Private Practice Scorecard Episode 1: Why Your Private Practice Isn’t Profitable (And the Metrics You’re Missing) With Adam Robin

[00:00:00] If I came to your practice and I spoke with you or maybe some key leaders in your team, and I asked them just a few simple questions. Maybe, what's your average revenue per visit? What's your cost per visit? What are your minimum expectations for production? What percentage of your revenue are you spending on payroll marketing operations? Would you be able to honestly answer that question? Welcome to the Private Practice Owners Club. Your hosts and coaches, Nathan Shields scaled

[00:00:28] his practice and exited for millions, while Adam Robin went from working 60 hours a week in one clinic to scaling to multiple clinics while working less than four hours per week remotely. This podcast is meant to share with you exactly how they did it and how you can build a business that supports the lifestyle that you truly desire. And don't forget to join the Private Practice Owners Club community on Facebook, where we are obsessed with providing even more resources that help owners, just like you, win the game of Private Practice.

[00:01:04] Hey, Practice Owner, let me ask you a question really quickly. If I came to your practice and I spoke with you or maybe some key leaders in your team, and I asked them just a few simple questions, maybe what's your average revenue per visit? What's your cost per visit? What are your minimum expectations for production? What percentage of your revenue are you spending on payroll marketing operations? Would you be able to honestly answer that question? For most of us,

[00:01:29] the answer is probably no, which is why I'm here today. What I want to give you is perhaps what I feel is the most valuable thing that I can possibly give you for free. I'm going to help you walk through your very own Private Practice scorecard, one metric at a time. And so if you stick with me through this series, I'm going to give you the playbook. I'm going to give you what most people charge money for.

[00:01:57] I'm going to give you a superpower, one that helps you actually be the designer of your business and gives you the tools that you need to succeed, not just personally, but also financially. So let's get into it. So let's talk about the reason why I'm here. Nathan and I have been really thinking this year about how to add more value to our audience, add more value to private practice owners.

[00:02:22] Our mission has always been to transform the lives of others. We want to transform the lives of 1,000 healthcare leaders in the profession. And so we're trying to figure out the best way to do that. And time and time again, we continue to come back to this recurring theme, which is the one that we're all probably very familiar with at this point. And it's this, private practice owners, healthcare

[00:02:50] leaders, PTs, OT, speech therapists, MDs, chiros, we are people driven. We are emotionally connected to our people. We want them to win. We have this deep empathetic drive to help others see greater possibility and opportunity in their life, period. And so it's like, tell me if this resonates. When people come

[00:03:16] to your practice, you just want to be present. You want to connect. You want to truly hear them. You want to acknowledge them. You want to touch. You want to truly connect with them in a way that helps them feel seen, feels heard, and feels valued, feels appreciated, and feels like, you know what? Maybe I'm enough. Maybe who I am is enough to actually gain control over this thing in my life, whether it's usually it's their health or their mobility or something like that.

[00:03:45] That's why we got into this profession. We got into this profession because we were like, you know what? We're going to make a difference. And therefore, we're generally pretty good at that. We're good at connecting with people at a very high level, perhaps higher than most people. Tell me this. You typically are a leader in your community. You're a leader on your team. You're a leader in other areas of your life. Maybe it's your church, or maybe it's the community

[00:04:12] events that you're involved in. You stand out. You know how to connect with people. You know how to drive collaboration. You know how to drive outcomes with people. And so we're naturally good. We're gifted. We're wired to thrive within the people component of our businesses because all we

[00:04:33] want to do is help people. We're natural people pleasers. Okay? But where do we continually get stuck? And the truth is, we typically aren't as strong or aren't as geared towards being successful with our finances. Meaning we don't like the metrics. We don't like the numbers. We don't like the

[00:05:01] quote unquote business side of things because it's heavy and it's transactional in nature, which is almost counterintuitive to what we actually want to do. So it feels sleazy. It feels weird. It's harder to digest. It's not something that comes very natural to us. And gap between where we are, kind of like with our financial literacy and our operational excellence to where we need to be,

