High Performance Practice Series, Ep. 2 - No More Empty Slots

High Performance Practice Series, Ep. 2 - No More Empty Slots

Introduction 

Welcome to the show. I’m with my partner, Adam Robin. How are you doing?

Solid, man.

Except for the back. You complained about the back.

I’m just getting older. I'll be in my 40s. I’m hitting chapter two. I'm getting into the next season of life.

Wait until you get that AARP card in the mail like I did.

I can't wait. You know you made it.

Welcome to everyone tuning in. We're on episode two of the High-Performance Practice series leading up to our conference in October. The Private Practice Owners Club is having their 3rd Annual Private Practice Owners Club Conference. The High-Performing Practice Conference to help you build profit, profitability and freedom. These episodes are meant to be like a playbook, but focusing on different aspects of the business to make it a high-performing practice, as per the title. This episode is about schedule efficiency and utilization. It's to maximize the efficiency and productivity of your clinics.

We'll be diving into that. In order to highlight the conference, go to PPOClubEvents.com to register. I’m super excited about the conference. Again, it’s October 15th through 17th, in San Antonio at the Saint Anthony Hotel, I believe. I keep wanting to call it Saint Michael. I don't know why. It's going to be a great event. At least 200 people would be there that you can network with. Sponsors you can talk to. There will be dinners and networking and all kinds of fun things. Most importantly, it’s super valuable for you and your team members to learn how to be more effective and productive in your practices.

Go to PPOClubEvents.com to register. There are discounts that are being set up if you want to bring your spouse and also discounts for your team members. There will also be breakout sessions specifically geared towards your leadership team members, so they can become better leaders on your behalf as well. We're doing some new things compared to previous conferences, if you've been there. Even for our pediatrics owners, we're going to have a couple breakout sessions for you as well specifically. Check it out.

Getting into episode two, schedule, efficiency and utilization. As we're talking about schedule, efficiency and utilization, it's important to say efficiency can mean a few different things. Some people get focused on how they build different insurance-based clients. Maybe they schedule their Medicare patients a little bit differently than the commercial payers. Sometimes, some practices are scheduled in the 40-minute or 45 minute or one hour. Some get booked and some don't. Are you guys on the hour or half-hour, Adam?

We do them on the hour.

Defining Schedule Utilization

We're not going to get into that too much because people find their groove in different ways and some people prefer the 40 minutes and make sure they get three units. Some people do an hour and make sure they get four plus units for each visit. We won't talk about efficiency so much in that regard. We’ll focus a little bit more on utilization and maximizing the schedule that you have with the visits that are on the schedule and team members that you have in total and maximizing their production.

I will also say when we say utilization, that's usually, how many visits your provider team is able to see against what the capacity is for the clinic. If there are 100 visits available in a given week based on your schedules or provider schedules, if you see 80 visits in that given week, you're at 80% utilization. Only to outline some definitions that we go off of when we say the word utilization. Before we get into that, it's important that we talk a little bit about what the expectation is for production from your team.

The Importance Of Your Breakeven Number

A good place to start is with that breakeven point. Breakeven can mean different things to different people, but if you've read the show for any time, you know our definition of breakeven is your total expenses as laid out in your QuickBooks or whatever financial software, plus 10%. We're not trying to break even so that we can just cover everything. Our breakeven is going to give us some buffering and build in some profit to it. We're going to figure out our breakeven numbers so that we can work from there.

We even did a full podcast on the breakeven metric back in the day. It was around this time at the importance of it and how to figure it out. If you want to check that episode out, check it out. Tell me about your experience, Adam. When you figure it out you're breakeven, how did that change the dynamic of your management of your schedules?

It created a budget. I can remember during any businesses that we built whenever profitability was a challenge, it's usually during times where we didn't have strong metrics. We weren’t measuring good data and holding ourselves accountable, including me, to operating in the most efficient way possible, including the schedule. Once we were clear on what that breakeven was and where things needed to land for survival, it created a clear boundary that, quite frankly, was not negotiable.

