Looking for books to read that will not only keep your reading habit alive, but also educate you in a host of different, essential skills? This is the right place for you! Host, Nathan Shields, talk about some important books that have influenced the Physical Therapy Owners Club for the better. A good leader is a leader that keeps their mind open, and one of the most productive ways to keep the mind alive is to read. Check out these helpful and empowering titles today!
To start off the New Year, I want to look back at some of the more influential books of the Physical Therapy Owner's Club from 2019. Back in 2018, I mentioned a number of books and reviewed those, but I wanted to get into some of the books that were influential to me in 2019 and at least share those with you. Some of those were references back to books that I'd mentioned before and reread, but there are plenty of new ones as well. The books that I reviewed in 2018 included Good To Great by Jim Collins, The E-Myth Revisited, Michael Gerber, Think and Grow Rich Napoleon Hill, Mastering the Rockefeller Habits and Scaling Up by Verne Harnish, Rich Dad Poor Dad by Robert Kiyosaki and The 7 Habits Of Highly Successful People by Stephen R. Covey, some of the more basic fundamental small business or entrepreneurial books out there. If you haven't read them, I highly recommend it.
Some of those I reread including Rich Dad Poor Dad reference back to that again, including The Cash Quadrant by Robert Kiyosaki. I reread E-Myth Revisited. I also re-read parts of The 4-Hour Workweek by Tim Ferriss. Some of the newer books that I've read and I wanted to talk a little bit about included Building a StoryBrand by Donald Miller, The Coaching Habit by Michael Bungay Stanier, Change Your Questions, Change Your Life by Marilee Adams. A book that I got halfway through, I didn't completely finish was Profit First by Mike Michalowicz.
To review some of the newer ones, I'll start with Building a StoryBrand because this was influential to me as I've started my coaching business and wanted to build out on my brand. Building a StoryBrand by Donald Miller is all about building your brand and also developing the marketing content in order to engage and attract more customers. It starts with laying out what Donald Miller considers the essence or the elements of any successful story. In doing so, it takes you along the path of developing your brand and creating the most engaging marketing content.
Donald Miller spells it out like this. Every story in a nutshell essentially has a character who wants something and encounters a problem before they can get it. There are two parts right there, the character and the problem. At the peak of their despair, a guide steps into their lives, step number three, gives them a plan, step number four and calls them to action, number five. That action helps them avoid failure and ends in success, the sixth and seventh elements. There's a seven-step process, not only to any successful story but also to our marketing.
Following the sequence is what keeps the audience, namely our customers engaged and wants to reach out and buy. This is how we should market to our customers. This is how Building A StoryBrand flipped in my perspective. Unfortunately, as PTs, we sometimes see ourselves as the saviors, the heroes or the main characters in the story when we go about developing our marketing content. We ride in our white horse. We heal everybody that we touch on and we’re the hero.
We aren't the hero. We could be but consider this, our marketing typically demonstrates that we are the best, that we have the best. We only use PTs. We have all the letters behind our names. We have the newest treatments and that we will essentially save you. Our best marketing efforts shouldn't put us as the hero. The way Donald Miller puts it exactly on page 30, and this is what flipped my perspective and this hit me with a ton of bricks, is that the customer is the hero of the story, not your brand.
When we position our customer as the hero and ourselves as the guide, we will be recognized as a trusted resource to help them overcome their challenges. Our best marketing efforts should not put us as the hero. What the patients want is the guide to help them overcome their problems and they are the hero of their own story. They want to know what we have to offer, where we're located, etc., but our marketing content should set us up as the guide to help them overcome their problems and lead them to success or avoid failure.
As I went through the Building A Storybrand process myself and the cool thing about is they have this free online worksheet to help you work out your content after each chapter that you read. I developed my messaging for my coaching and podcast website going through the process changed my focus. A lot of it was focused on stability and freedom. If you’ve listened to my intros in the past, now I’m more focused on freedom and profits. I'm hoping that resonates, but it also simply changed how I look at my content to ensure that I'm setting myself up as the guide and not necessarily the hero.
The next book that I got a lot from is called The Coaching Habit by Michael Bungay Stanier. As I'm setting myself up as a business coach, I found this to be super helpful. I found this in my own practice, as we built bigger and bigger teams, we find ourselves doing more and more coaching to help our teammates achieve their goals or simply to hold them accountable and walk them through issues that they have. I wasn't treating patients all the time and I wasn't simply developing policies and procedures all the time. There were a lot of times where it needed one-on-one meetings. Since we aren't typically trained to be coaches and counselors, it can put us in an uncomfortable position or at least put us in a place of uncertainty as to how to proceed without it becoming a therapy session and not the physical therapy kind.
The Coaching Habit lays out seven standard questions to follow. If you use the first three over and over again, you'd get the desired effect and they allude to that. It helps you develop good coaching or listening habits in order to make your meetings more beneficial for your colleagues and sets you up as a leader. I'll go through a few of these, not all seven, but I'll go through the first three because they're the most important and then I’ll share a little bit after that.Develop good coaching and listening habits to make meetings more beneficial for your teammates. Click To Tweet
The first question in some of these meetings should be essentially this, “What's on your mind?” This question alone opens up things for the person to discuss those things that are most important to them at that time. It is focused as if to say, “What matters most to you at this time?” Question number one, “What's on your mind?” Question number two, “What else?” We all have the tendency after they come up with their issues after question number one to give advice especially if we have the answer. The whole purpose behind coaching is not to necessarily give advice all the time and have all the answers. It's to help them come up with their own solutions.
The second question, “What else?” keeps you from jumping in too quickly to the point where we may be giving solutions when we aren't even certain of what the problem is. What else helps us stay curious and buys time to consider what's going on and also helps us dive a little bit deeper into what else might be going on in their lives that's leading to any of the issues that they have. The second question also leads then to question number three, “What's the real challenge here for you?” This helps the person and informs you what's going on. You may have a good idea, but until they verbalize what's going on and maybe with the help of some clarifying questions, you can't be certain what their true issue is.
This question helps them get to the heart of the problem so you can help them. I've been trained in variations of these questions in the past, in some of my trainings, and I've even mentioned this on social media, a simple meeting could consist of three questions, “What are you working on right now? What do you need from me? This is what I need from you.” These first three questions are somewhat like that. In fact, I would add one more question to it. If you're going to do an abbreviated coaching session, and this is question number five on their list, “What do you want from me?” “What's on your mind? What else? What's the real challenge for you? What do you want from me?” It’s going to be a super powerful question for both people in the room.
The person has a chance to put towards exactly what they want or need and overcome their issue. Verbalizing it, and you as a leader can become very clear about what you can do to help them if you can help them or not. It keeps the colleague in a position of power to overcome any of the problems that they have and puts you in a position of trusted support and guide without taking their problems upon yourself personally. There are a number of other tips in the book that help you develop the habits of a coach such as listening, being okay with silence and how to avoid the use of why questions. The Coaching Habit is huge especially as you becoming a leader of your team.Your business will work according to what you demand from it. Click To Tweet
The next book that was helpful to me was Change Your Questions, Change Your Life. I'm not going to get into it too much like I did the previous two books here. A lot of what this book revolved around was what's called the choice map. The choice map shows two paths that we can take whenever we encounter any task challenge or circumstance, one path leading to positive responses and interactions called the learner path and the other one leading to negative responses in interactions called the judger path.
When we find ourselves on the judger path, we end up looking for fault, blame and others or even talking negatively about ourselves in a win-lose scenario, typically emotionally-based. When we follow the learner path, we continue to stay curious about our reactions almost stepping out of ourselves to look at what's going on both within us and within the situation itself. On the learner path, we question our assumptions. We consider the facts and the history and consider what's best for others in order to get a win-win scenario compared to the win-lose scenario on the judger path. This path tends to be more logic-based and searching what is best for you and the person that you're working with.
Considering the rollercoaster of business and the emotions that you go through as a small business owner, it's good to step back and avoid being judgmental all the time and rather consider the facts and avoid immediate judgment. I noticed this in a couple of clients, especially during the holiday seasons, when they have less busy weeks or even months and these things inevitably happen. It's in those times it's easy to go to thoughts of doom and gloom or looking for someone or something to blame. I had it all the time when I was a younger owner because in Arizona, the summer months were always our “slow season.” It takes a lot of effort to be positive and not think, “This is the end of my career. I'm going to lose my businesses,” and go to doom and gloom.
It's in those situations that take a lot of effort to lift our heads up, figuratively speaking and show, “You've done some awesome things in the past year. Not everything is horrible. You've doubled your revenues this past year. You've gotten through the slow season at least 4 to 5 times in the history of your clinic without any problems,” or “You met your year-end goals within 6 to 8 months, you should be celebrating. You have some issues and we do need to develop a plan to turn this temporary blip around, but you've got a lot of things to congratulate yourself for.” Changing the questions that you have helps you change your perspective and move forward in a positive direction. Changing from, “Who's to blame? Who's at fault? What's wrong with me?” to “What can I learn here? What are the real facts? What's the best thing I can do now?” That will set us up for better responses and more positive interactions within our clinics and amongst our teams going forward.The bigger and bigger your team is, the more you find yourself coaching your teammates. Click To Tweet
The book that I started reading and didn't finish admittedly, but I think it's worth noting because it falls along the lines of what I have shared with you from Christopher Music and Eric Miller in previous podcasts and it's called Profit First by Mike Michalowicz. Setting aside your profit first as an expense line, which will set you and your business up for success, financial success in the long run. It's counterintuitive because we always consider we have all these expenses and whatever's left over is profit and I get paid. Profit First flips that on its ear and the guys from Econologics say the same thing. They contend that if you put you in your household first, as the most important vendor to your business and pay yourself first, pay your profit first, your business will do whatever it needs to ensure that number one is being satisfied and all the other expenses are being paid.
From a bigger picture, your business will work according to what you demand of it. If you demand your business to generate a profit and pay all its expenses, that's what you'll get. If you demand that your business grows in size and revenue, that's what you'll get. If you want to “meet expenses,” that's what you'll get. If you demand greater freedom from full-time treating patients all day in order to work on your business, while you can do it, that's what you'll get if that's how you prioritize things and that's what you demand of it. Profit First is a great mindset creator for those who aren't sure how to attain and maintain a solid profit from their businesses. If I had followed these principles, I would be hundreds of thousands of dollars ahead of where I am now. I’m not complaining, just saying a great financial advice there.
Some of the books that I referenced back to, reread parts of them included The 4-Hour Workweek by Timothy Ferriss. Three things that struck me in particular, the laziness of being busy, Parkinson's Law and the magic of virtual assistants. Let's get to the laziness of being busy part. I was within a few pages as I was reading this in bed, I had to put the book down and take a deep breath because I felt like he was talking specifically to me. On page 75, Tim says, “Slow down and remember this. Most things make no difference. Being busy is a form of laziness, lazy thinking and indiscriminate action. Being overwhelmed is often as unproductive as doing nothing and is far more unpleasant. Being selective, doing less is the path of the productive.”
Isn't that weird, doing less is the path of the productive? He goes on to say, “Focus on the important few and ignore the rest.” Tim Ferriss, by the way, is a huge proponent of the 80/20 principle that 20% of your efforts gets 80% of your results. The key to not feeling rushed is remembering that lack of time is lack of priorities. That was a huge blow to me. I find purpose in staying busy that I'm constantly being productive and when some of the things I'm doing aren't as productive at all if you compare them against my true personal and professional goals. For example, I spent a few hours cleaning out the garage, but should I be cleaning up the garage for hours at time when I could have been taking my kids to the trampoline park? Instead they were watching TV, maybe playing video games. It would have been more productive long-term to me to have more time with my kids. In my world, yes, my busyness created a situation where I focused more on the task than my children. That, in Tim's words, is lazy.
To talk about Parkinson's Law, if you haven't heard of him before, he describes it like this. “Parkinson's Law dictates that a task will swell in perceived importance and complexity in relation to the time allotted for its completion. It is the magic of the imminent deadline. If I give you 24 hours to complete a project, the time pressure forces you to focus on execution and you have no choice but to do only the bare essentials. If I give you a week to complete the task, it's six days of making a mountain out of a molehill. If I give you two months, heaven forbid, it becomes a mental monster. The end product of the shorter deadline is almost inevitably of equal or higher quality due to greater focus.”
There are two things he recommends that are synergistic approaches for increasing productivity. Number one, limit the tasks to only those that are important in order to shorten the work time or number two, shorten your work time to limit the tasks to which those are important. Ideally he says this, “Identify the few critical tasks that contribute most to income and schedule them with very short and very clear deadlines.”
Another way to consider this, and I listened to Tim Ferriss podcast with Gary Keller of Keller Williams. He has also written the book, The One Thing, which I highly recommend. This is Gary Keller talking, “What tasks can you do now such that by doing it, it makes everything else easier or completely unnecessary?” That question alone can help you prioritize them and focus on that thing that is most important for you at any given time. Lastly, the third thing I wanted to mention from The 4-Hour Workweek is that Tim hales the virtues of having a virtual assistant. This was a book written many years ago, but I have two PT owner clients who are using virtual assistants to complete tasks such as creating marketing materials, marketing content, creating Excel spreadsheets, making phone calls to various vendors. Both owners swear by and love their VAs.
There are many categories of payment that you can have with a VA, whether you want to use them ten hours a week, twenty hours a week or even full-time. Both of my clients I believe are using their VAs 10 to 20 hours per week and give them tasks every week to complete rather often. When their per-hour rate comes in at around $10 an hour with no benefits and no HR headaches, the value is immense. Both of them live and die by their VAs. One of the owners in my peer-to-peer PT mastermind group was complaining about creating a spreadsheet for marketing purposes. He was going to have to manually create this Excel spreadsheet with a ton of cut and pasting on data that he was going to generate from his EMR.
He recognized that it was going to be a waste of his time and not too excited about it, but something that he wanted to get. One of the other owners, my friend who has a VA, offered their usage instead. It would probably take her about 2 to 3 hours to complete. My friend jumped at the offer and $40 and a couple of days later, he had this spreadsheet that he needed without taking out his personal time and it's significantly less cost. If you have tasks that aren't getting done, whether it's personal or professional, include your personal stuff in there or content that you don't want to generate, VAs can be an amazing solution to your problems.
Make a list of your personal professional things that you would have a VA do for you and make it HIPAA compliant, your work with them. Consider throwing everything at them for a month or two trial period and see what you think. My business partner, Will Humphreys, use the VA a number of years ago to do some of his personal stuff and absolutely loved it. He said it was great. He was able to have his VA find great birthday gifts for his wife and also set up a vacation for him and his family. It's things like that where we consider how a VA can help us loosen up our time.
The last book I wanted to reference, and I hope I haven't taken too much time and I hope this is worth it for you. I want to reference back to Rich Dad, Poor Dad and his Cash Quadrant. If you haven't read Rich Dad, Poor Dad or Cash Quadrant, the book is square with four boxes within it. In the top left box is E for Employee and the box below is S for Self-employed, the top right box is Business Owner and the bottom right is Investors. Consider where you land in this quadrant. If I were to ask you, “Who here is a business owner?” A lot of us would raise our hands and say, “I'm a business owner. Put me in that box, the business owner, that's me.” Let me explain to you the definitions of what an employer, employee, self-employed, business owner, investor is and maybe you would reconsider.
An employee is someone who is getting taxed by the government up to 50%. You're a partner with the government. You're an employee of somebody else. You don't have any stake in the business necessarily. You simply exchange hours for money. Self-employed means you own your business, but the business is solely dependent upon you. If you're not there, the business goes down. That's it. A business owner is someone who owns a business, but they have the systems and the people in place to run without them for up to a year and still function. That's Robert Kiyosaki's definition of a business owner. An investor is someone who is financially intelligent enough to take calculated risks that pay off well and do so with other people's money. If I were to ask the question again, “Are you a business owner?” Consider where you are in your business, maybe you're more of an employee or self-employed.
Robert Kiyosaki breaks it off into two-halves. The left side of that box means that you have some security, but you're also under some bondage to the business. The right half of that box represents where the rich and the wealthy live and have significantly more freedom obviously. The important thing is to know where you are within the box and also what it takes to get to the next level or to move up from employee or self-employed over to business owner, and what it takes to go from business owner to investor. Essentially the one goal for any self-employed person to move from the left side of the box to the right side of the box, which means being a business owner is to develop traditional systems and build your business over time with policies and procedures for the different departments. That's exactly what it takes to gain the freedom and profits that I'm talking about. He even goes on to mention that in order to make this move, it requires typically either an MBA or mentor of some kind to help you develop these policies and procedures, but pays off in terms of freedom and profits like I mentioned.
That's my breakdown of the most influential books of 2019 for the Physical Therapy Owner's Club. If I was to make a shout-out to any other books out there, I started getting into Traction. It’s a great book, but I haven't completed it yet. I'm on my way to finishing that one. Also, a small book called As A Man Thinketh by James Allen. Both have been cool to read and consider the theories that they are espousing, but they're going to be huge to my continued development through the year 2020. If you have any recommendations for books that you would like me to read, or if you have any questions on books that you'd like to read, feel free to reach out to me at Nathan@PTOClub.com. I'd be happy to engage with you. I look forward to this next year of 2020 where we can continue to be a resource for you to earn a greater firm and more profits out of your PT business. Thanks for following along with me. I look forward to a great 2020 together.
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The Private Practice Section of the APTA established the Peer2Peer (P2P) Network a few years ago and since then has provided a great opportunity for PT owners to collaborate with fellow PT owners and discuss how to improve their businesses. In this episode, Nathan Shields interviews Randy Roesch, PT, owner of Business Solutions Consulting Company, and Steve Anderson, PT, Executive Coach for Orange Dot Coaching. They are also current facilitators for P2P. Both have personally benefited from networking during the course of their careers, making them a great resource about the benefits of networking and what P2P has to offer. Nathan then also highlights his mantra for successful business ownership, which is Reach Out - Step Out - Network.
We are going to talk about networking. I've got Randy Roesch and Steve Anderson, both physical therapists and facilitators for the Peer2Peer Network in the PPS section of the APTA. If you don't know much about it, I highly recommend you look into it and possibly apply because the application process is closing during the month of January to join the network. I specifically want to talk about not only the network but also the importance of networking, whether it's the Peer2Peer Network or Entrepreneurs’ Organization, Vistage or BNI to name of the few networks that are out there on the country. Networking has provided to the people in my network, the benefits of growth and accountability. I'm sure there's more to it than that. The Mastermind concepts have been around a long time and seem to be initially labeled by Napoleon Hill in Think and Grow Rich. In terms of growth, usually what I find is that the benefit that leads to that growth is the fact that you've got multiple minds coming up with solutions to problems, specifically your problems.
You also now have access to resources, people that may have been there and done that or they may know a company that might be able to help you solve that problem. They might have someone in their network that they can refer to you to help you improve or grow. Secondly, the accountability as owners, we don't have anyone holding us accountable other than maybe our spouses, but the health of the business maybe. There is no one to hold us accountable to the goals that we set forth initially. We all know that if we have an accountability buddy, we'll do better when it comes to achieving our goals. That being said, I wanted to highlight The Peer2Peer Network, especially since it pertains specifically to us as PT owners. From a greater perspective, I want to make sure you all understand the importance of networking with whatever network it is. Let's get to the interviews.
I have Randy Roesch and Steve Anderson. They are both facilitators of the Peer2Peer Network in the Private Practice Section of the APTA. I wanted to bring them on because if you've heard my mantra before, it's, “Step out and network.” Not very often we talk about the importance of networking, especially as independent physical therapy owners, but it is huge. First of all, I want to thank you, Randy and Steve, for coming on.
Thanks for having us.
Randy is the Owner of the Business Solutions consulting company but also a doctor and a physical therapist. Steve Anderson is also a doctor of physical therapy. He's a former CEO of Therapeutic Associates on the West Coast and is an Executive Coach for Orange Dot Coaching. They both are working hard on the Peer2Peer Network and they'll share a little bit with us about the details here as we go along. Before we get into the details, I want to learn a little bit about you because you were both successful physical therapists in the past. I want to know a little bit about your path. Randy, do you mind sharing with the audience a little bit about your professional path and what got you to where you are?
I graduated from the Mayo School of Allied Health in 1973. I've been a PT for a long time. It started out, as most of us do, in acute care and decided that I wanted to do something on my own. I was practicing in Florida and the director in a hospital. I talked to the hospital about getting a piece of the action and they said no. I went out and started my own private practice. Over the course of years, I built that company. The name of the company was RehabWorks. Some of you may have heard that name. I think it's still around in some areas. Eventually, I had four partners and we had a company in 26 states. We employed 1,800 therapists at that time. We were in hospitals, nursing homes, school systems and outpatient clinics. It was a wonderful experience.
We finally reached the point where we couldn't continue to grow without some influx of funding. We pulled interest and joined a company called Continental Medical at the time and that company eventually went public. I've been in the corporate world too. It was an interesting experience. I stayed on for four years and then decided that getting back into private practice was what I wanted to do. I joined my husband in his private practice for several years and then started my consulting company. I've been working with PTs in private practice for the past years. It is a fun ride.
Steve, how about you? Tell us a little bit about your path and what got you to where you are.
It's a little bit similar in the sense that I started out as a staff PT. I joined a company that I was impressed with. The name of the company was Therapeutic Associates. I started with that company. In a few years, I became the director of one of the clinics in the company and eventually became the CEO. I was with the same company for 37 years. I was the CEO for 19 years. It's an interesting company because it is a shared ownership company. It's a legacy company. It's owned by physical therapists. When I retired at the end of 2016, I believe there were 50 PT partners. The directors of each of the clinics have ownership. It continues on and it's doing great in the Pacific Northwest. We also have a hospital contract in Southern California that we've had interestingly enough since 1954. I retired at the end of 2016 and I did what has always been my real passion, which is helping leaders become better leaders. I started Orange Dot Coaching. I now do coaching services for executives, NPT and in the business world as well.
Since we're talking a little bit about networking, specifically the Peer2Peer Network. For either of you, did networking play a part in your progression in your professional path?Everybody is willing to share in Private Practice Section. Click To Tweet
It did for me. I was active in the Private Practice Section beginning in the early ‘80s when I started my private practice. It was an amazing experience. I met many wonderful people. The thing that I found in the Private Practice Section was that everybody was willing to share. It was amazing. You would go to these meetings and people would tell you what to do and what all the resources were. It was great. It was one of the reasons that I've stayed active in this section. I wanted to give back because it helped me so much in the development of my company.
For me, I felt like I was on an island when I opened up my own clinic at the younger stages. I thought I had to figure all this out on my own. I felt like it was up to me to figure everything out. Little did I know, once I started networking, that there are other people out there that have already been there, done that and know all the answers or can give you the resources. If I had only tapped into something like that earlier in my career, things would have gone so much smoother. What was your experience, Steve?
The Private Practice Section was great for me too. I've heard her say before and I felt the same way that you go to your first meeting or two and you say, “I've found my people. They understand me and they helped me.” Some of my dearest friendships continue to this day that I found at the Private Practice Section meetings. I love them. My story also goes in the sense that I was part of this big private practice company, Therapeutic Associates. I was elected by the board to become the CEO at 41 years old. I was excited and felt pretty cool about that. The real truth, I was scared to death.
Just like a lot of my clients, I’m overwhelmed with the enormity of the job and to do so networking was extremely important to me. I got a lot of help from friends in the Private Practice Section, but I also found something that we may touch on here a little bit too. I joined a group called Vistage, which is an international group that puts groups of CEOs together and there were 12 to 15 in a group. I did that for seven-and-a-half years. We met on a monthly basis and that was extremely valuable to me. I learned a lot in that period that we're going to talk about, how I learned a lot after that type of setting. A huge proponent of it, I felt that it took me to the level where I needed to be interacting in life in that environment.
That's a great point, Steve, because my business partner and I were part of the Entrepreneurs’ Organization. Much like Vistage, it gives you an opportunity to network, talk with and share issues with people who are outside of the healthcare, specifically the PT industry so that they can maybe challenge some of the perspectives that you have. “Why do you have to do it that way?” They don't come from where we're coming from. Sometimes it's helpful to talk to people outside of the PT industry to look for some of the answers. It gets a little bit different perspective on how things go outside of the industry, what expectations are, what company norms or business norms are. Whether it's a Peer2Peer Network, Vistage, Entrepreneurs’ Organization or BNI or any number of this business that can be hugely helpful in your ability to overcome some of the issues that you're having, but also mingle with other professionals.
The key to that set up or organization, which I know Peer2Peer does as well, is that you need to get to a level of trust and vulnerability with people to get to them to the bottom of things. The way they're set up like that, you can get there because you get to know these people. It's amazing. There were tons of business stuff that came up, but quite frankly, there was some personal stuff that came up too that shocked me at first. When you're running a business and you're working these long hours and doing things, sometimes you have issues at home that you'd like to run by people, “How did you handle this?” If you have that trust and vulnerability, I'm already set into the group, but you can go there and help there as well.
As far as Peer2Peer Network is concerned, Randy, what's the history around Peer2Peer Network? How long has it been going? What got it started?
A couple of people that were on the board, they always laugh about how they were out having a beer one night. Mike Horsfield and Jeff Ostrowski got to talking about how nice it would be if they had a board of directors that they could talk to and they could share problems. They talked about how they could maybe create this group. They thought they came up with this brand new idea that nobody had ever thought of. As Mike says, we realized that the Mastermind concept has been around forever. It started in the early 1900s. That's what it's patterned after is that Mastermind concept. We call it networking on steroids because it's a way for PTs to network with each other and learn from each other. They went to the board of directors of the Private Practice Section. They said, “We'd like to try a couple of pilot groups and if it's successful, then maybe this is something the section would want to offer.”