[00:05:30] there's a real gap there. And we want to help you bridge that gap. Okay? We want to help you bridge that gap and make it easy and seamless. Because I've been talking to a lot of really successful people, people who are a lot more successful than me. Private practice is really, I love it. And I definitely am not somebody that has all the answers or has it all figured out. I have a little bit figured out, but I have so much to learn. And so one of the ways that I learn

[00:05:58] is I surround myself with people who are smarter than me, who are like, hey, this guy's got a hundred clinics. Let's see if I could pick his brain. I want to learn about the way he thinks. I want to see what he sees or she sees. Right? And so I have these conversations with people as a student, as somebody looking to absorb and gather as much information and perspective about what is next

[00:06:22] in the practice owner journey and in the industry. And what I have found is there are two very common kind of overarching themes that are critical for us to get. Number one, this is key. We used to be, as private practice owners, it used to be okay, or we used to get by with average business skills,

[00:06:47] average, or even slightly below average business skills. The margins were there, right? It was easier to be successful financially. And so we would waive co-pays and we would kind of not really focus on the billing stuff and over the counter collections. Yeah, yeah, yeah. We would kind of get to it when we had time. And we used to be able to get by with that. And unfortunately, that is not the case anymore. Reimbursements are continually, continuously declining and becoming a bigger and

[00:07:17] bigger challenge for us. Therefore, in order for us to survive as an industry, private practice, that is, we must become above average and if not exceptional at financial operations and business literacy. It is critical for our survival because winging it and kind of getting to it whenever we have, quote unquote, have time is no longer going to cut it because things are just too thin. Okay.

[00:07:44] So that's number one, we must elevate our skills as a business owners to be successful. Number two, we must pivot. The traditional model of healthcare is no longer going to serve us. That doesn't mean we have to flip everything upside down and go, we're dropping all the pay insurances and we're just going to do some weird stuff, right? But we have to make some minor yet impactful pivots in the way that we deliver care and how we get reimbursed in order to create a future that is not just viable for you,

[00:08:12] but also for our teams and for everyone else. So those who pivot will survive if, and this is a big one, and I want you to sit with this because I care about you. If we as an industry do not confront the brutal truth that number one, we must get better at business and number two, we must pivot. If we don't do that, the only outcome to that is that we slowly start to erode and go out of business over

[00:08:37] time. Kind of just a slow bleed over time, which will ultimately result in you shutting the doors. All right. And I know how heavy that is. Money stress is real, right? It creates real internal pressure for you, for me, for everyone. And it makes it hard to show up and truly be present because we're worried about survival. And that is a very hard place to be for our patients, for our team,

[00:09:02] and for the people we love most, for our families, for our kids. Okay? And so I want you to go on this journey with me. And so what I'm going to do is I'm going to walk through a series. It's going to be called the private practice scorecard, one metric at a time. It's going to be a series of podcasts and

[00:09:26] YouTube videos, and they're completely free. Never has it been more easy to get real free, high-level business education than it is right now. This is exactly what I paid thousands to learn from other business coaches and mentors in my past. I'm giving it all away. All away. Free.

[00:09:51] My goal is to elevate you, to empower you, and to build trust with you. Okay? And so this is going to be a 12-part series. A 12-part series, all right? Where we're going to help you know your visits, know your revenue per visit, and know your cost per visit, all right? So that you can see exactly where money is leaking, all right? This is going to be a full masterclass, and it's not going to be

[00:10:20] high-level stuff. This episode is going to be a little bit high-level, right? It's the introduction. I'm kind of just sharing the vision with you. I am going to kind of talk through why this matters and what the overarching goal is. But starting next week, when we get into our first chapter, our first real application chapter, it's going to be very hands-on. I'm going to give you step-by-step guidance on exactly what actions to commit to in order to create outcomes. I'm going to give you

[00:10:45] strategies. I'm going to give you tips. I'm going to give you access to me and my team. So all you have to do is reach out to us. We'll answer any questions with you to help you make a real financial change in the business, all right? So here's a high-level overview, all right? Today, like I mentioned, it's going to be really more about the vision, about the overarching theme, about the goal, all right? I'm trying to get you bought into this, right? Because this is valuable.

