When Scaling Healthcare Quietly Breaks Everything - The Pin Factory Problem

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There's a phrase that shows up in every

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health care boardroom,

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every investor deck and every acquisition

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announcement.

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We're going to scale this.

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And on paper, sounds like the goal.

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More locations, more patients,

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more growth, more reach.

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But if you've been around long enough,

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you've probably seen the opposite happen.

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The thing that made the clinic great

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gets watered down, culture shifts,

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clinicians feel it first and eventually

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the patients do too.

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So today we're digging into a question

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that sounds simple,

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but is actually pretty uncomfortable.

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What if scale is the thing breaking

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healthcare platforms?

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Larry just dropped a piece and talked

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about the pin factory problem,

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and it challenges one of the most accepted

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ideas in business.

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So let's get into it on the operator.

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All right, Larry,

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you open with that phrase.

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We're going to scale this,

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which sounds like we're going to go to

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the moon.

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Let's just we just need some rocket fuel

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and let's and we'll aim up.

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a phrase that everybody nods along to

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because it sounds like it makes sense.

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But at what point did you start realizing

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that that phrase,

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we're going to scale this,

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might actually be dangerous in health

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care?

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Yeah, if I'm being completely candid,

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I started overhearing it.

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And really,

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the moment that I heard complete

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confidence by people who had never run a

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clinic,

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who were either a non-clinician or a

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clinician of an unrelated matter,

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And they were taking this pride in their

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ability to be a professional manager.

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And it's like the gobble speak that

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professional managers have to say.

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And the phrase isn't in and of itself

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wrong.

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It's the certainty, I should say,

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behind it that will absolutely terrify

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you.

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In my experience,

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and we're talking about four decades of

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building and watching these things,

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we're going to scale almost always means

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one of two things.

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Either someone has figured out a genuine

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model worth replicating,

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or someone has raised enough capital that

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we've confused funding for proof.

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In the healthcare world,

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that matters because you're not scaling a

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software product,

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you're scaling human systems.

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So licensed professionals,

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complex patient relationships,

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regulatory environments that change

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constantly,

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reimbursement environments that change

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several times a year,

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and they don't care how good your pitch

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deck is or who is on your board.

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And so the moment that I knew the

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phrase had completely just was dangerous

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is when I started seeing organizations

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celebrate what I would call clinic count,

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pins in the map,

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rather than clinical outcomes.

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We went from twelve to forty seven sites

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in eighteen months.

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We opened X number of De Novo's.

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We did X number of tuck ins and

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everybody applauds.

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Nobody asked, did the model hold?

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Nobody asked what happened to the people

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already working there?

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the numbers go up, the room claps,

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and somewhere in clinic thirty-one,

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a front desk coordinator is drowning and

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nobody on the home office even knows their

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name anymore.

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That's when scale stops being a strategy

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and really becomes more of a story you

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tell your investors.

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What I've tracked in my last two articles

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was where platforms go awry.

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And this fits into it perfectly because

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unlike metrics that really are dangerous,

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the series before it,

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these are really more about concepts that

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also throw you awry.

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Yeah.

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Well, you bring up Adam Smith.

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For people not familiar,

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Adam Smith's Pin Factory.

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basically said the foundation of economies

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of scale might be misunderstood.

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That's what you sort of wrote about.

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Why does this matter for someone running a

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PT clinic, a healthcare platform today?

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Yeah,

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so in my presentations to my company,

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State of the Unions,

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I traditionally would show a picture of a

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potato chip.

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And I would say, you know,

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what is it about that potato chip that

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you need to scale?

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Manufacturing, the size, the flavor,

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the packaging.

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all of those kind of things,

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all of which is very true.

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But you know what happens?

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That potato chip will never talk back to

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you, at least articulate language, right?

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And oftentimes,

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we've been running health care like we've

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been running potato chip factories,

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or in the case of Adam Smith,

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like we've been manufacturing pins and

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we're not.

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Smith's pin factory is the argument for

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specialization in the division of labor.

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Break the task into simple assigned steps

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to a specialist or a subject matter

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expert, watch the output explode,

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and it works brilliantly for pins.

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The problem is that healthcare borrowed

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this logic and it applied it to a

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relationship intensive work.

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In healthcare,

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we're in the relationship business.

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That's the business that we're in.

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The two things that make Smith's model

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work,

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standardization and interchangeability,

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for lack of a better word,

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are exactly the things that erode

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clinical value.

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Now,

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I'm not talking about standardization of

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clinical treatment protocols and the

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science of evidence.

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I'm talking about standardization and

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widget making and the commoditization of

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doctors, PTs, dentists,

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and thinking they're interchangeable parts

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like widget makers.

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PIN doesn't care which worker touched it

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on step four,

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but your patient absolutely cares which

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clinician they saw on visit number three.

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Continuity is the product of a

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relationship business.

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It's the therapeutic mechanism is the

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tacit business of healthcare.

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It's not a sentiment that's actually

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supported by the way by the outcomes.

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So when we apply a factory logic to

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a clinical environment,

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when we start thinking about thorough put,

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interchangeable providers,

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optimization of schedule density,

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we get efficiency metrics that look great,

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but outcomes that quickly and quietly

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deteriorate.

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And that's when we're surprised.

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It's why I think the number one metric

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in health care is how many of your

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new patients are former patients,

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friends and family,

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because it forces you into the

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relationship counting rather than in

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counting.

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Adam Smith, by the way, was a genius.

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He just wasn't writing about PT or dental

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hygiene or primary care.

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And people, you know,

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running a lot of these platforms and this

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private equity emphasis and this board

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emphasis on, oh,

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we got to get to scale.

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We got to run off founders and run

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off people because they're interchangeable

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to the commodity driven widget making PTs

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that we need to put in place.

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And that's what tends to happen.

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And that's been what I've seen in my

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experience.

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Yeah, you make this distinction,

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and maybe the real estate example applies.

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The difference between scaling a

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footprint, pins in a map,

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and scaling a model.

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These two things are not the same,

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but one looks good on a spreadsheet or

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a heat map in a pitch deck.

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So what's the difference?

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Let's draw a line between these two.

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And where do most healthcare platforms get

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that wrong?

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One looks pretty,

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and one's actually profitable and

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productive.

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That's right.

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We tend to,

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the fundamental issue with scale is we

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tend to want to get things more

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comfortable and more easy to measure.

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A footprint is easier to measure.

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Model is hard to verify,

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so guess which one gets tracked.

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And things that are difficult and things

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that don't make it easy

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because by nature they can't be scaled is

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where we make that leap and that mistake.

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Scaling a footprint means opening

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locations, signing leases, hiring staff,

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putting your logo on the door.

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You can count that.

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You can put it on a slide.

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The photography of ribbon cuttings looks

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wonderful, right?

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But scaling a model means that the things

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that worked in one location

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is actually what's working in location.

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And that is all around culture,

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the accountability structure,

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the results oriented work environment that

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you do,

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the day-to-day decisions that you entrust

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people at the level,

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most closest to patient care to make the

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way a manager handles difficult

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conversations on a Tuesday afternoon,

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those things do not lend themselves well

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to photography.

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They're harder to verify.

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And so most platforms operate around

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trying to

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normalized comfort rather than what they

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should be normalizing,

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which is discomfort.

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What happens instead,

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you open location number twelve,

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you staff it,

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you give the manager a manual and a

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login to reporting dashboard,

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and you call that replication.

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What you've actually replicated is the

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container,

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the thing that makes the original work,

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the judgment, the culture,

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the clinical relationships,

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the informal leadership that develops over

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time.

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That takes years to develop,

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and it relies on retention.

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It relies on leadership.

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And you can't franchise it with an

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onboarding checklist.

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You just can't.

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Platforms that go sideways almost always

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expanded faster,

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not necessarily in de novos.

