The 5 Must-Haves To Successfully Grow And Expand Your Clinic - Nashville Workshop

[00:00:00] Hello and welcome to the Private Practice Owners Club Podcast. I'm your host, Nathan Shields. And this episode is a little bit unique to most of my episodes because it is simply a presentation that I did at a recent Nashville workshop regarding the 5 successful things that you need to do in order to grow and expand.

[00:00:17] The presentation itself will provide you a ton of value, but if you are super interested and you are goal-oriented towards growth and expansion at any point in your organization, you have to connect with us at our annual conference in Destin, Florida, October 2 through 4. It's going to be right on the beach, beautiful location. The speakers are going to be amazing. I have speakers procured who have 10, 20, 40 clinics and they're going to share their secrets.

[00:00:45] But one of the more important things is to just connect with other owners and learn from them. Learn that you're not alone and that we're in this together and that other people have figured out the same problems that you're dealing with right now. And we share those things during the conference. So make sure you register, go to ppoclub.com under the resources and events tab. You'll be able to register.

[00:01:08] There are super early bird discounts. If you register before July 1st, there's even early bird discount after that, although the price goes up. So make sure you register now, book your hotel and we'll see you in Florida.

[00:01:23] Welcome to the Private Practice Owners Club. Your hosts and coaches, Nathan Shields scaled 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.

[00:01:47] 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. All right. Who's looking to grow? What are some of your goals for growth? I love it. What's your five-year plan? Where do you want to be in five years? I'd like three more than three. Cool. All right. Wonderful.

[00:02:18] Okay, great. Let's get there. What is your five-year plan? We all want that company where we can take a month off and not catch a single phone call from the company, right? Yeah, that's what we want. So in order to do that, we need some guidelines. Like, how do you know when you're ready for the next clinic? If I were to ask you right now, Connor, what determines whether you open up the next site or not? Profit. Cool. Good. All right.

[00:02:43] So let's talk about some of the guidelines that I learned about growth. We're going to talk about five key rules for growth. The five areas we need to consider if you're going to grow and scale a private practice in healthcare. Connor brought up the first one, profitability. How are you going to grow if your current model isn't profitable? It's probably not a good idea if you're going along at 10% profit margins. So think, let's do a second one of these.

[00:03:14] How can I do more of this? 10% is not enough. We need to be profitable. You've got to know your KPIs. Some people, as they joined the private practice owners club, might have been overwhelmed by the KPI dashboard. There's a reason why we're forcing you to put in your KPIs on a regular basis. Because if you don't know, how do you drive a car if you don't have a dashboard? If you don't know how fast you're going. If you don't know if the tank's full. If you don't know if you're overheating. Look around.

[00:03:48] Well, you don't want to wait until you run out of gas, right? Or the smoke is coming from the engine, right? You've got to know your numbers cold. You've got to know them. Boom. Drums. Boom. They're not foreign to you. These aren't alien to you. You've got to know them off the top of your head. We'll go through some of them. You've got to build a strong core team. When you went from one to two clinics, did you have a core team in place? The start of one.

[00:04:15] When you went from two to three clinics, was it easier because you actually had a core team in place? Much easier. So much easier when you had leadership in place because you have a core team. They do that. Create and document systems. Those of you who are in the private practice owners club, we have the vault. It's a bunch of systems written down. You need to have your own vault.

[00:04:40] That's what Ujwal is waking up at 5 a.m. every morning to do is to create his own vault with videos, templates, job descriptions, roles, responsibilities, KPIs. Every role has a KPI. Every role has a product. Every role has descriptions. They have scripts for how they greet the patient at the front door, collect the, you name it, right?

[00:05:01] This is what makes McDonald's grow to the biggest fast food chain in the world because they can plug a 15-year-old boy at the counter. He follows the system and gets the same product and we still go on by it. So it's systems dependent versus people dependent. What does that mean? Systems dependent versus people dependent. We've all been people dependent at some time. That person's doing their role at the front desk and they do it very well.

[00:05:30] If you don't have systems behind them, what happens when they leave? They take the systems with them. So you're dependent upon them and then you're having to try to train the next front desk person on the way that person did it, but how you wanted to do it. There was no system. The person was the system. Tani knows all about this. When you go to sell your practices, what's the difference in value?

