Efficiency Is a Weapon: How the Word Healthcare Loves Most Is Quietly Destroying It — with Larry Benz

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okay all right today is one of those

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ideas that sounds right it still sounds

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right when it's coming out of my mouth

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until you actually look at what it's doing

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oh yeah consequences of the actions and

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the word today is efficiency i don't think

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i've ever heard anybody argue against

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efficiency it feels like the safest word

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in healthcare operations i feel like it

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might signal it signals discipline

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performance control

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But what if the thing you've been

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optimizing is the exact thing breaking

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your clinic?

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Because here's the tension,

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as Larry writes in his new article,

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the more efficient clinics become on

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paper, the more clinicians churn,

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the more patients drop off,

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and the long-term revenue quietly erodes.

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So either the operator is wrong or the

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model is.

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So today,

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Larry is going to break down how this

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thing that felt safe and good and

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wholesome efficiency went from a useful

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concept

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to something that's actively working

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against clinical care and why most

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platforms are chasing metrics that look

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good while destroying the outcomes that

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actually matter.

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So Larry,

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let's start with what we were talking

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about before we hit record.

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Let's make sure we understand the terms

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because we don't want to make these terms

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nebulous.

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Probably the first step in where we get

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in trouble.

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No, that's exactly right.

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And whether we're talking about efficiency

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or scale or growth,

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these are very general terms that allow

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you to define them any way that you

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want.

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Left to our own devices,

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we tend to define them on a very

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narrow scale.

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and a bias.

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You know, so when we get to,

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you know,

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the whole idea around weaponizing

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efficiency,

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I'm one of the guys who would say

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that because it shows up in the whole

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area around scheduling.

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And so let's take a step back for

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a minute.

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In my experience in multi-site operations,

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which is effectively forty years,

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what I noticed even as my companies,

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and I had a couple generation of this,

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or even go back to my military days,

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the most

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variable function that I've ever seen in a

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healthcare site, physical therapy clinic,

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dental clinic, primary care,

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is how you schedule.

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And you can be part of the same

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brand,

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but from one clinic to another clinic to

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another clinic, it is highly,

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highly inconsistent.

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And so what is our knee-jerk reaction?

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Our knee-jerk reaction is to make it more

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efficient or to optimize it,

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to increase productivity.

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And I've seen board decks,

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including recently,

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where somebody's talking about going from

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is really a goal that should be followed.

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In any event,

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the whole template around scheduling is

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where it becomes a weapon and that's

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ground zero because the scheduling

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template is where every abstraction about

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efficiency becomes concrete.

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dogmatic, irreversible.

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Somebody in a home office or a consulting

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engagement,

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which is even further from the operating

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floor,

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decides what the optimal visit lengths,

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the optimal daily count,

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the units per visit,

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the ratio of support personnel.

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They run the math.

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The math looks clean.

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They roll it out.

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And then let's use physical therapy as an

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example.

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A therapist tries to explain to a seventy

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four year old woman with a new hip

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who's got maybe mild dementia and a

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daughter who drove a long way to help

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her at the appointment,

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that they have eleven minutes left in the

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appointment.

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And so the therapist is thinking,

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my blocks of time efficiency that's been

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pushed on me from corporate,

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and I've got this situation in front of

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me.

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And that's where it becomes a weapon.

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It becomes a weapon in the treatment room.

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And the worst part

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We never blame the template.

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We never blame corporate.

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The clinician knows time management

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issues, not hitting productivity targets.

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And obviously all that compounds patient

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by patient, clinician by clinician.

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And somebody finally wonders why there's a

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retention problem and patient outcomes are

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drifting.

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It's a scheduling template did that.

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We just never put it on a metric

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dashboard.

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So when operators do say the phrase,

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we need to be more efficient,

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what are they actually chasing and why

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does that feel so seductive?

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Yeah,

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what they think they mean is what I

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would call doing more with less,

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eliminating waste,

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getting rid of resources,

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sort of the Toyota production system,

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being lean, sort of the good stuff.

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But what they're actually doing more often

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than not is they're compressing parts of

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the clinical encounter that are really

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hard to measure and therefore they're the

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easiest things to cut,

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the intake conversation that surfaces the

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real problem.

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I like my clinicians doing much more

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subjective talking, relationship building,

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otherwise things become transactional.

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That doesn't get counted in minutes.

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You don't bill for a CPT quote around

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that.

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The two minutes at the end of the

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visit where the patient asks questions,

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and as you well know,

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based on survey data long term,

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the last thing we tend to do as

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medical practitioners is explain things to

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patients.

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That doesn't get counted.

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Clinical reasoning,

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all those kind of things,

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and none of that shows up as a

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line item.

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It all does show up in the outcomes,

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though, eventually,

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but eventually is sort of too slow for

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a quarterly review so that by the time

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a board comes to it, you know,

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at the end of it,

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they start to cut out waste.

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And when what really gets cut is margin

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and it's clinical margin.

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The buffers allow really good care to

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happen under imperfect conditions.

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You have to,

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management's tough because you have to

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give flexibility to your professionals.

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If it's PTs,

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you're a doctoring profession.

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If it's dentists,

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you have to give some professional leeway.

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And if that means once in a while

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a patient in the waiting room waits a

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little bit more and is disgruntled about

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it,

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that's probably okay.

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I'm not saying that's a good way to

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conduct their business,

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but those are the necessarily, you know,

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the unintended consequences of good

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management.

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The unintended consequences of bad

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management is every patient gets seen on

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time.

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If you have a clinic that is celebrating

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that every patient is seen on time and

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nobody's disgruntled about waiting room

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time,

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then my guess is you have inefficiency,

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not efficiency.

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All right.

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In the article,

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you bring up Taylorism and industrial

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efficiency.