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It could be,

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but it could also be an M&A.

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And their management depth couldn't

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support it.

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Or they ran off their managers because

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they were trying to scale and build for

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an exit, you know,

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and get a better transaction multiple at

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the end.

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You know,

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they built the shell faster than they

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built the soul.

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And by the time the metrics flagged it,

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the damage was already structural.

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And then you get what's happened over the

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last several years,

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which is post-COVID shortages,

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high interest rate, inflation,

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a much more difficult operating

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environment that not only can't scale

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well, is more dependent on retention,

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more dependent on being a destination

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employer with a high culture.

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And that's why you've run into the

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problems that you have in healthcare right

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now.

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And some people might look at some of

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the things that you're writing or hear

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some of this and say that you're

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anti-scale.

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So to be clear,

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you're you're not anti-scale,

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but you're saying some of the things scale

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really well and some don't.

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So what parts of health care businesses

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should be scaled and what parts absolutely

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should not?

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I think if people are paying attention,

00:10:10.711 --> 00:10:12.813
they're saying care decisions and the

00:10:12.854 --> 00:10:14.414
things that the very the humanness.

00:10:14.455 --> 00:10:16.537
But what parts should and should not

00:10:16.856 --> 00:10:17.638
absolutely be scaled?

00:10:18.357 --> 00:10:19.578
No, you're exactly right.

00:10:19.639 --> 00:10:21.719
I'm not anti-scale at all.

00:10:21.739 --> 00:10:24.019
I'm just also not anti-delusional.

00:10:24.179 --> 00:10:25.941
And I think you always have to rethink

00:10:26.701 --> 00:10:28.321
concepts and metrics.

00:10:28.581 --> 00:10:30.841
It's when you become so familiar that

00:10:30.881 --> 00:10:33.383
familiarity bias is when you get ruined.

00:10:33.423 --> 00:10:35.764
So some things in health care absolutely

00:10:35.783 --> 00:10:36.264
scale well.

00:10:36.344 --> 00:10:37.524
I like to think about it as what

00:10:37.544 --> 00:10:40.004
are the non-patient facing things,

00:10:40.024 --> 00:10:41.586
so a technology infrastructure.

00:10:42.105 --> 00:10:43.826
your EMR, your billing system,

00:10:43.846 --> 00:10:45.206
your scheduling platform,

00:10:45.447 --> 00:10:47.227
all your compliance architecture,

00:10:47.248 --> 00:10:48.288
that scales really well.

00:10:49.087 --> 00:10:51.048
Operational protocols, credentialing,

00:10:51.109 --> 00:10:53.409
payer contracting, supply chain,

00:10:53.950 --> 00:10:55.250
training frameworks,

00:10:55.591 --> 00:10:57.370
concepts around training, the curriculum,

00:10:57.390 --> 00:10:58.051
for example,

00:10:58.412 --> 00:11:00.552
clinical standards that you try to deploy

00:11:00.572 --> 00:11:03.493
and make people think about the evidence

00:11:03.972 --> 00:11:04.614
to guide them.

00:11:06.054 --> 00:11:08.438
Those are really genuine leverage points,

00:11:08.759 --> 00:11:11.264
build them well, scale them aggressively.

00:11:11.304 --> 00:11:12.947
But here's what doesn't scale clinical

00:11:12.988 --> 00:11:13.408
judgment,

00:11:13.710 --> 00:11:16.115
the capacity of a therapist or a dentist

00:11:16.154 --> 00:11:17.537
or a physician to read a room,

00:11:18.875 --> 00:11:22.436
to empathize and to bring compassion,

00:11:22.495 --> 00:11:23.716
to adapt to a patient,

00:11:24.076 --> 00:11:26.576
to decide what needs to be flexed today

00:11:26.615 --> 00:11:27.517
or prioritized.

00:11:27.777 --> 00:11:28.657
You could train for it,

00:11:28.677 --> 00:11:31.297
you can systemize it into a workflow and

00:11:31.336 --> 00:11:33.217
call it done, but it's really,

00:11:33.238 --> 00:11:35.097
really difficult to scale because it

00:11:35.138 --> 00:11:36.618
relies on trust,

00:11:37.057 --> 00:11:38.458
which doesn't scale automatically.

00:11:38.499 --> 00:11:40.178
Trust between a patient and their

00:11:40.219 --> 00:11:41.999
clinician, their manager, the frontline,

00:11:42.038 --> 00:11:44.139
how they operate, I have your back,

00:11:44.299 --> 00:11:46.159
all those environmental things does not

00:11:46.200 --> 00:11:46.460
scale.

00:11:46.940 --> 00:11:48.660
It gets built locally over time and

00:11:48.721 --> 00:11:51.121
repeated through interactions in time and

00:11:51.162 --> 00:11:51.841
experience.

00:11:52.581 --> 00:11:54.403
You create an environment and conditions

00:11:54.442 --> 00:11:54.702
for it,

00:11:54.743 --> 00:11:57.183
but you cannot mandate it from the home

00:11:57.244 --> 00:11:57.624
office.

00:11:59.445 --> 00:11:59.884
Culture,

00:12:00.485 --> 00:12:02.405
probably the biggest thing that can't

00:12:02.426 --> 00:12:02.745
change.

00:12:02.765 --> 00:12:04.567
It's the one thing that kills platforms

00:12:04.586 --> 00:12:05.386
when they get it wrong.

00:12:05.927 --> 00:12:07.447
Culture doesn't travel in a memo,

00:12:07.508 --> 00:12:10.048
it travels through behavior and actions.

00:12:11.020 --> 00:12:13.182
How leaders act when it's inconvenient.

00:12:13.241 --> 00:12:15.863
How leaders act when their direct report

00:12:15.962 --> 00:12:18.062
or their supervisor isn't in the room.

00:12:19.104 --> 00:12:21.504
What gets rewarded and what gets tolerated

00:12:21.604 --> 00:12:22.404
in your culture?

00:12:22.524 --> 00:12:23.684
That's the way I think about it.

00:12:23.725 --> 00:12:26.066
When you grow faster than your culture

00:12:26.086 --> 00:12:27.826
transmission mechanism,

00:12:27.865 --> 00:12:29.307
you get a diluted culture.

00:12:30.027 --> 00:12:31.748
And you get a vacuum that fills with

00:12:31.788 --> 00:12:32.989
whatever's locally available.

00:12:33.028 --> 00:12:33.830
Sometimes it's fine.

00:12:33.889 --> 00:12:34.909
Oftentimes it's not.

00:12:34.929 --> 00:12:35.990
And what I see is they bring these

00:12:36.030 --> 00:12:37.951
sort of professional managers in and they

00:12:38.273 --> 00:12:39.092
talk about culture,

00:12:39.113 --> 00:12:40.653
but what their culture is, you know,

00:12:40.754 --> 00:12:43.255
their reward is their stock and when I

00:12:43.275 --> 00:12:44.576
can get an X transaction,

00:12:44.616 --> 00:12:46.238
what my multiples are going to be and

00:12:46.258 --> 00:12:47.678
how much EBITDA I've got.

00:12:48.438 --> 00:12:50.980
And that just blows the doors.

00:12:51.041 --> 00:12:51.520
It is the,

00:12:51.562 --> 00:12:53.082
if you put that in a Petri dish

00:12:53.102 --> 00:12:54.462
with culture, it destroys it.