They had two groups, five people, who were in companies with gross revenues of less than $2 million and five people who were in companies with over $2 million. They started working together on how to better their company. They talk about the problems they had and the things that they had in common that they didn't understand and could help each other with. They loved the experience. They brought that back to the board and said, “How could we make this happen?” They decided to try this Peer2Peer Network. At the point that I joined them, I had been very active in the section as was Steve has for many years. I was very excited about the opportunity to do something like this that would be so beneficial for therapists. We opened it up. During the first year, we had 35 new people join. Now, we have 157 network members and 29 groups.
The groups are made up of 5 to 8 people. As I said, we have this arbitrary cutoff at $2 million. Steve and I interview everybody that's coming into the programs. We get to know them and then we put the groups together. We look at what your strengths and weaknesses are, so if somebody wants to learn more about social media marketing, we might put them in a group with a younger person who's got a lot of experience with that. If someone wants to own a building, we'd put them in with somebody who owns a building. We build and put these groups together. The groups meet on an annual basis face-to-face. We have a summit every year in April. It's a three-day summit and then the rest of the time, they meet on a monthly basis. Usually, video conferencing and then there are tons of emails and texts going back and forth. Most of them have a Dropbox as a way to communicate with documents that they want to share and so on. We're getting amazing feedback from everybody that's in the program. The one thing that I often hear is, “It's the best thing that PPS has ever done. These are the people who saved my practice. They helped me make some of the decisions I needed to make or learn how to move forward. I was stuck.” It's been a great program.
The person who turned me onto Peer2Peer Network, and I didn't know much about it at all, was a friend of mine who owned a clinic up here in Alaska. He said the same thing. He met with a group of about 6 to 7 people. He was having issues with recruiting physical therapists, especially up here in Alaska, how to retain therapists and how to move his clinic forward in different aspects. He grew 85% over the course of one year and attributed a lot of that success to Peer2Peer Network. It sounds like that's not an uncommon success story.
It's really not. As I said, we've had several people who have said that it's made tremendous in their business. The thing that I find interesting and Steve maybe found this Vistage, but what people are saying is a lot of times, especially solo owners didn't have to be accountable to anybody. They had great plans but they weren't accountable. A lot of the stuff, you go to these meetings, you're all these great things, you come back with great ideas and then you get busy and it goes away. This is like having your own little board of directors and you have to go back and talk to and say, “I did that. I didn't do that.” “Why didn't you? What's up?” These people are setting goals and they're holding each other accountable. That's what they say has made a tremendous difference.
Would you agree with that, Steve?
Absolutely. That's what I experienced when I ran a bigger group. We hold each other accountable. I think for the smaller practices that don't have that, it’s a huge benefit. People you know and trust, you don't fool. You don't show up to the meeting and BS them because they'll call you out in a second. Sometimes, as humans, we need that. I would totally agree with Randy on that.
I've recognized the same thing as I've been in some of those groups. It's hard to make excuses for some of the things that you didn't get done and that you had committed to because they'll call you out on it. They'll say, “You can't use you are busy as an excuse. We're all busy. How are you going to prioritize and get things done?” I love that you brought it up, Randy. That accountability piece is huge because who's holding the owner responsible to get things done? If it's an employee, they can huff and puff and maybe they might even leave. It's nice when you don't have to get to that point and someone else out of empathy and an environment of security is providing that ability to hold you accountable. That's huge in the growth of small business owners.
In the groups, we talk about the rules of engagement. The things that people learn and help each other with is that they trust. They have this huge trust. As Steve said, that was important in this group, the commitment to the group. They show up for the meetings. They schedule these monthly meetings and everybody shows up unless there's some kind of emergency. Everybody comes to the summit every year. They work hard on balance sharing so that everybody's talking, sharing and not just one person taking over the group. It's important. We don't have any competitors in the groups. Number one, we have a wide variety. We have people who have been in practice for 30 years and people who have been in practice for three years and they might be in the same group.
We also are very careful that they're from different geographic areas. That vulnerability, you're not to talk about opening a clinic if you know that your competitors sitting there. I'm moving into that area. The confidentiality piece is extremely important and then the ability to play well in the sandbox. We've been fortunate because we've had very good results with the people who have been in the program. Very few people have left. We've had a few people who have left because they sold their practice. One of the criteria is that you're the CEO in your practice and an owner and some people are not able to continue anymore. We've had a few people who have said, “This isn't quite for me. I've gotten all that I could get.” We've had less than 10% attrition. I think that's pretty good.
What are the criteria? I think you've covered a few of them.
It’s a PT or a PTA and you have to be a member of the Private Practice Section. You are the chief executive in the company, which typically is the owner. I think we only have one person who was the CEO and not an owner, but he was the CEO of the business. There's a fee. It's $750 a year and that covers the costs of the summit as well as what we do for the program. It also covers benchmarking. PPS, we developed and started in Peer2Peer Network. Some people have probably heard about benchmarking opportunities through PPS. We have twelve KPIs that we monitor. That's done on an annual basis. We have an outside firm that does all the work. It's all anonymous, but we use it so that you can compare yourselves regionally and nationally to all the benchmarks and the groups use it to extensively compare to each other, “How come your cost per visit is this? Let's talk about how we can make me more like yours.” That's been a huge benefit for the members of Peer2Peer.
That is huge, especially when we don't have the business acumen and the ability to compare some of those finances like, “How much of my gross revenues am I spending on the payroll? What is my cost per visit? What is my average number of visits per new patient?” Those kinds of KPIs you want to compare and see where you're at. Am I below average? Am I above average? It's good to have an idea of what's happening in your clinic compared to the industry. There aren't a lot of benchmarking data out there for physical therapy owners. It is a huge benefit to have that available to us.Solo PT clinic owners do not have to be accountable to anybody. Click To Tweet
We've expanded it now. We've opened it up so that other members of the Private Practice Section can also get into the benchmarking program. I think we are offering 500 slots, but we thought the more the merrier. We can have more information and more data. That's why we opened it up beyond Peer2Peer.
Steve, you're talking to some of these people who are considering joining the network. What are some of the issues that they have that you have to address? What kind of encouragement do you find yourself reiterating to the PA owners that are considering joining the network or any network?
Whenever you're running a business, it doesn't matter the size of it. There are two things that I see. One is being overwhelmed like, “I know I've got so many things to do, but I still have to treat patients. I still need to do this. How am I going to get it all done?” Seeing what others do and how others have handled that is extremely important. The other thing I see in my clients a lot too because I know I have it big-time is what's known as the impostor syndrome. When you're sitting there thinking, “Everybody thinks I know what I'm doing because I have a successful practice and I don't have a clue.” That's a hard thing to deal with. When you're in a group networking like this, there are two things that happened. One is you hear about people in the same boat so you can say, “I'm not weird thinking this.” Secondly, people are going to reassure you that you're not clueless, that you do have some skills and you are successful for a reason. You can build on that and that's what that group brings to you. They say it's lonely at the top and I would totally agree. Sometimes you need people that are very objective and willing to tell you what you need to hear and not just tell you what they think you want you to hear to the organization.
Randy, what are some of the common concerns that they bring up as to why they don't want to join the network?
I don't talk to very many people that don't want to join because my job is to find people who want to join. I would say that some of the people who have decided not to remain, it's been primarily a time issue. They don't feel like they have the time to devote to it. Even though in my mind, it's not a huge time commitment. It's probably a few hours a month for the call and then some emailing back and forth and those kinds of things. I don't know if it’s the true reason why they didn't want to stay with it. To reiterate what Steve was saying, we're finding that a lot of people, no matter what size the practice have a lot of similar problems. They appreciate the opportunity to be able to have someone to talk to about it and learn from other people.
To add to that, I find this with people I do work with as well. Sometimes they said, “I really want to do this, but I don't have the time.” It's a funny thing to say because the reason you do it is so that you can find more time and be better at what you're doing. It's like, “I need to hire somebody, but I'm not going to hire him because I don't have time to train him.” You just need to find the time to bring them on and train them and then help you expand it. The same thing goes with leaders is there's never going to be a good time. There's never going to be, “Now it's exactly the time to do this.” You have to decide, pull the trigger and go.”
I think you have to recognize that and I want to get your feedback on this as well, whether it's networking or something else that you might commonly recommend the PT owners do, but they've got to take the time to put on the owner hat and recognize that they are the leaders, the owners of their company. Sometimes, if they're treating patients full-time, they do not recognize that. They're putting on their owner’s hat sometime around midnight when they've already lost a ton of energy. They're neglecting parts of their business because they're not fully executing in that ownership seat. If you were to go back and talk to yourself or maybe a younger version of yourself that owned a clinic like some of these owners do, what are one or two things that you would highly encourage them to do? What kind of mindset or encouragement would you give to them at this stage if they are treating full-time, not much time to run the business type of situation? I'll start with you first, Steve.
You mentioned earlier when we first started about working on the business and not in the business. We probably all read The E-Myth book and understand what that means. It's one of those things where I find that when you're in small business and you've got all these pressures on, you tend to think very short-term. What I try and tell leaders is that you need long-term strategies so you can kill it for six months, nine months, a year, maybe a couple of years and do well and be profitable. At the end of it, you can't sustain it. A long-term strategy is what can I do to set things up now so that when I am 2, 3, 4, 5 years down the road, I can sustain what I'm doing and continue to grow because otherwise, you're going to hit it. There are only so many hours in a day one person can do and you're going to tap out unless you're preparing for that growth along the way.
What would you share, Randy, in terms of talking to that younger owner?
I think Steve’s spot on. They use the phrase, “We're running our business by the seat of our pants,” and that's how it feels as a PT because we didn't learn any of this stuff in PT school. I think as Steve said, we can work as we all did really hard, but at some point, you got to figure out how you're going to run this business and be able to not be working 80 hours a week and trying to have a life besides your business. Looking ahead and trying to make a plan, you got to start somewhere and you're going to work hard for the first few years. It's important not to neglect thinking about your goal, where you want to take this thing and how are you going to get there and plan it out rather than go day to day and figure that somehow it's going to work.
I love that you shared the long-term aspect because a lot of times we were thinking short-term, how many visits are we getting this week and new patients and not looking long-term as to what we need to grow in terms of company. If someone wants to join the Peer2Peer network, Randy, how did they go about doing it?
We take applications and the application period is open now until mid-January. They go to the PPS website, which is PPSAPTA.org. There's a networking tab right on the main page of the webpage and that's where the Peer2Peer Network lies. Once they go into networking, they'll see Peer2Peer and they'll see the application. There's a list of FAQs in that tab. Steve and I are also available to chat with anybody at any time to talk with them a little bit more about the program and see if they think that it's right for them. We often do that.
Is your contact information on that webpage? Would you be willing to share?
I'm willing to share it, but our contact information is on that webpage so that they can send us an email and then we get back in touch and talk with them, answer their questions and do interview calls with everybody to where I'm in. We want to make sure that they feel it's a fit, that they're going to enjoy the experience. My email address is RRoesch@Ymail.com.
They can reach out now. You said that the application period starts now, but did that start in September or October?
The application period is open all the time but for the class coming up, we're going to have to cut off probably about mid-January. Steve and I interview everybody who's coming into the program. We put the groups together and then we do some group calls before the summit in April. We have a lot of work between January and April. We try to get things tied up by mid to late January. If people are interested, they need to apply as soon as possible.
It only comes around one time a year.
We do a new class and we bring in 50 new people a year. That's 8 to 9 new groups every year. We're continuing to grow at that pace, which is great. We're very excited about it.
The exciting thing this year is the conference is in San Diego, which I'm excited about.
We held it in Alexandria, Virginia, which is where the Private Practice Section headquarters are. We did that for the first four years and we have people from all over the country, like, yourself, from Alaska. We had people asking if we could possibly consider moving it. We said, “That's only fair.” This year we're on the West Coast, in the beautiful San Diego.It's important not to neglect thinking about your goal, where you want to take it, and how you are going to get there. Click To Tweet
That's April 22nd to 24th or something like that.
The meeting starts on Wednesday afternoon. We end at noon on Fridays, so people can get back home for the weekend.
Anything else you want to share, Steve, in regards to the Peer2Peer Network or some of your insight to the audience?
I think we've covered most of it, but it's a wonderful program. I commend the people who came up with it, Mike, Jeff and Randy for driving it for the first few years. It is a top-notch thing in the Private Practice Section. I believe everyone could benefit from it. My advice to you is don't say you don't have the time. Find the time. It's not very expensive. If you take a look at Vistage and some of those other groups, you're spending some pretty big dollars and this is done very economically. I don't think the cost is an issue. You just need to find the time.
Thank you, both, so much for taking the time to join me here. I appreciate it. Thank you so much for sharing your insight and the work that you've done in the past.
Thank you, Nathan.
It has been fun being on the program.
Dr. Roesch began her career as a Physical Therapist, graduating from the Mayo Clinic School of Allied Health in 1973.
She practiced at the Mayo clinic for 6 years and then moved to Sarasota, Florida where she was the Director of Rehabilitation at Blake Memorial Hospital for 4 years.
In 1983, Dr. Roesch opened a private practice outpatient clinic and began providing rehabilitation contract services to local nursing homes, Easter Seals, and the local school system. Over the course of the next 6 years, Dr. Roesch acquired 3 partners and grew her business, known as Rehabworks. Rehabworks employed 1800 therapists, and provided rehab services in outpatient clinics, hospitals, long term care facilities and school systems in 26 states.
Rehabworks was sold to Continental Medical Inc. in 1989. The new company then went public. Dr. Roesch stayed on as Chief Operating Officer for 4 years. In that capacity her primary role was to value and acquire businesses as well as lead the transition team for these new acquisitions.
In 1994, Dr. Roesch started Business Solutions, a consulting company to provide services to therapists in private practice. Today she concentrates her business in the area of succession planning and practice valuation.
Dr. Roesch has been very active in the Physical Therapy profession over the course of her career, including volunteer service with the APTA. She has served on the Board of Directors of the Florida Chapter, the Private Practice Section, and as Director, Secretary and Vice President of the APTA Board of Directors. She served as the Interim Executive Director for the Private Practice Section. She is currently a Trustee and Board Secretary of the Foundation for Physical Therapy Research. She is also the Facilitator/Director of the Private Practice Section Peer2Peer Network program. Dr. Roesch has received our professions’ highest honor being named as a Fellow of the American Physical Therapy Association in 2016.
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How can you further increase the value of your company so you can sell it at the highest price on your terms? In this episode, Nathan Shields welcomes back Eric Miller, the Co-Owner of Econologics Financial Advisors, to talk about money! In fact, he specifically discusses what it takes to increase the value of your clinic. Whether you're looking to sell or not, a clinic that has great value generates greater profits and is running at optimum efficiency or is easier to own. Eric breaks down seven items that you need to address in order to increase your clinic's profit, efficiency, and overall value, including routine work on your business in the specific areas.
I've got a guest returning, one of my favorites and one of my favorite topics, money. I've got Eric Miller of Econologics joining me. If you've read my blog, you know that I'm excited talking about money, but I've done episodes in the past regarding improving the value of your clinic, most notably one with Steve Stalzer of 8150 Advisors. It's a topic worth returning back to because even if you're not looking to sell your clinic anytime in the near future, it's important to run your business as if you are up for sale at any given time. If you are up for sale like selling your house, you're going to make it look as good as possible to get as much out of it as you can. If we run our clinics like that, something that's going to be more valuable on the market is also going to give us something that returns greater profits.
For acting like we are out on the market, it's going to be a business that gives us more money and runs more efficiently because those are the things that buyers want to see. Whether you're in the market to sell your clinic or not, this episode is going to be super valuable for you. Consider some of the fundamental things you need to do in order to increase your value. They are things that we've covered before in the past, but it's worth repeating over and over again because those things that bring us more value also bring us more profits. Let's get to the episode.
I've got Eric Miller of Econologics back on the program. We had so much fun the first time in our discussions a few episodes ago that we decided, “Let's do this again.” I'm always happy to talk about money. Thanks for coming on again, Eric. I appreciate it.
No problem. I love it.
We're not going to talk too much about your backstory. If people want to know where you came from and your history a little bit, they can read the previous episode a few episodes ago. We want to talk about increasing the value of our clinics and what we can do to put ourselves on better footing if we're going to sell. Even if we don't want to sell, how can we improve the bottom line by getting some sound structure and onboard? We're going to go into a number of different things but we want to get things started in that realm. This is something that you guys specifically work with. Why don't you tell us a little bit about what kind of clients you work with at Econologics so that people have an understanding of where you're coming from?
We work primarily with private practice owners. We've set up our business to work with that type of clientele. We focus on two things. The first is to make sure that a practice owner is running his household finances like a business and that they have their attention and emphasis on improving and increasing the value of your business. For most practice owners, that's your biggest investment and that's where all of your cashflow is created. You want to make sure that business is flowing money like a Mississippi and then convert some of those profits to the household to create other income streams along the way. 90% of a practice owner's attention should be on figuring out ways how to scale their business and increase the value of the business.
I love how you stress the importance of 90% of your time focused on this thing because number one, it is the lifeline to the business. It’s not only the lifeline to the business, but the lifeline to their household and the lifeline to their retirement. There was so much riding on it. It's imperative that we spend the time that we need working on the business and not in the business full-time. Let's talk a little bit about what we can do to increase the value of our clinics. Not only will we set us up for a better possible sale price or a better possible exit in the future but also improve our bottom line as we go forward. What are some things we can do?A good systems indicator is when your staff assures that they can handle tasks even without you in the office. Click To Tweet
A couple of things on that, the moment that you start building this practice value, not necessarily for you but for someone else is where it starts to change a little bit. It's a different mindset because you're not building this thing just for me. You're building this thing for a successor, for the employees, for the patients, for the community at large, and you start taking that perspective and that look. It changes the game. As far as trying to increase the value of the business, it's not just a money market value. Value has many different terms. There's time, money, relationship value, accomplishment values, all kinds of things that would make up the value. When you start looking at your business and saying, "What can I do to make sure that this entity that I put much effort into can provide the kind of value that I need? How can I build this not for just my own benefit, but for someone else?" It starts to change the game a little bit.
There are definitely some things that are going to drive value in the business. You want to look at it from the perspective of who's going to buy your practice. What are some of the things that they're going to want to see in order to make sure that you get the highest value possible for that business? I can go through a couple of those. The first thing is that if I'm going to buy a business, I want to make sure that the personnel in that business is well-organized. There's an organizational system in place, there are policies and procedures. There are job descriptions. All these things help the organization run. As a buyer, I'm going to want to see that. People are running around like chickens with their heads cut off. They want to make sure that there's order in that business. The first thing is making sure that you have well-organized personnel.
There’s some value to showing a leadership team so that not all the decision-making is on you. They don’t want to be buying you so much as they want to buy the systems that are in place and maybe the leadership team that’s there.
Think of it from that perspective. If I'm going to go in there, I don't want this business to be dependent on Nate Shields. I want it to be where there's a team there that I can depend upon that will continue the production and the profitability of the business even after the owner is gone.
If the owner is the linchpin and you pull that out, there's too much risk involved and don't know which way it's going to go. Is the team going to continue to progress and grow or are they going to say, “I don't like this buyer, so I'm out?” It's imperative to have that leadership team in place and you mentioned the importance of having the business systems. When I sold my business in 2018, they wanted to see all of my policies and procedures. They wanted to see if we have marketing strategies. They wanted all the HR contracts. They wanted to see everything that we had and the more we could provide, the better. It's almost like the more policy, the more procedure you can provide, the greater security they have in giving up their money.
It's not very exciting to build systems in business either. It's hard. It's a grind. It's like pulling teeth. Sometimes you don't necessarily see the fruits of your labor when you're doing that. It's interesting because it's repetitive, boring actions that you're doing to build these systems and you don't see, "All of a sudden I have this windfall of money now." It doesn't work like that. If you keep at it, if you do build those systems in the business, I'm telling you it will pay off as you know in a higher value for you and more time. The big indicator is this. To know that you have good systems in your practice, if you can walk away for about 60 days and come back and still have the production and the profitability of the business still uptrending, then you've built some pretty good systems in your practice. You’ve got a good leadership team. That's a good indicator.
It's exciting to interview some of these guys that I talked to. The one that comes to mind is Travis Robbins. He's with a group called Next Level Physical Therapy. There are some owners in there that are exactly that way. They work from home most of the time and when they go into the clinic then everyone is like, "Get out of here because you mess things up." You start making changes and giving ideas and we're like, “No, we're doing fine, step away.” That's the position you want to be in as an owner. That's where you have some real value than when you're out to sell. You're talking about value. It's not just the monetary value. Can you imagine the freedom that you have, the accomplishment to get to that point? Your employees are excited to work where they're more empowered to do more and make a change and grow and say, “We did this and it wasn't all the owner that did it all. I can have a little glory to myself." It's those kinds of things that provide some value.
That's when you're wearing your owner hat. That's the second indicator that you build good systems is that when you walk in there, the staff looks at you and says, “What are you doing here? Get out. We got this." That would be good.
That's great if you can do that. That's a position that a lot of owners dream of. There's some freedom there so that if they did want to treat, they could go in and treat a little bit. If they have greater aspirations, that's when you start looking for the next location, the next possible acquisition, or increasing your assets to get different revenue streams. Real estate is always an option. People have different ideas if they're going to want to trademark or patent something. That's when you have that freedom to do that and pursue those other avenues.
It certainly allows you to expand in any other area of your life. That's the moment where you start to realize that you're not there to serve the practice. The practice is there to serve you when you're in that position. That's a pretty good feeling.
We're talking about leadership teams, we're talking about business systems, but it also starts with a sure foundation. When I say that, you need to have some sound structures in place when it comes to your financials, legal structure and records.
I would think another area would be the assets of the company. From a financial point of view, you should be able to have your profit and loss statements at hand. You should be able to print off your balance sheet, your tax returns and all of those things that are an indicator, your production reports, all of those things you should be able to have at hand readily. That's one of the first things that a buyer's going to ask for. They're going to ask for your financials. They want to see exactly what cashflow this thing is producing. Make sure all your records are kept up to date. It wouldn't be a bad idea that you would have an audit done on your company prior to selling to make sure that all the records are in good shape and no back taxes are due. No payroll taxes are due. Make sure all the legal rudiments are in good shape, the same with all your corporate documents and then all your contracts. You should at least have your finger on the pulse of where all those things are and then you can access them quickly if you should need them.
Even if they're collecting dust, know that they're in that file towards the back somewhere. Make sure you have them.
It's an owner's function. That's an owner function to make sure that the compliance is in good shape and to make sure that all the financial records are up to date and current and it's not hard to do.Money has a way of filling up the crevices you poured in concrete. Click To Tweet
We might do some self-audits in terms of documentation. From a financial point of view, do you recommend doing occasional financial audits even if you're not up for sale?
I would because you never know what you're going to find. You're never going to go wrong by paying attention to what's happening on your money lines. If it uncovers something that may have been a camouflage goal, who knows? When you pay attention to your money lines and you have an audit done or something like that may uncover something. It could be costing you a lot of money. How often do you do it? I don't know. Maybe once every two years would suffice, but it's something that I think should be done, definitely.
If you're like I was several years ago, I didn't know what a P&L was. I didn't know what my cashflow was. I didn't know how to read any of that stuff. It was a matter of me telling my CPA, "I want you to teach me what all this stuff means and we're going to meet monthly from now on." As I did that, my expenses came in lying a little bit and they were more predictable going forward. I knew exactly what my make break line was. I could do some reverse mathematics to figure out how many visits I needed to make each month and where we were tracking. There's much power behind that. You can't take your finger off the pulse of your money lines. The guys that I'm talking to that are losing money and going into a negative cashflow are those people that have taken their fingers off of the money lines. They turned a blind eye towards it for a little bit.
It doesn't happen overnight. No emergency happens overnight. It is a series of things that have been neglected for a long period of time. That's what causes the emergency to happen. I see that regularly. I go into an office or someone's having trouble with cashflow. This wasn't a month phenomenon. This has been something that's been going on for months, if not years. Don't neglect it. It's too important of an area. Your financial solvency is everything. If an organization doesn't have more money coming in than what's going out, then that organization will eventually die. It won't be worth anything, which leads to the earnings of the business. At the end of the day, I've been watching a lot of Warren Buffett videos here. That guy is brilliant because he looks at things from the perspective of, “What kind of cashflow can I expect from this business that I'm buying?” He doesn't so much care about the price of it. He's not speculating. He wants to know what the return of the money will be from that particular business.
As a practice owner, one thing that we do have control over is what the earnings are. You look at the difference between a well-managed practice. Let's say maybe it's doing $1 million practice that's doing a 20% profit margin. That'd be maybe $200,000 of earnings. That may sell for $600,000 to $800,000 at a 3 to 4 multiple, but then you look at that same $1 million practice that only has a 10% profit margin. That's going to sell for a smaller multiple. That may only get $200,000 to $300,000. You're talking about $600,000 of value, same revenue, different profit margins, different management. One person paid attention to their money and their earnings and they got a much higher multiple and they got more money for it as well.
That's a real-life situation. When you can show it increased the bottom line, that's when you have greater value. That's when someone will pay more for your business.
Totally, because there's prediction there for them. Anytime you buy a business, you want to have a prediction. That's the one thing that you got to have to think of when you're selling your practice. You’ve got to think of that buyer, whoever it is, whether it's a corporate buyer or a successor, you have to think that they need a prediction of that cashflow. The more prediction that you can give them that all of the company, whether it's the systems, the personnel, the assets, the financial condition, there's a prediction for them when they assume control. You build a practice. There are moments of chaos all the time. It's imperative to make sure a transition goes well that there's going to be points of chaos when someone assumes control of the business. The more prediction you can give them, then that'll allow for the value to be higher.