[00:05:51] If someone's coming to buy a practice and it's built on legitimate systems that generate patience and profit, what kind of value does that create from when you're going to sell? Your company's worth more when system dependent and not people dependent. Ensure your demand is scalable. When we sold our companies in 2018, they wanted to see our marketing strategies. They wanted to see our marketing plan on top of everything else that they want.

[00:06:21] See, what's your marketing plan? How's it look? Who are your top tier referrals? Where are you getting them? What percentage of your new patients come from certain providers versus others? Right? What's your payer mix? Where are your insurance companies? All that stuff. They want to know and they want to see it. But you also need to have a marketing system.

[00:06:42] If you're going to open up another company, you want to plug and play a marketing program that says, I'm going to open up my third clinic in this other city. Okay. Okay. We know that in order to get new patients at about that time, we need to start running our SOPs, standard operating procedures, two months ahead of time, two months before the doors open. And we're going to hit this many doctors each week. We're going to send out this many Facebook posts on week six, six, five, four, and week three.

[00:07:12] And these are the posts that we're going to send each week leading up to grand opening day. That's a system. You take that one time, you have a system in place. Now it's going to be easy to open up clinic number four because you just click number four. We do the same thing. Get it. That's a marketing strategy. All right. So rule number one, prove the model first. When I say prove the model first profitability, you got to prove that the model is profitable and it works on a regular basis and via systems, et cetera.

[00:07:41] So here's your checklist. Is the owner taking a salary? A lot of you at smaller scales might be taking distributions when something's available. Owners got to be taking a salary on a regular basis, right? Break-even point is known and you are consistently well above it. So what is break-even point? Those who have listened to me enough, maybe on the podcast or trainings, what does the break-even point represent? Pay-in, what do you think is price-takes? What's this?

[00:08:10] Well, expenses plus 10%. So I'm not in the business to just cover expenses, right? So I'm going to build my break-even that includes minimum 10% profit, right? So break-even point is known and it's consistently well above this metric. We did a whole podcast on it about two months ago. So look at Private Practice Owners Club, scroll back a number of episodes. Adam and I talked for an hour. It can be measured in dollar amount per month.

[00:08:40] We broke it down by visits per week. You get your dollar amount per month and divide it by average reimbursement rate per visit. And then you come up with number of visits in a month. Break that down by 4.2 in number of visits per week. Our break-even was at 150 visits a week. And if I was getting below 150 visits a week, then I knew things were in trouble. So know your break-even. So this is the next part of the checklist. Make sure you've got a healthy double-digit profit margin every month.

[00:09:10] Simple enough, right? It's got to be over 10%. And then in regards to profitability, making sure you have significant cash reserves or money available to you. All right? You need to access the cash in order to grow. So line of credit, if you're a small business owner, have a line of credit that helped them get through. Yeah? We never used it. We had a $250,000 line of credit because we knew we could use it anytime we wanted to.

[00:09:39] Growth could be one of those reasons. There are insurance vehicles. Talk to your financial advisor that you can pay into a life insurance policy that has some tax benefits. You can also draw from that life insurance policy to grow and expand. I've had friends that have done that. And then just the cash reserves. If you're making profits, I would recommend if you read Profit First by Mike Michalowicz,

[00:10:04] you get to the point where you're putting 10% of your top-line gross revenues away for rainy days or investments. We always kept minimum two months of expenses in a cash savings account. Minimum. It might have been three months. And if you went through COVID, you might have wished you had six months.

[00:10:25] Another rule of thumb I use from my experience, opening a new location of about 2,500 square feet should be in the $60,000 to $100,000 range. You need to have access to that kind of cash. SBA loans are available. You go through the bank, they're kind of a pain in the butt. But if you can show a track history that helps a ton to get loans like that, if you know that growth is in your future, setting aside the cash is really helpful

[00:10:52] instead of just expecting the profits from the other clinics to flow into that other clinic, having that set aside is probably I would be doing that at the same time that I'm applying for an SBA loan. All right, moving forward. Some of the KPIs I was talking about, this is general rules of thumb to know when it's an appropriate time to hire the next provider or open the next new clinic. Utilization rate and max capacity of the clinic. Utilization rate. So 100 appointments are available on your schedule.