00:12:55.203 --> 00:12:56.205
Scale the systems,

00:12:56.284 --> 00:12:58.566
but protect the things that make the

00:12:58.686 --> 00:12:59.206
systems,

00:13:00.006 --> 00:13:02.508
worth running yeah that was that phrase

00:13:02.528 --> 00:13:03.847
that you said a minute ago you replicated

00:13:03.888 --> 00:13:06.109
the shell you diluted the soul what does

00:13:06.129 --> 00:13:08.349
that look like what's the Canary in the

00:13:08.389 --> 00:13:10.350
coal mine what are the what are the

00:13:10.610 --> 00:13:12.350
leading indicators as you had said before

00:13:12.690 --> 00:13:13.490
what does it actually look like in a

00:13:13.549 --> 00:13:15.051
clinic when it's happening real time so

00:13:15.110 --> 00:13:16.630
maybe you could put the brakes on it

00:13:17.091 --> 00:13:20.131
you know it's interesting because it's the

00:13:20.172 --> 00:13:22.153
antithesis of it that you would notice but

00:13:22.373 --> 00:13:23.793
when it is going well

00:13:25.071 --> 00:13:27.293
It looks incredibly normal.

00:13:27.533 --> 00:13:28.735
That's the terrifying part.

00:13:28.774 --> 00:13:29.975
The clinic opens on time.

00:13:30.035 --> 00:13:30.996
The software works.

00:13:31.018 --> 00:13:31.999
The signage is right.

00:13:32.019 --> 00:13:34.541
The intake forms are all in their place.

00:13:34.620 --> 00:13:36.322
Someone did their onboard training and

00:13:36.342 --> 00:13:37.203
their orientation.

00:13:37.605 --> 00:13:39.907
There's a manager who passed the sort of

00:13:39.966 --> 00:13:41.389
hiring screen through the talent

00:13:41.428 --> 00:13:42.230
acquisition group.

00:13:43.009 --> 00:13:45.253
And then six months later,

00:13:46.019 --> 00:13:47.639
small things start accumulating.

00:13:48.080 --> 00:13:50.001
The manager's making a decision based on

00:13:50.022 --> 00:13:51.883
what they think corporate wants to hear,

00:13:52.442 --> 00:13:54.063
not what the floor actually needs,

00:13:54.303 --> 00:13:56.024
not what the bell in their head is

00:13:56.065 --> 00:13:57.666
telling them is the right thing to do.

00:13:58.486 --> 00:14:00.748
Staff ask questions and get directed to

00:14:00.788 --> 00:14:02.769
the policy document instead of a person

00:14:02.808 --> 00:14:03.330
who knows them.

00:14:04.129 --> 00:14:06.131
A clinician who's senior has a concern

00:14:06.152 --> 00:14:07.672
about the patient care volume and they

00:14:07.712 --> 00:14:08.153
raise it.

00:14:08.613 --> 00:14:10.573
They get a pleasant non-answer and they

00:14:10.594 --> 00:14:11.554
stop raising it and say,

00:14:11.875 --> 00:14:13.176
we are trying to optimize.

00:14:13.655 --> 00:14:15.236
The front desk coordinator is doing the

00:14:15.277 --> 00:14:16.197
job of three people.

00:14:16.277 --> 00:14:18.277
Nobody at the regional office is paying

00:14:18.317 --> 00:14:20.018
attention to what they really should be

00:14:20.057 --> 00:14:20.258
doing,

00:14:20.298 --> 00:14:22.339
which is how do I take more water

00:14:22.399 --> 00:14:23.918
away from them or take more problems,

00:14:24.058 --> 00:14:25.399
more tasks away for them.

00:14:25.879 --> 00:14:27.480
Patient waiting time, dropout,

00:14:27.539 --> 00:14:29.441
people start not caring.

00:14:31.057 --> 00:14:32.798
And that's the thing that's hard to notice

00:14:32.817 --> 00:14:34.639
because it's an intangible, right?

00:14:35.639 --> 00:14:36.480
Nothing's on fire,

00:14:36.541 --> 00:14:38.503
but the thing that made the location work,

00:14:38.543 --> 00:14:39.342
the trust,

00:14:40.004 --> 00:14:42.125
the clinical confidence that someone in

00:14:42.166 --> 00:14:43.787
leadership has actually understood,

00:14:43.826 --> 00:14:46.028
the vibe, if you will, what's going on,

00:14:46.068 --> 00:14:47.429
the ability of people to just want to

00:14:47.470 --> 00:14:48.390
go there and hang out.

00:14:49.451 --> 00:14:50.913
None of that starts to, you know,

00:14:50.932 --> 00:14:51.693
it all goes awry.

00:14:52.014 --> 00:14:53.414
And it's replaced by process,

00:14:54.014 --> 00:14:55.817
which isn't nothing, but it's not enough.

00:14:55.856 --> 00:14:57.758
And so the soul is the judgment

00:14:58.519 --> 00:15:01.181
that sits above the protocol.

00:15:01.541 --> 00:15:02.621
Would I do this?

00:15:02.861 --> 00:15:04.023
Is it the right thing to do?

00:15:04.043 --> 00:15:05.524
Would my mother be proud of it?

00:15:05.744 --> 00:15:07.405
All of those things start to happen.

00:15:07.446 --> 00:15:10.008
And the shell is the protocol itself.

00:15:10.048 --> 00:15:12.669
You can replicate the protocol in a week.

00:15:12.690 --> 00:15:15.331
The judgment takes years and develops,

00:15:15.672 --> 00:15:17.932
requires mentorship to transmit.

00:15:18.714 --> 00:15:21.176
And really most scaling plans,

00:15:21.196 --> 00:15:23.518
they just don't have a plan for that.

00:15:24.504 --> 00:15:25.826
People will say, and I've heard this,

00:15:25.886 --> 00:15:27.729
especially in physical therapy, right?

00:15:27.749 --> 00:15:28.770
If we don't scale, we die.

00:15:28.811 --> 00:15:30.293
If we're not getting stronger,

00:15:30.332 --> 00:15:31.313
we're atrophying.

00:15:31.894 --> 00:15:34.719
So how should people think about growth if

00:15:35.299 --> 00:15:37.883
more locations or just scale it isn't the

00:15:38.003 --> 00:15:38.303
answer?

00:15:39.697 --> 00:15:42.379
The premise has a ring of truth to

00:15:42.438 --> 00:15:42.559
it.

00:15:42.820 --> 00:15:44.961
And mostly after time,

00:15:45.001 --> 00:15:46.623
people use that as an excuse.

00:15:47.243 --> 00:15:47.703
So yes,

00:15:47.744 --> 00:15:49.826
staying small certainly isn't

00:15:49.946 --> 00:15:50.946
automatically safe.

00:15:51.846 --> 00:15:53.849
Market shift, payer dynamics change,

00:15:53.908 --> 00:15:54.970
labor costs rise.

00:15:55.490 --> 00:15:57.630
technology right now and use of AI and

00:15:57.650 --> 00:15:59.152
all these things creates all kinds of

00:15:59.211 --> 00:16:00.912
pressures, including competitive pressure.

00:16:01.552 --> 00:16:04.114
There are real forces that require growth

00:16:04.153 --> 00:16:04.813
to respond to.

00:16:04.833 --> 00:16:06.615
I'm not going to pretend a ten clinic

00:16:06.634 --> 00:16:08.495
PT company is immune to what's happening

00:16:08.535 --> 00:16:09.556
in the industry right now.

00:16:09.995 --> 00:16:11.996
But scale or die is often deployed as

00:16:12.037 --> 00:16:13.498
a thought terminating cliche.

00:16:14.474 --> 00:16:16.216
It forecloses the actual question,

00:16:16.236 --> 00:16:17.740
which is what kind of growth,

00:16:17.899 --> 00:16:18.942
at what pace,

00:16:19.562 --> 00:16:22.307
and at what preconditions are we going to

00:16:22.347 --> 00:16:22.548
do?

00:16:22.629 --> 00:16:24.191
What are we going to stand for?

00:16:24.893 --> 00:16:25.653
And what are we going to,

00:16:25.673 --> 00:16:26.475
at the end of the day,

00:16:26.535 --> 00:16:27.476
be proud of?