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I like when you give examples in other

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industries and bring them in.

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We found this in pin making or car

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production, and we brought it over here.

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So where did healthcare go wrong in

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borrowing that industrial efficiency

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model?

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Yeah, this is just my guess.

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I think that the moment somebody said that

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healthcare is a service business and then

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a consultant heard service business and

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they thought manufacturing,

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that's my guess.

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And so really, you know,

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when you take manufacturing and Taylorism

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and industrial efficiency framework,

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time and motion studies, specialization,

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standardization, throughput optimization,

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all that works brilliantly when the idea

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is to produce the same product.

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every single time without variation but

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you need it it works for steel it

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works for semiconductors it works for the

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assembly line of an auto plant but it

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does not work when the product is

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relationships and therapeutic ones at that

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in the raw material

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It's humans.

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Those are humans in pain who show up

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with a history.

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They don't come.

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They don't come to get become their reason

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to get treated, not hell.

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They come for help.

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And so what we do is we want

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to, you know, bad,

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bad business says we treat them with

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efficiency.

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And when that starts to happen, watch out,

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you know, in the.

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In the nineties is when,

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at least my best recollection,

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when we got to this whole concept of,

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you're a little young for this Jimmy,

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of managed competition and managed care,

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the utilization review movement.

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the idea was to apply rigor to what

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you know effectively if you think about

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health care was an artisan economy right

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and some of it was legitimate there was

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a lot of waste a lot of variation

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practice patterns real room for better

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improvements variability and treatment of

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how we go about no real protocols so

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there was some reason to it but the

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mistake was believing that this framework

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was

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You could apply it any and everywhere.

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You could standardize parts.

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Some do and most don't standardize when

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you're dealing with human beings.

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And what suffered was clinical judgment.

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That became a variable to be controlled

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rather than a capacity to be enabled.

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And when you really think of when doctors

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and therapists and dentists leave,

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it's because they've been infringed upon.

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They spent all these years in school and

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what do we do?

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We do all this stuff to take that

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away from them.

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And so we're paying for that mistake just

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with very, very different terminology.

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And we have to think twice about that

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because we look at turnover and retention

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data and burnout,

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but we don't look at really the underlying

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causes.

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And part of it is our insistence on

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being efficient.

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In this article,

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you argue that the causal chain is

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actually backwards,

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that efficiency doesn't drive revenue.

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It's the other way around.

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So what actually does then?

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What drives revenue?

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Yeah.

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Well,

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so the conventional model runs efficiency,

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capacity, revenue, growth.

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That's the conventional model.

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Right.

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The actual model runs closer to this.

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Clinical quality, number one,

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patient outcomes,

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word of mouth referral relationships,

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new patient volume, revenue margin growth.

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Let me think backwards on that a minute.

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Yeah.

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The old model is efficiency, capacity,

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revenue growth.

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The actual model should run closer to

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this.

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Quality is number one.

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Sounds like Ford Motor Company, wasn't it?

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Yeah, yeah, yeah.

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Quality is number one, right.

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So let's bring that to healthcare.

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That then leads to a drive on patient

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outcomes.

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word-of-mouth referral relationships comes

00:10:02.466 --> 00:10:02.927
out of that.

00:10:03.447 --> 00:10:05.990
New patient volume then is generated that

00:10:06.029 --> 00:10:07.211
sort of the network effects,

00:10:07.230 --> 00:10:08.331
then revenue margin,

00:10:09.011 --> 00:10:11.974
which obviously all that is growth.

00:10:11.994 --> 00:10:12.815
You see, big difference.

00:10:12.835 --> 00:10:15.216
So growth is the end-pull.

00:10:15.476 --> 00:10:17.138
One is based on efficiency, capacity,

00:10:17.197 --> 00:10:17.519
revenue.

00:10:17.538 --> 00:10:18.619
The other one is based on clinical

00:10:18.639 --> 00:10:20.260
quality, patient, word-of-mouth,

00:10:20.520 --> 00:10:21.922
driving that to growth.

00:10:22.101 --> 00:10:23.562
And those things are hard to put,

00:10:23.682 --> 00:10:24.663
as you've mentioned before,

00:10:24.743 --> 00:10:28.023
in a slide deck or harder to measure.

00:10:28.563 --> 00:10:30.083
So what does this look like on the

00:10:30.124 --> 00:10:31.443
ground for clinicians?

00:10:31.484 --> 00:10:34.404
Where does efficiency start turning into

00:10:35.144 --> 00:10:37.466
burnout or what you actually call,

00:10:37.586 --> 00:10:38.985
you're bringing in different words,

00:10:39.025 --> 00:10:41.927
which I liked, you call it moral injury.

00:10:42.725 --> 00:10:43.725
That's exactly right.

00:10:43.826 --> 00:10:45.749
And I think it starts the moment the

00:10:45.788 --> 00:10:48.011
clinician starts making trade-offs because

00:10:48.052 --> 00:10:50.235
I'm not letting clinicians off the hook

00:10:50.535 --> 00:10:53.940
because default goes from the love of care

00:10:54.600 --> 00:10:56.624
and compassion and empathy and outcomes

00:10:56.644 --> 00:10:58.566
and clinical intervention and the science.

00:10:59.167 --> 00:11:01.028
to now I'm going to default to the

00:11:01.067 --> 00:11:02.548
company says I have to see this many

00:11:02.589 --> 00:11:04.450
patients per hour, this many per patient.

00:11:04.710 --> 00:11:05.590
This is what I'm based on.

00:11:05.931 --> 00:11:08.211
My daily email tells me my productivity,

00:11:08.451 --> 00:11:09.952
where my bonus is based on that

00:11:09.993 --> 00:11:10.692
productivity.