[00:11:21] How many of those were filled up in a week? 100 appointments available, 85 people came in. Your utilization rate is 85%. Okay. So you want to break these down by provider and by clinic. What are your benchmarks for utilization rate? What do you expect your providers to be at? General rule of thumb, I like to keep them at 80 to 85%. Over 85% on the regular, then it's time to hire the next provider.

[00:11:49] That gives me, if someone's like, when should I hire the next provider? What's their utilization rate? Ah, they're hitting 90%. Like you can feel pretty comfortable hire bringing on that next provider. That's the green light for me. So if you assume they're going to be 40 hours a week, what's their schedule? How do you schedule? What's the availability? You just have to work backwards into someone that has a more reasonable schedule compared to your own. How do you come up with their minimum level of expectation?

[00:12:16] So we built it off of that breakeven plus 10%. And then we knew we needed to hit 150 visits a week. And if we were going to have two full-time providers, well, 75 visits a week might be too much. So if we had three full-time providers, they each need to hit 50 a week to get to 150. And if they were below that, then we had accountability conversations. Right? And if they were above that, we had some bonus and incentives. Right? So that was the expectation.

[00:12:46] General utilization rate above 85% by provider, but also clinic-wide. So if you're clinic-wide, everyone's running hot, 93%. I would say if you're over 90% in our clinics, burnout was starting to get an issue if that continued for too long. But clinic-wide, that's when maybe I can open another clinic. Other metrics are met and profitable and well above my breakeven. And I'm filling this clinic with my marketing system. It's time that I can open another clinic.

[00:13:14] Now, considering the space, if you were to say 10% of your square footage in visits per week. So if I have a 3,000 square foot space, I would assume, and I'll follow up with my CPA on this, but if I had expenses and whatnot, I would assume that 300 visits per week in this space is the max capacity. Are you thinking treating these space? All of it.

[00:13:36] All of it. Yeah. So if you're going to pay for it today, you're going to pay for it today.

[00:14:05] We'll figure it out in the wash later on. And if I need to cut you a check, great. But I'm not going to be your bank and give you a loan for your co-pays and co-insurances until they figure that out. So if they were supposed to collect $500 today, then you need to collect $500 at the end of the day, somehow, some way. The magic sauce, those of you who have done it, I know you've seen the difference.

[00:14:28] The difference between keeping credit card on file and not keeping credit card on file could be all it takes to get that full 500 bucks. Every new patient's going to have their credit card on file with me. If we didn't have the conversation at the front desk, we're going to charge it at the end of the day. The front desk is going to share the responsibility to fill the schedule. They know this KPI. The front desk knows that one of their metrics is to fill the schedule and collect the money.

[00:14:56] If they think their job is to, I don't know, call insurances and that kind of stuff. Sure, do that. But do that after you fill the schedule and collect money. And if your front desk operations are such that your arrival rate is currently 75%, maybe get that better before you consider the next clinic. All right. Next one, finance. We talked about cash reserves. So it needs to be well-funded. Here are some of the growth accounts or savings accounts you might want to consider moving some of your money into. We talked about setting aside money in your growth account.

[00:15:24] We talked about a rainy day of three to six months of expenses. Right. Don't be surprised by your taxes. Please. Please. I've done it too many times where I've had the conversation with my accountant that said, you had a great year last year. Can you send a check for $80,000 to the IRS today, please? Don't do that. Have the conversations with your CPA. How much do I need to set aside this month for my taxes next year based on what my revenues are or my profits? So know that.

[00:15:53] And then setting aside money for fun money. If you have a little bit more, maybe bonuses, company parties, gifts, hokas, that kind of stuff. So you have some fun money to play around. These are some things that I've learned from financial advisors. Distinctly separate savings accounts from the operations account that you have in your company. And these are getting funded on a regular basis. It could be automatic.

[00:16:20] I do that sometimes and push 500 bucks over there and I never see it. I never have to push the button. A couple of years later, all of a sudden I have $30,000 in that account. Where'd that come from? That's cool. Right. But can make things very easy if you do it that way. Hey there, private practice owners. The wait is over. Registration is now open for the Elevate and Expand, a scaling conference.

[00:16:47] Join us from October 2nd to 4th at the beautiful Hilton Sandestine Beach Golf Resort and Spa in Miramar Beach, Florida. This is your chance to learn how to scale your income, time, freedom, and impact in today's complex economy. Secure your spot now to gain exclusive access to transformative sessions and invaluable networking opportunities. Go to the show notes now to find the registration link.