00:16:28.291 --> 00:16:30.552
The answer I'd offer is this,

00:16:31.052 --> 00:16:33.754
grow from strength, not FOMO.

00:16:34.375 --> 00:16:35.796
The platforms that survive,

00:16:35.816 --> 00:16:38.118
and I mean genuinely survive and thrive,

00:16:38.738 --> 00:16:40.899
they not just stay alive long enough for

00:16:40.960 --> 00:16:41.419
recap,

00:16:41.440 --> 00:16:43.301
they're the ones that added locations when

00:16:43.321 --> 00:16:45.042
the existing ones were operationally

00:16:45.082 --> 00:16:45.503
healthy.

00:16:45.923 --> 00:16:47.744
When the management bench was deep enough

00:16:47.783 --> 00:16:50.485
to absorb another site without diluting

00:16:50.525 --> 00:16:51.167
supervision.

00:16:51.767 --> 00:16:53.528
when the culture was strong enough to

00:16:53.568 --> 00:16:55.551
transmit its leadership and action.

00:16:55.890 --> 00:16:57.873
The ones that fail open locations between

00:16:57.953 --> 00:16:59.815
seventeen when locations nine and twelve

00:16:59.855 --> 00:17:01.177
are still struggling because that's what

00:17:01.197 --> 00:17:03.078
their capital had available and that's

00:17:03.099 --> 00:17:04.400
what their board deck said that they were

00:17:04.420 --> 00:17:04.840
going to do.

00:17:04.861 --> 00:17:06.903
That's what their growth committee said.

00:17:07.363 --> 00:17:09.525
Its managers form way too many committees.

00:17:10.185 --> 00:17:12.026
And they try to build consensus through

00:17:12.046 --> 00:17:13.646
committees that nobody knows who's on

00:17:13.666 --> 00:17:13.926
them.

00:17:14.666 --> 00:17:16.887
And the pressure from the board is very

00:17:16.968 --> 00:17:17.307
real.

00:17:17.367 --> 00:17:20.169
And that creates even more dysfunction.

00:17:20.209 --> 00:17:21.288
That's not a strategy.

00:17:21.328 --> 00:17:24.470
That's like a momentum with no steering

00:17:24.490 --> 00:17:24.769
wheel.

00:17:24.809 --> 00:17:27.450
So organic growth during periods when your

00:17:27.490 --> 00:17:29.631
existing platform is under stress is not

00:17:29.651 --> 00:17:30.090
growth.

00:17:30.230 --> 00:17:32.070
It's distraction that looks like ambition.

00:17:32.090 --> 00:17:34.231
What I mean by organic growth there is

00:17:34.271 --> 00:17:36.031
the de novo M&A side,

00:17:36.071 --> 00:17:38.252
not true organic or same store growth.

00:17:39.557 --> 00:17:41.897
You tease part two in this series,

00:17:42.018 --> 00:17:43.557
what actually can't be scaled,

00:17:43.577 --> 00:17:44.919
but I'll ask it now and you can

00:17:44.959 --> 00:17:45.939
give it away a little bit or a

00:17:45.979 --> 00:17:46.199
lot.

00:17:46.618 --> 00:17:47.640
What are the one or two things in

00:17:47.680 --> 00:17:49.319
healthcare that no matter how big you get,

00:17:49.359 --> 00:17:51.560
you have to protect at all costs?

00:17:51.601 --> 00:17:54.682
You've teased a few of those today.

00:17:54.741 --> 00:17:56.303
If I was boiling it down to two,

00:17:56.343 --> 00:17:56.542
Jimmy,

00:17:56.603 --> 00:17:59.124
I would say clinical sovereignty and

00:17:59.203 --> 00:18:01.365
management presence.

00:18:01.424 --> 00:18:02.704
Clinical sovereignty,

00:18:03.085 --> 00:18:04.385
and I'm just starting to play with that

00:18:04.465 --> 00:18:06.266
idea in a more conceptual framework,

00:18:06.286 --> 00:18:07.926
is the idea that the clinician is in

00:18:07.946 --> 00:18:08.227
the room.

00:18:09.005 --> 00:18:10.144
that they're the one actually that

00:18:10.204 --> 00:18:10.925
delivering care.

00:18:10.965 --> 00:18:12.006
They're the priority.

00:18:12.546 --> 00:18:14.926
They're the centric of which the sun,

00:18:15.047 --> 00:18:15.207
you know,

00:18:15.227 --> 00:18:16.626
the center which the sun rolls around.

00:18:16.666 --> 00:18:18.107
And so they have to have meaningful

00:18:18.167 --> 00:18:21.588
authority over clinical decisions and they

00:18:21.628 --> 00:18:23.769
have to have decision rights about things

00:18:23.808 --> 00:18:24.990
that matter over time.

00:18:25.529 --> 00:18:27.391
The moment that authority, you know,

00:18:27.471 --> 00:18:29.730
migrates upward to a regional VP,

00:18:29.770 --> 00:18:30.411
for example,

00:18:30.510 --> 00:18:32.511
optimizing for utilization or a finance

00:18:32.531 --> 00:18:35.593
team, you've broken a value proposition,

00:18:35.653 --> 00:18:36.913
you know, not metaphorically,

00:18:36.992 --> 00:18:38.034
but literally.

00:18:39.469 --> 00:18:41.131
This is an anti-management, by the way.

00:18:41.171 --> 00:18:42.071
It's a pro model.

00:18:43.113 --> 00:18:44.934
The clinical relationship is the asset.

00:18:45.055 --> 00:18:46.596
If you structure your organization in a

00:18:46.616 --> 00:18:48.778
way that erodes clinical judgment in favor

00:18:48.818 --> 00:18:50.401
of productivity or compliance,

00:18:50.842 --> 00:18:53.444
you're liquidating your own equity.

00:18:53.464 --> 00:18:53.625
Come on.

00:18:55.417 --> 00:18:56.298
There we go.

00:18:56.397 --> 00:18:57.258
All right, we'll redo that one.

00:18:57.278 --> 00:18:59.519
So you're teasing part two in this

00:18:59.558 --> 00:19:00.439
two-part series,

00:19:00.499 --> 00:19:02.179
what actually can't be scaled.

00:19:02.558 --> 00:19:03.459
But I'll ask it now,

00:19:03.499 --> 00:19:04.819
if you had to boil it down to

00:19:05.559 --> 00:19:08.180
one or two things in healthcare that off

00:19:08.220 --> 00:19:10.080
limits, no matter how big you get,

00:19:10.520 --> 00:19:12.421
you have to protect at all costs or

00:19:12.560 --> 00:19:12.861
else.

00:19:13.780 --> 00:19:13.921
Yeah,

00:19:13.941 --> 00:19:17.001
the concepts that I'm articulating around

00:19:17.041 --> 00:19:18.221
this are really two,

00:19:18.261 --> 00:19:21.022
and that is clinical sovereignty and

00:19:21.083 --> 00:19:22.583
management presence.

00:19:23.598 --> 00:19:25.701
So clinical sovereignty is this kind of

00:19:25.741 --> 00:19:28.085
concept that you're always mindful of the

00:19:28.144 --> 00:19:29.365
clinician in the room,

00:19:29.445 --> 00:19:31.788
that they are the centerpiece.

00:19:32.509 --> 00:19:34.251
They're the one delivering the care and

00:19:34.291 --> 00:19:36.775
they have to have obviously authority over

00:19:36.855 --> 00:19:37.816
clinical decisions,

00:19:37.856 --> 00:19:39.578
but they have to have decision rights over

00:19:39.638 --> 00:19:41.260
many other decisions day to day.

00:19:41.661 --> 00:19:43.622
You can't scale all decision making.

00:19:43.642 --> 00:19:44.582
When you try to do that,

00:19:45.142 --> 00:19:47.623
you really impugn clinical sovereignty.