00:11:11.153 --> 00:11:13.315
What happens in all those examples is your

00:11:13.414 --> 00:11:15.355
incentives shift.

00:11:16.035 --> 00:11:17.917
and you start to make trade-offs and your

00:11:17.977 --> 00:11:20.779
default mode mechanism changes and that's

00:11:20.799 --> 00:11:23.701
the inflection point not when the schedule

00:11:23.881 --> 00:11:26.543
busy necessarily clinicians always expect

00:11:26.563 --> 00:11:29.885
to be busy not when the documentation you

00:11:29.905 --> 00:11:31.548
know requirements are annoying they're

00:11:31.567 --> 00:11:33.448
always annoying damage starts when the

00:11:33.528 --> 00:11:36.250
system creates a structural conflict

00:11:36.291 --> 00:11:37.751
between the job and the love and the

00:11:37.812 --> 00:11:40.494
passion meeting a certain efficiency

00:11:40.533 --> 00:11:42.134
performance standard and then the

00:11:42.174 --> 00:11:43.996
clinician either is forced

00:11:45.164 --> 00:11:47.025
to adopt to that performance standard,

00:11:47.126 --> 00:11:48.447
or they default out and they go to

00:11:48.488 --> 00:11:49.327
another employer,

00:11:49.427 --> 00:11:51.669
or they have kind of cognitive dissonance.

00:11:53.530 --> 00:11:55.592
When seeing a complex patient carefully

00:11:55.712 --> 00:11:57.333
puts you behind the productivity metrics,

00:11:57.354 --> 00:11:57.975
so what do you do?

00:11:58.475 --> 00:12:00.397
You hustle through it and don't do what

00:12:00.437 --> 00:12:01.618
you know is the right thing,

00:12:01.658 --> 00:12:04.379
avoiding the time spent with them because

00:12:04.679 --> 00:12:06.280
your incentives have shift to either a

00:12:06.301 --> 00:12:09.203
dollar sign or a carrot,

00:12:10.063 --> 00:12:11.706
some type of reward system.

00:12:12.426 --> 00:12:14.667
And so we have to stop rewarding with

00:12:14.746 --> 00:12:15.408
carrots,

00:12:15.567 --> 00:12:18.089
incentives and bells and all those kinds

00:12:18.129 --> 00:12:18.610
of things.

00:12:19.049 --> 00:12:21.350
And we have to go back to liberating

00:12:21.370 --> 00:12:22.072
clinicians.

00:12:22.511 --> 00:12:25.474
What I find interesting is clinicians want

00:12:25.494 --> 00:12:26.173
autonomy.

00:12:26.653 --> 00:12:27.294
I'm not saying you,

00:12:28.075 --> 00:12:29.576
get rid of all guardrails.

00:12:29.596 --> 00:12:30.638
What you do is you get rid of

00:12:30.677 --> 00:12:32.419
the number of guardrails that you have and

00:12:32.440 --> 00:12:35.163
you create boundaries and autonomy within

00:12:35.202 --> 00:12:36.504
structure and accountability.

00:12:36.965 --> 00:12:39.067
And if a clinician's expected productivity

00:12:39.106 --> 00:12:41.009
is eleven and one day they see thirteen

00:12:41.048 --> 00:12:42.370
and another day they see nine,

00:12:43.105 --> 00:12:44.005
You got to live with that.

00:12:44.806 --> 00:12:48.307
And managing a service-related business is

00:12:48.427 --> 00:12:50.087
much a battle in what I call normalizing

00:12:50.128 --> 00:12:50.707
discomfort.

00:12:50.748 --> 00:12:52.048
You have to get comfortable with the

00:12:52.107 --> 00:12:54.028
uncomfortable and the fact that you can't

00:12:54.048 --> 00:12:55.708
have equal standards across them.

00:12:56.089 --> 00:12:58.168
I have some clinicians that are really

00:12:58.229 --> 00:12:59.990
more built around productivity.

00:13:00.070 --> 00:13:02.149
Maybe their patient mix is more

00:13:02.269 --> 00:13:02.811
commercial.

00:13:03.331 --> 00:13:05.691
I have others that I want them staying

00:13:05.730 --> 00:13:07.912
within the elderly Medicare patients.

00:13:07.971 --> 00:13:08.991
And I know that they're

00:13:09.760 --> 00:13:09.961
You know,

00:13:10.000 --> 00:13:11.201
their numbers are going to be less.

00:13:11.221 --> 00:13:11.740
But you know what?

00:13:11.760 --> 00:13:12.701
We do that in baseball.

00:13:13.042 --> 00:13:13.241
You know,

00:13:13.261 --> 00:13:14.282
we're not going to give up on the

00:13:14.361 --> 00:13:15.501
great receiver.

00:13:15.642 --> 00:13:16.922
I'm sorry, the great shortstop,

00:13:16.942 --> 00:13:18.243
who's an incredible fielder,

00:13:18.263 --> 00:13:20.342
but her batting average is less.

00:13:20.363 --> 00:13:21.802
We want our center fielder to have the

00:13:21.822 --> 00:13:22.884
higher batting average, right?

00:13:23.264 --> 00:13:24.884
Those are just examples of how we

00:13:24.923 --> 00:13:26.443
professionalize it in sports.

00:13:26.464 --> 00:13:27.303
But somehow or another,

00:13:27.784 --> 00:13:31.085
we've made it an industrial experiment,

00:13:31.164 --> 00:13:32.245
B-School project,

00:13:32.325 --> 00:13:34.485
and really screwed it up in healthcare

00:13:34.505 --> 00:13:35.265
service businesses.

00:13:35.707 --> 00:13:36.687
Plus, you know, in baseball,

00:13:36.707 --> 00:13:38.428
when a guy's like, oh, he's due.