[00:11:10] This is real stuff. Honestly, I'm sharing this with you not because I think... I'm sharing this with you not for any other motivating factor other than I truly believe that this is the information that will make the biggest difference for you. I'm going to write that down and say it one more time.

[00:11:32] I'm sharing this with you not because I'm smart or there's no alternative motives around this. The single reason why I'm sharing this is I honestly and truly believe that this information, based on all the work I've done with practice owners, all the conversations I've had with the smartest owners that I know, from all the conferences that we've done, from all the vendors

[00:11:57] that I've worked with, from all the sponsors that we've had and communicated with, and who we've been advised by, I truly believe that this is the most valuable information that will make the biggest difference for you and your business. That's why I want you to know this, okay? So as I mentioned, it's going to be a 12-part series. And forgive me, I'm kind of looking down at my notes, all right? So part of episode number one, goal, vision, high-level overview. Once I kind of go through

[00:12:27] this, I'm going to break down kind of what listening, what implementing these things will ultimately get you, okay? Stay tuned. That's going to come towards the second half of the show. But the first episode, the one that we're going to do next week, is going to be all about marketing drivers. How do I generate leads? How do I generate sales opportunities inside the business, all right? And specifically, what metrics do I use to measure the success of that, right?

[00:12:58] That's going to be... So it's all about marketing. So for your practice owners who are like, I need more new patients, I need more leads, I need more sales opportunities, this is going to be for you. I'm going to break it down. I'm going to show you how to measure it, what actions to specifically commit to that will give you the biggest ROI on your marketing dollars, okay? That's number one. Second, kind of second bucket, which will be a series of multiple episodes, is going to be the front desk, patient care coordinator. So think about it. Lead generation is where you start.

[00:13:27] Conversion is the next step. And that conversion happens at the front desk or at your administrative side of the business. It could be a virtual assistant, or it could be whoever's doing the intake process for new business. Typically, it's the front desk or some type of sales professional. Could be even you as the owner, okay? So we're going to go through four primary metrics

[00:13:53] within the front desk. There are tons, but we don't need to focus on tons. We need to focus on the four primary, okay? The core four. It's going to be lead conversion percentages or referral conversion percentages. How do we take that lead? Who's like, hey, I'm interested. How do we convert that to a new patient that's on the schedule ready for a sales opportunity? Okay, that's number one.

[00:14:17] We'll do a whole episode on that. Number two, the new patient arrival rate, the new patient arrival rate percentage. Because arrival rate's important, but how many times have you had a new patient on the schedule and then they cancel? It's like new business, new business. That's the worst one to lose for so many reasons. So we want to treat that with its own special episode because these are your

[00:14:43] VIP new opportunities that we want to have very specific intentions around in order to ensure that they show so that we can create impact. Number three, arrival rate, general arrival rate. So once they convert and they show, how do we keep them on the schedule consistently? What are the specific things that we do from front desk to clinicians to technology to ensure that our show rate is as high

[00:15:08] as it possibly can be? And then number four, over-the-counter collection percentages, okay? Over-the-counter collections, that's the first financial touchpoint inside of your private practice. And it's where we typically start. A lot of things happens during that intake process, clarifying over-the-counter collections and driving that financial touchpoint is really, really key. All of these conversions and arrivals, all of this is going to lead to

[00:15:39] more new patients, right? So marketing doesn't give you new patients. Marketing gives you leads. Conversions, conversions create new patients. Conversions create new patients. So how do we maximize our opportunities to create new patients, all right? Going on to the next kind of bucket. So we're going to do episodes on every single one of those. Next one is going to be provider performance,

[00:16:05] our clinical team, okay? What are the metrics that we use to drive efficiency, utilization, and production while we are delivering care? Very, very important. So we're going to do two primary episodes. Number one is going to be two statistics. One is going to be our average frequency per week.