00:19:47.663 --> 00:19:49.502
So the moment the authority kind of

00:19:49.544 --> 00:19:52.344
migrates upward to a regional VP,

00:19:52.364 --> 00:19:54.944
they're responsible for making that

00:19:54.984 --> 00:19:58.026
decision for optimizing utilization or you

00:19:58.066 --> 00:19:59.547
defer it to a finance team.

00:20:00.446 --> 00:20:02.548
You really start to break that value

00:20:02.607 --> 00:20:04.548
proposition of this clinical sovereignty,

00:20:05.548 --> 00:20:05.969
literally.

00:20:05.989 --> 00:20:07.368
And so you're now producing a different

00:20:07.409 --> 00:20:08.588
product than your marketing.

00:20:08.690 --> 00:20:10.009
The patients, by the way, feel it.

00:20:11.637 --> 00:20:12.679
You have to have, you know,

00:20:12.739 --> 00:20:15.903
patients want their provider to have this

00:20:16.403 --> 00:20:19.067
aura about them that is not just,

00:20:19.627 --> 00:20:20.888
you know, over clinical,

00:20:20.909 --> 00:20:22.050
but it's almost like they want the

00:20:22.171 --> 00:20:23.332
Superman complex.

00:20:23.392 --> 00:20:25.334
It really reinforces the comfort and the

00:20:25.355 --> 00:20:26.316
trust relationship.

00:20:26.776 --> 00:20:27.536
you know, that you have.

00:20:27.556 --> 00:20:29.576
So you kind of build, you know,

00:20:29.957 --> 00:20:31.396
this pro model around it.

00:20:31.877 --> 00:20:32.817
And I would say the other one is

00:20:32.877 --> 00:20:33.917
management presence.

00:20:34.758 --> 00:20:36.778
And I mean presence in the literal sense,

00:20:36.838 --> 00:20:38.880
leaders who are physically and

00:20:38.940 --> 00:20:41.140
relationship-wise close enough to the

00:20:41.160 --> 00:20:43.320
floor, what's actually happening,

00:20:43.381 --> 00:20:45.422
not dashboards, not regional calls,

00:20:45.862 --> 00:20:47.701
not people who are working remotely.

00:20:47.721 --> 00:20:48.883
What I see in a lot of these

00:20:48.942 --> 00:20:51.042
platforms now is the clinicians are all

00:20:51.083 --> 00:20:52.663
working day-to-day and the clinician is

00:20:53.003 --> 00:20:54.765
and the so-called you know job hopping

00:20:54.825 --> 00:20:56.765
professional managers who've never had any

00:20:56.805 --> 00:20:58.445
success they're working from their home

00:20:58.865 --> 00:21:01.007
and they brag about it and you know

00:21:01.186 --> 00:21:02.886
i think if you looked at one question

00:21:02.906 --> 00:21:05.127
you could have in a healthcare company is

00:21:05.167 --> 00:21:06.827
do people show up in an office every

00:21:06.847 --> 00:21:11.170
day we fundamentally believed in my roles

00:21:11.230 --> 00:21:13.309
that you have to show up because your

00:21:13.349 --> 00:21:15.530
clinicians have to be there every day

00:21:16.391 --> 00:21:17.971
And that is a symbolic thing.

00:21:18.011 --> 00:21:19.212
And so you could almost judge

00:21:19.252 --> 00:21:20.073
organizations.

00:21:20.093 --> 00:21:21.554
And what I see in private equity is

00:21:21.574 --> 00:21:22.534
they default to, well,

00:21:22.594 --> 00:21:24.234
the whole world has gone to remote living.

00:21:24.275 --> 00:21:26.256
So we're going to allow our CEO to

00:21:26.296 --> 00:21:27.016
live in Texas,

00:21:27.115 --> 00:21:28.596
even though their headquarters is in

00:21:28.957 --> 00:21:29.477
Missouri.

00:21:29.997 --> 00:21:30.538
You know,

00:21:30.557 --> 00:21:32.057
those kinds of little things start to

00:21:32.097 --> 00:21:32.459
become,

00:21:32.479 --> 00:21:35.440
you start to normally accept all these

00:21:35.500 --> 00:21:38.461
little no-nos that ruin culture and ruin

00:21:38.601 --> 00:21:40.142
sovereignty and ruin presence.

00:21:41.692 --> 00:21:42.894
I feel like if there's one thing to

00:21:42.933 --> 00:21:44.233
take from this conversation, it's this.

00:21:44.273 --> 00:21:46.154
Scale doesn't necessarily create strength,

00:21:46.194 --> 00:21:49.175
but it might reveal strength or reveal

00:21:49.195 --> 00:21:52.376
where the weakness actually is.

00:21:52.557 --> 00:21:54.218
I think you have to have a mantra

00:21:54.317 --> 00:21:56.818
around or a philosophy around what you're

00:21:56.838 --> 00:21:58.099
going to scale and what you're going to

00:21:58.119 --> 00:21:58.819
say no to.

00:21:58.859 --> 00:22:00.240
Companies are typically not...

00:22:01.319 --> 00:22:03.501
know legendary by what they say yes to

00:22:03.622 --> 00:22:04.982
it's what they say no to i would

00:22:05.022 --> 00:22:06.503
say the same thing about good leaders and

00:22:06.523 --> 00:22:08.825
good managers what do you tolerate what do

00:22:08.845 --> 00:22:10.586
you tolerate is a fundamental cultural

00:22:10.645 --> 00:22:12.948
question culture is the driver of all

00:22:12.988 --> 00:22:14.868
these other things and you know there's a

00:22:14.888 --> 00:22:17.711
really really profound business strategy

00:22:18.171 --> 00:22:20.653
concept that says you know strategies that

00:22:20.673 --> 00:22:24.434
are very very difficult to imitate are a

00:22:24.955 --> 00:22:27.617
source of sustained competitive advantage

00:22:27.637 --> 00:22:29.878
if it's difficult to imitate it's really

00:22:29.939 --> 00:22:30.419
difficult

00:22:31.680 --> 00:22:33.761
For somebody that allows you to sustain a

00:22:33.801 --> 00:22:35.962
very, very flourishing, you know,

00:22:36.784 --> 00:22:39.806
above normal economic performance culture,

00:22:40.405 --> 00:22:42.027
which is really difficult even for a lot

00:22:42.067 --> 00:22:43.848
of organizations to define,

00:22:44.229 --> 00:22:45.890
becomes the source of competitive

00:22:45.930 --> 00:22:47.570
advantage because your others can't

00:22:47.651 --> 00:22:48.271
imitate it.

00:22:48.832 --> 00:22:50.093
And yet at the same time,

00:22:50.353 --> 00:22:52.393
you recognize it in part of how you

00:22:52.453 --> 00:22:53.693
recognize the actions,

00:22:53.733 --> 00:22:55.515
thoughts and the way you behave around

00:22:55.575 --> 00:22:57.915
each other and all your ways you support

00:22:57.935 --> 00:22:58.355
your mission,

00:22:58.375 --> 00:23:00.517
your vision and values is what you're

00:23:00.537 --> 00:23:02.136
willing to tolerate and what you're not

00:23:02.176 --> 00:23:03.637
willing, your ability to say no.

00:23:03.657 --> 00:23:06.479
And I hope organizations try to scale

00:23:06.659 --> 00:23:09.500
everything out under the mistaken belief

00:23:09.539 --> 00:23:10.480
that a humanoid

00:23:11.325 --> 00:23:14.346
is much better than, you know,

00:23:14.365 --> 00:23:15.905
somebody who's able to make decisions.

00:23:15.965 --> 00:23:17.386
I'm seeing the same thing around AI

00:23:17.426 --> 00:23:18.626
decision-making right now.