I like what you talk about prediction and they want minimal risk. That leads into another topic that we want to discuss and that is making sure that you've got a well-diversified payer mix or referral mix of physicians so that not everything is coming from A1. If you've got one insurance or one referral source that leads to 60% to 70% of your business, that can be unsettling for a buyer. It should be unsettling for you as an owner to be reliant on A1.
The term I've always heard is that you never want to be relying on one of anything. When you rely on one of anything for too long, then you can lose everything because what happens when that source is no longer there? We all talk about having multiple streams of income for the household. That's been a notion that a lot of people have heard. It's correct. I would like to have multiple income streams, but you need to look inside the business as to where all of your income is coming from and make sure that you're not heavily relying on one of anything. That gets back to building the systems in the business and not relying on one referral source, not relying on one insurance company and not relying on one therapist or whoever it is. Don't rely on one of anything. Make sure that you're building it so that income is coming in from a lot of different sources.
That goes back to the buyers want to see your marketing strategy, your growth strategy, whatever that might be so that you are diversifying yourselves. Part of your strategy if you do have as a single, large payer source or referral source, what are you doing to diversify yourself? It doesn't have to be immediate, but are you reaching out to the community more or are you trying to gather the contracts? Are you talking to other doctors to get more to diversify your mix?
At the same time too, they want to see that your sales trend production-wise is going up, even if it's incremental. Even if it's at 4%, 5% or 10% rate, they want to see that. No one wants to be buying a company that's declining or sideways. It's important that you put your attention on that every single month. What's the trend of the organization? Is our production higher than it was the year before? What's that growth rate and what should it be?
No buyer wants to buy a sinking ship even if it's not falling off the cliff. If you're going downwards, there’s that lack of predictability. Which way is it going to go next year? We don't know.
You don't want to catch a falling knife. I certainly wouldn't want to. I'd want to buy a business that was showing a lot of strength and then I felt good at the marketing that they were doing was attracting a lot of new patients. That they were producing at the level that they should have. What's the percentage? I don't know, but if you're doing 10% to 15% a year, that's pretty good growth.
When we went through our sale, the accountants came in and they asked us about changes each quarter and, “What do you attribute this growth to? What do you attribute this loss to? Why is this happening?” They had some serious guys come in and look over our financials over the past two years and asked all kinds of questions. “Where did this expense go? Where did that expense go? What happened to that? Why don't you see more of this?” They wanted to see the predictability. They wanted to see a gradual improvement over time.You're never going to go wrong by paying attention to what's happening on your money lines. Click To Tweet
It's good that you mentioned that. It's a good exercise for every practice owner to go through that process even if you don't decide to sell. They'll do it. If you have a practice that's worth something and you reach out to a corporate buyer or somebody like that and say, “I'm thinking about selling my practice." They'll look at it. It's a good experience for every practice owner to go through because they see what it is that a buyer is interested in. To your point, they're going to ask you questions that you're like, “I didn't think about that before.” It's a good way to get some intellectual capital as far as what the people who have the money, what they're thinking and what they're looking for. I would encourage every practice owner, which I do, in some cases to like, "Go through that process. You don't have to sell if you don't want to." At the end of the day, you can say, “I'm not going to sell.” It's important to go through that process.
Prior to that sale that we did in 2018, we had been through 3 or 4 companies that had at least put out a letter of intent on our clinics. We had an idea of what we needed to do going forward and we turned down the other offers but good experience so that we weren't blindsided by the whole process. We knew that it was a long haul. This wasn't going to happen in a couple of months. We had a good idea of what they wanted to see in terms of financials and legal paperwork and reports. We knew that that was a whole process. It also gave us a good idea and I highly recommend people go through the thought exercise of what they want if they are going to sell. What does that exit strategy look like?
Will and I both knew ahead of time before even going out onto the market that we weren't going to sell unless we got to this point whether that was a number or a multiple or a dollar amount, you name it. We weren't going to sell unless we got that. If they didn't hit that, then we weren't going to sell. It was easy for us then to filter things out. Either it was a yes or a no. It wasn't, "Let's think about it for a few weeks." We knew in our minds what we wanted. Every owner should have a good idea of what that exit strategy looks like.
All the things that we've mentioned so far, all the value drivers that we've talked about from systems to financials to the diversification of income sources, those are all good. You need to start with a transition plan. What are you doing? Who are you building this for? What is your ideal scene for transitioning out of practice? Until you have that plan to something that you can strategize on and build upon like you and Will did. That's incredible that you knew exactly what you were doing and you built everything to that end and then it happened and you're like, “Great.” It was a pleasurable transition. It wasn't like you're selling this business on a fire sale.
At that point, you're selling it on your terms. You don't want to be in a position where you have to sell. That takes you out of a position of power. We had an ideal scene. We had an idea of where we wanted to go and how we wanted to grow. This exit strategy was a sideline thing that if it came up or if it got to that point, then we could visit that strategy. Our ideal scene when that offer came up is we saw the offer becoming an opportunity to accelerate our ideal scene to begin with. We went from 4 clinics up to 25 clinics. In a situation where we work together with other clinics that had shared values, shared vision and because of that, we felt it was an acceleration of what we were already producing in our four clinics. There are opportunities there for owners to figure out what their ideal scene is, both in terms of what they want currently, but what they want in their exit strategy. By going through the processes that you'd mentioned, it only gets us closer to that immediate ideal scene and benefits our household in the meantime and funds our retirement and all those good things.
To that end as well, you want to make sure that you've built a lot of good people around you as the practice owner. It's imperative to not only have what your transition plan would be, but the next step is making sure that you have good experts around you that can help you along the way. It's advisable that you have a good CPA or accountant that can help navigate. When you go through a transition, there are a lot of tax issues that come up that you may not be familiar with. Certainly, have a good mergers and acquisitions attorney, depending on what sale you're doing to review all the documents. Make sure that you have a good financial advisor that understands what you're trying to accomplish from a household perspective. Make sure you have a good business consultant that can help build the systems along the way. It's definitely not a one-man show as you know. Building that team around you is key to getting a lot of value for the business down the line.
I find that with anything financial when you have a team of resources that helps you so much, because you can't expect to know everything and the ins and outs of everything. To have that team around you and spreads the energy, but also increases your power on a multiple to access other avenues of wealth. I see on social media that sometimes people are saying, "What are you looking for in a CPA?" Does anyone that get well communicate with you quickly? If a CPA is willing to answer an email within 24 hours or sit down with me once a month for an hour and show me what my P&L is. I want a guy that's going to communicate well, answer my questions even if they're one-off things. Not someone who comes around every one year to do my taxes. Those are the type of mentors, resources and experts that you want to have around you.
They're out there. I love to make fun of CPAs more than anybody else on the planet because I have to deal with them and their viewpoints every once in a while. When you freely find a good one, don't let go because they can help you tremendously in this area. When you sell a business, this is likely to be the biggest financial transaction that you ever have in your life. You have to pay attention to what's happening, the tax situation, the proceeds that you would get managing that correctly. It can end well. They can send you to another level. I've seen some practice owners that after they've sold their business, it turned into a disaster because they misapplied the funds. They misallocated the money. They didn't know exactly what to do with it and then all of a sudden, you've got all this money and you're like, “I don't know what to do with this. I've never seen this amount of money before." There was no plan. Money has a way of filling up the crevices you poured in concrete. It will go everywhere if you don't control it.
It's one thing to plan an exit strategy or an ideal scene after you sell. Is it knowing what are you going to do now with some extra funds or with the extra time? I don't know what I'm going to do and I'm going to move forward doing this and I don't know how I'm going to make money after that. That can be a tough situation to be in and things can flitter away.
It's unfortunate that we have to see some of these things happen, but to your point, when you don't have certainty about what you're going to do next. When you don't have a plan or a game of what you're going to do after the sale that motivates you, that gets you up in the morning like, “This is what we're doing next,” then boredom sets in. Unfortunately, I've seen a lot of people that they start getting into things that aren't beneficial to them. I'll leave it at that. You can imagine what happens to people when they get all this free time. They start to do some not so constructive things for themselves.
I love the insight that you gave that if people want to see where they're sitting in terms of the value of their clinics or what that process looks like. I do have to put in a plug that the group that we merged with Empower PT, is always looking for clinics out there to grow with, acquire and merge with and share what we're doing. There is an opportunity if people want to reach out to the people in Empower PT, I'll put a little bit of plugin there but that's the group that we joined with. It was a great experience. I've heard about this a number of times, people who have sold and joined maybe a corporate owner and have been dissatisfied 1 or 2 years later. I can say that's the opposite for us. We've been more than happy with the structure that's been created after the fact because we did a lot of this work that you're talking about ahead of time. Imagining what that ideal buyer looked like, what our ideal situation looked like and planning that out ahead of time.
I'm glad to hear that because we tend to hear a lot of the negative stories and it's nice to see someone that's been through it. I'm sure that when you decided to work with that group, there were a lot of philosophical synergies that you had with that group. That's important when you're going to do something like that. It's not about the money, which I know is important. There's got to be some synergy there that I believe what they're doing and that I understand how they view physical therapy and running an organization and you're in agreement with that. When you have that, then it allows things to have the result that you did, which is awesome.
Thanks again, Eric, for taking the time on our second episode here, the last little bit. Are there any parting thoughts before we leave?
We're getting towards the end of the year. There's a tendency that the complacency sets in. Don't let complacency set in. Wherever you are in your business, your phase of ownership, there's always something that you can do to get more direction, more certainty, more control over the direction of your business and your personal finances. That's one thing that we always try to preach to practice owners is that something can definitely be done no matter what financial condition that your business is in or your personal finances are in.When you rely on one of anything for too long, then you can lose everything. Click To Tweet
Be intentional about it. Make that final push to meet your goals by the end of the year or start planning for 2020. How it might be different or take advantage of tax savings towards the end of the year and you get your stuff right. Start reaching out to resources like you guys or other people to take advantage of those tax savings opportunities.
Our phones are operational and working.
How can they get in touch with you if that's the case?
Are you guys doing any workshops, webinars in the near future?
I'm doing a webinar. The topic is The Next Level Game Plan For Practice Owners: Your Action Plan For Building A Profitable Practice And Personal Financial Success. We're going to talk about all kinds of things about getting to the next level and the areas that you're bleeding cash that you may not realize it and how to remedy that. We're an advocate for physical therapists. We believe in physical therapy. That's why we picked this niche because we believe in the care that they give and the help that they deliver. Physical therapists, especially owners, deserve to have financial success. Sometimes, I don't necessarily think that they, themselves, think that they deserve that, but they do. More than we can get them in the financial condition that their practice is strong or their personal finances are strong, then they can help more people. That's the point.
A webinar like that, are there some recordings on your website?
We do or we're going to. We're doing a transition to a new website, but we'll certainly have resources on our website for webinars like this. They'll be able to access that.
Thanks for your time, Eric. I appreciate it.
No problem. Thanks, Nate. I appreciate it.
Eric Miller has been in the financial planning industry for over 20 years. He’s a co-owner of Econologics Financial Advisors – awarded an Inc.
5000 honoree for 2019. As the Chief Financial Advisor for the firm, Eric has had the good fortune to have over 10,000 financial conversations with private practice owners in the various healthcare industry and helped guide them into a more optimum financial condition using a proven system.
If you consider marketing to physicians "Marketing 101" for PT owners, then obviously, marketing directly to consumers (potential patients) would be "Marketing 102." And if Marketing 102 for PT owners were a college course, Matt Slimming, PT would be the professor. Recognizing the changes happening around him - POPTs and hospital network consolidation, referrals from physicians are down 50% over previous years, etc. – Mark realized that he needed to access patients in a different way. Whether it's improving SEO, getting patient reviews, or utilizing social media ads, he found that there is a greater pool of patients available to him when he markets directly to the surrounding community, plus he won't have to rely solely on the doctors to keep his eight clinics steady busy! It may be a new concept for some of us, or maybe some of us have tried it and not seen the results. Listen to what Matt has to say and maybe he can guide you to online marketing strategies that have been proven.
I have Matt Slimming out of the Greater New Orleans area. Matt is uber-successful. You can tell he's a transplant from Australia. He came to America and has established and grown his physical therapy clinic to eight clinics at this time, I believe. He's doing something right. Matt has come up against some of the similar issues that we have as independent clinic owners in obtaining new patients with as many physician-owned physical therapy clinics that pop up, hospital networks that have gained ground in many urban areas. Based on the inspiration of an episode I did with Mike Bills, I'm excited to talk to Matt a little bit more about online marketing and getting your patients not from physician referrals, but focusing on direct to consumer marketing and how he is able to get more patients that way. Matt is going to share with us what has been successful for him in his online marketing and social media marketing approach that has led him to be successful and continue to grow and get new patients in this current environment. Let's get to the interview.
We have Matt Slimming, Founder and Owner of STAR Physical Therapy in the Greater New Orleans area. First of all, I'd like to thank you for coming on.
It's a pleasure, Nathan. Thanks for having me.
Matt, if you don't mind, I've heard great things about you. You've got a great presence within the New Orleans area, eight clinics. Congratulations. Tell us a little bit about what got you to this point where you've been able to grow to where you are.
What's allowed us to move forward was the struggle that many clinics have of suddenly finding themselves competing with an ever-increasing amount of pops and hops and start-up clinics coming from every nook and cranny. It happens to a lot. I was speaking to an owner in North Carolina and experiencing the same thing. Suddenly, they're everywhere. They seem to love to jump into the nice areas that people want to move to. Chances are if you're in a nice area, it's either undergoing a dramatic increase in competition or it's about to. We found ourselves in that situation where we had at that time three clinics and we found that we weren't growing anymore. We were starting to slip backward in one of them.
How long ago was this?
This was about 2010, 2011.
Were you starting to see some of these pops in hospital networks coming in?
Pretty aggressively. Also, our community that we're in, which is on the Northshore of New Orleans, our main clinic early on was designated as the place that New Orleans was growing to. Therefore, all the business owners wanting to get there before the crowd got big. We saw an influx of new businesses, the new PT clinics. We had to work hard at marketing. A couple of years later, it was about 2015, direct access became a reality in Louisiana. In 2011, we started the market aggressively and we started to do a little outside marketing. In 2015, we realized that we now have the freedom to market in a way that attracts the direct access consumer. Since then, we've been studying online marketing. Gradually, our business has shifted over the years to where that's the main focus of our organization is online marketing to gain the audience and the new patients through that media.
It's interesting that you say that because in 2014 or 2015, you got the direct access opportunity in Louisiana. It sounds like you guys jumped up on that quickly. It seems like a lot of physical therapy owners drag their feet when it comes to marketing direct to consumers. What do you attribute that to? Why aren't owners taking more advantage of direct access in their states? All of us have direct access at this point. Some may be better than others but we do. Why aren't physical therapists taking advantage of that?
In some communities, it is a concern that they might ruffle some feathers and that they might offend referral sources. The orthos have been against direct access with good reason that they would perceive that they might lose market share. We understand that. A lot of physicians in a lot of communities hold the belief that we shouldn't have direct access, that we don't have the skills and knowledge for that and the education for that. Because of that awareness, a lot of good PTs with great relationships with physicians didn't want to rock the boat. Why mess with something that's doing okay? That combined with the, "How do you do that in a way that works?" A lot of guys tried a few things, it didn't work for them so they said, "Forget that. We'll keep on rolling."
It's tough to swallow because like you said, there's not only competition coming around every clinic out there but there's also the fact that physician referrals are plummeting. I don't know about your experience, but my experience is if a physician is referring out to physical therapists nowadays, the majority of them are saying, "Here's the prescription." They’re giving it to the patient, "Find a physical therapist that you like." They're all good. We're commoditized in their view. We've always had that subservient attitude. We want to be subservient to the other healthcare providers and not ruffle feathers.
That's a different conversation for a different day about my issues with that but a lot of it goes to how do you do it? Do I now become the local car dealership that posts advertisements for other chiropractors that are doing it? How do we do it effectively? How do we do it in a smart sense that makes us look well but also shows that we are the experts? Maybe there's a part of that too where we haven't necessarily been the gatekeepers in the past. Are we prepared to be the person that sees that for that patient right off the bat because they've typically gone through somebody else first and been screened out?
To answer the second thought, we all deal with initially the idea of, "I have much more responsibility now. I've got to catch those red flags or yellow flags. I've got to make sure I know what I'm doing." There are a lot of PTs, and some PTs in our group, that we had to educate on how to do direct access well. That's the first thing we have to be good. We got to know that we're not going to hurt someone, that we're not going to keep someone from getting the care that they need that might be better for them.
As you're dealing with more direct access care and maybe as you bring on the physical therapist onto your group, especially new grads, is that one of the first things you're doing in your training with them? Are you saying, "If we have direct access now, these are some of the things that you need to sure up?" Are you doing some training in that regard?
We don't have our new PTs do much direct access work initially. It might be months that they're working with us before we allow them in that process. What we find is most PTs have the education to the DPT where they're effective at doing direct access. I didn't know that when I first came to the US. I went back and got my doctorate and that's what allowed me to have that knowledge. Most PTs now, they're coming out with good knowledge. There are more nuances perhaps that we have managing and massaging the direct access than just the clinical stuff.
We can do it. If it's a hurdle or it's a fear, it's a matter of training yourself a little bit more and getting ready for that opportunity so that as you do the marketing direct to consumer, you show yourself well. You become that actual gatekeeper and gain confidence. It's the repetition and the work that breeds confidence. The confidence doesn't come first.
It's a good point, Nathan. There are two groups, those guys who are confident and happy to be putting it out there and then the other guys who are just as great skilled as a PT but don't feel like they are the expert. The reality is that PTs are the experts at musculoskeletal problems from a broad area. We need not be concerned that, "I'm not the smartest PT in my community. There are guys out there who have more initials after their name. I shouldn't be the one doing this." No. You know enough to help people better than most of the physicians in your area, probably would initially is what you can do for them. We always have an obligation on ourselves to be intentional about helping our fellow man and getting the word out there about what we can do.
You guys had three clinics back in 2010. I imagine you might've grown a little bit here and there between then and 2014 and 2015. You've grown to eight clinics. Do you think most of that has come from your direct to consumer marketing?
A part of it, I wouldn't say most of it. Without that direct access marketing, we wouldn't have had the confidence to open other clinics. We know that we can be successful with zero physician referrals. We can still make it work. It's nice to have that behind you to say, "This will still work." We'd be foolish to only rely on that. We're all in communities. We all need only to be good neighbors and we all need to collaborate. One of the nicer things about direct access and being successful in online marketing is that we can now refer to physicians much better. That's a treat when you offer pods in the area looking to chat with you because you sent them a couple of patients last month. That changes dynamics entirely and it's a refreshing place to be able to live.
What are some of the successful actions that you can share with us that you're doing online and developing that patient referral base that is separate from physicians?Because most states have direct access, it is a must for PT owners to take advantage and market to their local communities. Click To Tweet
A lot of people start and try something. It doesn't pan out well until they say, "It's not for me," which is unfortunate because in every community, there's a way to do it that works. The first thing is we have some real strength as physical therapists. We are the good guys. Patients that leave your clinics will think of you as a friend. If they see you in the supermarket, they're going to give you a high five. They're going to introduce you to their wife. You are the good guy. You didn't bilk them, you didn't even charge them out the kazoo. You're reimbursed poorly as a physical therapist. No one thinks you're tremendously paid. You don't have that burden to deal with. We also can share comprehensively what we do and what we know.
Those two things are a real strength because a lot of other disciplines in healthcare, they’ve got some stuff under their hood. They cannot afford to be comprehensively honest and transparent because there is some weird stuff. I don't want to point at any particular type of doctor but we've got an opioid crisis. That would be an example of some stuff under the hood that might be hurtful. We haven't got that as PTs. With those two things in mind, we can be confident about marketing online. Being transparent about who we are because we're the good guys and what we know because what we know works and it doesn't come with side effects.
That's the base that we work from. We have to couple this educational approach because you can feel free to educate along with a degree of sales knowledge. It certainly isn't good to go out. They're good enough at least to go out there and tell what you know because you may help some people, but the chances are people aren't going to act on what they learned from you through some online medium. They're only going to get the help they need when they see you in the clinic. We have to couple that with some direction, some sales techniques that will bring these people into the clinic and that's in the form of a funnel. If you can imagine a funnel that you've got all these people that join your funnel at the top of the funnel and your goal is to get them through as many of those folks through to be patient as possible or at least of those that need your help.
You only want to help those that need your help. We don't want to be serving people that don't need our services. We have this funnel. You want to attract a broader group at the top of the funnel and you want to keep as many of those coming as a patient as the need to. There's a lot that goes into that funnel. First of all, I will say you don't want to be marketing physical therapy because when you ask someone, "What would you go to a physical therapist for?" you get all kinds of answers and it won't be negative. It won't be back, knee pain, shoulder pain. We've got to be approaching them with, "You've got this problem.” Let's say it's knee pain. You want to have your marketing be focused on how you're going to help that knee pain. From there, you draw them in with some good information.
We have a process that takes those people in through phone calls, texts, emails, and then possibly through some other ads going back to them to educate them a little bit more. Once you identify them, we call that retargeting. You draw these people through the funnel by more and more education until they feel A, that they are educated about what's going on a little bit and about how you can help them. B, they trust you because they've heard from you and they've seen your stuff in numerous channels, but they've also heard from you, your different ways. Now, they're starting to trust you. Once you've achieved that, it's much easier to go that last little step of the puzzle to say, "Come on in to the clinic and I'd loved to meet." There's a long process, but that works.
A couple of things regarding your process. What is the percentage? Is it 10% to 15% of people that need physical therapy or would qualify for physical therapy get it? Maybe it's even less, like 5%. When you're considering marketing to the consumer or the community, physical therapists are fighting for 5% from these physicians. We’re all fighting over 5%. If we could open up our minds and get a greater perspective that there's 95% more out there that need our services and what they don't have is that they don't know us. They don't know what we do. They don't know how we could help them. They can't like us because they haven't met us. If someone's going to buy, they're going to have to know, like and trust you.
What you're talking about then is developing this pattern so that you can show them who we are, what we do, like the message that you're sharing. They have to like it or they'll turn you off and they have to trust you that, "This does work." This guy does know what he's doing and I can put my knee and the faith that they're going to help me with my knee in their hands. There are a lot of thoughts to go that are going around in my head as you're talking because this is the direction we needed to go more towards. That is direct to consumer marketing. Take advantage of the direct access and how we go about doing that is education. Don't start with physical therapy because if you say, "Blankety-blank physical therapist is the best rehabilitator in the Greater New Orleans area," it's not going to get you anywhere.
I read a book called Building a StoryBrand by Donald Miller. People don't want to hear how you are the hero. They want to be the hero of their own story. You are otherwise the guide. You're the Obi-Wan Kenobi to the Luke Skywalker, they're the Luke Skywalker. They're looking for their Obi-Wan. If you can set yourself up as the Obi-Wan to fight the evil and get the bad guy, then they can become the hero of their own story. It goes back to a lot of what I hear from marketers is that they don't want to necessarily hear about how you're going to heal their knee pain. They want to know how you're going to get them back to golf or tennis or things that they want to do, a lifestyle.
It's often said that people don't make decisions based on information. They make them based on feelings. That's how most of us make most of our decisions. That's the case with me. We analyze everything, but in reality, we would be paralyzed if we analyze everything to the point of decision. We all do things on emotion. Nathan, it's important to be fit for them to feel comfortable and to like you. Thinking that you will be a good guide where they can say, "Show me the way," what a relief that is for people.
What are some of the successful actions you're doing online to create this funnel of available patients and to maintain them? Are you on social media? Is it email campaigns? Are you using some postcards? What are you doing?
We're doing work on Facebook and Google and email campaigns. Those are our main ways that we're reaching people now. Our website captures a lot. If you do all this stuff well, it's great for your SEO because it directs people back to your website. I'm a great student of Facebook and I utilize it for work fantastically I feel, but I am not a great partaker of Facebook. I'm not one that can sit there and look at whatever I was thinking now about the same thing or something. My wife tells me that every single lady that she knows is on Facebook. Thankfully, our wives, the ladies, the ones who make decisions about our healthcare, those are the folks that you want to hit. Those are the folks that make good decisions based on their emotions. They've got great instincts. If you can connect in the Facebook world, ladies and seniors are probably prevalent on Facebook, a bit more than younger fellows. It's a great opportunity for us that there's a great group to connect with.
You have to consider it. You and I probably do the same thing. If someone's going to send you a referral to a place, what's the first thing you're going to do? You're going to google them. You're going to see what their website looks like. See the picture. Who's treating me? Do I like that staff member? What does their website look like? Is it easy to navigate? What is your clinic? What does the inside of your clinical look like? If you're considering that person, my wife and I are the same way. If we're considering any vendor that we might want to use, throw it up on some community page on Facebook and say, “Who's a good physical therapist out there? Who's a good doctor for blankety-blank?” You'll get 4 or 5 replies. My wife does photography and she gets business because she's in a group or in different small business groups in the community. When someone on Facebook says, “Who do you guys recommend for some portrait photos?" my wife will come up. The same thing can be said for physical therapy. You're on physical therapy, I'm sure as your clinics, are you doing some Facebook ads as well?
We do a lot of Facebook ads. What connects with people changes all the time. What's working now won't be working very well in several months. With Facebook, there are a couple of keys. The first thing is you want to measure and track every single ad that you put out there. There's a lot of great information that Facebook provides for us. From as little as cost per action you want whether that's a lead or a click-through to how many people viewed it. You can look at likes, all those things. There's so much data that Facebook provides. Whatever ad that you do, you can check and analyze then measure how successful it is.