[00:16:30] So essentially measuring the average prescribed frequency of that plan of care every week. Included in that episode, we will do the average visits per evaluation, which is more of a duration, right? So one's more of a frequency, one is more of a duration. How many visits? So ensure that we're maximizing frequency and duration ethically and compliantly, right? Ultimately driving utilization

[00:16:58] and production up and maximizing it not from a place, not beyond what is ethically appropriate, but maximizing what is ethically appropriate, okay? And elevating production. And then lastly, the second episode for our providers will be our units per visit. So here's the thing, like, if we have a bunch of visits on the schedule, that's great. That's awesome. What a great opportunity.

[00:17:25] But if they only stay for a minute each and we're not able to bill for those visits, then it doesn't really move the needle for us financially. So we want to ensure that we have a unit per visit expectation or target for our clinical team such that for every visit that is on the calendar, that we can maximize

[00:17:49] our billing opportunities and we can deliver value in a way that is consistent and congruent with that value and billing. And we can code it well, and we can have a very stable revenue per visit from a billing and coding perspective, okay? So those are the two episodes there. Next kind of section is going

[00:18:10] to be, I believe we're going to be doing two episodes for the billing team, okay? By the way, going back, the provider performance, the way that you bill, that's your second financial touchpoint. Inside the business. Second financial, the second transaction happens there, okay? The third transaction is your billing and collections team. So ensuring how do we get that money back into the

[00:18:39] business? So we're going to be looking at, we're going to be doing two episodes, full episodes for the biller billing department. First episode is going to cover three metrics, denial rate, percentage of collected versus projected and the aging report or the percentage of collections that are outstanding beyond 90 days. We want to tighten those things up and make sure that we have processes in place to

[00:19:08] drive efficiency with those three things. The second episode is going to be our average revenue per visit. How do we make sure? All right, I'm back. Had a little camera issue. Average revenue per visit. How do we ensure that we are driving our revenue per visit up? How do we do that? And we'll do a full episode on our average revenue per visit.

[00:19:35] So this next bucket is going to be our accountant and bookkeepers. This is our fourth and final financial touchpoint inside the practice, okay? So we're going to be looking at how to track very clean financials and look at a few metrics, gross income, gross expense, net profit, profit margin, and cost per visit.

[00:20:02] And specifically for gross expense, how do we break those expenses down in a way that's easy to understand? And that actually helps us make decisions and set budgets inside the company so that we can drive profitability, right? So because expenses drive profitability. Expenses are just as simply,

[00:20:23] it's going to help us. Expenses is a metric of efficiency. How do we keep as much money in the business without losing it through other expenses, right? And so if profitability is a metric of efficiency, typically it's not a metric of volume or top-line revenue. And so what I've seen, and Nathan will

[00:20:51] attest to this, is that most businesses, big or small, if you're having cashflow issues, typically the best place to start is by managing your expense lines first. How do I drive down expenses in a way that is efficient and streamlined so that I am plugging all of the holes inside of the

[00:21:17] business, which will actually give me some breathing room between my income and my expense? And that is where your margin lives. And that is where all the possibility lives. And that's where your freedom lives is right there, which is hard, right? That's where all of your systems and your organization, your discipline and your routines, all of those things set budgets and boundaries on your behavior

[00:21:44] and on your spending, which is the thing that creates expense. So that's a very critical episode. Make sure you stay tuned, okay? And then lastly, we're going to talk about the tools that you need to actually use this. And I'm going to give you the tools for free, okay? These are going to be the tools to help you get all this out of your head and just see it on a spreadsheet, just like a