00:23:18.646 --> 00:23:19.727
I mean, the number one thing,

00:23:19.747 --> 00:23:20.666
this is going to be a subject of

00:23:20.727 --> 00:23:21.548
upcoming articles, Jimmy,

00:23:21.627 --> 00:23:24.407
is the frame or the lens for use

00:23:24.448 --> 00:23:26.888
of AI in an organization of a healthcare

00:23:26.949 --> 00:23:28.249
complexity ought to be,

00:23:29.089 --> 00:23:31.549
what am I doing AI around that allow

00:23:31.589 --> 00:23:34.310
my human, my provider to be more humane?

00:23:36.071 --> 00:23:37.692
that's the framework that you ought to be

00:23:37.752 --> 00:23:39.713
prioritizing in your AI spec,

00:23:40.253 --> 00:23:42.555
not some shiny new object that does a

00:23:42.595 --> 00:23:43.714
little bit of efficiency.

00:23:44.275 --> 00:23:46.036
See these same type of mistakes,

00:23:46.076 --> 00:23:48.557
whether it's a new technology or something

00:23:48.616 --> 00:23:50.938
brand new, like an evolving, like AI,

00:23:51.478 --> 00:23:53.638
all beget the same problems that started

00:23:53.699 --> 00:23:55.859
years ago when you are looking at

00:23:55.880 --> 00:23:57.881
something from the long lens and long

00:23:57.941 --> 00:24:00.261
framework of that clinical, again,

00:24:00.301 --> 00:24:02.042
sovereignty is what I like referring to it

00:24:02.123 --> 00:24:02.222
as.

00:24:02.881 --> 00:24:03.662
Yeah, and in healthcare,

00:24:03.761 --> 00:24:05.605
the product itself is trust and

00:24:05.625 --> 00:24:07.606
relationships and outcomes, as you said,

00:24:07.666 --> 00:24:11.112
and suggesting someone to your own

00:24:11.132 --> 00:24:11.511
grandmother,

00:24:11.573 --> 00:24:13.174
you don't get to hide behind growth for

00:24:13.194 --> 00:24:15.417
very long if those things are eroded.

00:24:15.438 --> 00:24:16.179
That's exactly right.

00:24:16.617 --> 00:24:17.479
So if you're building, leading,

00:24:17.519 --> 00:24:18.799
or thinking about joining a platform,

00:24:18.819 --> 00:24:20.642
the real question isn't how fast can we

00:24:20.701 --> 00:24:20.962
grow?

00:24:21.002 --> 00:24:21.864
It sounds like it's,

00:24:22.403 --> 00:24:25.827
are we building something that deserves to

00:24:25.867 --> 00:24:26.188
grow?

00:24:26.868 --> 00:24:27.769
If you want to go deeper,

00:24:27.829 --> 00:24:30.432
Larry's full article is in his sub stack,

00:24:30.472 --> 00:24:31.053
The Operator.

00:24:31.093 --> 00:24:32.054
It's also linked below.

00:24:32.074 --> 00:24:33.355
And if this hit a little too close

00:24:33.375 --> 00:24:35.458
to home, good.

00:24:35.857 --> 00:24:37.180
That's sort of the point.

00:24:37.259 --> 00:24:38.181
Larry, thanks for the time.

00:24:38.661 --> 00:24:39.201
Thank you, buddy.

00:24:40.808 --> 00:24:41.169
All right,

00:24:41.269 --> 00:24:42.289
did you have time to try a couple

00:24:42.309 --> 00:24:44.092
of those phoners?

00:24:44.471 --> 00:24:45.313
Some of the, like, you know,

00:24:45.373 --> 00:24:47.994
we'll do some mock first time.

00:24:48.654 --> 00:24:51.298
I'll essentially read a question and act

00:24:51.337 --> 00:24:52.157
like someone wrote it in.

00:24:53.179 --> 00:24:53.739
Okay, great.

00:24:53.900 --> 00:24:55.500
I didn't, yeah, I didn't look at those,

00:24:55.540 --> 00:24:58.282
but I... These are all pretty, like,

00:24:58.303 --> 00:24:59.263
we'll start... I don't need to.

00:24:59.344 --> 00:25:01.005
I like talking in separate...

00:25:01.085 --> 00:25:03.366
I like stealing formats from people.

00:25:04.347 --> 00:25:06.048
So there's a woman who's got a massive

00:25:06.088 --> 00:25:07.651
following and all she does is...

00:25:08.615 --> 00:25:11.256
like IEPs and education plans.

00:25:11.695 --> 00:25:13.477
And every year there's another group of

00:25:13.656 --> 00:25:14.998
million moms and dads who are like,

00:25:15.018 --> 00:25:15.778
what does this mean?

00:25:16.077 --> 00:25:17.979
And all she does essentially is her

00:25:18.038 --> 00:25:19.578
assistant just raise her questions.

00:25:19.638 --> 00:25:21.039
And then she just sort of answers for

00:25:21.380 --> 00:25:23.701
five seconds, and then it's,

00:25:23.901 --> 00:25:25.061
that's how she grew her audience.

00:25:25.082 --> 00:25:26.241
No, I love it.

00:25:26.261 --> 00:25:27.122
So we'll treat it like that.

00:25:27.142 --> 00:25:29.163
All right.

00:25:29.182 --> 00:25:30.864
I'm doing two and a half million dollars

00:25:30.884 --> 00:25:33.785
a year, decent margins, but I feel stuck.

00:25:34.384 --> 00:25:36.486
What's the real bottleneck at that level

00:25:36.905 --> 00:25:37.826
that no one talks about?

00:25:38.836 --> 00:25:40.179
Yeah, so in health care,

00:25:40.278 --> 00:25:41.799
there are certain thresholds that you get

00:25:41.839 --> 00:25:45.064
to that you stagnate for a while until

00:25:45.084 --> 00:25:45.924
you break through them.

00:25:46.365 --> 00:25:47.426
And they can start, actually,

00:25:47.446 --> 00:25:48.086
I think in health care,

00:25:48.106 --> 00:25:50.329
they started a half a million in physical

00:25:50.369 --> 00:25:50.851
therapy,

00:25:50.971 --> 00:25:52.673
in part because that's about what the

00:25:52.813 --> 00:25:54.634
average physical therapy clinic does,

00:25:54.654 --> 00:25:55.915
which is about two clinicians,

00:25:55.955 --> 00:25:57.337
each clinician billing about two hundred

00:25:57.377 --> 00:25:57.979
seventy five.

00:25:58.499 --> 00:25:59.560
thousand dollars a year.

00:25:59.941 --> 00:26:01.343
So the way I think about it is

00:26:01.663 --> 00:26:04.246
you get stuck when your number of

00:26:04.286 --> 00:26:06.449
clinicians has reached sort of its max

00:26:06.509 --> 00:26:06.949
revenue.

00:26:07.470 --> 00:26:08.290
What's the breakthrough?

00:26:08.811 --> 00:26:10.012
Then you have to go to a hiring

00:26:10.053 --> 00:26:11.954
system, a talent acquisition process,

00:26:11.976 --> 00:26:13.837
become a destination employer around

00:26:13.877 --> 00:26:16.079
hiring more headcount of that particular,

00:26:16.099 --> 00:26:17.402
whether it be dental hygienists or

00:26:17.442 --> 00:26:17.903
dentists.

00:26:18.403 --> 00:26:19.365
And so that's the way I think of

00:26:19.424 --> 00:26:19.904
breakthroughs.

00:26:20.286 --> 00:26:21.508
We see the same thing in the large

00:26:21.587 --> 00:26:23.190
corporate world when you go from five

00:26:23.250 --> 00:26:24.672
million of EBITDA to twenty.