00:13:38.448 --> 00:13:38.889
What do we say?

00:13:38.908 --> 00:13:39.409
He's due.

00:13:39.429 --> 00:13:40.230
He's a good hitter.

00:13:40.269 --> 00:13:41.931
He's going to go seven for eight in

00:13:41.951 --> 00:13:42.931
the next three games.

00:13:43.191 --> 00:13:44.292
That's what you know.

00:13:44.312 --> 00:13:46.131
You've described something called

00:13:46.272 --> 00:13:47.472
efficiency theater.

00:13:47.493 --> 00:13:48.852
You touched on a couple of those elements.

00:13:49.274 --> 00:13:51.335
But what are some common examples that

00:13:51.475 --> 00:13:52.894
operators are celebrating?

00:13:52.914 --> 00:13:54.196
They're actually hurting them.

00:13:56.035 --> 00:13:56.197
Yeah.

00:13:56.216 --> 00:13:57.216
Efficiency theater.

00:13:57.277 --> 00:13:58.817
So someone opens a dashboard.

00:13:59.557 --> 00:14:01.578
The dashboard has green numbers.

00:14:02.559 --> 00:14:04.181
Everybody nods, oh, it's green.

00:14:04.201 --> 00:14:04.841
It's not yellow.

00:14:04.881 --> 00:14:05.543
It's not red.

00:14:05.562 --> 00:14:06.683
But nobody asks,

00:14:07.323 --> 00:14:10.307
what's downstream of the green numbers?

00:14:10.386 --> 00:14:11.847
And that's efficiency theater.

00:14:11.868 --> 00:14:13.990
It's the performance of sort of what I

00:14:14.009 --> 00:14:16.591
call operational sophistication with no

00:14:16.692 --> 00:14:17.653
substance behind it.

00:14:17.692 --> 00:14:18.774
The metrics are clean,

00:14:19.193 --> 00:14:21.056
but the causality is unexamined.

00:14:21.716 --> 00:14:23.597
And the room sort of moves to the

00:14:23.638 --> 00:14:24.698
next slide, right?

00:14:24.719 --> 00:14:25.799
That's the theater of it.

00:14:26.341 --> 00:14:28.423
Nobody starts talking about how

00:14:28.562 --> 00:14:31.225
utilization rates that look strong because

00:14:31.285 --> 00:14:32.966
patients are seen at a high volume without

00:14:33.067 --> 00:14:35.350
any analysis of completion rates.

00:14:35.549 --> 00:14:36.990
You and I have talked about the visit

00:14:37.051 --> 00:14:37.471
cleft.

00:14:37.951 --> 00:14:40.014
dropout patterns, outcome quality,

00:14:40.495 --> 00:14:42.738
productivity numbers that hit benchmarks

00:14:42.778 --> 00:14:44.179
because clinicians have figured out how to

00:14:44.220 --> 00:14:44.961
make numbers work.

00:14:44.980 --> 00:14:46.143
They game the system.

00:14:47.104 --> 00:14:48.745
You bet on margins that hold because

00:14:48.806 --> 00:14:49.748
overhead has been cut.

00:14:50.248 --> 00:14:50.849
So, you know,

00:14:51.409 --> 00:14:53.111
all of this leads to really this

00:14:54.285 --> 00:14:56.908
this sort of notion that there are

00:14:57.307 --> 00:14:57.827
intended,

00:14:57.927 --> 00:14:59.929
unintended consequences of all these

00:14:59.970 --> 00:15:00.330
things.

00:15:00.509 --> 00:15:03.072
Let's have an adult conversation about

00:15:03.131 --> 00:15:03.471
them.

00:15:03.932 --> 00:15:06.173
And don't expect the cleanest numbers.

00:15:06.193 --> 00:15:08.014
You're dealing with human beings all the

00:15:08.075 --> 00:15:08.294
time.

00:15:08.315 --> 00:15:10.056
You're dealing with no-show cancellation

00:15:10.096 --> 00:15:10.375
rates.

00:15:10.856 --> 00:15:12.378
So here's what tends to happen.

00:15:13.038 --> 00:15:14.359
A classic example.

00:15:14.458 --> 00:15:14.698
Well,

00:15:14.759 --> 00:15:16.340
now you're getting less number of new

00:15:16.399 --> 00:15:16.860
patients.

00:15:16.879 --> 00:15:17.480
So what do we do?

00:15:17.561 --> 00:15:19.042
See, got to do more marketing.

00:15:19.062 --> 00:15:20.543
We got to do more lead generation.

00:15:20.562 --> 00:15:21.943
We got to create more fun things in

00:15:21.964 --> 00:15:23.924
the funnel, but never, nobody ever asked,

00:15:24.125 --> 00:15:24.345
you know,

00:15:24.404 --> 00:15:25.765
answered the fundamental question.

00:15:26.365 --> 00:15:28.207
If you are a friend's family and former

00:15:28.248 --> 00:15:28.628
patients,

00:15:28.648 --> 00:15:30.068
your word of mouth referrals went from

00:15:30.109 --> 00:15:31.149
thirty five percent.

00:15:31.190 --> 00:15:33.291
Most people even measure it down to twenty

00:15:33.331 --> 00:15:33.750
percent.

00:15:34.030 --> 00:15:34.932
Why did that occur?

00:15:35.392 --> 00:15:36.852
My guess is that typically occurred

00:15:36.893 --> 00:15:39.835
because you're emphasizing efficiency at

00:15:39.875 --> 00:15:41.275
the sake of outcome.

00:15:42.216 --> 00:15:42.395
Well,

00:15:42.437 --> 00:15:44.441
efficiency feels like it's brought in to

00:15:44.500 --> 00:15:45.062
save money,

00:15:45.121 --> 00:15:46.544
but there's a moment in the article that

00:15:46.565 --> 00:15:48.288
you described the math actually flips.