[00:22:07] calculator, right? I think about this is all just a very big math problem, right? It's a very big sophisticated or complex math problem. It's not that complex, but it's complex enough to where it's hard to hold it all in your head, right? Because there's a lot of moving parts, there's 12 episodes, right? But nobody gets overwhelmed whenever you use a calculator, right? When you use a calculator

[00:22:33] and you have a tool, we've all taken algebra, right? You plug all your numbers in, you put all these parentheses in, you put your cosines and all this stuff and you press enter, you know the number there. It's like, boom, that's the number. I trust it. And that's what it is, right? Two plus two is four. I feel certain to that. I may not like the number, but at least I know exactly where I stand and I know exactly what I can do about it to fix it. That is literally how you remove emotion from the business.

[00:22:58] And so that you can drive, you can be more offensive with how you're designing your model. Okay. So the two tools that you're going to use is a KPI dashboard, which is going to be a lot in your KPI dashboard is going to be your lagging indicators, meaning what happened. I'm measuring what the outcomes that we had. And the second tool is going to be a pro forma, which is going to be a tool that we use to make projections, to make projected out financial outcomes based on

[00:23:27] the things that we want to operationalize in the business. All of this is going to help you create a model, a model of doing business. And a model is very simply a series of activity rules and structure on how you deliver care that leads to a predictable financial outcome, right? So most of us don't have

[00:23:54] a model. Our model is show up and treat patients and figure out what happens. When you design a model, it says, we're going to take these insurances, schedule at this frequency, measure these KPIs, compensate our team in this way with this much. And this sequence of decisions and commitments,

[00:24:17] if executed well, will give us a blank financial outcome. So that is your model. That is your blueprint to financial success. And then you can apply that to your business. You can open up multiple locations with that model because it's consistent and it's predictable, right? And you are in control of the financial health of the company. So all of that's going to give you a model. All right. So how are all these episodes going to work? I'm going to give you four kind of,

[00:24:45] I'm going to break these down into like four parts. Anything outside of this would be just a little extra. Number one, I'm going to tell you what the problem is. I'm going to kind of outline, this is the problem. And these are the symptoms that you will experience if this metric is low or if this department is not ideal. This is the objective symptoms. This is the emotional symptoms.

[00:25:10] That you'll experience with you, yourself and your team. This is the problem. The second thing is, we're going to discuss the statistic that we actually use to measure that problem, whether good or bad. What is the objective tool that we use to objectify either success or failure with this problem? I'll give you the metric. I'll tell you how to calculate it. I'll tell you

[00:25:37] what I've seen the best way to find it. I'll give you everything I can about the stat. The third thing is, I will share with you what will happen as a result of you fixing this problem. What will that open up for you? What will that feel like for you, for your team? What will that do to your bottom line? And then fourth, the most important part that everyone likes. It's how to fix it. So I can't give you everything because I don't know everything,

[00:26:07] but I'm going to give you what I know, right? The best simple things, activities that you can do to actually fix the problem. I'm going to give you step-by-step. I'm going to give you tools. I'll give you SOPs. All you have to do is go and do it. If you do it, you will drive outcomes in each of

[00:26:28] these departments. Okay. Lastly, I think this is the last thing. What is the ultimate goal of all of this? Okay. Why should you even listen? Well, maybe you shouldn't. If you're making a ton of money and you're super happy, maybe you shouldn't. But this series is going to be purely financial. So this is going to be an objective series. This is going to be a series where we,

[00:26:57] yeah, we're not going to take, we're going to try to put our blinders on and think purely from a financial perspective. That doesn't mean that the people component of the business or the systems of the business aren't important or aren't worthy of consideration. All of those things are true, but we're going to solve those problems in a different episode, in a different series.

