EP358: 5 Expensive Mistakes Physician Owners Often Make (and How to Fix Them!)

Transcript

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Hey guys, welcome to another edition of Bootstrap MD, the podcast for physician and healthcare entrepreneurs. Before we get into it today, I want to thank some of the doctors that I got to meet recently at the recent Air Physician Academy. Air is a telemedicine physician group that I kind of helped push them along and they've just done some tremendous things and just want to shout out to the doctors that I got to meet and they told me that they listen to the show for years and it helped inspire them. And that makes it all worthwhile. And if you have a physician who's not heard about the podcast, I would really appreciate if you could just share them a link to the podcast, become subscribers, help support our advertisers. That keeps the lights on and helps spread the message about physician entrepreneurship. So, that being said, let's get into it right now.

And I want to start off by telling you a story about a surgeon I used to know. A really good surgeon. He had a busy practice, the kind of numbers that most doctors would be thrilled with. If you saw his books at the end of the year, you'd think, you know what? This doctor has it figured out. And a while back, I invited him to one of my business masterminds. A small room of like physicians who are actually building something, spend a couple days together. And he told me that he couldn't come. And it wasn't because of the money, it wasn't because of the flight. He couldn't come because every time he leaves, his business loses money. Every single time he walks out the door, his practice revenue goes down. So, I want you to sit with that for a few seconds. He couldn't afford to leave his business long enough to learn how to fix his business. And here's the thing, he didn't get there by being lazy, he didn't get there by being bad at medicine. He got there by making a handful of decisions years ago that looked completely reasonable at the time. And that's what I want to talk about today with you. Five decisions five expensive decisions and I watch physicians make every one of these. Heck, I've made most of these myself. And I'll tell you which. And not one of them looks like a mistake on the day you make it. And that's what makes it expensive. So, let's get into this. Five expensive mistakes that I see physician entrepreneurs make time and time again.

Number one, you make yourself easy to price shop. Now, let's start with pricing because it's the one everybody kind of gets wrong first. When I opened my cash-based practice, you know, we did what you're supposed to do. We looked at the competition. We actually did some secret shopping, called around, found out what everybody else was charging and I got a feel of where the market was. Sounds reasonable and that's fine. And that's homework. You should know your market in your area. But that's not pricing, that's just doing research. And if you stop there, you set yourself up for something that'll cost you for years. Cuz here's what happens. You look at what the clinic does down the street charge and maybe you come in a little bit under because you're new and you want to win and being cheaper feels like that's the safe way to do it. What you don't know is you've just entered a race to the bottom and you're not even going to win it because there's always somebody willing to make less money than you. So, let me tell you where we actually lose patients because we don't lose many, but when we do, I know exactly what it is. It's the commodity stuff. In particular, we did GLP-1s because a GLP-1 is a GLP-1. It's the same molecule, the same dose, same everything. And when somebody's shopping that, there's nothing to compare except the number. So, they call four places, they find the cheapest one, they might go to a telemedicine and then they end up going there. And they should. I do the same thing. If two things are identical, the only rational move is to buy the cheaper one. And that's not a patient loyalty problem, that's not a marketing problem, that's you made yourself comparable problem. So, here's the reframe and this is the whole segment. Your price isn't a number, it's a filter. It decides who walks in your door. And if a patient could put you side by side in a spreadsheet with somebody else, you've already lost. It doesn't matter how good you are. The comparison is the loss. So, what do you do about it? You make yourself uncomparable. You can offer the same GLP-1, but now it comes with vitamins. Maybe there's an aesthetic service attached. Maybe there's a check-in schedule that nobody else offer. Now, what exactly is this patient comparing it to? She can't. There's no equivalent product down the street. So, a package isn't a discount. That's what most people think it is. It's a way to bundle stuff and knock money off. It's actually the opposite. A package is how you stop being shoppable. And let me tell you on myself for a second. You want to know how most of my price increases have happened? A vendor raised the price on me, so I raised mine. And that's not pricing, that's just bookkeeping. And I'd bet the same is true for you and for most every doctor listening to this. Nobody sat down on purpose and decided what their services are worth. We all just kind of reacted to a competitor, to a vendor, to a slow month. So, here's your question and I want you to be honest cuz nobody's listening but you. Can a patient get exactly what you sell somewhere else? If the answer is yes, you're not running a practice. You're running a commodity and eventually somebody's going to undercut you and there's nothing you can do about it because you gave them nothing else to look at.