00:26:25.093 --> 00:26:26.273
In the physical therapy world,

00:26:26.374 --> 00:26:27.977
once a company has gone through a hundred

00:26:28.017 --> 00:26:29.459
million of EBITDA,

00:26:29.479 --> 00:26:30.579
they tend to not only stall,

00:26:30.599 --> 00:26:32.163
they tend to go backwards historically.

00:26:33.400 --> 00:26:34.540
But that's how I think about it is

00:26:34.580 --> 00:26:36.321
the thresholds typically related to

00:26:36.342 --> 00:26:36.801
headcount.

00:26:37.123 --> 00:26:37.923
At that threshold,

00:26:37.942 --> 00:26:39.625
you need a talent acquisition system.

00:26:39.984 --> 00:26:41.306
When you get the next threshold,

00:26:41.346 --> 00:26:43.028
it's probably you need to refine your

00:26:43.107 --> 00:26:44.249
payer, you know,

00:26:44.288 --> 00:26:46.029
contracting and negotiation system.

00:26:46.049 --> 00:26:47.750
When you get to the next one, multi-site,

00:26:47.770 --> 00:26:50.253
you might need to normalize the same EMR,

00:26:50.314 --> 00:26:52.315
credentialing purposes, those.

00:26:52.635 --> 00:26:54.136
You try to bring a little bit of

00:26:54.176 --> 00:26:57.078
scale in the right way once you get

00:26:57.098 --> 00:26:57.900
to certain thresholds.

00:26:59.372 --> 00:26:59.913
Next question.

00:27:00.053 --> 00:27:00.772
It's in hiring.

00:27:00.953 --> 00:27:02.494
I can't tell if I have a hiring

00:27:02.535 --> 00:27:04.856
problem or a culture problem.

00:27:05.258 --> 00:27:06.278
How do I spot the difference?

00:27:07.119 --> 00:27:07.359
Yeah.

00:27:07.400 --> 00:27:10.163
So you have a hiring problem based on

00:27:10.282 --> 00:27:12.845
the percentage of turnover or said

00:27:12.884 --> 00:27:15.186
positively, how many of the therapists,

00:27:15.207 --> 00:27:15.587
doctors,

00:27:15.607 --> 00:27:17.750
whatever you retain at the one year point.

00:27:18.547 --> 00:27:19.807
And I'll tell you why that occurs.

00:27:20.127 --> 00:27:21.368
The dirty little secret,

00:27:21.409 --> 00:27:22.869
whether it be a physical therapist or a

00:27:22.951 --> 00:27:26.232
dentist, is that the average new graduate,

00:27:26.313 --> 00:27:27.554
new dentist, new doctor,

00:27:27.594 --> 00:27:29.296
new therapist stays on their first job

00:27:29.316 --> 00:27:30.056
less than a year.

00:27:30.656 --> 00:27:32.157
So that would imply a hundred percent

00:27:32.198 --> 00:27:33.459
turnover at the end of the year.

00:27:33.499 --> 00:27:33.939
Well, of course,

00:27:33.979 --> 00:27:35.140
nobody's going to have a hundred percent

00:27:35.180 --> 00:27:35.540
turnover.

00:27:36.141 --> 00:27:39.001
And so you have a hiring problem if

00:27:39.041 --> 00:27:40.982
you are finding that the majority of your

00:27:41.022 --> 00:27:42.583
folks, more than fifty percent,

00:27:42.983 --> 00:27:45.364
are leaving the organization within nine

00:27:45.403 --> 00:27:46.684
months or at the end of the year.

00:27:46.924 --> 00:27:47.964
Then you have to look at what are

00:27:47.984 --> 00:27:49.306
the proprietary insights?

00:27:49.385 --> 00:27:50.885
Is it a compensation issue?

00:27:50.986 --> 00:27:52.747
Is it an onboarding or a training or

00:27:52.767 --> 00:27:53.907
a mentorship issue?

00:27:54.448 --> 00:27:56.808
Or is it because they moved and had

00:27:56.848 --> 00:27:57.868
other things going on?

00:27:58.249 --> 00:27:59.730
That will lead you to tell you whether

00:27:59.750 --> 00:28:02.133
you have a hiring problem or a culture

00:28:02.354 --> 00:28:03.894
benefit retention problem.

00:28:03.934 --> 00:28:04.836
They're very, very,

00:28:05.076 --> 00:28:07.538
very different kind of things.

00:28:07.578 --> 00:28:08.319
Okay.

00:28:08.380 --> 00:28:09.201
If you had to be honest,

00:28:09.480 --> 00:28:12.084
when does selling actually make sense?

00:28:12.523 --> 00:28:14.026
And when is it just an ego move?

00:28:15.164 --> 00:28:15.285
Yeah,

00:28:15.305 --> 00:28:17.465
I think there are a number of parameters

00:28:17.625 --> 00:28:19.405
or concepts around when you should sell.

00:28:19.787 --> 00:28:21.946
The first and foremost is we tend to

00:28:21.987 --> 00:28:24.067
in small business, any small business,

00:28:24.107 --> 00:28:25.848
whether it's a dry cleaning store or a

00:28:25.888 --> 00:28:26.949
healthcare platform,

00:28:27.028 --> 00:28:29.190
tend to get over-invested in our own

00:28:29.230 --> 00:28:29.609
business.

00:28:29.670 --> 00:28:31.009
Over-invested meaning that we have the

00:28:31.049 --> 00:28:33.730
majority of our personal worth laid out in

00:28:33.750 --> 00:28:34.491
that investment.

00:28:34.872 --> 00:28:37.573
So a diversification theme and strategy to

00:28:37.593 --> 00:28:37.772
say,

00:28:37.792 --> 00:28:38.893
I need to have some money in the

00:28:38.932 --> 00:28:39.252
market.

00:28:39.272 --> 00:28:40.594
I need to have some money in bonds.

00:28:40.614 --> 00:28:41.614
I need to have some money in my

00:28:41.653 --> 00:28:42.394
real estate portfolio.

00:28:42.413 --> 00:28:43.535
I need to have some money in my

00:28:43.575 --> 00:28:43.894
business.

00:28:44.335 --> 00:28:46.576
If you are overly lopsided at some point

00:28:46.596 --> 00:28:47.476
in your career,

00:28:47.797 --> 00:28:48.997
that would lead you to sell.

00:28:49.596 --> 00:28:53.298
A second reason would be around the area

00:28:53.419 --> 00:28:55.799
of where your dream and your roadmap is.

00:28:56.359 --> 00:28:58.040
Most folks start to sell.

00:28:58.201 --> 00:28:59.082
That's a good reason.

00:28:59.102 --> 00:29:01.643
When you've exercised your ability to

00:29:01.762 --> 00:29:04.203
self-fund or bring in your own financial

00:29:04.263 --> 00:29:06.785
resources to continue to fund your dream

00:29:06.825 --> 00:29:08.605
and your operation or your dream,

00:29:08.925 --> 00:29:11.606
and your vision have reached a plateau and

00:29:11.686 --> 00:29:13.867
you don't have the risk tolerance or the

00:29:13.907 --> 00:29:15.347
profile to go on that would be a

00:29:15.387 --> 00:29:17.449
reason to sell a third would be what

00:29:17.469 --> 00:29:19.730
the market dictates so there are times

00:29:19.769 --> 00:29:22.351
when opportunistically uh you can take

00:29:22.371 --> 00:29:24.230
chips off the table and have that be

00:29:24.250 --> 00:29:25.731
a very very positive thing for you

00:29:25.811 --> 00:29:27.352
especially if it was like reason number

00:29:27.491 --> 00:29:29.093
one where you're able to then diversify

00:29:29.113 --> 00:29:32.134
that portfolio um and then the last piece

00:29:32.193 --> 00:29:34.134
is if it's ruining your life health-wise

00:29:35.372 --> 00:29:37.153
I know so many business owners.