00:15:48.788 --> 00:15:51.615
Efficiency saves money early.

00:15:52.289 --> 00:15:54.610
but in the long run costs millions.

00:15:54.630 --> 00:15:55.711
I remember the first time somebody

00:15:55.750 --> 00:15:58.971
explained to me what replacing a clinician

00:15:59.032 --> 00:16:01.373
actually costs in all the different

00:16:01.493 --> 00:16:03.953
aspects, recruiting, lost revenue.

00:16:04.394 --> 00:16:06.294
So why are operators missing that?

00:16:06.375 --> 00:16:07.956
Is it short term, feels good,

00:16:07.995 --> 00:16:09.895
looks good on a chart?

00:16:10.417 --> 00:16:11.336
And then long term,

00:16:11.356 --> 00:16:12.957
this plays out over and over again.

00:16:13.398 --> 00:16:15.337
It loses money or bleeds long term.

00:16:15.618 --> 00:16:16.979
What are operators missing about that?

00:16:17.986 --> 00:16:18.326
Yeah,

00:16:18.346 --> 00:16:20.126
so I think the costs are distributed in

00:16:20.187 --> 00:16:22.248
such a way that doesn't fit really any

00:16:22.368 --> 00:16:23.988
standard financial model.

00:16:24.008 --> 00:16:25.528
If you think about standard financial

00:16:25.568 --> 00:16:26.889
models, we have a P&M,

00:16:26.948 --> 00:16:28.009
we have a cash flow statement,

00:16:28.068 --> 00:16:29.068
we have a balance sheet.

00:16:29.568 --> 00:16:31.929
But the dynamics that go between new

00:16:31.970 --> 00:16:33.169
patients, visits,

00:16:34.110 --> 00:16:36.951
lab costs if you're in dental or something

00:16:37.171 --> 00:16:38.331
else, all of those things,

00:16:38.350 --> 00:16:39.871
there's no interplay that we look at.

00:16:39.892 --> 00:16:41.152
And so the turnover cost

00:16:42.115 --> 00:16:42.657
of losing,

00:16:42.996 --> 00:16:45.200
say a senior clinician is very real.

00:16:45.961 --> 00:16:48.082
Recruiting, onboarding, ramp time,

00:16:48.124 --> 00:16:49.085
productivity gap,

00:16:49.565 --> 00:16:51.006
and credentialing now it takes three to

00:16:51.047 --> 00:16:51.607
six months.

00:16:51.687 --> 00:16:53.230
And so you have to factor the lost

00:16:53.289 --> 00:16:54.451
opportunity costs there.

00:16:55.292 --> 00:16:57.195
I've seen conservative estimates at fifty

00:16:57.235 --> 00:16:58.756
to one hundred and fifty percent of annual

00:16:58.797 --> 00:16:59.317
salary.

00:17:00.599 --> 00:17:01.940
I tend to look at it more as

00:17:02.019 --> 00:17:03.260
what do they produce in a year?

00:17:03.280 --> 00:17:04.741
So you take a physical therapist,

00:17:04.781 --> 00:17:05.521
average production,

00:17:05.561 --> 00:17:07.064
just say for sake argument is three

00:17:07.084 --> 00:17:09.605
hundred thousand dollars and add another

00:17:09.645 --> 00:17:10.465
three months to it.

00:17:10.486 --> 00:17:12.268
That's a hundred thousand dollars just

00:17:12.327 --> 00:17:12.548
there.

00:17:12.607 --> 00:17:14.068
Plus your cost of replacement and

00:17:14.108 --> 00:17:14.568
onboarding,

00:17:14.608 --> 00:17:15.990
credentialing and all those things you're

00:17:16.009 --> 00:17:16.570
looking at.

00:17:16.931 --> 00:17:18.231
In some cases, you know,

00:17:18.251 --> 00:17:19.633
one hundred to two hundred percent of the

00:17:19.673 --> 00:17:20.114
costs.

00:17:20.773 --> 00:17:22.016
Don't forget about the referral

00:17:22.056 --> 00:17:22.816
relationships.

00:17:22.875 --> 00:17:24.919
Let's say that clinician had a really

00:17:24.979 --> 00:17:26.099
strong referral source,

00:17:26.140 --> 00:17:26.901
good word of mouth,

00:17:26.941 --> 00:17:27.902
they had great quality.

00:17:28.282 --> 00:17:28.942
They leave,

00:17:29.344 --> 00:17:31.006
their business doesn't suffer as much,

00:17:31.685 --> 00:17:32.907
but you're missing out on it.

00:17:33.448 --> 00:17:34.750
And I think what we tend to do,

00:17:36.049 --> 00:17:38.191
In healthcare services and in dental

00:17:38.211 --> 00:17:38.651
services,

00:17:38.711 --> 00:17:42.011
we forget that these practices are many

00:17:42.071 --> 00:17:43.653
practices within a practice.

00:17:43.732 --> 00:17:45.713
I tell my dentist right now, I said,

00:17:45.733 --> 00:17:47.034
you are in private practice.

00:17:47.173 --> 00:17:47.914
Everybody is,

00:17:48.095 --> 00:17:49.414
even if you're within a practice,

00:17:49.454 --> 00:17:51.115
you work and live within the team.

00:17:51.135 --> 00:17:52.296
You don't live and work within the

00:17:52.336 --> 00:17:53.017
corporation.

00:17:53.576 --> 00:17:54.896
And in your team might be you in

00:17:54.916 --> 00:17:56.218
the dental assistants and a PT,

00:17:56.258 --> 00:17:57.478
it might be you in a PTA and

00:17:57.498 --> 00:17:57.959
a tech.