All right. Here's the number two expensive mistake. This is for practice owners. You bought the machine hoping it would fix things. All right. Now, if you're in aesthetics world, this one's going to sting a little. The laser, right? Let me tell you something about my own men's spa. I didn't buy a laser until I hit year seven. So, seven years it was it had been profitable, it had been growing, I had a real team, I had real patients. And we didn't have a laser in the building. And because it was never the thing standing between us and a better month. Nobody was walking out our door because we didn't have one. And then in year seven, I finally bought one. And you want to know how that's gone? It's been okay. I'll be straight with you. It hasn't been a game-changer. It's a good machine. It does what it does. Patients are happy. But the business did not transform magically when that thing showed up. It just changed less than I expected. And I'm telling you that because it's the exact opposite of what you hear at every meeting you get with a sales rep going into you, right? Because what is their goal? Their goal is to sell the laser. And I want you to notice that every single step is reasonable. I can understand revenues. Maybe it's been flat a few months, maybe it's been down. You're worried about the economy. You're not panicking, but you're thinking about it more than you'd like. And then you're at a conference, or a rep comes by, and there's a machine. It's got new technology, real results. And that's the part that gets you. It's a whole new service line, something the clinic down the street doesn't have. It costs 150, maybe 200k, but you know what? They're going to finance it. And the rep walks you through the math. You only need to do six a month to cover it. Right? Six a month, that's nothing, right? So, what do you do? You sign. And the machine shows up, and it goes into room three, and it just sits there. Because here's what nobody's saying at the meeting. The machine isn't going to market itself. It doesn't call your patient list. It doesn't explain to anybody why they need this. It doesn't handle the objection when somebody hears the price. It sits in a room being very expensive, while a patient leaves your account every month, whether you use it or not. So, here's the thing I actually want you to take out of this segment. Equipment doesn't create demand. Equipment serves demand you already have. And that's the whole lesson. A laser is an amplifier. You point it at demand and it multiplies it, which is fantastic if you have demand. But if you multiply zero and you get zero with a payment, it doesn't work as well. And now let me go back to what I told you about my own place because this is the part that I hopefully you'll get. I built the demand first, 7 years of it, and then I bought the machine. I did it in the right order and it still wasn't a game changer. So, imagine you're doing it backwards. All right, there's one more thing here and it's harder to talk about, so let me just say it. Once you've got that note, you you need to use that machine. You have to. And slowly, not on purpose, nobody decides to do this. It starts working its way into what you recommend. It creeps into the conversation. And I'm not saying anything you're doing right now is wrong. I'm saying if you I had a machine, you made a clean clinical decision and you attached a monthly payment to it. But what you've done is you've added pressure. It's pressure that you didn't have the year before. You bought yourself a bias. So, slow month is not an equipment problem. It's almost never equipment problem. It's a demand problem. You don't have enough of the right people who want what you already do and adding a new thing they also aren't asking for doesn't fix it. And now you've got two problems. And I understand the pull. Buying a machine feels like you're doing something. It's decisive. There's a delivery date, there's a truck. Fixing a demand problem is slow and boring and nothing shows up. Before you purchase your next big machine, I want you to ask this question. Do you have a waiting list for the thing that this machine does? If people are asking and you're turning them away, then buy it. That's exactly what the financing is for. It's a great decision. But if you're buying it hoping the demand shows up afterwards, go walk down a room three and look whatever you bought last time. It's probably still in there.