What we see now is that surprisingly, picture ads are still effective if they're done well. They've got to connect with the individual. What will connect in one community is different from other communities. The key is to be measuring. We'll throw out 6 or 7 ads for one particular opportunity. Let's say we have a funnel that we've put together a shorter resource online and we're trying to direct people to the shorter resource. We know that when they get into this shorter resource, there will be opportunities for them to connect with us through message and through email. They can set up an appointment with that shorter resource. We use seven different ads perhaps for it that will direct people to that shorter resource. There might be 2 or 3 picture ads. There might be a slideshow testimonial. There will definitely be a couple of video ads in there. We make video ads of different types.
The key is to measure every week we feel what's working and what's not. You stop the ads that aren't doing as well until you end up with the best 3, 4, whatever that are killing it for that. It changes over time. It used to be that the talking head ad would do well where it’s me sitting up there on Facebook saying, "Does this problem hurt? Let me talk to you about this problem." It used to work great. People either get tired of seeing the same face or it might be that they're tired of that type of ad. We've evolved into doing video ads that are more creative to them. There are a lot of great ways that you can get a good video that you can create and turn into a compelling ten-second message. It tells the story they need to understand in order to take action and click. That's the first thing. You've got to try different things and every community is different and it changes over time. Measure and get rid of what doesn’t work and keep on finding what's working better and better.
At your size, do you have someone that's creating that content? Do you have a team in place? Do you have physical therapists that are creating some of that content for you on a regular basis? How does that work?
That is my job, Nathan. The creative is me. I'm a frustrated marketing guy. I went into PT by default or something, but I love it. I find that fascinating science is creating an interesting creative. You've got to have that. You've got to have something that jumps out at people. That's my responsibility. We have other people in other paths that we follow too.
I'm not that creative guy. All that for me is like nails on a chalkboard. The important thing to take away is to find that person or get a team around. It might be this past episode that I interviewed Mike Bills. His physical therapists are responsible for creating one blog post a quarter or one article a month or something like that. It doesn't have to be a lot and maybe one video every quarter. They're developing this library of articles and videos that they can repost if necessary along the way so that content creation isn't all dependent upon one person. If it was depended upon me, it wouldn't happen and it wouldn't happen well. For someone like you, and there are plenty of owners out there that are the creative type and it's an outlet and fun and exciting, that's a great way to go but for the guy who might be a little bit overwhelmed, you've got to find, "Is there someone on my team that can do that?" Are there resources out there now? Do you use some other resources out there to help you out?
I can get video from different sources. There are websites where you can find a short video. The tricky thing is you can't type knee pain and there wasn't a video for knee pain. You've got to think outside the box. For example, we had a knee pain funnel and we want always to catch their attention. We've found this great video of different people dancing. This video phrase through had a couple of seconds of five different types of people, old people, young people, hip hop, all crazy stuff. The message was, "If your knee can't do this then you need to do X," which was the next step in our funnel. You've got to think outside the box and find a video that works and uses music that connects with the audience that would match that video.
Are most of your campaigns then diagnosis-based or body part-based?We're all in communities. We all need only to be good neighbors and collaborate. Click To Tweet
I would say body part-based, not diagnosis-based.
Do you find more certain body parts attract more patients than others? I would assume that your back or neck pain patients or those ads might bring you more patients than others.
It's surprising, back can do okay. What we find is that there are many people treating backs in our communities. There are chiropractors, goodness knows how many guys would like to inject backs whether they be surgeons or guys that usually are surgeons. There are many disciplines that are trying to get onto backs. That's the toughest space to compete in. It's worth doing but shoulders do great. Knees do great. Surprisingly, we've always had a positive return on ad spend but we would think they'd be right up there with backs, but not as much.
Are you also doing Google reviews, Yelp or anything like that? One of my previous episodes was with Roy Rivera and he doesn't do any physician marketing. The one thing he stresses is that with every discharged patient, he sits them down and says, "Did you like your therapy? Did you meet your goals? Will you write a Google review for us?" He gives them the link card and then follows up a few days later with an email that says, “Here's the link to Google. Would you please rate us and write a review?" Do you do something like that as well to improve your reviews online?
We started a couple of years ago where we said, "Let's take this seriously." We did an intensive 60-day campaign to get a bunch of Google reviews done. It was a face-to-face process where we were intentional about doing it. It's not something we wanted to keep up because for us, it didn't quite gel for our PTs long-term. The way I feel about our PTs is these guys work hard and they are good at one of the most important jobs in the world. I want to be great at that. Enjoy yourself. I don't want to load them up with an ongoing Google responsibility. We use bot ware and there are a few of these companies out there now where patients are sent emails asking them to do reviews. That's an automated fashion and that works well. We may only get one review a week per clinic or something, but that's all you need. I'm not an SEO master, but it does seem that as long as you're getting consistent reviews, it doesn't need to be a bunch. Get a bunch to start with because you don't want to see that there are 30 people or something that like you. As long as you're continuously updating that, that's what matters.
If you can get some ongoing consistent up-to-date ones, you don't want to see a review that's from a few years ago. You want to see something that's happened in the last month. That can always be positive. It sounds like you're also cultivating some of your past patients via email. Is that right?
As part of our online process, we do an email campaign to all our past patients we have emails for every month. It's not a one-off email. It's normally in a funnel mindset. It might be saying, "This is the first exercise we usually give for shoulder pain. This might help you if you have shoulder pain." You want to see okay. You don't want to be harassing people with emails that don't apply to them. You only want to re-email people that opened that email. For those people that opened that email, then you can send the follow-up email. It might be an article or it might be a web resource that you've developed or something else. Maybe after the next email, you give them a chance to opt-in for a free consultation or an operation. It's funnel-wise.
Are you using something like Infusionsoft to do that for you or another program to help you do that so it's automated?
That works for you. Is that something that you're on top of? Do you have someone that manages those campaigns?
I'm on top of that. I enjoy the content. Building that content and I'm deferring a lot of the responses to other people to manage. I don't need to go through and I don't go through and respond to every email. They go to other people that can respond. I will send emails from our other PTs. All our clinic directors, I'll send an email to their past patient list from them so that when they read that patient response, it's going to that clinic director who can then answer questions and so on.
Anything else you want to share with us about some of your successful online marketing strategies?
A key is to think outside the box. Workshops have been great over the years and they've been effective and they remain effective. What we all should be striving for is if you've done workshops, you know who generally goes to those workshops. It's folks over 55. You might get a few younger folks in there, but generally it's the over 50, 55 group which is great. We want to serve them and they're our bread and butter. For most of us, most PTs reading, if someone offered them a workshop on any topic, they would probably never go out. Who has time? Nathan, you might have a couple of kids.
We've got a couple. I'm a little busy.
If someone were to say, "Nathan, why don't you come to sit down for an hour and listen to something about investing?" you have to say, "Will you give me the first $100 to invest?" You're not going to go. How do we reach people that wouldn't go to our workshop? Think outside the box. Think about what would get their attention. One thing we did that was effective was we created a full risk assessment page online. You could go to this page and you could answer some questions and it would give you a lot of great information. There’s video work on there too that tells people how bad their fall risk is. We had ads on Facebook and Google the directed people to, "If you want to find out your fall risk, here it is."
The great thing about that is that the CDC and Medicare are behind us. They desperately want us to stop people from falling down and breaking their hips. You can feel good about that educational program where people are learning, "I'm at risk for this. I didn't realize that many people fall every year and when you break your hip, it’s that much chance that you won't make it for another year." It's striking for people. That's been effective for us in educating the community. Those folks that need it, they're coming to the clinic to get their balance right again. They don't have time to come in there and sit around an hour for a workshop one evening, but they do have time to go through some emails, some texts, some phone calls, and then they're like, "I need you guys. Let's do some therapy."
It's a good exercise to go through before you start any of these campaigns is to think about who's your target audience. What do they need to hear? What are they thinking? What are some of their fears? What do they want to do? How is this inhibiting themself? If you have a good idea of what that avatar looks like, then it helps you write the content that's directed to them and it's going to get their attention.
It's certainly helped to have true patients for a few years. It'd be tough for someone doing this. We know those marketing groups out there that aren't in this therapy space but they're trying to sell you stuff. If they don't know patients at this intimate level that we know them, it’s hard for those guys to know what they want to hear.
If people wanted to pick your brain and maybe see what you're doing on your end, is there any way they can get in contact with you? Would you share your information?
I'd love to chat with folks. What we all need as PT owners are lots of other great PT owners being successful. That's what we need most because if that happens, then people know they need to seek out good physical therapy as opposed to the other specialists. I'd love to answer questions and help and guide people for sure. I love doing that. My email is probably the best. It's Matt@StarPTClinics.com.
Are you willing to help people on this journey towards online marketing?
Absolutely, Nathan. I chatted with one lady in North Carolina and gave her some direction of where she could go. I enjoy doing that. We're going to be working with a small group of PT owners and taking on some of their online marketing responsibilities for them and building out some campaigns. The other thing is not only is the content time-consuming to develop but managing the funnel. Responding to the replies, the emails, the text, the phone calls can be pretty involved. Most PTs haven't got time for that. We'd like to handle that for them as well.
That could be huge. It could be a good resource because if you're not a content creator and you don't want to do it, you don't have the time to develop the funnels. Most importantly, follow through on the metrics and see what's working, what's not working in any particular area. You’ve got enough stuff on your plate already as a PT owner and I'm assuming my audience would love to have someone help them with that.
I'd love to. It's a blast. We enjoy it. If we can help, that's a win.
Thank you so much for your time, Matt. I appreciate it.
You're welcome, Nathan. It's been a pleasure. It was nice chatting with you.
Matt has had extensive training and specializes in treating the spine, lower extremity and vestibular rehabilitation. He is certified in the Fishbain DOT-RFC Functional Capacity Battery, Golf Fitness, and Essentials of Musculoskeletal Imaging.
He completed Barefoot Running, Surgical conditions for the athlete, Tennis Rehab, Running Rehab, BEST Exercise Program for Osteoporosis Prevention, Rehabilitation for the Postsurgical Orthopedic Patient, Modules 1 and 2, Physical Therapies in Sport and Exercise, Modules 1, 2 and 3, Muscle Energy Techniques, Evaluation Manual Correction and Treatment of the Sacroiliac Joint, and Direct Access Medical Screening.
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Reaching out for help from coaches helps us gain the needed insights for the development of our practice. In this episode, we are following up on the owner of Druid Hills Physical Therapy in Atlanta, Georgia, Dr. Avi Zinn, PT, DPT, OCS, about how he has developed his business. Although he has been successful in the development of his practice to this point, Avi reaches out because he recognizes that he needs to gain more business knowledge as the CEO of the business. He shares the importance of the stuff they did not teach in PT schools, such as tracking KPIs, leadership development, culture creation, and more. Learn how he is managing as a PT business owner and get a real-life look into what a business coach can do for you and your practice.
This is the first episode that I have with an individual PT owner in which I'm going to follow along with him as he receives coaching and implement some of the coaching programs into his independent PT practice. Avi Zinn is a Physical Therapist out of Atlanta. He reached out to me to get some coaching and see if maybe we could work together to help him achieve his goals. Full disclosure, he didn't end up going with me as we talked a little bit about what I could provide and if that might fit for him. I actually offered him a couple of friends that he could call and talk to about getting coaching and consulting services with them and he decided to go with a friend of mine, which I'm excited about. Avi’s ready to grow and he needs to take the next step. I wanted to bring Avi in order to not only follow his path but also because Avi is pretty unique. He hasn't followed the typical entrepreneurial path. He didn't go through the burnout, the crash and burn stages that many of us may have gone through before. He did something different. I want to share his story with you.
I've got Avi Zinn, Owner of Druid Hills PT in Atlanta. I'm excited to bring on Avi because he reached out to me in regards to getting some coaching and we've talked a number of times about his needs and how I could help him out, but things changed a little bit. He is looking for some coaching and consulting help and I want to follow his progress essentially and see what the coach or consultant has done for him to forward his clinic and to achieve his goals. This is the first introduction of that series of interviews because I imagine that down the road I'm going to do some follow-up interviews with Avi. I'm going to show you what it's like and what you can expect out of coaches and consultants and how they can help you as an owner. Let's get to know Avi a little bit and some of his influences and what got him to the point where he was reaching out. First off, thanks for coming on, Avi. I appreciate it.
Thanks a lot, Nathan. I’m happy to be here.
Tell us a little bit about you. Tell us a little bit about your professional path. How long have you been a physical therapist? How long you've been an owner? All that stuff so we can bring everybody up to speed on.
I went to PT school in New York. I finished in 2009. Shortly after finishing school, my wife and I moved to California and we went to the Bay Area. We were in Berkeley. I started my PT journey there. I’m looking for places to work, trying to see what was there. I found a cool PT practice based off their website. They’re more independent. The pictures of the clinic looked personal. They had a good vibe. I reached out to them and they hired me on, which was cool. Starting there was a good experience for me in a lot of ways, which ultimately led me opening up my own clinic.
Did you always have aspirations of having your own clinic?
No, not really at all. When I first started there, they had just done some coaching and consulting. They were in the process of transitioning their whole business model. I soon found out that when I started on, there was a huge turnover right before I came. I didn't realize that at first, but after being there for a few months, the remaining people that were still there were starting to talk about the old days or how things were different and not necessarily bad, but I think the change of the business structure led to other people just didn't agree with what they wanted. From following your show and all the people you've had on, it seems like that's a pretty common thing. You guys talk about your culture and your team. If you're changing your business structure and you're changing your team, then you’ve got to make sure that people are in line with that. I would assume if they're not, then they're going to leave or they're going to get told to leave. That led me to start my own clinic because it was an independent clinic. It wasn't a chain and it was two owners and they had a few locations at the time. I started seeing what it was like from the owner's side of things because they were at the clinic all the time.You have to take risks in order to have something you desire to create. Click To Tweet
Whereas later on when I started working for chains or hospital systems, you don't see the owners at those clinics. You just see clinic directors or whatever. Being there, I saw that the community and the PT practice had a great reputation. People knew about it but at the same time, the employees, the staff, the PTs weren't saying the same things that the people in the community were saying about the PT practice. It was interesting to see how there could be a different perception that the patients are loving it, but the PTs aren't. That probably happened because of the change in the business structure and however that played out. I started realizing that there could be different ways of going about this business. Clearly, we're providing good service because people were talking about it and people knew about it but the staff wasn't happy. That was interesting to see. That's what really started me thinking about like, "Maybe I could do this." Everyone thinks, "I could do this." I thought, "If I am going to do this, maybe I'd make it so people are happy at their job."
There are a couple of different reasons why people open up their own PT clinics. Either they have an entrepreneurial spirit and they want to own the job and that's something that they have a burning desire to do. I'm sure there are many other reasons, but the two that come to mind are the second one being, "Maybe I can do this better or maybe I can create something that I can fill a need or I can create some value that I don't see in my current position. I can treat the way I want to and expand on that.” There are a number of different reasons in your situation, in particular, you're thinking, "The owners are doing great. They've got a great connection with the community, but the internal structure and culture could be improved. Maybe I could do that myself and create my own thing." Is that about right?
Yes, that's right, Nathan. You have to remember, I was in the Bay Area, that's a hotbed for startups and entrepreneurs. I do think that was a part of it. I remember a good friend at one point. I was talking about a startup and entrepreneurs. He even said something to me that I could be an entrepreneur if I started my own PT clinic. At that time, I didn't know what that meant to be an entrepreneur. I didn't realize that starting a PT clinic would be the same thing. Getting that entrepreneur bug, that's what I'm sure we'll end up talking about pretty soon in The E-Myth what Michael Gerber talks about. I think doing it better though and realizing that maybe I can do this in a way that would provide that service and also have the people that work there happy as well. What I was seeing at that clinic that combined with getting that entrepreneur bug, those two started the process of me thinking about at one point starting my own clinic.
You eventually went to Atlanta and decided to do that?
My wife is from Georgia. She grew up in Savannah and I'm from St. Louis. We were in California and we didn't know totally, but we started thinking that we would want to be closer to family. Atlanta seemed like a pretty good city. My wife did an internship in Atlanta and that was when I stopped that job. We went to for the summer to Atlanta to do the internship, but also see if Atlanta would be a city we'd want to move to. We liked it and when we went back to the Bay Area, we knew we were going to move there. I knew I wanted to open up my own thing or start my own clinic, but also knew we were going to move at some point. I never really wanted to do it in California. At that point, I started doing other jobs and experiencing different types of PT. I did work comp for two years. I started doing home health, which was interesting. I did that for a bunch of years.
Eventually, we did move to Atlanta and started doing home health when we got here to learn the city also. It was a good opportunity that I learned the city, but I was driving around for home health. I was trying to get a sense of where I would want to start a practice. It all happened at a time where I was ready to do it. This location opened up right in my neighborhood. Literally, a four-minute walk from my house. It's on the main street. It's across the street from this big shopping center on this road where they say 50,000 people drive by every day. It was perfect. Everything worked out. That's when I started to get things going because we found this place and I had been thinking about this all these years. It was time when this place opened up.
How long ago was that?
That was the end of 2017.
During this time, had you been reading any books about business ownership or accessing any resources?
When I was doing home health, I was driving all the time and I stumbled upon Paul Gough's podcast. That was really the first one that I started listening to. That was talking about owning a business and how to run it. I don't know if this is exactly what he said, but this stuck. He said, "You don't have to have the best PTs, you just have to have good PTs. You can hire the good PTs and you have to be the one who's working on the business.” The truth is I could be combining that with some of the other, like Michael Gerber, your show, but I believe he did say that stuff and it started making me think about how I was going to set up a practice and what that meant.
The cool thing is that it set up a mindset for you, knowing where you are. You don't have to be the best physical therapist. Soft skills are more important than hard skills. You already had an idea that you were going to bring on some other physical therapists anyways. It wasn't going to be the obvious in a physical therapy clinic and a one-man show. You had aspirations for more right off the bat. You've opened up your clinic and how did you start working in it? How did you start developing it, so that it wasn't obvious in physical therapy clinic?
When I was trying to figure out what to call it, I was really against calling it my last name, Zinn. A little back story. My father-in-law has his professional experience. He opens a lot of businesses. He was able to guide me through a lot of this in the beginning. Helped me set up the LLC. When I was looking at this place to rent and lease it out, he guided me through with creating a pro forma and talking to the landlords about having my financials in order, even though we didn't have the financials in order. Getting that set up and he was set on calling it Zinn PT. He wanted me to do that and I was like, "I don't want to call it Zinn PT. I don't want it to be about me." Maybe because of listening to the podcast and knowing Paul Gough’s podcasts, knowing that I wanted to bring people on and I didn't want it to be about me because maybe had a little foresight knowing that I would have to do the business stuff at some point and not always having people wanting to go to Zinn but to the PT practice.
What did you start doing initially to make it so that it was not Zinn? You ended up developing Druid Hills Physical Therapy, you were the initial physical therapist. How did you start the progress? This is an important part of the introduction of you. You did things a little bit differently and I'll highlight that as we go through the story.
First of all, I was still doing home health, which was a huge help because home health is super flexible and I was able to bring in some income while setting up the practice as a group. There was no other way to do it. I took out a loan. I could've taken out a loan three times the size and lived off of that for a while. That would have been a little overwhelming. Setting it up, I started getting things in order. I don't know if it was from the podcasts or not. I wanted to experience every part of the business at first to know what it was like so that I could start putting people in those places. When I started, I did everything. I was a PT but I was also running back and forth to the front desk to answer phones and schedule. Instead of a front desk person, I had an answering service, which was helpful and they would email and text anytime someone called. I had a doorbell. That was my front desk person. If someone came into the office, I knew someone was there and I could run back and forth to the front to greet them. I started getting things in place. Aside from the business things, I had to start getting patients.
I tried doing all that I thought would have been the normal way to do it, which was called doctors but that didn't work. It started with that. I was lucky that a third-party work comp insurance called me and they were like, "We want to give you a contract and send some people to you.” I was like, "I need people to send patients," which was also cool because work comp authorizes a certain amount of visits, they pay the rate, whatever it's going to be. You don't have to fight with the insurances. They're not going to like deny certain code, which was a great way to start. Because I got those patients, I knew those visitors were coming in and I knew they were going to pay whatever they paid. That was also a little bit of a hard part, to begin with, was the money part. How you charge people. All of it was hard. I didn't know how to do anything.
How long did you go like that before you took on your first hire and eventually before you got your next physical therapist?
I started at the end of 2017. We had our third kid in March of 2018. It was a great idea to start a business and have a kid the same year. Right after that is when I hired on the first PT. The business was growing slowly. Knowing that we were going to do this, I started looking back at the schedule and tracking what was happening. The schedule was pretty light. Looking back, I don't know how I was confident enough to even hire someone on.
That's the question I have for you. How many visits were you at per week before you hired that physical therapist because you went against the grain?
I don't know. At that point, I was doing three days a week at the office and still doing two days a week home health.
You brought on your PT at that point. This is why I wanted to bring you on is that you hired a physical therapist, what most people would consider is too soon. Based on my training experience and if you were to ask me, "When do I bring on my next physical therapist?" I'm going to tell you, you bring on the next physical therapist when you're meeting at least 90% of your slots that are scheduled out in a given week on average. That's the time when you know, I'm working hard or my other PTs are working hard. It's time to bring on someone else where these people are going to get overwhelmed. Maybe you even have a waitlist, but you went against the grain and you don't necessarily know why. You brought on a physical therapist because this is the thing, the typical entrepreneur story is we don't do anything until we get overwhelmed. Sometimes there's a crash and burn element to it. If you read to some of my previous shows and the successful entrepreneurs but you didn't get to that point, so you brought on the next physical therapist. You must've had some faith that things were going to go in the proper direction or maybe you had some real intent out there in the universe that things were going to grow?
It was a little bit of both, Nathan. I was thinking about starting a business, in general, is a huge risk and I've maybe realized that you have to take risks in order to have a business. That was the same move. I saw the trajectory and patients, it was growing slow but it was steady growth. It looked like things were going in that direction. It was time to hire someone on and keep it going.
During this time, were there some resources that you fell back on that might have stoke that faith or inspired you to bring on someone else so that it wasn't on you? Did you also maybe see that there were some aspects of the business that you needed to work on so the PT would take the treatment side of things off of you so you can focus on those things? Was there a combination of some of those?
Because of how busy things got, I realized that I had to do more of the business stuff. That was what it was. It was the beginning of 2019 or it must have been earlier when I started following your show. I remember in January of 2019 is when I started reading The E-Myth. I don't remember exactly when I found your show or how that happened exactly. Even before that, I realized that I had to be able to step away to do from treating, there were only so many hours in the day. I didn't want to be working all day long and then going home and working all night long. I realize that the only way to do it was to step back a little bit. It wasn't a lot, but it was by hiring another PT that I was able to step away and do a little bit more of the business side of things.You have to take risks in order to have a business. Click To Tweet
The common fear when someone makes that first step is to bring on another PT. The biggest fear is, how am I going to justify that salary? I'm going to be paying somebody $70,000, $80,000. What if they don't work out and they don't produce? Somehow you overcame that fear. How did you do that?
After that first job in California and when we came to Atlanta, I did a traveling PT job. When we went back to California, I started doing PRN. When I learned about what PRN meant, that is ultimately when I hired my first PT, I didn't hire her on full-time. I hired her on PRN and it just happened that I found someone who wanted to do it. She was in a different job and she wanted to switch it up a little bit. She started doing two days a week with me. That is why I was able to not be so overwhelmed because essentially instead of making it five days a week for me, since I was only doing three days a week in the office, I made it a five-day PT but split between two people. I was able to have the patients coming in on all day, every day and then still have two days a week where I wasn't treating and doing some of the business stuff.
You were still running the front desk and taking all the calls and some of that stuff?
I was still doing that stuff and the billing, the front desk. Shortly after that, I got someone two days a week at the front desk. Gradually we started getting more patients, so that part-time PT ultimately wanted to switch all for hours over to this place. It worked out well because I didn't need to look for another person. She was already there. We were organically growing and filling those hours on the schedule without having to hire on a new PT and then have to be scared that you're not filling up their schedule for three months because we did it gradually anyways when she first started by two days and then added on more days.
She started taking on more hours. You started treating less it sounds like and you're working on the business during this time.
I don't think I really started treating less because for the most part, I was still treating the same amount, but it had blocked off certain times from the beginning to do billing, networking, calling people and driving around.
That's a huge part right there and I don't want to overlook that. You blocked off time on your schedule. As I'm talking to PT owners that are treating full-time, that's probably one of the biggest hurdles is to get them to commit to blocking off chunks of time, whether it's four days or 4, 5-hour blocks to work on the business. That is to look over your financials. That is to put together a pro forma like you're talking about. Consider what the future might look like. Do some networking. Even start developing some policy and procedures and hiring the right people to fill the spots that you either have open or are going to have open in the very near future. What you started doing maybe someone told you to or maybe you inherently knew you needed to do was to keep that time sacred for admin work.
Around the beginning of 2019 is when I read The E-Myth. That was transformative. I've heard people say it on your show a million times, working on the business and not working in the business. I think he came up with that. It made so much sense and you can't do it any other way. There's only so much growth you can have if you're working in the business. When I read the part about what a lot of people do is they create a job for themselves. That part was like, “I’m not trying to create a job. I'm sure I didn't try to create a business." I did somehow realized that I needed to keep that time separate to work on the business. Once I read that, it was when I started realizing I need to do more of this and if I want to grow, I need to not just hire more people. It would actually start taking more time to work on the business because once you start getting busier with more and more things going on, you need to have more time to figure out all the things that you had mentioned, which I still have not done yet.
