Case Study 1: Not Knowing What You Don't Know
Diana and Tim have been practicing therapists for eight years., and practice owners for the last two years after they took the practice over from their former employer. You could say they were “sailing without a compass.” Diana found me through my podcasts and attended my one-day workshop. Tim, being very reluctant to hire a "consultant," didn't think they needed any help.
He said, “Maybe a little help and marketing, because who couldn't use some new patients?" He agreed to do my one-day PPO in-office event. I have very simple rules. Be open and honest with me and I will be the same with you. They paid my $2500/day fee with my unconditional guarantee.
They took over a practice, but didn't know it was dying. Their office manager who was with the former employer to run the practice (and who was paid the most) didn't even know the numbers
Here are some red flags:
I asked about physical therapy retention, attrition rates, and their best payer. All of my questions were met with their best guesses.
But my biggest red flag was the fact that the owners did not run their practice--the office manager did. They only wanted to treat patients. If you only want to treat patients, then you should be an employee, not an owner. I found that their best payer was Medicare and second-best was Aetna. We now knew two things. If they kept going at the pace they were going, they would be out of business in three months. Not knowing your numbers is the kiss of death.
I also knew that they needed to understand how the business worked and that it was time to let the office manager go. Her salary of $95K could not be justified by her knowledge base or skill set. With that money freed up, the office could be spruced up a bit.
When I started working with them, they were at -$40K a month (net) and a gross of $75K a month. In three months, they were +$17K a month. They dropped two of their worst contracts. They fired all nonessential employees and created a training program for all new hires.
We created a cash program for all their past and former clients to join a monthly continuity program. This program was designed not to make money but to create a massive stockpile of clients for their practice instead of for the competition.
We added two additional revenue streams: first, I became their business partner, and secondly, out-of-network clients were billed per day. Due to this, they no longer needed to treat Worker's Comp, Medicaid and even Medicare. Medicare was their best payer (or so they thought), but that clientele took up most of their time. So in simple math, they would rather make $100 per hour on one patient than $60 every half hour per two patients.
I'm happy to see their practice has now become a huge competition to others. We attract a lot of other therapists from neighboring clinics. The word has gotten out. Diana and Tim are owners and not employers.
Case Study 2: Two Steps Back... and Many Steps Forward
Imagine having your senior therapist and office manager quit within a week of each other only to find out they are opening their own clinic about two miles away. This happened to my client Ryan M who had originally teamed up with me to add new revenue streams to his practice. We were only working together for one week when this heinous act occurred.
Yes, I was really pissed off. Not because I don't believe everyone has the right to start their own practice, but because it shouldn't be done by stealing the hard work of attracting patients and training support staff. You may agree or disagree with the statement. But that’s my opinion as a practice owner and someone who knows that this is how we feed our families. We don't have a steady paycheck. We eat what we kill. And right now, I had to help Ryan go hunting.
So, I took over and helped Ryan rebuild his practice. The first thing we did was assess the rest of his staff’s personality and cognitive profiles. We then had a leadership meeting for Ryan to implement immediately.
The clinic was losing about $35K a month. Also, due to the fact he had one less therapist, he couldn't handle his usual volume of patients. This made him lose at least $500 to $1200 daily. It was all starting to add up fast...very fast.
He was in crisis mode. His current staff was worried. What would happen? Should they start looking for a new job? Once Ryan and I completed the profiles and had the staff leadership meeting, the decision was made. I promoted two and fired one. Yes, I fired one. (She was going to be a poison to any new hires.)
We started my formal three-part hiring process. We were desperate. But not so desperate that we would take just anyone. I also put together a marketing campaign for past patients about a new charity we were involved with and how we were moving forward with new and exciting treatments. I also attached a CD and 10 video testimonials from our current patients.
The entire process took 90 to 95 days, but Ryan came out on top with a better staff, better systems in place, and a brighter, more automated practice. He learned the value of leadership, which most therapists believe does not have a monetary value.
But I disagree. Ryan's practice was -$50K a month due to poor leadership. He is now generating $80K a month and opened his second clinic using the same system. It's already generating $17K profit monthly.