00:17:58.638 --> 00:18:00.118
That's the team you gotta be thinking

00:18:00.138 --> 00:18:00.440
about.

00:18:00.900 --> 00:18:01.839
And as a business owner,

00:18:01.880 --> 00:18:03.941
you have to respect that you're promoting

00:18:04.730 --> 00:18:06.750
a real estate agent and not the brand

00:18:06.790 --> 00:18:08.790
of the real estate agent to use that

00:18:08.830 --> 00:18:09.392
context.

00:18:09.451 --> 00:18:10.912
And that's what I love about the business.

00:18:11.031 --> 00:18:11.991
If you do things right,

00:18:12.011 --> 00:18:13.093
you'll do it that way.

00:18:13.452 --> 00:18:15.032
Yes, you're at risk of losing people.

00:18:15.113 --> 00:18:16.433
It's your job to keep them.

00:18:16.453 --> 00:18:18.134
And it's,

00:18:18.473 --> 00:18:20.214
but what we tend to do is we

00:18:20.255 --> 00:18:22.336
work hard at optimizing and efficiency and

00:18:22.355 --> 00:18:23.175
we drive them away.

00:18:24.622 --> 00:18:25.603
Which brings up the next point,

00:18:25.623 --> 00:18:27.864
which is finding someone is one thing,

00:18:28.044 --> 00:18:30.125
but retaining them is a different thing.

00:18:30.144 --> 00:18:31.945
And you mentioned several things in this

00:18:31.986 --> 00:18:33.567
conversation of how to keep people.

00:18:34.106 --> 00:18:35.948
We hear it over and over again, autonomy.

00:18:36.288 --> 00:18:37.729
So if throughput isn't the answer,

00:18:37.848 --> 00:18:39.890
what does real efficiently look like or

00:18:39.970 --> 00:18:41.211
what should it look like?

00:18:41.810 --> 00:18:43.752
And what should leaders be measuring

00:18:43.992 --> 00:18:44.873
instead?

00:18:44.992 --> 00:18:46.334
I feel like you repeat the same thing

00:18:46.374 --> 00:18:47.013
over and over again,

00:18:47.193 --> 00:18:49.455
which is good because it means it's the

00:18:49.576 --> 00:18:49.816
answer.

00:18:49.836 --> 00:18:51.557
But what should they be measuring instead?

00:18:52.385 --> 00:18:52.526
Yeah.

00:18:52.546 --> 00:18:54.827
So the list is, you know,

00:18:54.847 --> 00:18:55.667
we've gone through this a couple of

00:18:55.688 --> 00:18:56.167
different times.

00:18:56.228 --> 00:18:57.890
I keep scaling it down a little bit.

00:18:59.790 --> 00:19:00.711
Most of it isn't new.

00:19:00.770 --> 00:19:02.112
It's just not traditionally on the

00:19:02.192 --> 00:19:02.833
dashboard.

00:19:03.053 --> 00:19:05.273
I think episode completion rate,

00:19:05.954 --> 00:19:07.736
and I'll grant you that it's harder to

00:19:07.776 --> 00:19:10.096
measure, but with EMRs and AI now,

00:19:10.136 --> 00:19:11.377
I don't think it's as hard as it

00:19:11.478 --> 00:19:12.159
once was.

00:19:12.878 --> 00:19:14.619
And that is what percentage of patients

00:19:14.640 --> 00:19:16.441
finish their plan of care, you know,

00:19:16.461 --> 00:19:18.182
versus the drop off cliff and all those

00:19:18.202 --> 00:19:18.982
things that go with it.

00:19:19.343 --> 00:19:20.324
The reason I say, Jimmy,

00:19:20.344 --> 00:19:21.825
is because to me, that's a proxy, right?

00:19:22.438 --> 00:19:25.082
If they're not finishing, why?

00:19:25.362 --> 00:19:26.844
Sometimes it's for the right reasons.

00:19:27.104 --> 00:19:28.605
Most of the time it's not though.

00:19:29.307 --> 00:19:31.210
And anything below sixty percent is,

00:19:32.050 --> 00:19:32.991
in my view,

00:19:33.032 --> 00:19:34.755
a clinical or operational problem.

00:19:35.866 --> 00:19:37.468
It just happened to be wearing a referral

00:19:37.528 --> 00:19:39.489
patient referral problems clothes.

00:19:39.868 --> 00:19:40.028
You know,

00:19:40.048 --> 00:19:41.589
I think the same thing in dental is,

00:19:41.690 --> 00:19:41.849
you know,

00:19:41.869 --> 00:19:43.290
there is such a thing as completion rate

00:19:43.431 --> 00:19:46.132
and treatment plan and treatment plan

00:19:46.152 --> 00:19:46.892
acceptance.

00:19:46.971 --> 00:19:47.712
And, you know,

00:19:47.732 --> 00:19:49.053
so for dental would be a little bit

00:19:49.133 --> 00:19:51.554
easier or a little bit different metric,

00:19:51.574 --> 00:19:53.154
but it's the same concept is how many

00:19:53.174 --> 00:19:55.096
are actually doing what was the intention.

00:19:56.250 --> 00:19:58.691
Dropout timing, when are they leaving?

00:19:59.171 --> 00:20:00.290
After the evaluation?

00:20:01.451 --> 00:20:04.832
And in dental and in behavioral health and

00:20:04.872 --> 00:20:06.613
in primary care and in PT,

00:20:06.633 --> 00:20:07.532
that's a real problem.

00:20:07.573 --> 00:20:08.593
The times are different,

00:20:09.093 --> 00:20:10.133
but they very much are.