We have to give it proper credit. The book that we're alluding to and referencing is The E- Myth Revisited by Michael Gerber. He does layout a lot of this stuff. When we say you working on the business, what are some of those things that you're doing? I have even some owners say, "If I'm not treating and I'm not catching up on my notes and I'm not paying bills, what am I doing?" What do you do in those admin times?
First of all, I still do the billing. That's part of it.
That's going to change soon. What are you going to do when the billings off your plate?
We'll find out soon. You did mention about policies and procedures. That's what I started doing was creating systems, which is what The E-Myth is all about. I created an organizational chart, which is another thing that they talk about in the book. Even though every single job in the organizational chart was me, I still was breaking up what created the business, all the different parts and all the different jobs that make up the business. I started writing out what happens under those positions, what one does for that job. Basically, I use Google Drive and Google Docs and I have a nice organized folders system of docs for every one of those job positions. Every time something happened that day that I had to troubleshoot or figure it out, I would put it in that doc and then I would try to create a system to make sure it didn't happen again or t try to delegate some tasks to the front desk person or the PT so that they can do it so that we wouldn't have to keep on going through the same mistake every time. We would know what to do every time.
You wouldn't have to learn the same lesson twice.
Yes, we don't have to learn the same lesson twice. Also, we wouldn't have to be where someone had to knock on my door and asked me what to do for it.
This is why I love having you on. You're at a place in your ownership that I would say a majority of PT owners are not. I'm including the guys that have been out there for 10 to 20 years. They haven't taken the time to write up their policies and procedures. I can say I was in that boat 10, 12 years after opening up my first clinic. Didn't take the time to write down policy and procedures. I didn't have an organizational chart. It doesn't matter if you are in each position. At least know what the structure of your company is and what it should be and what it will look like when other people start filling those positions is huge. That comes as naturally to some people more so than others, but you're organized enough with your Google Docs to have everything written up underneath each job with a job description, the responsibilities and the tasks that are given to each position. That's huge and that is the reason why you are where you are is because you've done some of those things. How many therapists do you have?
We have three therapists besides me. They're all about 30 hours or so. Part-time but full schedules. One is actually reducing hours the same original one who wanted to take on more but also step out of her first position and try something different. She's going to try something different and reduce her hours, which is fine. Everyone wants to do different things. There's nothing wrong with it. We're about to hire another person and she's going to be my first full-time. We'll have one full-time, two pretty full-times, one part-time and then me.
Being less than a few years into your ownership. That would be unfathomable for some people. I'm talking to some owners who are one-man shows and they're overwhelmed and they're three years into it and they don't see a way out because they're treating 50 hours a week and not working on their business. Whereas you've set yourself up such that you have multiple providers and you're already experiencing some freedom that most PT owners don't have.
Nathan, you probably would agree with this, but for the people that are working crazy hours, I made sure I did this in the beginning, I worked at the office. I did some stuff at night, but for the most part, I was in the office 9:00 to 5:00, and that was it. I made it a point to stop at the end of the day. Of course, you do some stuff at night, you answer emails or you work on the website.
You had some intention behind putting an end to the day.
I think that's what it is. That has allowed me to keep going. It prevented me from burning out and I didn't get so overwhelmed because I was like, “This is the end of the day. We're going to stop, we'll pick it up the next day.” If I work an extra five hours, it's not going to be any different. You need to put a brake on it every once in a while.
There's some power to that. Number one, the time that you do have is limited. There's going to be an urgency to get things done. If you don't have that end stop, you're like, "I can work until 7:00 and I'll take my time getting things done.” Inevitably there’s something called Parkinson's Law that, "The amount of things to do will end up taking up the time that has allotted to do them." If you're available to work until 7:00, you'll have plenty of tasks to keep you busy. If you put that hard stop at 5:00, you've done two things. Number one, you've set a deadline, but also, you were concentrating your efforts on doing the admin work. You can get more done for the benefit of your company by focusing that time on your business than trying to get tasks done. Instead of trying to get payroll down or pay bills. I'm sure you were focusing on what some people call the MIT, the Most Important Thing of the day and that is developed policy and procedures. Get my organizational structure in place. You're doing the billing, but that's a separate chunk of time. The fact that you spent that time on the policy and procedures and the organization of the structure of the company means you've developed solid integrity around that and you've accelerated your growth as an owner and as a business to the point where you are.There's only so much you know how to do. You need to reach out and ask people for help. Click To Tweet
To be clear, I still have a lot more work to do on the policy procedures and all that stuff. That's ultimately what we're getting at with coaching and consulting. In March of 2019, I hired on the second PT and then that's when I drastically reduced treating time down to twenty hours a week of treating.
Was that a scary transition or something that you're, "I need to do this?"
It wasn't scary at all. It was, "I need to do this." Partially because at that point I had read enough of your blogs and also had probably read to The E-Myth again for the second time or maybe even third time that I realized that it doesn't even matter if it's scary. That's what you have to do. There's no other way around it.
You recognize the need of the company was to go in that direction, right?
Yes and it was my business. If I'm treating, who else is going to work on the business? I have to be working on the business. There's no other way.
You talked to me about doing some coaching and consulting. What led you to that point?
Where I've gotten myself have been a lot of working on the systems and policies, but at the same time, there's only so much I know. As the business grows and when we're getting more patients in one of the main things that I've noticed is there are cancellations and why are we having 30 new patients in a month. We had eighteen new patients in one week and that was awesome. That was the most we had. The following week the schedule was half empty and it was like, "How is that happening?" I started running analytics, WebPT. I called them up asking, "How do I find out how many times each patient is coming in?" I’m trying to see what their plan of care and how many visits per week? I find that a lot of patients are only coming once a week or they schedule two visits and then they're gone and no one was tracking that. I run this lost patient report from WebPT and then all of a sudden, I look and there are 50 to 100 people on this report of people that came in and we never got them back on the schedule. That was a huge thing.
You recognize that you need to start monitoring your metrics and if you haven't taken the time to do that, then the metrics will control you and sink you.
On the analytics and WebPT, they have their main KPIs. There are six KPIs on there and that was cool. I realized I don't know. I feel like I've done a lot to get myself here, but there are people who know a lot more to take those numbers to who've already gone through this, who can tell you how to use those KPIs, those metrics and what to do with them. How to affect them and also, one of the biggest things through all this realizing that I am not just the owner, but a CEO of the company. I need to learn how to do that. I need to know how to manage my employees, train them and set up different structures and have certain people responsible for different parts of the business. I realized that there's only so much I know how to do. That's when I was time to reach out and ask people to help me along that.
You realize that you are the final word. People are going to come to you because you need to have the answers for the company. I don't think a lot of physical therapy owners who are relatively new don't put on that hat per se. They think that the ownership somehow is not as separate from them. They know that they're the owner, but they don't act like the owner and that they should be monitoring all the metrics and the financials. They should have some idea of what to do when a statistic goes bad and how to look and investigate issues in the clinic. It sounds like you had that realization that you need to take on that hat.
Nathan, that part is hard. I went to PT school, I learned how to become a PT. I didn't go to business school. I don't even know if you learn how to do that in business school either. I don't know how to run a company.
We're all in the same boat.
To answer your question, that's what it was. I realized that I needed to be the CEO essentially and I needed to learn what that means and how to do it.
You reached out to me and we had a conversation. I actually gave Avi some recommendations of other coaches to also consider outside of me and he has decided on another consulting company and I'm excited because he's going to do amazingly well. You can see that he's already set up the foundation. I want to follow you along this journey. How will you know if you've been successful with a coach or consultant? How will you know that they've met your goals? Is there a statistic that you want to see? Maybe gross revenues and net profits or is it more freedom for you? Is it growth?
I'm starting to understand financials and understanding gross revenue. I'm at the point where I can look at a P&L and understand it and gross revenue, of course. Let's get that up.
You need a return on your investment to the coach. You expect a multiple of your investment on the coach.
Having the patient drop-off, go away or at least get better. Maximize the utilization, which is something you were saying. If there's so many hours that the PT is treating, they should be treating patients that whole time or at least let's say 85% of it and figuring out how we can make sure that happens. Training the front desk also is the best way to take part in the patient's experience. Also, making sure that they're following through with their plan of care when the PT comes and brings them up to schedule. Making sure that they schedule it and making sure that they understand what it means and the cancellations are detrimental not to their progress but to the whole business. Probably a million other things at the front desk can do but hopefully, they'll help me out with all of that.
Are there some particular goals that you have then over the course of the next year or two? I'm sure the coaches will help you along with this, but what are some of your goals that you have?
As far as freedom goes, I don't need to be not in the office 200 days a year, which is great. Maybe one day. I like being in the office. I like working, but I don't want to work all day, every day. First, producing the treatment hours, that was key. I've done that myself, which is talking to you and talking to other coaches. That's what ultimately is going to set me up for success quickly with these coaches is because I've already done what a lot of people have to do initially once they start with the coaches is to back out of the treating.
You're a step ahead already.
That ultimately is going to allow me to focus on some of the goals a lot quicker. In 2020 who knows? Maybe this will happen in two months. If we have twelve hours of the day in the office, 7:00 to 7:00 and we have five PTs, I want to be able to fill up that schedule, which is ultimately going to bring in more revenue.
You're going to have to expand.
Yes, hopefully. These could be long-term goals. I remember early on Paul Gough that he’s talking about how he owns some of his own real estate and some of the practices. That could be a cool goal. I don't know so much about that on the numbers side. I imagine at some point it's beneficial, but maybe it's not always. That could be five years from now. I want to grow this space location that I have to maximize it. If I have to work twenty hours a week still treating patients, that's fine. I like treating, but I also recognize that I have to do other things. If I need to not and I can get someone else to do it, great. Maybe later on, in a few years, I can start treating again. Wherever the business needs, that's what I'm going to do.
That your decision matrix has to be exactly that. Whatever the business needs. If you're not wanting to set aside time to work on the business and want to treat full-time, then go work for somebody and work full-time. Don't spend the stress and energy to own the business on top of it. If you're going to commit to owning a business, you need to put the business first. That comes first. What a lot of PT owners don't recognize is the clinic needs them to treat less, needs them out of treatment because it's a distraction to treat patients as an owner. You need to set aside times to work on the business and eventually what happens is they work themselves out of treatment because the needs of the business become greater because they were expanding and growing. I'm excited for you and what you're looking. From my perspective, looking at where you're at, you're looking to gain more knowledge so you can confidently and securely wear that CEO hat and become more efficient. You're recognizing that there is a lack of efficiency maybe in your company and you don't necessarily know how to affect it.
That's what I think when I pulled up that last patient report that one time and I realized, that's why our schedule is not full, even though we're getting all these new patients. We need to figure out how to make sure that doesn't happen.Work on the business and not work in the business. Click To Tweet
That's a dagger to the heart when you find stuff like that.
That was hard.
It goes through a couple of things. That is a whole few pages, maybe one or two pages full of lost revenue. More than that, if you're looking at from a higher level, these are patients that didn't get the full complement of care. These are the types of patients that go back and say, "Physical therapy didn't work for me. I've been to Druid Hills Physical Therapy and it didn't help." You don't want that. That can happen unless you're focused on getting them to complete their plan of care. I said this in an interview that I did. I found out about it a couple of years ago when I interviewed Heidi Jannenga of WebPT, and they did their annual survey that most small businesses lose on average $150,000 a year because patients like those on that lost patient report don't complete their full plans of care. That's a detriment to you as a business owner. It's a detriment to them as patients because they're not getting better and the chance of recidivism or the chance that they didn't even get better is significantly higher.
It is a detriment to the profession as well.
We'd become a commodity. They say, “Physical therapy didn't work for me.” They don't say, "I'm going to try a different physical therapist." Like anybody would maybe with a dentist, they say, "Physical therapy didn't work, so I'm going to try something else." It's unfortunate. I'm excited for you and I want to follow along with you and see what you learn along the way and so we can share with the audience essentially the benefits of coaching. I wanted to share your story number one, because it's amazing that you haven't gone through the typical cycle of an entrepreneur that's even spelled out in The E-Myth Revisited. It's not in the physical therapy space, but I think she was a baker of pies and she had that burn out and she's like, "I can't do this anymore. I'm not seeing my family and I hate my job." You never experienced that because you looked ahead and started planning and started acting forward in faith that things were going to continue to grow and it's worked out well for you. You're going to continue to grow that you develop that foundation.
I want to say one funny thing that happened. We're in the process of moving houses. We're going through a bunch of things and I find a box of all my notes from PT school and I open up a folder from my business admin class, the one day that we spent on and pull out the handouts. There was right on the top was The E-Myth Revisited. I don't remember the professor ever talking about that back in the day. If anything, they were doing a good job teaching about business because they talked about The E-Myth. I'm sure there are other ways to look at it, but following that way of setting up systems and organizing the business and working on the business. That is what has allowed me to get to where I am.
What's different about you Avi compared to a lot of entrepreneurs, whether it's physical therapy owners or not, you've had it on the one book and I'm sure you've read other books, but this one's been influential for you. There are people out there that have read the book and I've read hundreds of others and aren't in the position where you are. The differences that you've actually taken action on what you learned. I read The E-Myth Revisited 6, 7, 8 years ago, but I didn't implement it to the level that you did it either. I would submit that people who are reading the business books, if they read The E-Myth Revisited, don't read it as a nice, good story, but to actually implement what he recommends.
The only way to implement it is if you take time away from treating and work on the business.
You've actually put those principles into practice and that's what I separated you from somebody who is simply read the book. I'm excited to see your growth here as you get some greater insight and knowledge on how to improve your stats and become more efficient. We'll follow up with you and do another interview and see what you've learned and what's been influential for you. Maybe there are some pitfalls, maybe there are some things that happened along the way, who knows? You might experience for yourself what your initial outpatient company did in San Francisco. Maybe not everybody's aligned. That or everything is going to go in a great direction because you have your ducks in a row already. I'm excited to see what happens. Is there anything else that you want to share, Avi?
For anyone, if they are reading for the first time, reading your blog has been helpful also. I talked a lot about The E-Myth, especially because I've set aside some time to work on things. I'll read your blog whatever interview person you have on and then try to implement those things that day or that week. It's been also helpful to know other people's stories.
That makes me feel good. Not only a resource but an inspiration to you. Thank you for that. We will stay in touch and we'll come back around to the story that is Avi’s in Druid Hills PT.
I'm looking forward to it.
Dr. Avi Zinn, PT, DPT, OCS is the owner of Druid Hills Physical Therapy in Atlanta, Georgia. He opened his practice at the end of 2017 and has slowly built it up—transitioning from a staff of one (himself) to a team of administrative staff and treating therapists. He continues to grow the practice gradually. Avi’s main mission for Druid Hills PT is to provide high-quality, personalized care to each and every one of his patients.
Avi has his doctorate in physical therapy from Touro College, and is a Certified Orthopedic Clinical Specialist. He lives with his wife and three children in Atlanta.
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Although Mike Bills, PT had plenty of managerial experience for a large hospital network, it did not prepare him for owning his own PT clinic. He quickly learned that owning and managing are two different ball games. Mike reached out and got some consulting support five plus years ago, stepped out of treating full-time, and has networked with other PT owners for the past five years. Now, his one-person clinic has turned to a 6,000-sf facility with thirteen providers, and they're continuing to grow in spite of the POPTs and hospital networks that have sprung up around them. What are they doing differently to thrive and survive? Today, Mike shares the formula to ownership success as well as their successful actions of obtaining new patients through their internal referral programs and social media/internet efforts.
I've got a friend of mine. I've known Mike Bills for a few years. We're both clients at Measurable Solutions. He's the President of Measurable Solutions for those of you that have been through any of their programs. Knowing Mike and the successes that he's had at his clinic, I had the opportunity to have a phone conversation with him. He shared with me how much they're growing and how well they're doing. I thought, “I need to bring him on because there's one aspect in particular during our conversation that stood out.” One of his most successful marketing actions is a robust internal marketing program to the point where a great percentage of their patients come from internal referrals from current physical therapy patients. They're not dipping their foot in the water here. They've been doing this for a number of years.
It flabbergasted me when I was doing the interviews. They do 30 minutes of drilling, training, and roleplaying with all of their 30 to 40 team members every week on how to get referrals from current physical therapy patients, not just providers. The entire team is responsible for this to the point where it's affecting their referral sources significantly in terms of internal referrals. Another example is that they've focused on internet and social media referrals. That's where they get the majority of their patients at this point. We go through that. He shares the powers and the numbers. They simply get a minor percentage of their patients from physician referrals. I want to share that with you because it's powerful what you can do with internal referral programs and the usage of social media and online marketing to the extent that I have seen from other physicians or physical therapy owners during the course of my show. I'm excited to share this insight with you. Let's get to the episode.
I have Mike Bills, CEO and owner of Loudoun Sports Therapy from Sterling, Virginia. He is also the President of Measurable Solutions. For those of you that might've been through Measurable Solutions at one time or another over the past couple of decades, Mike is now the face of Measurable Solutions. Thank you for coming on, Mike. I appreciate you doing so.
Thank you for having me. I'm excited.
You've got a great expanding clinic in Virginia. In talking with you in the past, you've had some successful exit actions in terms of your marketing strategies and whatnot. I want to get to that, but I wanted to learn a little bit about you and your professional path. What got you to where you are now? Would you mind sharing it?
I started out as a physical therapist many years ago. I was a therapist for quite a long time, but I got started in therapy probably a lot as everybody else did. I wanted to help people. I had some injuries myself in high school and in college and it led me down that path. I was trying to decide between being an athletic trainer or a physical therapist. I had some physical therapy issues and I fell in love with it. I'll be honest, I never truly had any inspirations to be a business owner when I started out. I talked to a lot of guys and they come out of school knowing they want to own their own practice by the time they’ve been out for a couple of years. I never had that interest on my part. Physical therapy was a lot different then. I went to work for a company that I had been to the place where I had been a patient. I knew a couple of the therapists that were there. I had a good relationship with them. They helped me to grow skill-wise early on in my career. We got bought by a large hospital system, and I ended up somehow in management and not a hospital system. Maybe I got tricked into it.
I was the Outpatient Regional Head of about 37 different outpatient therapy centers up and down the different parts of the East Coast hospital system. I don't know how I get into that because it wasn't the direction I wanted to go. In the several years that I did that, I will honestly tell you that I never learned a single thing about running a business. I was responsible for all these places, who got hired and who worked when, but nobody ever taught me how to run a business. One day I said, “I am not happy with what I'm doing. I'm not happy working for this big conglomerate. I feel like I'm being told how to do everything.” I pretty much said, “The first opportunity that comes up, I want to get out.”
I mentioned that to my boss at the time. I said, “Anytime any one of these physical therapy centers in this area where I live here in Virginia is up for sale, let me know because I want to buy it.” Lo and behold, a few months later, Jane called me up. She said, “We're going to need to close a couple of places. Are you interested in any of them?” I said, “I sure am.” It fell into my lap so it's on my lap. I knew nothing about running a practice. There I was. All of a sudden I owned a practice. That was in 2005. A few days later, my wife and I bought a new house. A few months later, my daughter was born. A lot of things happened in a short period of time.
Here I am, I'm doing well. It was me at the time. I started to realize that I didn't want to be small. I wanted to help as many people as I could. I was in an area that was growing a lot. New doctors are coming in and things like that. I started to figure, “I got this. I can do this. I've run all these other places.” I started almost grasping at straws and pulling things out of the sky. Sometimes it worked and sometimes it didn't. Healthcare was a lot different back then. We got reimbursed a lot better and there weren't all of the authorization and restrictions that there are now. As those things started to creep in, I wasn't sure anymore what to do. I was starting to have some struggles. You mentioned Measurable Solutions. I was a client of them as well, that's where I found them. I started to learn how to run a business and that's what's become successful for me to the point where I've grown my business significantly.
What led you to reach out to Measurable Solutions in the first place or decide to get some help? What's intriguing is that you had all these years of management experience, yet you didn't learn how to run a business and you would assume that it'd be an easy transition for you to be successful in an outpatient clinic, which is a story itself. What led you? Was there a turning point where you're like, “I need to get on top of this. I need to find something else?” Is there a backstory behind that?People don't buy what you do, they buy why you do it because they perceive how dedicated you are to what you do. Click To Tweet
Definitely, there is. Around 2011 to 2012, at least in my area, it's where a lot of physicians were starting to open their own PT practices. There were a couple of big companies that came into the area at the time, HealthSouth Physiotherapy came into the area. They started to open or buy a lot of clinics. I've run these outpatient centers, but I ran them underneath the guys in the management of this hospital system that I was part of. Here I am, I'm on my own. I don't know how to compete against HealthSouth Physiotherapy or PTs that are opening their own practice. I felt like I needed some help to help me to survive that period of time. That's when I reached out. That's what's been the impetus for me growing and being successful over the course of the last several years. We've expanded over 600% in terms of size and volume. It started from 2011 to 2012, where I was scared of what might happen if I didn't have a better plan in place to compete against these big guys that were coming in.
I don't know if the environment is all that different nowadays for new practice owners. Whether it's physicians that are taking their therapy services in-house if they haven't already done so or hospital networks buying up or larger nationally-run private equity firms or publicly-traded physical therapy companies that are coming and buying some of the smaller clinics. It's happening all over the place. Even though it's a little bit different than your situation, I'm sure there is a similar environment now where there are owners who aren't sure what their future looks like, reimbursements are going to go down, authorizations are going to be a lot harder, all that kind of stuff. There are plenty of questions out there. That's my mantra. You’ve got to reach out and get some help. Reach out, step out, and network. You’ve got to reach out and find somebody to give you some of that business training.
That's why I love your show because it exposes people to many other opportunities. Many other people had been through the same things. I was at PPS, I was talking to a lot of new guys that are coming out. They've been out for a couple of years and they're experiencing the same things. Here in my area, I forget about the fact that there is not even a primary care physician in my area anymore that doesn't own his or her own PT practice. I forget about that because I've got assistance ingrained. It works so well. As I was talking to some guys, it's happening all over the place pretty much no matter where you are from Alaska to Florida. It's the same situation.
It was you as a physical therapist when you initially got started. Where are you at now? How many providers do you have on staff? How many locations do you have?
I always like to look back on that. It truly was just me. I didn't have any office staff. I didn't have a tech. I didn't have anything. It was me. I answered the phone. I collected payments. I sent the claims to the insurance company. I treated the patients. I cleaned the tables. I always like to look back on that. Here's where we're at now. We had our fourteenth clinician PT that started. In PT/PTA, we have five athletic trainers that work for us as well. I wouldn't be doing it fair if I gave you a number, but we have a large number of the front office staff that includes billing and things like that. We'd probably have 8 or 9 people. We have a total of 38 or 39 employees now. We're all in one location. I would say I have six clinics. They're all in one building.
Every time we've needed or wanted to expand, we've been able to take on additional space in the building that we're in. It’s one of the things that I learned when I moved to this building back in 2007. We're in this direct center of the county and you have to drive through us to get to anywhere you go in our area. Rather than opening another place over here and another one over there, it's always worked economies of scale for us to take on another 2,000 square feet and turn it into that. We took on 2,000 square feet. We haven't knocked down the wall yet. We don't need the space yet, but it puts us at over 16,000 square feet. That's why I say I have six clinics, but they're all in one. Every time we do so, we've got to hire new office staff, new clinical staff and that's how we've grown.
I've always been envious of that. It's nice to say that I've got 4, 6, 10, 12 locations, but I've always been envious of you because you've got one location and a bunch of providers knocking it out. It’s economies of scale. You got immediate visual oversight of what's going on in the clinic and everyone is in connection with each other. It's easy to develop your culture and a lot of that goes on well. Your story is awesome but I want to talk about what ramped up your numbers. What were some of the successful actions? There's one particular program that I want to delve in with you about. What do you think some of the successful actions had been for you in terms of expanding your numbers?
I would say there are two pieces. One is getting more new patients in the door. I would sum that up as saying like marketing and promoting. Both internal and external things and how we look at and how we address a patient from the time they start to the time they finish, getting them to what I would call a successful discharge. Those are the two pieces where every year we'd rather bring in more new patients. We've expanded that way and/or we've tightened down our systems and made a much better process. We improved the process to make sure that we're keeping patients all the way to a successful discharge. Those two things have been the biggest driving factors in our expansion, especially over the last several years.
I love what you said there that you added tightening up the processes because many times, I find that many clinics if they're going through some tough times don't necessarily need a lot of new patients. What you find is that they have holes in the bucket, holes in the ship, however you want to analogize that, but they don't have the structural integrity to maintain the patients to get them through their full plan of care to a successful discharge. If you can shore up those holes and maintain the integrity of your system so there are people getting through to discharge successfully. You don't meet a lot of new patients, but when you do start getting new patients, you start seeing tremendous growth. That's what you see that you shored up your systems. I do have to put a plugin here. Your wife has been on the show before, her name is Dee Bills. She owns Front Office GURU. I recommend you go back and read her episode and when she recognized that she spent more than a year in fortifying the front office systems in your clinic to do exactly what we're talking about.
I am glad you mentioned that. I was going to say that in the year 2014, we had five fewer new patients came in the door in 2014 but it’s when we implemented and instilled all of the processes that she now teaches people out in Front Office GURU. We grew 31% in the year of 2014 both in collections and patient visits because we shored up all those holes. That's a great point to the fact that you don't need more new patients all of the time, you need to be sometimes look at improving your systems. We had fewer new patients over the course of fourteen from the previous year thirteen. We grew considerably because we shored up and plugged all those holes with all of the things that she now goes off and teaches other people. I'm lucky enough to be able to have learned that along the way with her. We continue to put it into play now.