It forced us to channel our efforts in our energy and to do what was required to hit that. Whether that's increasing the amount of visits on the schedule. Maybe it's improving our billing or whatever it is but we had to do something. We knew objectively we were going out of business. It was no longer emotional. That helped me and my team start making those decisions a little bit better.

This is one of those KPIs. If you haven't been doing KPIs within your organization, and you're just focused on total visits, new patients, arrival rate and maybe your bank account balance. If that's the extent of your KPI assessment week to week and month to month, this might be a good one to start adding to simply knowing, “What's the nut I need to crack every month in order to make these things worth it?” Even break that down into, “What do my providers need to do so that keeping them on the team is worth it?” There's an even exchange here.

You can figure that out in terms of, “How much money do I need to make per week?” Whatever that expense rate is in a given month on average from your QuickBooks. Divide that by twelve months or if it's from the month divide that by 4.2, because there's usually about 4.2 weeks per month. You know what you need to be generating weekly. If your average reimbursement per visit, you can divide that number by your average reimbursement per visit and find out how many visits per week you need to hit.

Having the financial metric and then the visit metric of your breakeven like, “This is our red line. We cannot go below this red line,” and everyone knows it. Don't keep it a secret. Don't lock it up and throw away the key. Everyone knows what the red line is and if we're below it for a period of time, everyone knows we're in trouble. Everyone starts rolling the little bit harder in the same direction.

They’re like, “We need some ideas real quick.”

It's an important metric to start off if you're getting basic and you need to expand on the basic metrics that I talked about. I said breaking down by provider as well. Are you still going off the metric that you expect your providers to generate between 2.5 to 3 times their compensation on a regular basis?

With that, yes. You could start there. Take annual salaries, multiply by 2.5 to 3 or probably lean towards 3. You know that therapists need to generate that amount of revenue typically in a 48-week calendar year because you know you're going to take four weeks of vacation. You can divide that number by 48 and now you know like, “I need therapists to generate that many dollars a week.” You can divide that number by your average revenue per visit.

I would recommend maybe a trailing 90 days or a trailing 60 days if you have something current and then you can say, “Now I know my production. I need my therapist to hit this many.” When I say hit, I mean by Friday evening when they clock out, they have completed. Meaning the patients came, they built for them and the documentation was completed. That minimum number of visits every week. That's a good unlock.

Is that a conversation that you're having with those providers during the interview process?

In the job description. In the job ad. Put it in the job ad. I know what it's like to run a private practice, especially if you've been doing it for not that long. It's very overwhelming. It's hard to insert the amount of cognitive energy that you need to get good at your numbers. It took me a long time to understand the numbers well. If you don't know those metrics, that doesn't mean you're a bad person or that there isn't something wrong with you. It just means it's worth spending a few Saturdays studying these metrics and starting to put things on paper.

There's a lot of times where I talk to practice owners and one of the questions I'll get asked is, “Adam, I'm not profitable. What should I do?” The three questions I usually ask are, “What’s your revenue per visit? How much are you paying your therapists? What is your minimum expectation every week for your therapists?” Usually, you can figure out why they're not profitable with those three questions. They're guessing their revenue per visit. It's not calculated. They know how much they pay their people because they write that check every two weeks but they don't have a clear expectation with their team either.

It’s like, “They see about 40 to 50. Sometimes 60.” It's loosely defined. As weird as it is, that's the problem. If you could just button that up and force yourself to create systems within those budgets, it's that simple, which is the hard work. Where all the hard work and all the valuable work is, but if you can dive into solving that problem, that's the thing that unlocks your freedom.

If you don't know those numbers in your trying to find providers to join your team. Someone asks for $110,000 a year, plus benefits and you don't know how they're going to generate. You don't know what they need to generate at that salary in order to justify them coming on your team. You're like, “I guess that's what the going rate is.” then you're signing up for potential disaster. These people could come on and you're like, “Finally I've got a provider,” but they're only generating one and a half times. Maybe they're generally less than $200,000 a year. That doesn't cover the cost of turning on the lights.

You’ll be in trouble.