[00:17:17] Mark your calendars for October 2nd to 4th and get ready to elevate your practice to new heights. And then billing and collections. Who feels like they have a really good handle on their billing collections? There you go. Good. It's not a strong suit for most owners. Regina had to take it over because it wasn't going so well. Kayla's gotten screwed over. So learning how to manage your billing collections team, doing this before you grow into another location, could be super helpful.

[00:17:46] And again, as a potential money pit. Tracking what you should expect this month in collections. So the month of June. I should know how much to collect in the month of June based on our visits in. How much I'm collecting in June depends on my visits in May. When we review it, we're going to review it in July. We're going to look back. Okay. We had 500 visits in May. You collected this month. And based on our average reimbursement per visit, you should have collected this much in June. Did you meet it or not? That's what I mean by that. Average.

[00:18:15] The AR aging benchmark. This is a general benchmark rule of thumb for physical therapy. And I think it might be the same for speech. This is zero to 60 days. 80% of what's out there that needs to be collected should be in the zero to 60 day range. 60 to 90, 5%. 90 to 120, 5%. 120 and above, 10%. Good rule of thumb. You know your biller is doing well if they're hitting these benchmarks, which are not easy to come by.

[00:18:43] And if it's not at this point right now, it might take six months or longer to get there. But this is a good metric off of which to judge them. Zero to 60, 80. 60 to 95. 90 to 125. 120 and above. Know your average reimbursement per visit. And when I'm saying average reimbursement per visit, it's not 95 bucks. $94.13. I want specifics on exactly how much you're collecting in average reimbursement per visit. Average cost per visit.

[00:19:13] A lot of us know this. This means nothing if you don't know this. If you're judging insurance contracts and if you're going to be profitable or not, and you don't know the cost per visit. Kenny knows he's got a flat rate payer that's paying about 60 bucks or 60 bucks a visit. His cost might be about the same, right? Then it's like, is that insurance contract worth it? This is what I mean by knowing the numbers cold. And then knowing your payer mix. Not just the current payer mix, but where you're going to.

[00:19:42] So if you're going to open another location, are you going to have the same mix of Medicare, Medicaid, Blue Cross with Shield? Do those city employees have the same health insurance payer as this city? Is there a chemical plant or some large industry over there that's going to provide a completely different mix of where I currently am? It's something to consider. And then talk to your bookkeeper or CPA about what if some of these numbers change and my average reimbursement rate might go up or down based on the knowledge you have there.

[00:20:12] Moving quickly. Oh, I like this one. Scaling without data is just guessing at a faster pace. Does that feel like that? You've been through that, right? Scaling without data is just guessing at a faster pace. Let's build a strong core team. Developing a leadership team to take pressure off of you. If you're seeing all the patients, Emily shared yesterday, seeing all the patients and building a new clinic and opening up a clinic.

[00:20:41] I'm sure your personal life, your sleepless nights were through the roof. Having a team helps a ton. At that point, you are the bottleneck. If you don't have a team, you are the bottleneck. You're the limiting factor. You are the stress point. Your checklist. Number one, how involved are you in patient care? Our rule of thumb. Jeez. Adam, what'd you say? Even if you're out of patient care two half days a week, that's not enough. If you're looking to scale and grow. All right.

[00:21:10] Well, our recommendation to anyone who joins our program is you get out of patient care a minimum of two half days a week. And if you're looking to scale, that's not enough. Let two half days go. You know, open up your schedule more and see less patients. What would you recommend? How much admin time versus patient time? How fast you want to grow. Your business will completely transform if you spend time. The love language for your business is quality time.

[00:21:39] The more quality time you give your business, the better it will be, the better the results, the faster you'll grow, the happier teams will be, the more patients will be connected, the more influence you'll have in your community, the better life you'll have with your family. Is the team able to be productive without your physical presence? If you're not there, can they produce and improve production? Can you grow without some of these things? Yes, you've done it.

[00:22:06] If you want to grow to a large scale without killing yourself and all those around you, this is optimal. I have to write a good book on this. Clockwork by Mike Michalowicz. Profit First is a good one by Mike Michalowicz. Mike Michalowicz. Clockwork helps you. Like, what do I need to do? He's going to say a lot of the same things I said. Yeah. Profit First is a therapist book. Oh, cool. Oh. Yeah.