I can't imagine how much money, how well that hit your bottom line, your net profits in that regard because your expenses were probably about the same. I did a show with Heidi Jannenga and they do their annual WebPT State of Rehab Survey Report. They found that the average small clinic loses about $150,000 per year in gross revenue. They haven't shored up their systems in there and patients essentially aren't completing their plans of care successful.
Think about it, you need to get a patient that finishes two visits, finishes themselves, two visits before they should have. You multiply that by however many patients there are. That's a ton of visits. It's a ton of money that we're losing as business owners.
What I want to talk to you is you've focused on and all of us are out there, “I need to get physician relationships, visits and referrals.” Those are super important. It's important to have those relationships with the doctors in the community, but you've been successful with your internal referral programs. Do you mind sharing with the audience a little bit about that and what you do?
We have done a good job in my opinion. We've done a good job of building relationships with patients that are current and how we get them to refer patients. You can call it a patient referral program, but anybody can give out a card that says, “Refer a patient or I'll give you a gift card to target if you refer me a patient.” I live hard on this philosophy of people who don't buy what you do, they buy why you do it. They perceive how dedicated you are to what you do. You talked about the culture before. You're creating a culture where patients want to share that with their friends and their families. It goes a lot into educating the patient. In Virginia, we have some loose direct access laws, which do help us. I would tell you, I'm working with a client in Texas that has some restrictive direct access laws. This is working gangbusters for them.
If you educate your patients on when they can come to you, how they can refer their family, friends, and you teach your staff how to have the right conversations, that program comes into play. I'll give you an example. If I'm working with a patient and I am talking to him about, “What do you do for work?” “I work around the corner at Oracle.” “Tell me something about the guys that you work with.” “We all sit around in these cubicles all day. We're all on our computers all day.” Let's say this guy is here for his knee because he hurt it running, but I will start to ask questions like, “Anybody at work ever complaining about their arms hurting them, their elbows hurting them, their necks hurting them?”
He was like, “We were having this conversation. We've got to figure out some way because at the end of the day, on Friday, our necks are always stiff and sore.” There's a light bulb for me. I'm going to educate him on what he should be saying to those five guys that he sits in a cubicle with. Before you know it, 2 or 3 of them have become patients in a short period of time while that guy that I was treating is still here. It's a matter of how do I educate him to go back to the office and educate those people so that the internal referral is walking in the door before that guy has ever been discharged. He's replaced himself 2 or 3 times over. That cycle keeps ongoing.Train, drill, and practice. Click To Tweet
I love it because that takes it to another level. I love it because you're basing it upon your higher purpose. Whereas our internal referral program in the past, it was a little bit more like, “Who else do you know that's in pain?” Inevitably you might know somebody that has some issues with this, that or the other. It was surprising to me how many patients would sit there as we're working on their knees and they'd ask us, “Do you guys work with low back pain?” That's 75% of my patient load. Patients still don't know what we do essentially. We have to educate them on how we can provide value to them. For those patients who are coming with their knees, you ask them, “Are they having issues with their backs? Tell us about your family or whatnot.” You look for opportunities where you can instruct not only them but also instruct them on how they can help or guide their friends and family over to you by the value you provide.
I realized that it's a matter of I had to change my mindset that it was okay for me to tell them what type of patient to send me and when to send me that. If I'm having a conversation with a parent and they're like, “What'd you do this weekend?” “I was with my kids. My kid had this soccer tournament.” “Does anybody ever get hurt on the field?” “All the time.” “Here's what I want you to do.” I had to change my mindset. “The next time somebody gets hurt, I want you to give them this card. We're going to write your name on it because I want you to get credit for it. Once you give them this card, I want you to tell them about the experience that you're having in therapy. What do you like about therapy right now?” “I liked the fact that every time I come in, you guys remember my name and you remember what we did last time. You always want to know things. You're progressing me.” “I want you to share that with that child's parents.”
It helps that process of I'm educating that patient on what to do because they don't know that we treat backs because they're here for their knee. They don't know that somebody else can walk in off the street because they came to us from a referral from a physician. All of those points where we can educate them on, it might come into play when they're in therapy. It might come into play a few weeks from now, but we all are going to come in contact with somebody that's in some level of discomfort. I want them to be able to go, “I had a great experience. You should go see those guys.” For us, that was a big part of it.
That's a great example of how you're not handing over the card saying, “If you know anybody, you can get a free movie ticket if you pass them along to us.” I love how you give them the words, the verbiage to use when they're in that situation so that they do feel comfortable. Maybe they don't use the exact words, but they know the feeling that you're trying to portray it. Through them, they can express that feeling in those words to someone who needs physical therapy, honestly. What have been some of the benefits of that? Have you seen a significant amount of growth simply by pushing the internal referral program?
Yes, we've tracked a lot of different statistics. The ones that we track is how many of our new patients on a weekly basis are coming from what we call patient referrals, which would be that internal referral program. On an annual basis up through the end of the third quarter, after the end of September 2019, about 38% of our new patients had come from referrals from other people, which is only second to new patients coming to us off of the internet, social media. It's three times the amount of referrals that we get from physicians, we're getting patients referring family, friends. It's been successful. When you look at it if I used to get three new patients from that, let's say 27 is what we had. If I get 27 new patients from patient referrals, then let's think about how much that's going to help things to expand. It takes us back to the previous topic we were talking about.
If I referred you to someplace, you're going to go with you're already sold. I don't have to sell you on your plan of care. You're going to want to stay because your wife said it was a great place. You're going to do what I tell you because your wife said that. It helps that process much easier. I always tell my staff, “Wouldn't you rather treat the friends of the patients that you liked, then roll the dice on that guy that walks in off the street and you don't know anything about him? You already know that patient because they work with Joe at Oracle. You already know things about them. You already have things in common.” It's much easier to treat that patient. Put that energy into educating them on how to refer somebody.
You use the words well and I'm sure you established a great referral program. How do you get the other providers on your team to do the same thing, to have the same words, to use the same energy? It's one thing to do it as the owner because you own that program and process, but how do you get that to extrapolate into the rest of the team, even the front desk?
This is the message that when you ask me, what is the one thing that's been most successful for you across all aspects of your business? It would be what I call drilling or training. We drill and we train all the time. I'll use it as an analogy. The World Series is finished. Washington Nationals, I'm not a Nationals fan even though I live right here in Washington DC. Let's say I was, I'm a Yankees fan, but nonetheless those guys train year-round. They'll take a couple of weeks off, but even on a day where there's a game, they're in the batting cage before the game. Why? They're going to get 27 pitches or so over the course of the game, but yet they're still practicing that. I take the same philosophy with my clinicians, with my front office staff.
We need to practice. I have to recognize that I didn't get good at having a patient referral program in the first few years I was a clinician. I probably was horrible at it back then. As the business owner, I've perfected that skill, which is what helped me to be successful as a business owner. As to help my staff, all of them, you have to be as successful as that. It comes to training. We train, drill and practice. How would you ask me for a referral? I wouldn't say, “Do you know anybody I know?” I would train them, drill with them, and practice with them how to have that conversation so that it flows They want to get those referrals. They don't know how to go about the process. They'll be like, “Have this referral card and bring it.” They'll get back to whatever they were doing because the conversation doesn't flow naturally. It's practice.
To get into the weeds a little bit, are you doing this one on one? Are you doing it as a group? I mistakenly immediately went and said that you're training this with the providers, but you're dealing with your whole staff. The entire staff should be on board with this internal referral program because they know the value that Loudoun Sports Therapy provides to the community. You shouldn't be holding that back. How often are you doing these drilling or training sessions?
I'll try to break it down for you this way. If we're talking about the referral program, it starts on day one. If you are a new employee, you're training and drilling on the referral program every single day. Whether you work at the front desk, you’re a tech, you’re a PT. There's some semblance of drilling on that every single day, five days a week as part of from day one of starting. Even my people that had been here from 5 to 8 years, they're still drilling a minimum of one time a week for 30 minutes on that one aspect.
We do drills on a lot of different things, but that is the key thing that everybody does. No matter what you do, everybody's drilling on that a minimum of 30 minutes a week, at least one time a week. There may be other things that you're drilling on. Every staff member for us drills a minimum total of 60 minutes a week. That's the inside of their 40 hours a week. It's not an addition. If you're newer, more of your 40 hour week is going to be on drilling. If you're older, you've been here longer, it's still that minimum of an hour and 30 minutes of that hour is always on the referral program.
Do you do that over the course of a year? You guys have become experts then at getting referrals from patients.
Yes, it’s the same thing. Think about the baseball players. They're still in the batting cage all the time. It's funny, we're having this conversation. My youngest daughter who's sixteen, who still is in high school, she's the only one that we have left at home. She is interviewing for a job here. She's going through the same process. She's worked there since she was eight, but she's still interviewing for a job. It'd be a position at the front desk. She came home, she had the interview process. She's like, “I won't say their name, but I might want to drill with Sally a little bit more because she wasn't as good at talking about the referral program as I think she should be.” There's always been a joke. My daughter has always said that she's the Deputy CEO of Loudoun Sports Therapy. It was interesting to see how somebody who's grown-up seeing that and to be able to see. She’s somebody who's been here for a couple of weeks and that's a new employee that she was talking about. She’s somebody that flows well but still has room for improvement on that.
You guys will not only train on the internal referral programming. Essentially, the goal with the training then is to get the referrals from the patient or to pass along the card simply. What is the goal of each training session?
The goal of the training session would be that they have an increased level of confidence in being able to help the patients to have a realization of somebody that's out there that maybe we could help. We're not looking for them to give us their name and their phone number. That's not the process we're following. If that's what somebody is doing, that's perfectly fine. What we're looking for is for them to have the realization. I dragged my trashcan down to the street and I was talking to my neighbor. He's like, “My knee has been bothering me.” What I want is for that patient to realize that's somebody that they could refer to us.” It's drilling with the staff member to have that conversation, help the patient to have that realization, and come to the conclusion of, “I don't have to send them here, shouldn't I? Do you guys do these?” “Yes, we do.” “Do you have something I could give them?” “I have this card. You could give them the card” We have a card that says referral card on it. We'll write the patient's name on it so they get credit for it. We'll send them a thank you, but we don't do anything else.The goal of the training session is to have an increased level of confidence in being able to help the patients. Click To Tweet
You say you're getting 38% of your patients from this internal referral program. I'm assuming that with all the physicians on physical therapy clinics in your area, you don't get a lot of physician referrals. What's your percentage there?
It is 11%.
Where are you getting a majority of your patients from at this time?
If we look at beyond the patient referral program, what I would classify to be like social media, the internet. It's social media, internet, and the patient referral program tied together. We have an expectation that every patient who successfully completes therapy is going to give us a success story. Do an online review for us. We average about 13 to 14 online reviews a week between Facebook and Google. That's hard. It's an extension of that internal review or referral program. They give us that review.
The discharge patients give us that review so that somebody out in the community sees that, has that reality with it and reaches out. The majority of our patients, we've been successful in building the use of that direct access through that patient referral program. Patients come to us off the street, they'll see something that we put up on Facebook or an email that we send out or something that we mail out. It’s a whole own separate entity. That's the number one driving force. The number two driving force for new patients is the patient referral program.
Physician referrals have declined over the course of a number of years. The study, a couple of years ago, it declined 50% between 2010 and 2018. It's dependent on us to change our marketing strategy. Don't forsake your physician relationships, those are valuable. You always want to be able to the physicians that these patients are saying, but you’ve got to consider direct to consumer marketing is the way you need to go. If you're outside of the internal, the patients are already there. I'm assuming you've got emails or newsletters that are going out to past patients and you're constantly mining that group because that's an ever-expanding group. You've got the internal referral program that gets you some immediate patients based on the patients that are in the clinic. When it comes to social media, are you doing some Facebook ads? Are you simply having those patients post on social media?
We're doing both. For example, that patient that is discharged now, they'll do an online review for us. They'll put their success story up. We'll share that. We'll like that. They'll share that and like that with their friends with that piece. We are doing a whole semblance of things online. We do run ads on Facebook, Instagram, etc. Most of what we're doing is unpaid. Most of what we're doing is I would term to be organic. It's not following the organic definition of Facebook. We post five things a day on Facebook about different problems. It falls back to the notion of if I educate people that there is a problem, how the problem is affecting them, that there's a solution for it, they're going to be much more likely to take action because they understand what it will do for them to take action.
It goes back to that mantra of people don't buy what you're doing. They buy why you're doing it. I'm constantly putting out content that helps people to see that it's not normal at the age of 45 to have knee pain, despite where we might think in society. In society, we think, “It's okay because I'm getting older.” It shouldn't be that way. It doesn't have to be that way. “Here are some things you might be having problems with going up and downstairs, sitting to watch a movie. There's a solution to it.” After they see that a certain number of times, they will start to take action. We'll tie that success story into it. “Here's Joe who had knee problems. He came to us and here are his results.” That's part of that whole process.
The majority of what we're doing when it comes to getting new patients off of social media, internet, isn't down that paid avenue as much as it's down the continue to educate them and give them good content and information. They will make that decision to take action in a relatively short period of time. I hadn't changed my mindset. I used to think, “One post a week was enough.” Now, I said, “We do a minimum of five a day and a minimum of two emails a day.” That's a minimum. If we just hired a new clinician and we're trying to fill their schedule, then it's 7 to 8 things a day and 4 to 5 emails a day. I had to change my mindset, but following that same philosophy.
Who's creating all that content?
We have all of our clinical staff create all of that content. We do all of our own social media stuff in-house. It's a requirement. It's an expectation. If you're a clinician that works for us, you're going to produce one blog every three weeks and one vlog every five weeks. We're constantly creating that content internally. I have full-time promotions, people that work for us as part of our staff. They're employed here, but that's her job as she does social media stuff. She's taking those blogs that she's getting, she's turning them into content, throwing a picture with it, putting it up online, deciding what to do with it. It's getting that stuff out, but all our clinicians are producing all of that.
Do you find you're getting a lot of patients that say, “I found you guys on Facebook?” Are you getting some of that?
When we look at it if I were to turn around here. If I'm looking at my referrals that came from online, 63% of our new patients came to us of some form of online, internet, social media.
I haven't talked to a lot of successful PT owners that have had as much success as you have when it comes to the internet and social media work. Do you attribute that sheer volume on the consistency of your posting?
It comes down to three things. One is the volume. It is the quantity of things that we're putting out. Number two, it's the quality of what we're putting out. We're not putting out, “Come to Loudoun Sports Therapy.” We're putting out, “Here's a problem. Here's how therapy can help. By the way, at Loudoun Sports therapy, we treat that.” We're telling a story to the patients that they come to have a realization that there's a problem. There's a solution to it. The third thing that I'd say that helped us to drive that as that I've spent a lot of time. The benefit of me being able to truly be an owner and not have to worry about being a physical therapist is I've been able to dedicate my time and hire staff who have the same desire to learn a lot about that avenue of marketing and promoting and using social media.
I've become a pseudo expert in marketing and promotion. That's one of the things that I do with Measurable Solutions is helping to pass that information on to other practice owners so that they can have the same results. It is something that's been successful for us. I talked to a lot of practice owners who tried it but it didn't work. I'll say it's because they didn't put their full attention and energy on it. They were paying somebody that's also marketing for the restaurant down the street, writing a blog for them about something. It's always driven towards, “Come to Loudoun Sports Therapy.” That’s a no-no. “Go to physical therapy. By the way, Loudoun Sports Therapy does the things that we're talking about.”People need to see something an average of twelve or more times before they take action on it. Click To Tweet
That's one thing I know about myself is that I'm not the creative type, content creation is like nails on a chalkboard. Inevitably you probably have somebody on your team that would probably love to have that responsibility to do that. You have shown by the fact that your providers are doing content creation, have created a culture, and a group of people that are willing, wanting and anxious to provide that.
I'd say it's a lot later. Back to the drilling on teaching a patient how they can refer to others. A lot of times, we'd get very all worked up about a blog has to be this big fancy thing with a lot of stats and a lot of stuff. It's making it simple for that staff member, “If you were standing in line at the grocery store and the person in front of you kept rubbing their neck, what would you talk to that person about for 2.5 minutes? Go write that down. That's a blog. Making it something that's much simpler because that's the type of relationship we should have with our potential patients. Don't be all fancy and super-duper hyper stuff. Be simple and basic.”
They will have that realization if they see it enough. You've got to have stuff out there and enough content. The same thing with the patient on the patient referrals side, the internal referrals, you can't mention it one time. You've got to be like, “When you went back to work, did you talk to any of those guys that were complaining about their neck pain?” “No, I didn't.” You're like, “You have to keep coming back to that point.” It's the same thing. It's everything in quantity will give you what you're looking for later on.
I love how you brought that back around full circle to the internal referral program. The one-time conversation isn't sufficient. There need to be followups, there needs to be, “As you walked around, have you noticed other people with a similar condition? What are your friends and family like?
I might've been talking to you about the guys you sit at work with you had lunch with, but then you're telling me about the soccer game. You're talking about raking leaves with your neighbors. All of those things are opportunities where I keep ingraining in you. I keep having this relatively same conversation, but I keep ingraining in you how you can refer to other people. I don't just have it one time. It's like a shoulder that's frozen. I don't mobilize it one time and it's all better. I've got to mobilize it twelve times and it starts getting better. It's the same thing with getting somebody to refer, getting those referrals in. A lot of times we get wrapped into, “I tried that. We tried it three times over the course of three months.” You have that conversation twice with a patient on day five. On day fifteen, they didn't do what you needed him to do.
I read a study that said, “On this day and age of social media, we need to see something an average of twelve or more times before we'll take action on it.” It changed my mindset. If I'm putting out a blog a week, a couple of weeks from now, maybe somebody will go, “I should do that.” The reality is if they're only seeing it once a week, they forgot about it by the time they see it next week. The same is true for patients. If I had a conversation with you about referring your wife, but I don't ask the next time, “How's your wife doing?” You forgot that we had a conversation. I’ve got to have that conversation with you multiple times for you to go, “I'm going to have the conversation with her and get her off my back at a minimum.” You’ve got to hear and see something twelve times before you take action on it.
That changes my mindset hearing you say that. It's understandable because, in the past, my refrain growing up was that someone's got to hear it three times for it to sink in. If you consider the decreased attention span of people nowadays and how easily distracted they are. You tell me once and I'm going to forget that by the time I scroll up to the next thing on LinkedIn or Facebook. If I see it a number of times and especially, more than three times over the course of even a couple of days, then it starts sinking in. I can see where twelve is coming from.
If you watch football games, if you watch an NFL game in a span of 3.5 hours, how many times do you see the exact same commercial? Not the commercial for Bud Light or for Ford trucks. It's the exact same commercial. It's the same philosophy. You've got to see it many times before you're like, “I need that truck.” That's the society we live in.
Thanks for sharing so much about some of the successful actions that you're doing with your clinic. It's evident in the numbers that you have now and the growth that you guys have seen. If someone wanted to reach out to you to pick your brain, ask about Measurable Solutions, even get in touch with Dee, how would they get in touch with you?
That's the point I love about where I am in my career now is that I get a chance to help other practice owners. I am so much about helping the private practice owner to survive in this day and age of big corporations. Anybody that wants to reach out to me, I would love to sit down, chat and help in any way I can. The best way to get in touch with me is to send me a text, shoot me an email, or leave me a voicemail. I'll give you my cell phone number. It's (703) 470-5995. One of the great things about me, having built this business to my clinic is I've been able to give back to Measurable Solutions that was helpful for me.
They taught me a ton of the basics of these things that I've applied and talked about. I've been able to join their team. I'm the President of Measurable Solutions now. The best email to reach me at is my email for them. That would be Mike@FortisBusinessSolutions.com. Send me an email. I'm happy to figure out a time that we could talk or anything like that. I am always about being able to help people because I want private practices to survive. I do not want us to get eaten up by physicians and corporations. I'd love to help anybody that's out there that wants more information.
Thank you for your time. I appreciate it, Mike. It was great. There's a ton of value. Thank you.
You're welcome. Thank you.
Mike Bills is the Owner and CEO of Loudoun Sports Therapy Center in Sterling VA. He started his practice in 2005 and did everything: answered the phone, treated patients, billed the insurance, etc. Since that time he has grown his practice by over 10 times. He now has a staff of well over 20 people, including 14 clinicians and a facility size of over 10,000 square feet. It was always Mike’s goal to have the time and ability to manage his business and not work in it and he has fulfilled that goal as he is the true CEO and no longer treats patients. Another goal Mike had was to be able to help other PT’s have the Freedom they deserved from their practice.
Mike was a client of Measurable Solutions where he learned how to truly manage a private practice and where he learned how to truly be the CEO. This is where he learned the basis for all of the systems that he uses in his practice that have helped him to be so successful. Recently Mike was named the President of Measurable Solutions and is now able to fulfill that goal of helping other private practice PT’s have the same success as him. If it weren’t for the perseverance and drive over the years to build a successful business this never would have been a reality for him. Marketing is one of the most important pillars of a private practice and I have worked hard to develop systems that continuously help my practice to grow and thrive despite the time of year or whatever else is happening in my community. I am happy to be invited onto the podcast to share just a fraction of what has helped us be so successful.
There is nothing more comforting than knowing that you are financially secure for the future. Bringing in a trusted expert from Econologics Financial Advisors, Eric Miller gets into the mindset, attitude, and strategic plans you need in place to secure your wealth for the future and for your household. Eric and Econologics have been working as financial advisors to hundreds of private practice owners over the past decade. Thus, they know some of the pitfalls that we share when it comes to our finances and what it takes for owners to become financially free. Eric goes beyond the investments and portfolios and sets you up with the right mindset and financial purpose and goals that are in line with your retirement plans. Secure your household and make your clinic the vehicle by which you achieve your financial goals in this episode.
I get to talk about money, one of my favorite topics. One of the reasons why I got into business was to have more freedom and security for my future. I decided to bring on Eric Miller of Econologics. If you remember, we had Christopher Music of Econologics on. I've been working with them for a little over a year. I do have to have full disclosure that I have an interest in their performance. I've also been a happy client. The reason why I like Econologics is not only do I like their perspective on financial planning but also the amount of communication they provide. If you follow my episode with Frank Cawley, we talked about important financial indicators like KPIs, reports and developing a financial team. Those things are all important. What I get into with Eric is more the mindset, attitude and strategic plans that you need to have in place in order to secure your wealth for the future and for your household. Important items to consider, this is all about securing the household and making our clinics the vehicle by which we achieve our financial goals. Let's get to the episode.
I've got Eric Miller, Chief Financial Advisor of Econologics joining me to talk about one of my favorite topics, money. Thanks for coming on, Eric. I appreciate it.
My pleasure, Nate.
Can you share with us a little bit about your experience as a financial advisor and your practice or work with private practice owners? What's got you to this point?
Long story short, I am a financial advisor and I've been in the financial industry for about twenty years. I grew up in Toledo, Ohio. I moved to Columbus, Ohio in 1990. The funny thing is I get so jealous of practice owners because a lot of you knew what you were going to do when you're 8 to 10 years old. I was 29 years old before I knew what I wanted to do. I always had an interest in money. For some reason, it was an area that always attracted me. I didn't study the subject when I went to college. When I got out of college, I worked for a mutual fund company selling 401(k)s and managed accounts.
I started to get introduced to what financial advisors did. By and large, what I found out was although they were benevolent and they wanted to do a good job, it was mostly an accumulation of assets. That's what they did. They didn't focus on, “How do we change someone's financial condition?” It was, “How much money can we manage?” I met a friend that said, “I'm going to start a financial planning company down in Florida. Do you want to join me?” At that point, I had a house, a dog and a girlfriend. I knew that was my purpose at that point in time. Like many people, I was like, “If I'm going to do it, I better do it right now,” and I jumped. I drove down there and got rid of that life. This was in 2008. Do you remember what was happening in 2008?
Bad timing.Your practice is what drives your personal wealth. It is the main money artery that most private practice owners have. Click To Tweet
It was a global meltdown. The stock market was down 50% and banks overlent to everyone. It was chaos. It was the worst time you could think of to start a financial planning company. We were thinking to ourselves, “We have to do something differently. We can't rely upon all these financial institutions for people to get financially independent.” We had to come up with a system where the business owner himself could be put back into control of his financial destiny. That's what we worked on. We started working with private practice physical therapists. It was the first type of clientele that we worked with. We developed our system of showing a business owner how he can be in charge of his financial future as opposed to putting it in somebody else's hands. How does he do that? How does he use the business as the engine to do that? We focused a lot of our efforts on that. We started working with veterinarians and other private practitioners, but our core is working with private practice physical therapists.
It’s cool that you niched down like that. You've had so much experience over the past decade focused mainly on physical therapists, so you'll know some of the ins and outs of our dilemmas, issues and whatnot.
That's the fun part about it. Your practice is what drives your personal wealth, for most of you. You don't always want to be in that financial condition. That's where most of the money comes from. That's the main money artery that most private practice owners have. If you're advising someone, you better know something about their business that you're going to help them with their money. We do spend a lot of time on that.
You've been working for over twenty years. For the past decade of working specifically with physical therapists, what are some of the things that you would recommend they consider as they're trying to establish a better financial picture or financial condition? We have plenty of display vehicles out there whether that's the traditional 401(k)s, IRAs and stuff. What is your advice to some of the physical therapists out there?