It goes back to that compensation ratio. That is our biggest expense. You have to be mindful of what you're paying your team and what your expectation is from them. Based on that, if you can line things up, such that you have an expectation per visit. You've done what you can to maximize reimbursement in your billing patterns and your managing, your billing collections team very well. You can say, “If I keep them busy and we fill their schedules, such that they are at that 80% to 90% utilization rate on a regular basis. We know we will be profitable at this range on our end of month financials.”

That's the importance of knowing the utilization rate is. We've done some of the backend work. You know their salaries and what they need to generate. We've got our billing collections team buttoned up. Our front desk is collecting well at the front desk, and they're filling up the schedule. Now we know we can project or expect or have confidence in a solid profit margin at that point.

That's right. You’re operating within budget.

Exactly. I remember when I first started coaching you. You had some problems at the front desk. You had to have some hard conversations with people at the front desk, if I recall. This is where they come in. We're talking a lot about financials but a big part of that lies in the operations of it, especially at the front desk. If it's one person's job to fill that schedule and increase the utilization rate. It is that person at the front desk. Was that hard for you to get them to understand that their main job was to fill the schedule?

I'm so glad you brought that up because it brings me back to those moments. Here's what is so hard about it, especially for those that are reading. I probably had maybe 2 or 3 therapists working with me at the time. A couple part-time front desk people or something like that. I was treated full-time. I knew very little about the front desk like what's going on up there. I was figuring it out. I was scrambling from day to day. I had zero systems in place.

That front desk person basically handcuffed the whole position. She was the boss. I couldn't tell what to do, because if she left, I was in big trouble. It was a scary situation because when you're trying to roll out more structure and accountability. People don't like change. Especially if they've been doing it their way for a while. It’s a very hard place to be as a practice owner, for sure. Those are the reasons why it was so hard.

Was it hard then to get them to understand what their main responsibility is? Was there any pushback or are they like, “What am I going to do about this? When am I supposed to spend time doing that?” Did you feel like that was like that conversation recentered them on what their focus is?

They eventually quit, so it didn't work out very well. I had to scramble but then the next person I hired was like a rock star. It was just hard. Honestly, the thing that was hardest for me in that stage is, I didn't have good leadership skills. I didn't know how to communicate that without being confrontational. I didn't have those skills and those soft skills of leadership. Some of those conversations probably aren't as handled as well as they should. I tend to be somebody who tackles things head on and sometimes that intensity can be over for people.

Probably, we've all had those stories where people quit because of you. That was one of them. I didn't know what the heck I was doing. There was no leadership in place. There was no training program and job description. I was figuring things out. I was trying to figure out how to run the front desk and be a leader at the same time. Sometimes you just have to start over.

I will compliment you in that regard. You said you tend to tackle things head on, but that was the reason why you had such amazing growth. It's over those initial years and up until now. You didn't take 2 to 3 weeks to figure out what you're going to say and how you're going to say it. What am I going to do and then worry like, “It’s not a good day to have that conversation because X, Y, and Z” You would hang up and have the conversation. The fact that you did have those conversations meant that over time, faster than others, you got better at those conversations.

I did.

It requires the courage to have those conversations quickly. Whether you've had the training or not. You got to start working out. Build that muscle.

It's the hardest challenge. I remember whenever she quit. I was terrified. I was very scared. We've all been in those dark places of practice ownership. It’s like, “How am I ever going to recover from this?” It's through those moments that you learn and grow. How fast can you do hard things over and over? That's the thing that will help you grow.

Work it out. Having them focus on not only filling up the schedule, but getting those people that are on the schedule to come in. Now that you have some front desk operations in place. Share with us a little bit about what you and maybe you involve your front desk team in a little bit. How do you look forward to it? We talked about things like facing things in the past. Looking at some lagging indicators. As you're looking for word into the day or the week or moving ahead, what is your process for that?

What we did is we built our internal dashboard. This has evolved over time. It wasn't like I had this tool mapped out perfectly from day one, but I got halfway decent at Spreadsheets and Google Sheets. I created some Google automations and things like that. Essentially, if you can imagine just like a spreadsheet with all the therapists on the sheet, their name in column A, how many hours are working for the week or for the day. Their FTE status, essentially.