[00:22:36] Back to Adams. What do we need in order to generate money in our company? Two things. If you can't consistently recruit, who's going to see all the patients that you plan on sending to that new clinic? Right? Guess what you're doing during this admin time that you're creating here? You're running a recruiting system and you're making sure that your director or VP of marketing is doing the marketing to get the clinic full. Right.

[00:23:03] So, recruiting program, it fills the holes as needed. Creating document systems. We talked about being systems dependent versus people dependent. Write them down. Scale requires consistency. Systems create freedom. When I heard the word freedom back in the day, that's when I got tingly. I was like, what? I've been doing this for 12 years and you're talking about freedom? Like, I'm tied to my business.

[00:23:33] The key to unlock the shackles of your business. Systems. Right? That's how you step away from businesses. Creating systems and getting others to do them. So, here's your checklist. Are you systems dependent versus people dependent? Are people running systems or are they just doing whatever they want? Are your systems written out or available in video format? Have your own vault within your own system. Go through our vault in the Private Practice Owners Club.

[00:24:02] Not just to learn, but to recreate your own vault for your own clinics. That's the template for what you should have in your company. You should have your own vault of systems and procedures. Spend time in it. Copy, paste materials. You need a recruiting and hiring system. You need an onboarding and training system for all new hires. You need a marketing system. You need a reporting system for all these people. How do they report to you? What does the report look like? What KPIs are they sending? You need a system for meetings.

[00:24:32] How often are you meeting? Who's meeting with whom? Are team members able to answer their own questions by following the employee handbook, policy and procedures, or compliance manuals without you there? One of the exercises we had to perform with our teams, you'd get the knock on the door. Got a minute? And they'd ask a question. Did you look in the employee handbook for the answer? No. Okay, come back. If it doesn't have the answer, then come back and talk to me. Nine times out of ten, they'd never come back. If the handbook didn't have the answer,

[00:25:02] we knew we needed to write up that system. There's a hole. And maybe we'd invite them into that process. Do you mind writing up that system for me so I don't have to do it? Running it by systems means they're literally answering their questions by going to the system handbook if that's appropriate. Rule number five, lastly, ensure your demand is scalable. You need a marketing machine that generates patience. You push the button and it generates patience. We talked about the four buckets of marketing. Where do we get patients from?

[00:25:32] Outreach. Current patients. Current patients. Physicians. And community. But it is current patients, getting referrals from current patients, past patients, warm outreach, physician sources, referring to physicians, and community outreach, which could be social media, paid ads, going to events, sponsoring a 5K, that kind of stuff, going to a CrossFit gym, right, and setting up a table. Have a system.

[00:26:01] And I'm okay if you say, I don't want to fill that bucket right now. I'm going to focus over here on these buckets. That's still a strategy. Just be intentional about it. Just say, I'm not going to focus on current and past patients and we're going to get our referrals up this year or this quarter, whatever it is. That's still a strategy, but have a strategy. Do the current and new team members know how to sell to the patients the plan of cares and ask for patient referrals? What do we say the compliance rate

[00:26:31] for completed plans of care is in the physical therapy space? What percentage of patients complete their full plan of care? Three, zero, 30%. Because your providers can't sell the plan of care and get patients to come in when they're supposed to... Lost money. Not necessarily part of the growth checklist, but you're losing money. You're not maximizing your current space if you're not getting them to do this. And then, can your current support team, credentialing, billing, collections, front load manager,

[00:26:59] take on any additional load? You've got to recognize where they're at if they're going to bring on a second clinic or it's just going to add credentialing expectations from them. Billing is going to be ramped up because of that. Are they going to be okay with it? Right? So, knowing these things. Are you ready to grow? Are you ready to take off? Know your checklist. Right? Are you profitable? Based on your KPIs, do you know the health of your company?

[00:27:26] Is your company decentralized from you and capable to continue to produce and improve without your immediate impact? Are you people dependent versus systems dependent? Can you scale this by initiating successful programs and then hand them over to other people? Thanks for listening to the Private Practice Owners Club. If you enjoyed this episode, would you mind doing us a huge favor and leaving a review?

[00:27:55] 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. Thank you. .