00:20:10.193 --> 00:20:11.594
So in a PT realm,

00:20:12.253 --> 00:20:13.594
dropping out after the first visit,

00:20:13.653 --> 00:20:16.115
that's obviously a really tough sign.

00:20:16.174 --> 00:20:18.296
I think another one is referral source

00:20:18.355 --> 00:20:18.836
engagement.

00:20:18.855 --> 00:20:21.855
Are your top referral sources sending you

00:20:21.915 --> 00:20:23.957
more complex patients or fewer?

00:20:25.215 --> 00:20:28.118
Complexity is a proxy for trust.

00:20:28.219 --> 00:20:30.119
I used to hear this from referral sources

00:20:30.140 --> 00:20:31.922
that in many cases own their own physical

00:20:31.961 --> 00:20:32.423
therapy.

00:20:32.722 --> 00:20:36.465
We send you our difficult patients, right?

00:20:36.486 --> 00:20:38.087
The orthopedic surgeons who send you their

00:20:38.107 --> 00:20:39.068
family members, right?

00:20:39.868 --> 00:20:41.510
I think clinical outcome rate by

00:20:41.550 --> 00:20:44.413
clinician, not to rank people punitively,

00:20:45.453 --> 00:20:46.595
But to understand,

00:20:46.654 --> 00:20:48.415
and now what we do with AI is

00:20:48.455 --> 00:20:50.277
we're able to give it almost a daily

00:20:50.297 --> 00:20:50.938
if we wanted to,

00:20:50.958 --> 00:20:52.519
but we do kind of a weekly report

00:20:52.538 --> 00:20:55.361
card on our operating structure,

00:20:55.840 --> 00:20:57.221
not as a punitive measure,

00:20:57.261 --> 00:20:58.702
but as a monitoring measure.

00:20:58.742 --> 00:20:59.323
Because again,

00:20:59.363 --> 00:21:01.144
people generally like accountability

00:21:01.163 --> 00:21:02.025
within structure.

00:21:02.902 --> 00:21:04.682
or I should say autonomy within structure

00:21:04.701 --> 00:21:05.583
and accountability.

00:21:06.123 --> 00:21:07.843
So some elements of feedback,

00:21:08.103 --> 00:21:10.323
call it sophisticated feedback.

00:21:10.383 --> 00:21:12.943
None of these are exotic, Jimmy.

00:21:12.963 --> 00:21:14.144
They're just harder to collect.

00:21:15.003 --> 00:21:18.224
And management is made to be efficient,

00:21:18.744 --> 00:21:20.265
not to be what it should be,

00:21:20.404 --> 00:21:22.905
which is to have complex adult problems

00:21:23.125 --> 00:21:25.205
that you get to the table and you

00:21:25.266 --> 00:21:27.286
deliberate about and you address.

00:21:27.626 --> 00:21:29.866
When you oversimplify solutions,

00:21:31.188 --> 00:21:33.151
your own desire for efficiency and

00:21:33.230 --> 00:21:35.534
management is contributing to the problem

00:21:35.574 --> 00:21:37.116
of trying to be efficient clinically.

00:21:37.497 --> 00:21:37.738
Right.

00:21:38.818 --> 00:21:39.861
Let's give a forward tease.

00:21:39.901 --> 00:21:41.823
What are you writing about next?

00:21:41.843 --> 00:21:43.125
What comes up next week?

00:21:43.964 --> 00:21:46.807
So this next week we're looking at,

00:21:46.827 --> 00:21:47.669
you know,

00:21:48.169 --> 00:21:50.951
we've done efficiency and now we're going

00:21:50.971 --> 00:21:54.174
to start looking at other concepts around

00:21:54.214 --> 00:21:55.776
efficiency that can be used, you know,

00:21:55.816 --> 00:21:56.817
for the same, you know,

00:21:56.836 --> 00:21:57.897
for the same concept.

00:21:57.917 --> 00:21:59.839
So I've got, you know,

00:21:59.900 --> 00:22:01.260
two or three in the hopper.

00:22:02.041 --> 00:22:02.342
Let me,

00:22:03.002 --> 00:22:05.184
give me a half a second here.

00:22:05.204 --> 00:22:06.205
Then I'll, I'll, I'll,

00:22:08.576 --> 00:22:10.115
We had growth, we had scale,

00:22:10.236 --> 00:22:11.396
we had efficiency.

00:22:12.076 --> 00:22:13.817
And now we're going to look at things

00:22:13.916 --> 00:22:17.857
like teamwork, collaboration.

00:22:17.917 --> 00:22:18.357
Again,

00:22:18.438 --> 00:22:20.597
these are words that are great words,

00:22:20.678 --> 00:22:22.759
but what do they really mean?

00:22:22.798 --> 00:22:24.719
And then where do they show up on

00:22:24.739 --> 00:22:25.459
the scorecard?

00:22:25.519 --> 00:22:26.358
How do you measure them?

00:22:26.439 --> 00:22:28.559
But you could easily go into an

00:22:28.599 --> 00:22:29.299
organization and say,

00:22:29.319 --> 00:22:30.460
there's no collaboration,

00:22:30.480 --> 00:22:31.420
there's no teamwork.

00:22:31.539 --> 00:22:33.901
But you weren't, I wasn't optimized.

00:22:33.941 --> 00:22:35.221
I'm not getting graded on that.

00:22:35.280 --> 00:22:36.560
Therefore, I don't do that.

00:22:37.236 --> 00:22:38.336
No, that's exactly right.

00:22:38.497 --> 00:22:39.217
That's exactly right.

00:22:39.237 --> 00:22:40.038
So we're going to look at some of

00:22:40.057 --> 00:22:41.097
those kinds of things.