If I know that target that I need. For me, let's say it's 50 visits a week. I have to be at minimum 50 visits a week per 1.0 full-time equipment. A 0.5 is going to be 25. If you have a spreadsheet, you can formulate those pretty easily. If you have another spreadsheet where you're keeping up with your arrival rate every week, you can probably run like your average arrival rate over the last 4 to 6 weeks. What's been your average arrival rate for the last 4 to 6 weeks? I recommend keeping it tight, because it depends on what time of year you're in.

Are you in the back-to-school year? You want that to fluctuate based on the season that you're in. Let's say your average arrival rate is 90%. You're crushing it. You're doing very well. I would just take 50 because that's my minimum that I've calculated from my finances. Divide that by 0.9 and that will give me a number of scheduled visits that I need at minimum for the week for that provider.

You're not going to divide it by 0.9 because if you divide it by 0.9, then that would take you up to like 55 visits a week so that they land at their 50.

That's where I need to be.

You're dividing it.

I would divide that by 0.9

I didn't hear you correctly.

That would give me the number of scheduled visits that I need to be at so that they land at 50.

They need to be at 55 scheduled. Build in the council rate, and then your front desk person knows, John 1.0 FTE. He needs 55 visits scheduled for us this week.

That’s right. That's how we'll measure it. We can extract like that over the week. We can extract it later like today’s schedule or tomorrow's schedule. If you can build a tool, which is maybe part of the process, that helps your front desk gamify exactly what they're trying to do. In this example, if Nathan only has 54 visits on the schedule. Nathan's going to highlight in red. It’s like, “Fix it. This is a problem.” You could even get it to where the Google sheet will send you an email.

It sends the owner an email, like, “This is red.” There's some Google sheet automations you can do. If it gets to 55, if I just hit the threshold maybe that's yellow. It's like, we're good but like, “If we have a bad arrival rate this week, we're screwed.” Maybe if I go 5% above that, let's say I get the 57 or 58, we're in the green. Let's try to keep it green on a day-by-day basis across the board no matter how many hours a week that therapist is working. That can keep people. They always have a pulse on the schedule.

It sounds like this is something that is probably up 24/7 on the front desk computer screen. It leans and breathes by this.

Clinic directors have it up and all the front desk people have it up. Everyday, we're tracking that schedule. For whatever reason, if we say something like, “Today’s green, but tomorrow's red and yellow. You have to submit a battle plan, which is going to tell us exactly what you're going to do whether it's adjusting schedules or moving appointments up or scheduling new evals. You have to submit that before the end of the day to fix tomorrow's schedule. Before we get here tomorrow.”

Interesting. You've got a system of accountability there that goes beyond spreadsheets. If something's red, they need to submit a battle plan on how that's going to change the green tomorrow.

It's still not perfect. If we hit our mark most of the time, then we should be good as long as we've got our numbers down.

You're looking today and tomorrow. Do you take time on Sundays or early Monday mornings to look at the week and how that's shaping up and where the potholes might be, if you will?

What we'll do is by Friday evening before we clock out, we want to have at least 80% capacity or 80% of our expectation for the week and a full schedule on Monday. That's our expectation. That's our deliverable before we go home for the weekend. It’s 80% for the week and a full schedule on Monday. That way, you walk into Monday with your schedule set and you can start working on Tuesday, Wednesday, Thursday, and getting things dialed in.

That way you're not scrambling Monday morning to check in patients and get people filled in for Monday and Tuesday.

Our whole thing is like, today’s schedule is the only thing that matters. Get that right. That’s the hole in the boat. If you can get that right, it's like, “Let me fill this up tomorrow.” There's a time lag between now and tomorrow that I can use to pace myself and be more strategic. It's not such an urgent pressurized chaotic system inside the front desk, which is what we want. Fix today, then fix tomorrow. Don't worry about Friday. Get tomorrow fixed. Tomorrow is the only thing that matters then the next day and the next day. We're always teaching like front load that intensity so that way you can give yourself some room so you're not trying to fix things last minute.