The main thing that we try to get across is number one, you have to treat your household like a business. What I mean by that is that a lot of physical therapists get trapped in the practice. They're there to serve the practice as opposed to the practice being there to serve them. The first thing that we try to teach private practice owners is that you are not there to serve this practice. It's there to serve your household. When you start doing financial planning, it starts with the household. What are the goals and purposes of the household? How can the practice benefit that? What we do is to teach them your point of where you're controlling things. If you look like a company like Facebook. Facebook is the parent company. It owns 80 companies underneath it. Those companies are there to serve Facebook, not the other way around. Our households are no different. Your household, the Nathan Shields’ household, all your kids and your beautiful wife, that's the parent company. That's where everything flows to for the benefit of that.
It's a paradigm shift. Many owners need to make it because they get trapped inside of the company. I espouse that all the time. That's why I want people to reach out and step out of the business so they can work on the business. It's the same thing when you're talking about financials. It's a mindset shift instead of, “What do I need to do inside this business to keep it afloat?” No, you're saying step out and look at it from the household perspective and say, “What does my household need to survive, sustain and prepare for the future? What can the company do for me in order to achieve my household goals?”
When you have that mindset shift right there, it's amazing what happens. You start to put the correct systems in the business that allow you to extract out of it so you can operate from the household level as opposed to being stuck in the business. When you have a plan, you start to know your identity. When you're in the business, you have certain roles that you have to play. You have your owner role, executive role and practitioner role. Not a lot of people are wearing that owner role like they should. That's where we teach people how to do that.
They conflate executive or administrative work with ownership work. Those are two different things. They maybe can hire an office manager to take over some of those administrative/executive functions and responsibilities. That doesn't absolve you from still being an owner, setting up your company appropriately, strategizing and making sure that it funds the household. This is on top of funding itself, so it can sustain your household.
You hit it right on the head. You can pick two of those roles. You can be an owner/executive or you can be an owner/practitioner, but you're always going to be an owner. You have to make sure that you have that mindset of what an owner does. What does an owner do? They make sure that the practice is creating maximum value for themselves and the household. They're trying to build the practice to the highest value that it possibly can provide for the household. That's what a good owner does.
When you sit in the ownership seat, you also never lose the Chief Financial Officer seat at our size. You're still the CFO. You can't delegate that and you shouldn't. You need to be on top of your cashflow.
You absolutely do. The biggest mistake that I see a lot of practice owners do is they stop paying attention to their money. For whatever reason, that's the one thing that you can never do. Money loves attention. It's like a two-year-old at the mall. If you take your attention off a two-year-old at the mall, you have no idea where they're going to end up. Things get lost and your money is no different. When you take your attention off of your money lines, even for a split second, it's amazing how the money will disperse everywhere. Being a good CFO doesn't mean that you have to know how to do spreadsheets and all those technical things. It means that you have to be a good controller of money. It means that you have to be responsible with money. You have to know the basics of money. It isn't that complex at all. It takes some training that you didn't get in PT school.
I can say that my financial situation improved when I started holding my CPA responsible for teaching me what a P&L was about, what a balance sheet looks like, and cashflow reports. I said, “I need to meet with you monthly so you can show me all these things.” I got my own education about finances. On top of that, I started meeting regularly with my biller, which I didn't do before. I was reviewing some of the billing reports and asking them to tell me, “What does this mean? What does this say? What should I know about this, that or the other?” That's when my ship started tightening up or when I started plugging some holes in that bucket. I could see the difference in finances.When you have a plan, you start to know your identity. Click To Tweet
All you were doing is putting your attention in an area that maybe you didn't confront for a while. One of the things that happen to a lot of practice owners is there's a lot of financial terminology that people don't understand and I totally get that. It's an easy area to say, “I don't want to confront this.” You need to dig into it and have some key metrics. A big thing, especially from the household perspective, is making sure that you have measurements or statistics to track your overall financial condition. It's not that hard to do. That's an obstacle that I see as well. A lot of people don't have correct financial statistics that they use to measure the kind of progress that they're supposed to be making.
A lot of people like looking at account statements. You look at your 401(k) statement and see how your mutual funds are doing. “I see that my bank account is a little bit bigger than it was from the week before and that's okay.” These are some of the things that I've asked people, “What do you use to measure your financial progress?” It's crazy some of the answers that I get. You have to look at that and have a list of metrics that can gauge the condition of the household if you're going to run it like a business. If you’re going to do that, you’ve got to do it professionally.
As people are trying to walk that path towards financial freedom or simply improving their financial situation, what are some highlights or actions that they can take in order to do that?
One of the biggest things is that you have to have a target. The first thing would be like, “What's the financial target that I want to achieve?” I created this chart called the Seven Zones of Financial Freedom. I wanted to make sure that people realize, “What financial condition am I in? What does that mean from a statistical point of view? What financial condition am I trying to get to?” That's defined by how much income I’m making, what my overall net worth is, how much ratio of my good debt versus my bad debt, how many income streams does my household have? These are things that you can look at and you can measure. The first thing would be like, “What financial zone do I want to get into?”
Regardless of what it is, personally, for a practice owner that is in control of your financial destiny, that can create as much value as you want to in your marketplace. If you want to be in a condition where you don't have to have concerns about money, your overall financial target has to be at least $7 million to $10 million of total assets. That to me would be a fairly safe financial condition to get into. It doesn't mean you have to save $7 million. When you look at the value of your business, maybe your real estate or other endeavors that you get into, that's the target you should be shooting for. That's a big thing because we haven't been taught to have that point of view. It's been like, “Let's accumulate a couple of million dollars in a 401(k) plan and let's hope that we don't run out of money.” That's not financial freedom.
As we get started at a young age, we think that retirement goal is so far off that it's not feasible to consider that down the road. The more attention you pay to it, maybe you get a little accelerant and you can get closer to that goal faster than you think. It doesn’t have to be all in your clinic. It could be on other vehicles but there's no reason why you can't accumulate those kinds of assets.
The wealth accumulation is almost like a hockey stick graph or a grind. When you’re trying to create an owner independent practice, you're trying to put these things in and you're not seeing these huge results, then all of a sudden over a two or three-year period, you see these massive results. Wealth building is the same way. You're doing the same repetitive and boring things that you would do and you're like, “I don't know if I'm making a lot of progress.” It accelerates towards the end. The other thing would be the time frame to get into a financially independent state. It doesn't need to take 25 to 30 years to do that. You should be able to do that within 7 to 10 years if you're concentrating on your main money source, which is your practice and building that up.
Are there some things out there that you hear financial advisors recommend that you'd say, “That’s probably not the way you should go?”
To me, it's more of a mindset than the recommendations because I found that every investment vehicle has its place. It's the utilization of it and how you're applying it to your situation. There's not a bad investment, aside from someone trying to rip you off. There's some workability to retirement plans, managed accounts, life insurance or annuities. It would be like, “What's your strategy first?” That would be the first thing I would start with, “What’s your overall strategy?” I'll give you an example of what our strategy is for most of our clients. I have an acronym for it. I call it PREP. It stands for Produce income and be profitable in your business. That's the first target. Second, make sure that you are setting up an automatic and systematic way that you're retaining cashflow from the business to the household. Eradicate all bad waste like interest, cost and debt. Protect your assets from any kind of loss including taxes and lawsuits. PREP, that's a strategy right there. If you focus on those four things, you're going to have a mountain of success.
Anything else that falls below that would be tactics. “Do I buy this policy or that policy?” “Do I put money in this investment or that investment?” It's all part of an overall strategy. A lot of practice owners get caught up in tactics as opposed to strategy. This money market accounts yielding 0.5. Should I put my money on this one or should I put this one that's dealing 1.2? They put their attention on things that aren't going to move the needle on their financial condition. We spent a lot of time thinking about what's the strategy first and then tactics. It was Sun Tzu who had a great quote that he said, “Strategy without tactics is the slowest route to victory, but tactics without strategy is the noise before defeat.” I thought that was important. I know when someone's about ready to lose financially when all they want to do is talk about investment products and performance of something. They’re all about tactics, they're not about the overall strategy. It's interesting.
Do you see a typical pattern when it comes to physical therapy owners? Are they focused on tactics more so? Is there something about physical therapy owners that's unique and that you have to fix even if it's mindset or strategy?
For the most part, physical therapy owners are healthcare professionals. They love to help people. A lot of them are trying to push themselves out of the practitioner role in trying to be better executives and owners. I see that in more so in the physical therapy field than I do in veterinary or dentist. People that are veterinarians or dentists, they love being practitioners. Not that physical therapists don't like being practitioners, but they seem to have the business acumen. They can see what could happen if I get a lot of physical therapists here working under me and I grow this business and I scale it. I can create something that has a mountain of value to it. From a mindset standpoint, I still see a bit of scarcity and some of the decisions that practitioners make. Money is scarce and it’s either this or that. It's never both. A lot of what we're trying to do is trying to make sure that they look at it from that perspective, “I don't have to do this or that I can do both.” How much money does the practice need to produce in order to do that and making sure that I keep my profitability level at a certain amount so I can do that?Money loves attention like a two-year-old at the mall. If you take your attention off them, you have no idea where they're going to end up. Click To Tweet
That's true for most physical therapy owners. There's a scarcity mindset. There's a lot of fear involved in what we do. They also tend to be a significant amount of burnout from what I can tell, so that's why maybe there's that transition out of patient care more so. You don't see a lot of older physical therapists in the profession.
That's funny that you should say that because a lot of the burnout comes from an industry where you're relying upon insurance reimburses. A lot of the reimbursements are going down and the profit is being eroded away. The burnout comes from the fact that there's a lack of exchange there. You're putting all this work and you’re putting all this effort in. You're seeing 10% or 7% profit margins and that would tax me. You can go buy a Puerto Rican bond for 6% and not have the headache of employees and regulators coming in there and saying, “You overbuilt here.” “You didn't code this correctly.” I can see where it taxes and makes a practice owner burnout. Once you solve that profitability issue adding additional services that maybe you didn't before and you get that backup, that's where you see people live it up a little bit.
As you've worked with private practice owners and you've seen them in all kinds of different financial conditions, what are some of the successful actions that they're taking? We talked about the mindset and we talked about strategy. We talked a little bit about tactics. Anything else that you recognize what helps that struggling maybe not struggling? How do those physical therapists improve their financial condition on top of those things?
A lot of it starts with their own personal training. When I say personal training, personal financial education training. Know what some of the basics are of money. Let's not be scared about it. Profit and loss statement is not something that is difficult to understand. That's not even that important to know. You should know about it but knowing some of the basics of money. You need to seek advice from people that are qualified to give it. That's a basic of money. Staying out of bad debt and that would be another basic principle. Things that they probably inherently know but are having a tough time applying. To me, it always starts with making sure that you have your attention on your main money artery.
I call it the main money artery, which is your practice. There's this idea that you have to go out and create all these different income streams that are true for the most part. You definitely want to have multiple income streams flowing into your household. You want to make sure that you have one that's flowing like the Mississippi first. If you can get that one going and setup system, the money then flows to the household to create other income streams. That's probably the most successful action that I've seen. There are some of the most successful owners that I've seen have gotten their practice to a point where it's cashflowing. They set up the system where they take a portion of their business cashflow and automatically every single week set it aside in the household to help create other income streams in the household. That's been the most successful action that we've done with practice owners. If I can get someone to do that, it's game over. They start to feel like, “This practice is starting to serve me as opposed to the other way around.”
I had Christopher Music on and he talked about setting aside 10% of your revenue every month, maybe weekly, but at least monthly. That blew my mind. That's the first time I'd heard that concept and I thought, “If I had set aside 10% of my gross revenues every month for the past sixteen years or whatever I own my clinic, I'd be in a much different situation.” It was cool how he laid it out if you set aside that like it's an expense. Christopher mentions this, you guys mention it. I've read it in Profit First, a popular financial advisory book by Mike Michalowicz. You set aside the Profit First that becomes like an expense line. Inevitably your business grows to meet it.
You have to. We operate with the concept that I know that a business is going to try to spend every flipping dollar that it makes and then some. You know that going in and you see that when you look at practice owners over and over again. I see that pattern. I know business is going to try to spend every dollar that makes. I also know that it will make the exact amount of money it thinks it needs to make to survive. Know those two things, so when you incorporate that 10% as an actual expense and you put it in, you have to do it on a gradient though. If you try to do it too fast, it could cause some problems but if you do it on a gradient, it’s amazing what happens. Things change overnight because you've incorporated that expense. The business thinks it's an expense, but it's simply the accumulation of a reserve pool for the household. If I could tell your whole audience if they did that one thing, they would never regret that ever.
It will change their financials entirely, especially if you look down the road. It's going to be a completely different condition.
Most of the practice owners that are doing $1 million of revenue a year, they're like, “We’ll do the math on that 10%.” “$100,000 a year?” I’m like, “Yes.” When you look at that, that's your owner's compensation. If you're a good owner, that's your owner's compensation. You deserve it. I always tell owners, “If Medicare comes in to audit you, who are they going to audit? They're going to audit you. They're going to audit the practice and you own that.” If you have a lawsuit who gets served. Whose names are on all the notes of any of the practice acquisition loans? It's you. You took all the risks to put this thing there by God, you deserve to get that 10%. That's a reward for you.
Sometimes I have to convince people. It was the funniest thing when we first started, I thought that would be the easiest thing that I could possibly do. I'm like, “There's nobody that would say no to that.” It's the hardest thing to get a practice owner to decide. I knew we were onto something when we started that because I’ve got the most push back when I started saying, “We need to put this money away.” “We can’t do it.” There’s no way.” “There's no way the business is yet too many expenses.” “I can't do it.” We figured out a way that they could do it, so it doesn't cave them in. Once we got that in, everything clicked right after that event for the business owner. It was fascinating.
It's interesting how it also changes the mindset. It changes the energy around the person as you have them focus on their money lines, their lifeblood, their main artery, whatever you want to call it. Once they put their attention on that, the energy changes. They take on the control that they didn't seem to have before and they seem a little bit more focused.
When you do that, it enhances your financial awareness and then it gives you confidence. That's the most important thing in any industry, you have confidence. When you have confidence, you make better decisions. You slow things down a little bit. You control time like an athlete that you see that's competent and what they do, they have so much confidence. They can control time. Most physical therapists are good at doing that from a training standpoint, but on business and an ownership standpoint, they're not as good at that until they get trained to do it. It's establishing financial confidence that does increase your confidence by a high degree.When you have confidence, you make better decisions. Click To Tweet
As you bring on physical therapy owner as a client, is that something you work on them with? What was your typical work look like that might set you apart from other financial advisors?
The first thing that we do is we give them a detailed financial scene that we want them to get to. We define what your ideal financial condition would look like. I don't think that a lot of advisors do that. They'll say, “Let’s save enough for retirement.” They don't give them a clear definition of what their financial condition looks like. We've created a road map where we encompass all the different component parts of your financial life. That’s the thing that differentiates us as well. Your financial life, the body is made up of several different systems. You have the circulatory system, the respiratory system, the endocrine system and all these different systems.
There are nine financial systems that make up your household, from asset protection to estate planning to income planning to debt and credit to tax optimization. There are several different systems and our job as financial advisors is to make sure that all of those systems are operating at their optimum level for every one of our practice owners. Whereas a lot of financial advisors will focus on the investment side. That's 1/9 of your overall financial scene. We put people's awareness on that and say, “Maybe let’s not only look at your investments while they're important. Let's not put all the focus on that.”
I have to say that I work with Econologics and I have enjoyed my experience with them especially compared to other financial advisors that I’ve worked within the past. Simply by the fact that you guys are in communication with me which is typical of the financial advisors that I've had in the past. I wish I had started working with you earlier. To give voice to the first exercise you're talking about. My wife and I went through that, setting a target you talked about $7 million to $10 million. That might seem to be a lofty way out there for some people. You also had us break it down to, “What do I need to be making per month in order to get to those goals?” That gives you a little bit more concrete and current number that can work on. I have that number, and my wife and I have those numbers in our head, “We can have this kind of lifestyle if it makes this much per month, but we can have this much better lifestyle to make this much per month. Let's try to reach for that.” That guides us on a lot of the decisions we're making as much as it pertains to income, investments, and whatnot. That's valuable.
Thank you. When you break it down, I know sometimes we set big targets for practice owners. You will be sometimes a little bit like, “There's no way I'll be able to do that.” When you break it down to like, “We don't have to do all this now.” What can we start? Where can we start? We build upon that. Financial planning is a set of boring repetitive activities. As you continue to do them, you see little mini results. All of a sudden, it’s like, “Boom.” It's amazing how it works. Traditional financial planning is like, “If you put $10,000 away for the next 25 years then you'll have blank amount.” Real-life doesn't work that way. People change, business owners change. Their confidence and business changes. The production of their business changes the industry that you're in. There's so much money pouring in private physical therapy.
There are so many opportunities out there to create a practice that you want to that there's no reason that you should restrict yourself at all. To your point, set big targets and big goals. Let's work backward on what are the actions that are going to lead to get there. When you get the numbers down, it's not that much. It's not that hard. It's not that much and that's where a lot of people appreciate you. You need to have a written plan not only a proposal of, “Let's put X amount of dollars and this investment strategy and X amount of dollars and that and this investment strategy.” That's a proposal. A plan is like, “These are the sequence of actions that I need to take in order to accomplish this.” Most people are operating on financial proposals and not financial plans and that I've seen.
The plan goes back to your ideal financial scene. I want to invest in my children's education. I'm going to have this much at retirement so I can live the way I want. I want to invest in these kinds of vehicles. I want to live mortgage-free. Those are the things that you start from and work on.
That's where it starts. What are the financial goals of the household? Which a lot of people have done. It digs into, how are we going to measure that? That's where I've seen, in our industry there hasn't been a lot of good financial metrics that measure the condition of the households and how we integrate the business into that as well. We have seventeen different financial diagnostic statistics that we look at. We can show someone, “Here's a statistic that you need to look at and we want to improve.” It goes above looking at the performance of an account. It's something that will help someone change their overall condition.
Is there anything else you want to add to the financial stuff that we hardly get into it or what?
I don't even know. This is getting fun.
I know we’ll definitely have you on again, so we have to save a little bit.
For the most part, the keys I want to leave people with is, no matter what your financial condition is, good, bad or ugly or no matter where you're at in your life cycle, whether you're still growing your practice, whether you're mid-career or whether you're thinking about exiting out. You can always do something to change your trajectory. You can always do something to change your financial condition. The sooner that people can realize that their household is the parent company. Make sure that you're wearing that identity of a Chief Financial Officer assuming that beingness, there's a good book called Atomic Habits on if you ever read it before.No matter what your financial condition is, you can always do something to change your trajectory. Click To Tweet
I've heard a couple of people mention it. I need to read it.
The main point of that was, the actions aren't that hard. It's who you have to become if you want to be successful at something. You have to become the identity of that person. Your financial conditions are no different. You have to assume the identity of someone that's responsible with money, that knows how to acquire and control money, and that can expand money. That's an identity. That's the Chief Financial Officer identity. If you can assume that identity, understand that and wear that, the actions are easy. It's not that hard. It's don't spend more than what you make. Take 10% of what your practice does and set it aside, invest prudently. The basics are not that hard. You have to assume that identity of the person that is going to direct this whole thing.
I love that idea because you are exactly where you think you should be. There's an internal dialogue that's always going on. If you assume or if you take on the mantle of, “I am good with my money and my business makes money for me,” then that's what will happen. If you are careless with money and you think, “I spend more than I make. I need to do better with my money.” That's exactly where you will be.
It's 100%. I have created what's called a Chart of Money Attitudes. I don't know if you've seen it or not. Every single day I’ll say certain things to myself like, “I'm a creator of money. My financial decisions are naturally right. I'm fully responsible with money. I want enormous wealth and I want others to have wealth too.” All these affirmations, things that I'll say to myself every single day because I want to make sure that my attitude towards money, which if you want to look at it, this is where it starts. What's your attitude towards money? If you have the attitude of, “I can't have money. Money is scarce. I'm terrible with money. It always disperses,” you're going be bad with money. You need to give yourself a checkup from the neck up every once in a while. When it starts with your money, that’s a key thing. Make sure your attitude, in terms of money, is in good shape and get out of some of the fixed ideas that you have or get out of some of the following gurus and around. You don't need a guru. You need a guide. The attitude comes from other places too, from parents and the experiences that they’ve seen and all kinds of things. We can get deep on this one.
It brings us full circle. It's where we started. It all starts with your mindset and your attitude with money and recognizing that the business works for you instead of you working for the business.
You hit it right on the head.
If people wanted to reach out to you, Eric, how do they do that? What do you have coming up?
We have a three-day training academy for private practice owners. We built our system for private practice owners. We don't work with engineers or teachers or any other of those types of vocations. We work with private practice owners and we built our financial planning specifically for them. We also create a financial planning education system where we teach them the basics of how to increase the value of their business and then how to make sure that they turn those business profits into personal wealth. If they want to contact us you can definitely start by going to our website which is EconologicsFinancialAdvisors.com. You can email me directly at Eric@Econologics.com.
We created 100 question assessments that will give you a snapshot of where you stand in your personal finances. I would recommend that if anybody has any uncertainties, confusion, or I don't know in regard to their personal finances or curious. Everyone's curious about their credit score. What's my credit score? We've created an assessment that will give you a financial score. If people want to go to our website, it's called the Financial Prosperity Index. They could click on to that and it will take them right to that assessment. They can take the assessment. We will give you a free 30-minute strategy session where you can ask us anything you want in the subject of money and personal finances anything at all. As long as you take that assessment, then I'll assure you that you'll get that free 30 minutes or longer depending on how long it takes.
Thanks for coming on. We'll have to have you on again because I know you've got more to share for private practice owners.
We'll keep it on topic next time. We’ve got a lot of different places right there.
It was good. I love it and like I said, I love talking money.
It's all good.
Thanks for your time. Thanks, Nathan.
Eric Miller Has been in the financial planning industry for over 20 years. He’s a co-owner of Econologics Financial Advisors – awarded an Inc. 5000 honoree for 2019.
As the Chief Financial Advisor for the firm, Eric has had the good fortune to have over 10,000 financial conversations with private practice owners in various healthcare industry and helped guide them into a more optimum financial condition using a proven system.
It's an age-old question for PT owners - should I have my own billing department or outsource it? It's a dilemma that each PT will go through at some point. Let's get the answers from billing veteran Amy Sparks. Amy has 20+ years of medical and PT-specific billing experience and has a firm grasp of what it takes for an in-house billing department to run smoothly. IF you have the right people and IF you can monitor and manage them regularly (weekly and monthly meetings), then in-house billing may be right for you. But IF you outsource your billing, you still need to monitor, manage, and demand regular reporting. Make your decision to go in-house or outsource but never abdicate your responsibility to stay on top of your cash flow.
I get to talk with Amy Sparks. She is the Billing Account Manager out of Star Physical Therapy clinics in New Orleans. We're discussing whether or not to bring your billing in-house or to outsource your billing. After my discussion with Amy and based on my personal experience, I personally believe that in-house billing is the best way to go, but only if you have a couple of things in place, only if you have these two things. Number one, you've got to have the right person with the right personality type. The best billers that I've had seen billing and collections as a reflection of them personally. They take it personally if people don't pay, whether it's $5 or $500, they're in the pursuit of that money. They're willing to confront anybody that's not willing to pay, whether it's insurance companies or patients. They've got to be able to hold those conversations and demand payment when it's appropriate. The second thing is you've got to be able to have the time and the bandwidth to monitor and review and check up on the reports of the billing department that they provide you.
You've got to step out of treatment. Take the time on a weekly and a monthly basis to review billing reports with the billing supervisor, whether that's in house or outsourced to track your money. Whatever time you take away from patient care to review billing will come back in spades both immediately and in the future. That's your money, that's your cashflow, that's the lifeblood of your clinic and you've got to stay on top of it or else it will leak out. We talked about some of the reports, some of the KPIs that you'll want to review on a weekly, a monthly basis. Ultimately, the billing department did what's best for me when I demanded the most out of it. When I found the right person, I would talk to them about my expectations for the KPIs and they went along with it. I also talked about the reports that I wanted to see and they went along with it and created those reports and even added some statistics on top of it to show their performance and help them track the performance of people that they managed.
When you work in synergy like that and demand more out of the billing and collections, your billing and collections will improve. Your cashflow will improve. Those clinics that are growing have a heavy, solid, strong billing department. Those companies that are floundering typically also have a floundering billing department. We talk a lot about the ins and outs and the pros and cons of in-house versus outsource billing, some of the questions that you should ask if you are going to bring your collections in-house and some of the expectations you should have if you are going to outsource your billing. Let's get to that interview.
I've got Amy Sparks. She is the Billing and Account Manager out of Star PT Clinics based out of New Orleans. They have eight locations. I came upon Amy because she wrote an article in Impact Magazine regarding in-house billing versus outsource the billing, what you should do and how to determine what if you should do either one. I'm excited to do this because it's a common question for all PT practice owners. First of all, Amy, thank you for coming on to the podcast. I appreciate it.
No problem. Thank you for having me.
Tell us a little bit about you, the experience that you have with physical therapy and billing in particular. How did you get to the point where you are now?
I was raised in New Orleans. I actually got involved in billing by accident about many years ago and I can't believe it's been that long. I started in billing for outpatient dialysis. From there, I ended up working at health insurance. I got to take those phone calls all day. I got involved as the biller for an OB-GYN doctor. About a few years ago, I got a job at an outpatient physical therapy clinic. That was my first experience in billing for physical therapy. I've been here at Star for two years.
Did you notice this significant difference in the billing between those other medical professionals and physical therapy?If you billed for any sort of health care facility before, you can bill for physical therapy. Click To Tweet
Other than the coding, no. The codes are different, but pretty much the rules in the game are exactly the same.