[00:27:24] This series is going to be, what are the behaviors that I would need to commit to, to drive financial success, period. Then we can, through that lens, we're going to naturally create some limitations like, well, what about this? What about that? What if my team doesn't like it? Is that ethical? We're going to be approached or confronted with those questions and we can solve those at a later time in a different episode, or you can reach out to me and we can have a

[00:27:52] conversation about it. But for now, we're just going to focus, we're going to try our best to stay in this lane so that you can be more objective. And so the objective outcome that we want is three things. Number one, more visits. If you're a private practice owner, one of the key metrics that you look at is how many visits a week are we doing? How many visits a day are we doing? More visits means more income, means more impact, means more impact, more success for the patient, more success for you,

[00:28:20] for the team, for the community. Everyone wins with more visits typically. Number two, more revenue per visit. So as mentioned, more visits isn't the only thing. We have to make sure that we're getting paid a lot for each visit. And so if you follow the formula within this framework, you will see a noticeable increase in your visit volume and in your revenue

[00:28:49] per visit, which will give you much more favorable income, favorable top line revenue, right? The top of that profit and loss statement, the one that says, this is how much money we made last month as a company, that will go up. You will see that. The third outcome is decreased cost per visit, which is the harder thing to typically, it's the harder thing to get right. But that's the

[00:29:15] efficiency piece, right? So if we button up and create systems, habits, routines, and metrics, and accountability around them that drive efficiency and that allow us to deliver care without spending as much money, we will create a gap, a healthy gap between our top line income and our bottom line expenses. And it's within that gap that creates profits, which is what our industry

[00:29:44] needs more than anything. And so there is a way to do this. I promise you, you can do this. You can carve out more 10, 5, 10, 15% more profit margin if you follow these simple steps, okay? So that's what I want to give you. And honestly, it is literally the most valuable thing that I can give you, that most valuable thing I can give you. You will be able to listen to this on a podcast.

[00:30:11] You'll be able to, there will be a YouTube video. You'll be able to tap into the YouTube channel. You will be able to reach, connect with me or my team, right? There will be resources. You can email me. You can text me. There will be ways that you can connect with my team in the show notes or somewhere in the YouTube channel. You can join the Facebook group and you can just pop your questions. A lot of people in that Facebook group are going to be listening to this series.

[00:30:41] So bring your questions in the Facebook group. Me and my team are there. We will answer them. We will help you get over the hump. We will help you implement, right? And so all you have to do is dedicate some time every week to listening to these, save them, bring your pen, bring your paper, write down the specific action items and the blueprint and go

[00:31:06] and execute with your team. Because execution is the hard part, right? Like we can sit around and talk about theory and we could talk about all these ideas and all of those things are good and they create perspective. But the hard part is how do I drive behavior change in myself and in my team? That

[00:31:29] is where execution lives. And that is what separates winners from losers. Okay. And so it's the execution that is going to drive home the life and the business that you want. And you're the only person that can do that. So don't make the mistake of listening to all this and, oh, I listened to that thing once and I didn't do anything about it. That's the biggest failure ever. Don't be that person,

[00:31:53] be the person that can actually commit to some type of change. Okay. So if this sounds of interest to you, I want you to stick around. I'm going to try to put these out every week and they're yours. It's my gift to you. It's literally everything that I know about this stuff. You can check out the show notes. If you want to learn more, if this is your first time listening, you could check out the show notes, check, go ahead and join our Facebook group, subscribe to the YouTube channel, get involved in the private practice owners club, and we will be diving into this together. All right.

[00:32:23] Make sure that you have everything that you need to connect with me and my team. And I will see you next week for the first episode, the first actionable episode where we are going to start tapping into the marketing drivers inside your business. My name's Adam and I'll see you next week. God bless. Thanks for listening to the private practice owners club. If you enjoyed this episode,

[00:32:51] would you mind doing us a huge favor and leaving a review? This helps us get the podcast out to more clinic owners to help them create greater freedom and profits so they can own their future and visit our website ppoclub.com to find more resources and connect with us.