We did this on Thursdays with our front desk. We called it our walkthrough. We'd walk through all our active patients. The clinic director is with the front desk person and walks through all the active patients. “Who is still active? Who needs to be discharged? This is what I'm doing about that.” That would give them Thursday afternoon and Friday to fill up next week.

There you go.

We followed a similar pattern. I'm just sharing a little bit of extra as to what we do. I'm sure you guys are doing the same thing on Thursday or Friday. Reviewing who needs to stay on the active list, who needs to be discharged to keep that clean and make sure everyone's accounted for. Also, who should be coming in two times a week and who's not coming in three times a week like they're supposed to and have those conversations. Those are important to have.

You not only fill the schedule. Let's be honest, the focus on feeling the schedule is to get patients that come in for their visits on a regular basis at the prescribed amount of time, so they can get better. If the patients come in at the frequency that they're supposed to come in, for as long as they're supposed to come in. They will get better and your business will be better.

I'm sure this all sounds like we're doing whatever we can to get patients in the door just so we can have a better business. We got to think about our true purpose as a clinic and that is to get patients better. As we're measuring things and doing these things, we need to remember, on the front stage, patients are getting results because they're coming when they're supposed to come in.

Which is probably the most important thing.

For sure. We’ve got to tell the patients what to do.

News flash for everybody reading. You guys join our coaching program so we got to tell you what to do, too. Your customers have to be supported. They don't know what they're doing. That's why they're there. They need guidance, structure and support. They need help creating the behavior change because they're not used to going to therapy three times a week.

It's not part of their life every day. They need reminders and structure. I don't know if you can see me getting a little passionate about this. As a therapist, your job is not to just document. Your job is to change people's behavior and change their life. It's your ability to do that that helps them get the result. You got to just buy into that. Your patients need to be told what to do.

They need to be led. What you're doing is like, “This is where you're at. This is where you're going. I want to help you get there so you can be the hero of your story. I will be your OB1 and let's go. If you want to get there, I'm going to hold you accountable so you can get there and see how this works.” It's important to have those conversations with your clients, but you have to understand your providers as you hire them and probably haven't been trained in those conversations. It is your responsibility to train them in those conversations so the patients come in when they're supposed to come in so they can get better.

It's your front desk’s responsibility to train the patients to understand, “When you come in, these are your insurance benefits. This is what you owe every time you come in. We expect to pay it when you come. This is why we keep a credit card on file. This is when we'll charge the credit card.” All that stuff. Those training are imperative. As you do that, then the focus is on improving patients showing up in general. How do we measure that in a few different ways? Schedule utilization being one of them. The average visit frequency per week for active patients is another one. As we fill that up, then we know we're running a business that's valuable and it's fulfilling its purpose.

I love how you broke that down.

Good stuff. One other thing I'll add to that. Schedule utilization metric is one that can also tell us if and when it's time to expand. If you are looking to add another provider to the team, maybe look at another location because most of us are all entrepreneurs and have ideas for growth, expansion and scaling our businesses. That is one metric that if you are bumping up to 90% and over on a consistent basis. That usually gives you a green light that it's time to bring on the next provider.

When I say 90% on a consistent basis, I'm talking about the business as a whole on average and every provider within the organization. Not like some people are burning out both ends trying to get to 95% utilization on a weekly basis while someone is doing 75% or 80%. No. Everyone's averaging above 90% on a regular basis. The clinic as a whole is above 90%. If you do that long enough, people are going to be begging for another provider to come on the team because that's running pretty hot. That's another way you can use that metric, that utilization metric to determine if and when it's time to bring on another provider or look for another location.

I'd like to speak a little bit about two things. Number one, the type of person that belongs at that front desk role. The type of avatar that typically is successful. Maybe what they would need in order to drive this in that role. We can be quick. You alluded to it. If you want somebody to be successful at helping you fill the schedule, they've got to be a sales oriented professional. I use that word professionally loosely, but they just got to be very motivated to serve. They get energized by having conversations and communicating with their patients. They just love it. They're people.

You got to be people-people.