00:29:37.594 --> 00:29:39.556
I used to see in my early career,

00:29:40.215 --> 00:29:42.438
lots of private practice PTs, for example,

00:29:42.478 --> 00:29:43.999
do so much volunteer work in their

00:29:44.019 --> 00:29:45.640
professional association or in their

00:29:45.660 --> 00:29:47.281
community that they

00:29:48.228 --> 00:29:49.209
ignored their business.

00:29:49.868 --> 00:29:51.150
But the flip side of that is also

00:29:51.190 --> 00:29:51.471
true.

00:29:51.530 --> 00:29:53.011
If you were spending so much time in

00:29:53.051 --> 00:29:54.333
your business, you know,

00:29:54.353 --> 00:29:56.153
if your resting heart rate in the morning

00:29:56.193 --> 00:29:58.455
is eighty and your blood pressure is up

00:29:58.496 --> 00:29:59.957
and your values are not good,

00:30:00.377 --> 00:30:01.178
it's not worth it.

00:30:01.577 --> 00:30:01.759
You know,

00:30:01.778 --> 00:30:03.119
there are plenty of opportunities.

00:30:03.160 --> 00:30:04.320
And so you have to look at,

00:30:04.701 --> 00:30:06.321
is it impairing your ability to be a

00:30:06.422 --> 00:30:09.525
parent, a spouse, your health, your,

00:30:09.644 --> 00:30:11.405
you know, your brain,

00:30:11.526 --> 00:30:12.606
all of those kinds of things,

00:30:12.886 --> 00:30:13.607
your mindfulness.

00:30:14.087 --> 00:30:15.107
All of those things matter.

00:30:15.127 --> 00:30:16.249
And if that is the case,

00:30:16.288 --> 00:30:17.828
these things are meant to engage you,

00:30:18.209 --> 00:30:20.730
liberate you, and allow you to flourish,

00:30:21.150 --> 00:30:22.430
not allow you to decline.

00:30:22.470 --> 00:30:23.609
So I would put that in the last

00:30:23.650 --> 00:30:25.711
category.

00:30:26.050 --> 00:30:27.411
Two more.

00:30:29.152 --> 00:30:32.053
What's a metric clinic owners obsess over

00:30:32.472 --> 00:30:33.772
that actually doesn't matter?

00:30:35.039 --> 00:30:36.260
I would say visits.

00:30:37.840 --> 00:30:38.122
Yeah,

00:30:38.142 --> 00:30:39.821
what I see is you can either obsess

00:30:39.882 --> 00:30:41.663
over the amount of new patients you want

00:30:41.982 --> 00:30:44.545
or obsess over the number of visits that

00:30:44.565 --> 00:30:45.025
you have.

00:30:45.144 --> 00:30:45.924
Both are bad.

00:30:46.286 --> 00:30:47.486
Both will lead you to awry.

00:30:47.605 --> 00:30:49.686
If you're only getting visits and not

00:30:49.727 --> 00:30:51.107
throughput of new patients,

00:30:51.587 --> 00:30:53.909
you're going to eventually oversee your

00:30:53.949 --> 00:30:55.210
patients with too many visits.

00:30:55.670 --> 00:30:56.730
The flip side of that is,

00:30:56.750 --> 00:30:57.971
and we've talked about this before,

00:30:58.010 --> 00:30:59.872
if you obsess over new patients,

00:31:00.372 --> 00:31:02.353
you might be not taking advantage of the

00:31:02.393 --> 00:31:03.574
patients that are already in the door.

00:31:04.273 --> 00:31:07.537
So either extreme is neither good.

00:31:07.576 --> 00:31:10.499
And I see most PTs obsess over the

00:31:10.538 --> 00:31:11.220
extremes.

00:31:11.680 --> 00:31:14.342
It's the moderation that usually wins in

00:31:14.383 --> 00:31:15.163
that example.

00:31:15.663 --> 00:31:17.484
Last question is a leadership question.

00:31:17.944 --> 00:31:18.205
Larry,

00:31:18.246 --> 00:31:20.768
what's something you believed as a CEO ten

00:31:20.827 --> 00:31:24.190
years ago that now you think is completely

00:31:24.230 --> 00:31:24.471
wrong?

00:31:25.571 --> 00:31:25.912
Yeah,

00:31:25.932 --> 00:31:30.015
I believed at one point that great

00:31:30.055 --> 00:31:33.117
clinicians can become great managers.

00:31:33.757 --> 00:31:36.278
I also believe that to be true today

00:31:36.378 --> 00:31:37.799
with the exception that I'll go into in

00:31:37.819 --> 00:31:38.240
a second,

00:31:38.259 --> 00:31:40.340
meaning that your skills as a clinician,

00:31:40.721 --> 00:31:43.603
diagnosis, evaluation, people, compassion,

00:31:43.722 --> 00:31:45.325
empathy, high quality connections,

00:31:45.384 --> 00:31:47.506
transport themselves really,

00:31:47.566 --> 00:31:50.307
really well to a manager and to a

00:31:50.347 --> 00:31:50.708
leader.

00:31:51.669 --> 00:31:54.329
Where I was wrong was the assumption that

00:31:54.450 --> 00:31:56.291
every clinician wanted to become a leader

00:31:56.551 --> 00:31:57.251
or a manager.

00:31:58.053 --> 00:31:59.693
And the reality is, guess what?

00:32:00.967 --> 00:32:02.307
you know, PTs, doctors,

00:32:02.407 --> 00:32:03.928
dentists want to become managers,

00:32:04.807 --> 00:32:06.769
a smaller subset than the number there are

00:32:06.808 --> 00:32:07.449
clinicians.

00:32:08.130 --> 00:32:10.309
And so I made mistakes by pushing people

00:32:10.329 --> 00:32:11.790
who are such great clinicians into

00:32:11.830 --> 00:32:13.692
management and leadership when the reality

00:32:13.811 --> 00:32:14.791
is in our models,

00:32:15.211 --> 00:32:17.093
we found that only twenty percent even

00:32:17.192 --> 00:32:17.873
wanted to be.

00:32:18.313 --> 00:32:19.953
So then you take those twenty percent,

00:32:20.013 --> 00:32:21.555
you apply more training, you know,

00:32:21.575 --> 00:32:24.195
more education and more framework around

00:32:24.215 --> 00:32:24.395
them.

00:32:24.875 --> 00:32:26.355
And so the mistake is to think that

00:32:26.476 --> 00:32:27.777
everybody wants to be an owner.

00:32:27.876 --> 00:32:29.136
Everybody wants to be a leader in that

00:32:29.156 --> 00:32:29.438
clinic.

00:32:29.478 --> 00:32:30.478
Everybody wants to be a manager.

00:32:30.538 --> 00:32:30.938
And by the way,

00:32:30.958 --> 00:32:33.181
there's absolutely nothing wrong about the

00:32:33.221 --> 00:32:34.281
eighty percent that want to become

00:32:34.301 --> 00:32:34.821
clinicians.

00:32:35.142 --> 00:32:36.844
They become great mentors.

00:32:36.864 --> 00:32:38.546
They become great leaders of fellowship

00:32:38.586 --> 00:32:39.727
and residency programs.

00:32:39.747 --> 00:32:41.167
They become master clinicians.

00:32:41.429 --> 00:32:42.970
They get all kinds of initials after their

00:32:42.990 --> 00:32:43.431
last name.

00:32:43.451 --> 00:32:45.152
They have brilliant careers and they make

00:32:45.172 --> 00:32:45.613
good money.

00:32:46.614 --> 00:32:46.953
Well done.

00:32:47.153 --> 00:32:47.233
Yeah,

00:32:47.253 --> 00:32:49.316
I think I'll frame these as like ask

00:32:49.355 --> 00:32:51.959
Larry and I'll use these separately from

00:32:52.058 --> 00:32:52.138
from