I asked that because a lot of PT owners might be looking for that billing person. I never knew, is it important that they have physical therapy-specific experience? Any healthcare experience is beneficial and there's not much difference, but you're telling us it’s not that different.
The CPT codes vary, but the rules of the game stayed the same. If you billed for any healthcare facility before you can build physical therapy.
I liked how you talked about the typical storyline that physical therapy owners go through in the article. You talked about a story that I'm very familiar with and a lot of other physical therapy owners are familiar with. Did you start with maybe a dedicated staff member or someone like that who is a rockstar? Maybe they want to do things on their own or maybe they start with an outsource billing company. What's the path that you typically see that you mentioned in the article?
Typically, what I usually see is when someone with a physical therapy clinic is starting out, they will hire somebody they think is a rockstar or even a family member or something, thinking, “Our patient load isn't that crazy right now. This person can handle this.” What ends up happening is they end up growing. Once they grow, they realize either they’re not so much of a rock star or this person was great when we were seeing twenty patients a week, but now that we're seeing 100 patients a week, it's too much for them. They'll end up either outsourcing to a billing company or trying to hire someone they think is better equipped for the job.
That usually goes a long way and based on your experience, I can share my experience as well, but outsourcing to a billing company, what are some of the pitfalls with that?
Some of the pitfalls with that is if it's a larger billing company, I don't think they can devote as much time as they should basically to your AR and your claims and stuff like that. If I have 200 other customers, they don't devote that amount of time and they're trying to get to that basic level, "We said we would get you 80%. That's where you're at." We're not going to go for the extra, even though it would be easy to. This is the same thing for in-house. You're at the mercy of who you hire in a way. People can look great on paper. They can interview like a rock star. When you get them actually to put their money where their mouth is, so to speak, they don't know half of what you thought they did.
You see that no matter whether you're doing it in-house or outsourcing your billing, you're never quite sure who you're playing with. When it's in-house, you do have some control there or more control at least because you can hire according to your values and hire someone that's aligned with you. You also can hone in on the customer service aspect of it that you don't have a lot of control over when you're outsourcing. One of the issues we had with outsourcing was that we had someone who was a jerk on the phone to these people and they were like, “That's not us. That's not our values. We could control that a little bit more when it was in-house.
I was going to say too because the person's right there, you can see how they spend their day. If you wanted to check in on them, you can hear how they talk to your customers, how they talk to insurance companies. That way you have more control of, “Is this what kind of person we want doing this for us? Are they giving us a bad reputation and we don't even know about it?”
Unfortunately, that can be the last impression that they have of your clinic. They're no longer being seen in physical therapy and you don't have any contact with them. If they're doing something 3, 4, 6 months later that could be negative, that impacts you in a bad way.
Absolutely, it does. I always say the clinician and the billing department are basically in a relationship of a good cop, bad cop. The clinicians are the good cop, the people in billing are the bad cops always. We're good with that. We're fine with that. We're the ones who are going to take the bullets from your patients and stuff like that as far as getting of claims paid and such. We got that going on, but at the same time you have to keep a level of professionalism. You have to be mindful of what the owners want and what their values are. You can't overstep that and can go rogue with that as far as dealing with patients because you get problems with that. With in-house, you have more control over that because you get to see that more on a day to day plus you're right there. Your patients are right there. If they had a bad experience, trust me, the clinicians are going to be the first one to know about it.
It's also important to note that as you're managing the billing department from an owner's perspective, it's so important to manage the reports. When you have someone in-house, you can generate those reports and create them in a way that you want to see those important numbers, the KPIs and whatnot, getting them from an outsource billing company. Sometimes I've had a difficult time getting those reports. I have a hard time meeting up with them to talk to them about the reports or individual cases.
We're leading down the road towards the benefits of an in-house billing department. Some of the cons for an outsource billing department and we'll get to that because there are some benefits to an outsource billing department and not everyone's ready for an in-house billing department. As you manage your cashflow and as you manage your money when it is in-house, you have greater control. You can manage it appropriately. You can dig down on individual cases very readily. You can set up meeting times at appropriate times for both parties to work it out well. There is a huge benefit to that. That is difficult when you're outsourcing.
You don't have the freedom of meeting convenient times for you. You're at their mercy. If you have questions, you might be waiting a minute to get your answers because you don't have the person right there readily available to answer the questions for you. It depends. If you're starting out and you want to focus on growing your business and if you have the patient traffic coming through your doors already then maybe you do want it in-house because you want to focus on this. There are pros and cons to both. It depends on really where you're at. Honestly, the patient flow has a lot to do with it as well. If you have the patient numbers and where you're at in your business and what you're looking for. It depends.
It's almost like a seesaw. I like how you explained the cycle that some clinics go through, they'll outsource and they're not happy with the collections rate or how they're being representative of patients so they bring it in-house thinking they have a solid person who can do that and "save them money." Maybe the billing isn't as good as it should be because they don't have the experience and the knowhow. Maybe they have to consider, “We need to find another EMR as better billing software.” It's the seesaw battle. What I liked about how you broke it down is how to determine if you're ready for in house billing to ask the questions. If it's truly right for me at this time to have an in-house billing department, these are the questions I need to ask and answer. Let's go over those a little bit.
If you're considering doing in-house billing, we definitely want to have dedicated staff members who have a good work ethic, who know how billing works, who understand coding, who basically looks at your denials and say, "I need to fix this.” Also, they have the ability to find the right people to staff your billing department as well because that is a huge area. Hire somebody and you might think they're great and might take you 3 to 6 months to realize that this person's not great at all. The good thing about the billing is probably the only job that will always tell on you.
The numbers don't lie.
The numbers don't lie and you can't hide that you don't know what you're doing or you're not doing your job in billing. You might be able to pull it off for a month or so, but eventually it's going to tell on you.People can look great on paper. They can interview like a rockstar. When you get them to put their money where their mouth is, they don't know half of what you thought they did. Click To Tweet
You're saying you have to have someone who's not only educated but dedicated to billing. Maybe they're not full-time if your numbers don't match up. They need to have separated segregated time to do billing, only billing, focus on that and then also be capable of being a manager. As you grow, that billing department is also going to grow. That person is going to move from being the biller to the billing manager and maybe not touching everything but having to oversee somebody else.
As you grow, as a building manager, you have to know how to delegate. If you don't delegate, you will live swamped, constantly feeling like you can't your head above water. You have to find people around you that you can trust. That you can tell to do something. They're going to do it how you want it done and let you know when it's done, that you can rely on. To me a very strong work ethic is as important as the knowledge you bring.
It's a certain personality type that succeeds in billing. I'm sure you've seen this and what I've seen is the people that are successful, they are going to get every penny and it's almost a personal assault. They take it personally when people don't pay. They have to be able to confront. If you're very passive and laid back and trying to be a nice guy, you're not going to do well in the billing department. You have to find someone who is able to confront these patients who have a balance and talk about money because it can be a sensitive subject.
I've always told clinicians even though it's one patient, we are dealing with two completely different personalities because you're getting the nice, "Help me please," and very friendly. I'm getting a different person because I'm trying to get money out of them. He might be the sweetest person in the world in clinic, we'll get him over here and they'll start yelling. It's the nature of the beast. You definitely have to have a person who is thick-skinned, someone who doesn't take things personally. We need somebody who has a great attention to detail. A lot of times you'll find things are denied because one digit is off. I need you to find that or somebody has to have a very strong attention to detail. When you're talking to a rep on the phone and insurance rep particularly when they try to tell your reason for denial, I'd say a good 50% of the time, that's not what it is. You're looking at it like, "No, that's how it is." "What you're telling me is wrong, I see that I've done that part." “I see this down here is not right.” If I could look at that and say, "Look at coding," and say, "This needs to be modified or this code needs to be changed." things like that. They have to have very good attention to detail, definitely.
Tell us a little bit about the reports system, the ability to meet, review reports and where your clinic is in that regard. How important that is to determine if you can do in-house billing?
For example, I meet with the owner once a week and then we meet again at the end of the month after we close out that month. What he will do for example, is he'll do an analysis. He'll randomly pull ten patients and check to make sure that the follow-up on them is done according to our procedures. That pretty much everything he pulls randomly has been touched. It goes to figure if he's pulling ten patients and I see that three of them have not been touched in several months, then it's safe to say that you probably have a pattern there going throughout your clinic. We'll meet on that. We make sure everything balances out, paychecks, denials, adjustments and refunds. We go over all these reports at the end of the month to verify that nothing was written off.
It shouldn't have been that insurance reversed the payment, but it was a legitimate reversal. It wasn't, "We want to take our money back on this," things like that. It's like the check and balances system. Meanwhile, throughout the month I'll randomly pull an AR report, go through it and spot check it basically to see. I’ll make sure everything looks good, the girls are following up working denials and things like that as they should be. He spot-checks me. It's a system of checks and balances that we have in place. We will meet once a week. We email, "Can you meet at this time?" We set up a time. It's very convenient because like I said, I'm here in-house.
Especially if you're going to do the in-house billing, then it's necessary to recognize that you need to set aside the time to meet weekly and monthly to review weekly and monthly reports. You know what you're looking at as the owner. There are certain statistics that I'm sure he's going to review or certain categories that he wants to check out. Also, take the time to do some spot checking and follow up on it themselves. I think that's a great word of advice, but tell us a little bit about some of the key statistics that you're looking at maybe that you and your owner are looking at as you review some of the weekly or monthly reports. What are some of the top 3 or 4 statistics that you guys are reviewing?
One thing we look at is called the Accounts Receivable Conversion ratio. It’s called an ARC ratio. It's basically our total AR divided by the number of average number that we have built out per month. We'll take an average of the last three months, not including things like auto, attorney or people who are in collections obviously. We basically divide the AR by the average bill. We'd like that number to be less than 1.3. Basically saying that it takes us 1.3 months or less than 1.3 months to collect. That's basically what that tells us. We are much less than that actually. That's always a good thing as long as we stay below that number.
It's great because we all know that the longer you let that money sit out there, the less likely you're going to receive it. You get pennies on the dollar the longer it stays out there. To keep that average within or 45 days is huge.
It also helps you as far as if there's a problem somewhere. For example, we monitor it every single month. If that number were to skyrocket from one month, the next we'd be like, "We have a problem here somewhere." Either an insurance began processing our claims wrong or we're not receiving payments somewhere or something's not right. It's also great with a monitor that everything should be steadily going down with that number. It's a good way to monitor and make sure I catch it early if there are any issues happening that maybe you're not aware of.
That's a monthly statistic that you follow and that's huge. What are some of the others that you follow?
Another one we follow, we call it the 90-plus. Basically what we do with that is we will take the AR 90-plus.
The AR aging report and whatever's in the 90 plus day range and above.
We'll divide that by the total AR and that gives this a percentage of basically AR that is over 90 days old. You want that to be less than 10% of your total AR.
When you come into a clinic that's bad or a clinic that’s in a bad situation, when it comes to collections, you'll see that statistic specifically be bad. To take it from there to under 10%, in my experience can take anywhere probably about six months at least to get down to a good range. That's where you're going to find some extra cash, but you're also going to lose a lot of money as that number gets larger. We used to actually bonus our biller based on her ability to keep that under 10%. Once she did that, then she essentially got a raise to continue to keep that under 10%.
Once you get it down there, it should be very easy to maintain, but I'm glad you brought that up because I think a lot of clinic owners, whether it be in PT or other areas of healthcare don't realize that if your AR looks bad, it's not going to get fixed overnight. It is going to take time for it to come down because it takes an insurance 30 days to process a claim and that's if it looks good. You have to keep in mind that it's not going to be an overnight thing. It will take a couple of months to get it down. Six months is probably very good timeline think about. If you're not seeing anything drastically improving in a month, don't freak out. It will be a slow and steady drop it took and you didn't get this bad AR overnight it's going to take at a time to come down. It's going to be a lot of fighting with the insurance because that is definitely something that has changed since I've started back in the day. It used to be a lot easier. You file a claim, the member ID is right and the birthday is right, they’ll get paid. Now, no.
Not so much.The clinician and the billing department is a relationship of a good cop, bad cop. The clinicians are the good cops and the people in billing are the bad cops. Click To Tweet
There are two players I'm thinking of in particular that are good at the game. You've probably seen this yourself. For example, therapeutic activities. You build therapeutic activities with any other therapy exercises. There are two payers in particular that they will automatically always deny therapeutic activities even though it was built correctly. They'll deny it and that they want you to send in all this documentation and medical records. If they find your documentation is sufficient, then they'll pay it things like that, which is very time-consuming. You're left with this $50, $60 balance on your claim. They'll sit there for a few months because they will take their time with that. The frustrating part is that there was never anything wrong with it. We could have paid it from the get-go. It ends up on your AR longer than it should.
They know that if they simply deny it, then they'll save money. Most people won't take the time to appeal it. Especially in some of those cases where the outsource billing won't go after the extra $50.
They'll say, “We're going to write this off,” and it can be a problem like that because those charges do add up. They don't want to devote the time. I can tell you from our standpoint, we've gotten to the point with that where we've had to basically create a letter of medical necessity template. We tailor that for each patient and it seems to be working. Prior to that, you'd go through sending in flow sheets, sending in medical records and waiting for those to tell you, "No, that's not enough." That is a team effort because we have to get the clinicians on-board like, “I need you to tell me exactly what you did every single minute.”
That can be difficult.
They're not crazy about it either obviously, because they know what they're doing.
What are some of the things people should look for if they are considering a billing company? What guidelines do you recommend?
If you are looking for a billing company, you should look first at all your costs. I would say you should not pay any more than 6% to 9% of your collections. Also they should provide you with consistent reports to show you their performance like, "Here, look what we've done." They should also provide you with their policies regarding their workflow because like you said earlier, their policies, their way of doing things might not match up with your values. You need to have a clear idea of what their policies are regarding their workflow, how they handle things.
They should also be very transparent regarding how much time do I actually put into a claim as you ask. If I have one code that denies from $50, are you even going to try and fight for it? Are you going to suggest that we write it off and move on? That will give you an idea of how much time they're going to put into chasing, not just that claim but all of your claims. The insurance is hoping that you're going to give up. They think that if they hold you out for six months, you’ll be like, “I'm tired of this. Let's go. I'm going to write it off.”
One thing that also always brings up the red flag for me when it comes to dealing not just with billing companies but with any vendors is their willingness and ability to communicate. If I have to constantly search and ask for reports or feedback, that's a lot of wasted time and energy. I would like for them to take the initiative to provide those reports on a monthly basis. I've had to do that with billing companies in the past. I said, "At the beginning of each month, I want to see these reports come to me without me asking for them. Can you do that for me? If you're going to ever write off a balance, that needs to be cleared through me first.”
I don't even write off balances without getting the owner's approval first. I do think this is true for anybody, your support staff starts at the very front, your receptionist. I know a lot of people think that, "She just answers phones, schedules and appointments, whatever." She needs to have a great attention to detail because she's doing the data entry of this patient's information usually and not to mention she's your first point of contact for your patients. She's basically the face of your company when they walk in the door. It's important to understand that one wrong digit on a birthday or a member ID number will delay your claims payment for at least another 30 days. You have to have a strong person at the front. At least double-check what she put in, make sure the numbers are right. You need to have somebody very strong upfront as well. It's a whole group effort between the receptionist, the billing department and the clinicians.
One thing also to figure out with when you're considering outsourcing is how closely are they going to work with you on improving collection or billing performance. One benefit of having in-house billing is to say, "We're constantly getting denied for such and such code," like you're talking about, "We're constantly getting denied for therapeutic activities. Should we consider modifying our documentation so it’s built under therapeutic exercise and we don't have to go through all of this?" Of course you don't want to tell them how to treat, but you need to raise the awareness like, "We're spending a lot of time and effort on a code that's getting denied." If you have someone in-house, you can have that conversation. If you're going to outsource this, you need to make sure that you're having those same conversations and you need to make sure you're setting up time and the awareness that's expected.
I agree and something you had mentioned was saying how you've had to chase down some of them out when you outsource to get your reports and stuff. An important thing to remember is not to sell yourself short with that because if that was happening in-house, you wouldn't tolerate that. You wouldn't tolerate having to chase down an employee to get a report. You would expect them to bring it to you. It’s the same thing with the outsourcing. You have what you expect and you shouldn't settle. If you're not getting what you need from this outsource billing company, I would say definitely you need to make a change, but you really shouldn't have to chase people down because you're paying them. They're not paying you. They work for you, so they're like any other employee.
If I have a question, I need you to answer it in a timely manner and you need to expect constant communication. There are many times that they need information from you or they're expecting information from you and you need either back to them. Because of that, sometimes I think we feel like we're working for them instead of the other way around. You need to remember that you're the owner, you can always change this person out. You can always fire your outsource billing companies. If they're not doing what you need them to do in terms of reports, meetings, communications, customer service on your behalf, you can always fire them and you need to find someone better.
There are too many companies out there. There are too many people out there with billing experience. There are companies that do outdoors that you shouldn't have to settle, if you're not getting what you want.
To give some of the owners a heads up, what is your experience when you do switch out of an outsource billing company to in-house? If you're moving from an in-house biller to another in-house biller because one got let go or whatnot. I'd say that to preface this is to say that when I've seen billers change whether going from outsourced to in-house, there can be a real blow to cashflow for about six months or so before you get back on your feet again. I think PT owners need to understand that they expect the transition like that might be good, but you're not going to see the benefits of it for 6 to 12 months and they have to be patient and stay on top of the metrics in the meantime.
I know it's human nature. You want it now, but you have to keep in mind that the fact that your reason you're changing is that if it wasn't working the way it was going. More or less, you've gotten yourself or billing company has gotten you into a hole, if you will. You're not replacing them because they were doing a great job when your AR is low. You're replacing because they weren't doing what you needed or your AR, your cashflow is going down. It's a mess. Like any mess, it’s going to take time to clean up. As I said, you didn't get in this hole overnight. This took months to happen. It's going to take months to fix it. I know it's very frustrating for owners because they expect to see an improvement within the following month. It doesn't happen that way because keep in mind that insurances on average take 30 days to process a claim in itself. When they're going through cleaning up your AR, they're refiling all these claims, correcting them, refund insurance.
At best, you're looking at 30 days and that's not going to be for everything because at least half of that you're probably going to end up fighting for because the insurance doesn't want to pay. The worker's comp company doesn't want to pay it. They'll deny it for crazy things. Probably one is not timely, even when you send in proof of timely file. For example, you know how it prints on a HIPAA? If today's date would be 10, 18, and 19. I've had a particular insurance company deny saying that date of service was prior to the patient's date of birth. I realized that the patient was born in 54, they are reading the date of service as 1918 or 1919, not 2019. I'm like, "Are you kidding me? My health insurance is in 1919. My health insurance’s dead. What are you talking about?" I couldn't believe it. It blew my mind. This is hands down the worst denial I've ever seen in my life.
I want to talk to you a couple more questions simply because you are a billing manager now. You are working with billing people who work underneath and you oversee them. What are some of the recommendations that you can give the PT owners as they're working with a billing department, not a single person? If they're large enough to where they have two, maybe three people doing billing for them, what are some of the things you are looking for as a billing manager in your management of others? The separate duties, how do you organize your staff?
I separate my staff. We have a person who bills out claims every day so she'll bill those up. She's also the person I have that works my insurance AR because she knows how to code. She's billing the claims out. She knows what to look for. She's very strong in that. Also, I call her my pit bull because she does not have any issue getting on the phone and fighting. I swear she fights like it is her own money and that's what I look for. That's what I love in a billing person. It's like, "I'm sorry I got mad." "No, don't be sorry, you got mad. I appreciate the fact that you act like that is coming out of your personal pocket, like this is your money."
I love that. I look for that. I look for a good work ethic. You don't want somebody that's constantly calling out because this, that or the other. Somebody who doesn't mind being on the phone, doesn't mind getting into the trenches as far as that goes to the insurance company and sitting there on the phone with them for 30 minutes fighting. Also on the flip side, I have another person, she does all of my patient payments, my attorney's cases and my patient AR. I have her do the patient payments because she's the one calling the patients to about bills. That's how I break it down. As I said, I oversee them, I spot check them and that's my checks and balances for them.As you grow your business, you’re going to have a billing manager. You have to know how to delegate. If you don't delegate, you will live swamped 24/7. Click To Tweet
I have somebody who does the same thing for me. You need to have systems in place with reports. Checks and balances is a great thing. I do it to them and somebody does it to me. That's how we make sure that we're running officially, policies are being followed, procedures are being followed, everything's being done, how it should be. We have a system in place as far as patient collecting, “You do this and this,” and then you send them to collections if you've got nowhere. We made sure all the steps are being followed and things like that. It works. Prior, I've seen it done other ways. I didn't like it.
I've seen where they would say, "This person is going to handle these five insurances and then this person is going to handle these five insurances." Basically everybody’s got their hands in everything. I prefer to keep it separate. It flows better that way. You only have the same two people accountable for patients. You have the same two people accountable for insurance and that will never cross so there can never be, “He said, she said,” kind of a thing. All communication between the billing department and the receptionist needs to be via email because we have a paper trail that way again, “I told her this." “No one ever told me that.” It cuts out all the, “He said, she said.”
That's a great policy to have because the insurance or the billing department is all about paper documentation of everything they do. You might as well keep that as it pertains to communication with the front desk as well.
Also we have over 100 employees here, otherwise a lot of people are always emailing billing, which is fine. I prefer email because like I said, you have a paper trail and also you're not constantly getting that distraction on the phone. You take this phone call and by the time you're done with that, "What was I doing?" That kind of a thing. This way it's all in writing. You're not getting constantly distracted twenty times an hour or pulled away from what you're doing twenty times an hour to answer phone calls about, what about this? What about that?
We talked a little bit about when you consider an outsource billing company, their charges are typically somewhere between 6% to 9% of your revenues. What is your company's expectation as far as what the cost of your billing department is to the revenues of your company?
We'd like to keep it between 3% to 5% maybe and it's toward the 3% honestly.
It gets like that when you're a larger company. For a guy that's smaller, if they're thinking that, “Maybe I can save some money, if I bring it in-house, they'd probably need to expect it's going to be closer to the 5%.” Maybe a little bit more and recognize maybe some of the benefits that go with it if it's running well. If it's not running well, then that billing department's going to cost you more. When a billing department is running well, you can expect it to be in a smaller clinic somewhere between 5% to 7% compared to the 6% to 9% that you would pay otherwise. You'd have to consider the benefits and the pros and cons of both.
We've had Star open eighteen years. We've had quite a significant amount of time to grow and expand and work out all the kinks. We're about 3%, but as I said, we're larger though. We've been around for a while, so I could definitely see where to expect that number to go up whether you're smaller or a newer clinic even.
You guys have been around a long time. You've got a ton of experience. If people wanted to reach out to you and maybe ask you questions or get your advice, are you open to that?
Absolutely, we actually love to mentor and advise new PTs, new clinic owners. I actually spoke to someone. I didn't know her but it was through the article and she was a clinician and she was just asking me questions about different things we thought she should do. One of the things I definitely want to preface to her was that as the clinician, you don't want to be involved as far as try to collect patient balances. You're the good guy. You're the helper. You need somebody to keep it that way. You need somebody to bigger fall guy basically and that's what we are. As I said, we're good with that but you definitely don't want to be both because you're on their side.
You don't want to taint that in any way by bringing money into it basically. You definitely want to keep those two separate. As a clinician, you want to stay as far away from that as possible. You definitely need people for that. I was going to say that while you're starting out and it's new and you don't think you need this, that or the other because "We're new, we're starting out." That is one thing you would definitely need as a new clinician. You need somebody to handle that for you. Whether it be outsourced or whether it be in-house as a clinician, no matter how small you are you don't want to be that person.
If people had questions like that, how would they get in touch with you?
They can email me. My email is Amy@StarPTClinics.com. Our owner for example, he's been practicing since ‘93 and he's a member of the editorial APTA board member. He loves to talk to other PTs and business owners like that. He loves to advise them. He loves to help them with any questions they may have or anything they might possibly need. He likes to help other PT clinicians grow and expand their business. That's what he's really trying to get into now. As part of that, something we would also like to do is possibly start billing for other PT clinics. You could go with an outsource you might not know too well or you have solid companies you can go for. You can go for that as my reputation and word of mouth.
You guys obviously have the systems in place, you know how to get things done. You've got a ton of experience behind you. It's one thing to go with an outsource billing company that might do a billing for all kinds of medical professions. Whereas you guys are PT-focused, PT-specific, you've got a couple of decades in the business based on your owner and the experience that you bring with it. You guys can bring a lot of value to those PT clinics that are looking to get things started to maybe outsource until they're ready to bring it in-house.
We have all the systems in place, the reports, policies, checks and balances, you name it. Obviously it's been successful because Star itself has been open for eighteen years but we're still growing. We opened up our eight clinic and we still have plans to open more. It’s obviously successful. Our owner's been practicing PT since 1993. He loves helping, marketing and helping people grow and expand, showing new owners what to do. He's been through the trenches, he's been through the trial and errors of it all. He has seen it all because he's basically was his own test patient more or less.
What was his name?
His name is Matt Slimming.
We'll have to remember him.
If anybody wants to reach him, you can email me and we'll both be in touch with you.
Thanks again for your time, Amy. I really appreciate you sharing your wisdom.
No problem. If you need anything, give me an email.
Thank you very much.
Amy B. Sparks is the Billing Manager for Star Physical Therapy, the largest independent Physical Therapy group in the greater New Orleans area, with eight clinics and growing. Amy was born and raised in New Orleans. She began working in health insurance billing twenty years ago.
She has experience billing for several different types of healthcare providers and has also worked for Aetna Health Insurance, giving her experience on both sides of the industry.