can and cannot do.
Patient’s Best Interest
Ultimately this needs to be in the forefront of your mind. It is one thing to sell to your friends and family, but attempting to sell to your patients is quite another. Put yourself into your patient’s shoes. Would you want someone, who you came to see and get you out of pain, then give you a sales pitch on a product you have no interest in? They may think “oh they are selling that stuff? I bet they will just keep bringing it up each time I come” and refuse to come back. They can also tell their physician about what you are doing. Physicians can get protective of their patients just as we do, and not want to send anyone else to someone who will just bombard them with something they would not want to buy.
Your employer can also be upset with this. When you are on the clock for them, you are expected to complete your job duties. Management does not want time lost to other endeavors the company will not benefit from. This could result in being reprimanded or terminated, depending on the rules of the company.
At the end of the day, the decision to join in with a MLM company is entirely up to you. If you are considering it, make sure you do not rush into the decision no matter how much the salesperson tries to pressure you. Do your research and be honest about what you believe will be the outcome of joining. If you believe that you will lose money or it will affect your career, then it would be best to decline the offer. But if you feel that you will gain some experience in sales and can leave the company without much hassle, it could be worth it. Make sure in the end that you consider all aspects of taking on this new venture.
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Comments
It would be the best if you called these groups out by name, vs. just giving rules to read. Most folks are going to look at this as “TLDR” and skip over something that is extremely valuable. Just a tip from someone who sent me this and then I had the “TLDR” reaction…
Thank you for this post as it is true that MLM but there are companies out there that do provide quality products and are solutions to many issues patients experience. It’s no different than going for a facial and really liking the product used, then buying it there. It’s convenient and if the esthetician gets a commission, great! I feel like it’s unfair that health care providers are not allowed to make income while pharmaceutical companies are making billions selling to physicians to prescribe to their patients. These prescriptions , i.e. opiates used for pain management have actually killed 300,000 people nationwide and has become an epidemic. Where is the outrage in scam there?
I say this only because I’ve experienced benefits from MLM products as a consumer and wanted to share with my patients but didn’t because I’m a provider. Sadly, knowing how effective these products were, I didn’t mention out of fear that it would be considered unethical. How is that ethical, knowing there is another healthier alternative but not sharing with the patient just because the product happens to be part of a MLM company? Yet, prescription drugs that cause dangerous side effects are considered ethical? Why can’t patients, as consumers have an option “prescribed” from their doctor and allow them to make the decision?
In my opinion, it’s not unethical if it is a product that is actually helping your patient. And why can’t the doctor make an extra income? My thought against this is there is already a shortage of health care providers and if they were offering healthy alternatives, they wouldn’t see as many patients and Big Pharma wouldn’t be making as much money. I see MLM as a blessing but ONLY if the compensation plan is fair, product is backed up by solid research and effective treatment.
I agree with your points about being cautious with “MLM schemes”, but I’m also glad to have well-studied alternatives to prescription meds available through some reputable companies. I have researched and used several effective products over the years. Like Kate (above), I also haven’t sold them to my patients because of the potential for conflict of interest. However, the studies showing their effectiveness and safety when compared with prescription drugs have me question the commitments and ethics of the external forces (like the pharmaceutical industry) influencing our Healthcare providers and system. But that’s a different conversation. Thanks for your thought-provoking post.