00:22:41.858 --> 00:22:43.098
Also going to look at,

00:22:43.159 --> 00:22:45.181
I'll tell you what's been on my mind

00:22:45.280 --> 00:22:45.820
lately,

00:22:46.740 --> 00:22:48.061
because I've had some people write me

00:22:48.102 --> 00:22:48.541
about this.

00:22:48.582 --> 00:22:50.123
And that is, they say, okay,

00:22:50.482 --> 00:22:52.243
our cost per visit has gone up.

00:22:52.305 --> 00:22:53.884
It used to be in a service business

00:22:53.984 --> 00:22:55.566
at forty to forty two percent.

00:22:55.625 --> 00:22:56.946
Now it's above fifty percent.

00:22:56.967 --> 00:22:57.567
So in PT,

00:22:57.586 --> 00:22:59.469
that would be your cost of salary,

00:22:59.509 --> 00:23:00.909
wages and benefits for your physical

00:23:00.949 --> 00:23:02.789
therapist is over fifty percent of your

00:23:02.829 --> 00:23:03.550
visit cost.

00:23:04.030 --> 00:23:04.932
Right.

00:23:04.951 --> 00:23:06.673
There's fifty percent of your net revenue.

00:23:06.693 --> 00:23:07.355
And remember,

00:23:08.476 --> 00:23:10.838
expenses of people are about sixty seven

00:23:10.878 --> 00:23:13.060
percent of your overall expenses and about

00:23:13.121 --> 00:23:14.162
now a little bit over fifty.

00:23:14.442 --> 00:23:16.144
How do we regain margin if we're not

00:23:16.183 --> 00:23:16.704
efficient?

00:23:17.465 --> 00:23:17.645
Right.

00:23:17.665 --> 00:23:18.807
And so that's a problem I'm going to

00:23:18.826 --> 00:23:20.489
be tackling through my writing as well.

00:23:21.183 --> 00:23:21.683
And one of them,

00:23:21.703 --> 00:23:23.384
and part of the solution, by the way,

00:23:23.424 --> 00:23:24.645
is not all that surprising.

00:23:24.685 --> 00:23:26.626
And that is those who manage best manage

00:23:26.686 --> 00:23:26.906
least.

00:23:26.926 --> 00:23:27.807
You got to cut overhead.

00:23:28.347 --> 00:23:30.669
You have to absolutely start learning to

00:23:30.729 --> 00:23:33.830
trust your therapist to make decisions and

00:23:33.851 --> 00:23:36.152
to do things the right way with limited

00:23:36.192 --> 00:23:36.833
guardrails.

00:23:37.553 --> 00:23:39.095
And with the ability to hold them

00:23:39.154 --> 00:23:39.675
accountable.

00:23:40.517 --> 00:23:42.199
So we're going to talk about how to

00:23:42.219 --> 00:23:44.382
regain margin back in the business because

00:23:44.721 --> 00:23:45.762
no margin, no mission.

00:23:45.804 --> 00:23:47.045
So you have to have I'm not a

00:23:47.164 --> 00:23:47.445
you know,

00:23:48.046 --> 00:23:49.548
I do have capitalistic tendencies.

00:23:49.567 --> 00:23:51.230
I'm not against the profitability of all

00:23:51.250 --> 00:23:51.931
these kind of things.

00:23:51.971 --> 00:23:53.673
But how can you do that in a

00:23:53.792 --> 00:23:55.575
way that makes sense without trying to be

00:23:55.816 --> 00:23:56.596
overly efficient?

00:23:57.243 --> 00:23:57.483
All right,

00:23:57.523 --> 00:23:58.545
if this episode made you a little

00:23:58.565 --> 00:23:59.884
uncomfortable, good, that's the point.

00:24:00.625 --> 00:24:01.625
This is one of those ideas that I

00:24:01.666 --> 00:24:03.047
think hides in plain sight.

00:24:03.146 --> 00:24:04.387
It looks like a warm and fuzzy,

00:24:04.448 --> 00:24:06.628
but can actually be weaponized against

00:24:06.689 --> 00:24:06.828
you.

00:24:06.888 --> 00:24:08.931
So if efficiency feels responsible,

00:24:08.971 --> 00:24:09.911
it feels disciplined,

00:24:10.451 --> 00:24:11.872
but if you didn't define it correctly,

00:24:12.092 --> 00:24:13.792
it could quietly dismantle the very thing

00:24:14.114 --> 00:24:15.294
you're trying to build.

00:24:16.234 --> 00:24:18.135
Make sure you check out Larry's Substack.

00:24:18.296 --> 00:24:19.215
It's called The Operator.

00:24:19.276 --> 00:24:20.436
The link is in the show notes.

00:24:20.957 --> 00:24:22.018
Until next week, Larry,

00:24:22.317 --> 00:24:23.479
thanks for digging into efficiency.

00:24:23.499 --> 00:24:24.398
Absolutely.

00:24:24.419 --> 00:24:24.839
Thanks, buddy.

00:24:26.297 --> 00:24:27.298
Hey, Jimmy, a couple things.

00:24:27.557 --> 00:24:28.818
My book is going to be,

00:24:29.500 --> 00:24:31.201
the publisher's dot up.

00:24:31.240 --> 00:24:31.421
I mean,

00:24:31.441 --> 00:24:33.923
they're just in the editing stages of a

00:24:33.962 --> 00:24:34.624
couple things.

00:24:34.663 --> 00:24:36.085
I mean, everything's done.

00:24:36.885 --> 00:24:38.646
So I'm guessing, call it six, eight weeks.

00:24:39.508 --> 00:24:40.848
So I want to do a launch up

00:24:40.888 --> 00:24:41.148
to it.

00:24:41.189 --> 00:24:42.009
It's a second edition.

00:24:42.028 --> 00:24:42.750
It's expanded.