They've got to be also motivated by metrics. They have an internal competitive drive with themselves. I don't mean from a place of life of selfishness, but from a place of, “I want to be the person that can create that type of impact.” This is the type of person you want owning that schedule. That has a high sales drive, a high urgency drive from a place of service. Hopefully, you guys can picture it out. The other person, when they walk in the room, they become instantly like the person in charge. There's like, “Everybody, we're going this way,” but they do it in a way that everybody likes.

I've recognized that.

They're very charming.

The successful clinics that I have had and I've seen in other clinics, if they're females, they tend to be mother figures. They care about everybody that's coming in. They're going to ask about the kids. They're going to know what's going on and happenings in the community. It's easy for them to hold a conversation. They're cheerful naturally. They are up to date on a regular basis and they are happy people. The idea of interacting with people all day lights them up. It brings energy. The more people, the better. Bring them all on. Bring in the whole world. I want to talk to them.

I like to work hard. I'm a hard worker. I'm motivated.

Setting Provider Production Expectations

I especially saw this in Alaska. The clinic where I met the owner and that dude was boring and a jerk at the same time. He was weird and I was like, “How does this guy have this clinic?” Which was super nice. It has beautiful architecture. A busy clinic and a great reputation in the neighborhood, then I met his front desk person. I'm like, “Oh, okay. I get it,” because she was all about me.

I'm talking to the owner but when I came in, she was all about who I was and what I'm doing. She’s like, “How can I help you? Can I get you some water?” This is the driver of the clinic. It is this woman right here. That's the type of person that makes you a ton of money. People like to come and come to your clinic when you have that.

The Front Desk As A Profit Driver

For sure. They're good at holding people accountable. Also, for insurance. You got to be clear on your metrics. You got to know your metrics as an owner. Once that you know, you can build some type of tool to help gamify the system. If you can gamify the system and make it red, yellow, and green. There's a lot of psychology behind gamification. That's going to be a very valuable asset for you to build. Consider it.

Aligning compensation and incentives around that game of vacation. If you can't add some bonuses for schedule utilization for that front desk for arrival rate. That is a very powerful motivator so that you don't have to micromanage all the time. If the incentives are aligned, it's gamified and you got the right person. It's just going to work most of the time.

Building Accountability Dashboards

That's the system that you want to have in place if you can work at those things. Aside from that, being clear and transparent about those expectations at the job ad, job interview and during the onboarding process. Simply having an accountability system where those metrics are reported to you and you meet with them on a cadence. I know that sounds like a lot for somebody who's not doing that but it's not that much once you have it all set up in place. It's just designing that system is going to be the thing that makes that person thrive and also your clinic thrive.

It comes down simply if we were to break it down. It's finding the right people and giving them the right systems then your business will be highly profitable. That's up to you to generate those systems and determine who the right people are. That's where a lot of the work is. It’s like, “Who is the right person for this position and who is the right person to fit in my organization?” Based on my experience, what are the successful actions they need to do in order to generate the product that I want from this position that is profitable? Not only the generating product. They got a generator product that ends up generating profit. You have to make those connections. If we can find the right people and find and generate profitable systems, that's where we can generate money.

There you go. That's a wrap.

When To Expand Your Clinic

We'll talk more about it at the conference on October 15th through 17th, the High-Performance Practice Conference in San Antonio. Hopefully, you guys can join us. PPOClubEvents.com is your registration with discounts for team members and spouses. Look for that. Anything else you want to add about schedule, efficiency, and utilization to wrap up the episode, Adam?

None. Take one thing from this and just go do it. If you got the wrong person, go find the right person.

We're going to have a worksheet for you just to help write out some notes. You can download a worksheet to take some notes from this. It can give you some guidance as to things to consider as you're trying to implement changes in your organization and improve the utilization efficiency of your schedule. Talking to you, Adam.

Thanks, brother.,

I'll talk to you later.

Important Links

• Adam Robin on LinkedIn
• PPOClubEvents.com
• Do You Know Your Breakeven Number - How To Find And Leverage It – Previous Episode
• Explore more resources from the Private Practice Owners Club