All right, guys. Let's go to number three. The number three most expensive problem I see physician practice owners and entrepreneurs make is you hire too fast. You've heard the mantra, you want to hire slow, fire fast. Everybody's heard it. It's probably been on a poster or a meme somewhere, and I believe in it. I really do. It's how I try to run things. I bring people on. They spend like on a trial basis with me for a few months. Let's see how this actually works. Do I like them? Do they like me? You know, is there a fit? And if it isn't working, I move fast because the person who isn't right doesn't get more right with time. That's the theory. And here's the problem with the theory. You never hire slow when things are calm. Nobody's out there casually interviewing with the schedule light and everything's running fine. You hire when you're drowning. You hire when somebody quits or you're turning away patients or you personally have not had a day off in 5 weeks. So, the mantra doesn't fail on the easy days. It fails on the exact days you need it most. So, let me give you a real one. I needed somebody. I needed them yesterday. So, I moved fast. I skipped the stuff I normally do. I didn't dig deep on the references. I didn't ask the hard questions. I didn't take the time to really understand what this person actually wanted out of their career. And what I found out later was she wasn't really interested in the job. She was interested in becoming an influencer. This role was a stepping stone. That's what she wanted, and honestly, good for her. But it wasn't what I hired her for. It wasn't what I wanted. If I would have known that, I'd have slowed down for two or three more conversations. So, what did hiring fast actually save me? Save me nothing. It cost me. Because when you hire fast, you don't save time. You just move the time. You spend way more of it after they start. Training somebody who's halfway out the door, managing around them. And then eventually having the conversation and starting the whole search over. So, here's the thing about a bad hire that nobody really tells you. It's not the salary. The salary is actually the small part. It's the month of your attention. It's the patient who had a mediocre experience while you were still figuring it out. It's the fact that you were already exhausted. I mean, that's why you probably hired fast, and now you feel even more exhausted. So, your question here is, your last hire, did you interview that person because you were ready, or because you were drowning? Because if it was the second one, you didn't make a hiring decision. You made a panic decision that happened to involve that person.

All right, number four mistake. Expensive mistake that I often see physicians make. The whole thing runs through you. Now, remember the surgeon story that I gave you at the beginning? Remember he couldn't leave? Every time he walked out, his revenue went down. I want you to be really clear about what his problem was. Because it's easy to hear it the story and think, "Well, he's busy, he's in demand. I guess that's a good problem." No, it's not. His problem was that he built a business where every single dollar required him to be physically in a room. Every dollar. So, the business didn't have a revenue engine, it had him. And if the person got sick, if a person's kids graduated, if this person had a parent who needs help across the country, well, guess what? His revenue drops. Now, the good news, and this is why I love telling the story, is I did eventually convince him to come around. He ended up restructuring his practice. He went to a hybrid telemedicine model, changed when he actually had to be present. And he matched what he was making before, but he actually surpassed it. But that's not even the part he talks about. What he talks about is how he got his time back with his family, time back with his friends. He got to enjoy his life again, which is a strange thing to happen to have to say about a successful surgeon, but there it is. And let me tell you where I am on this, because I'm not going to sit in here and pretend I've got it perfect. I've got a lot a week at a time, sometimes a couple weeks out of the month. But the good news is the med spa's revenue doesn't drop when I go, because I'm not the one delivering most of the services. I've hired people who do that. The business generates money whether I'm standing in it or not. Am I completely out of it? No, not yet. It's a work in progress and I still at this point I feel that I still need to be part of it. I can't completely distance myself from it. But am I able to take a week or two weeks or more at a time? I am. And I'm still doing part of it. A practice that needs you to be in a building is not a practice that you can sell. Because when somebody comes to buy your business, whether it's another doctor or most cases when it's venture capital and you know, someday they might come in. They're not buying your revenue, they're buying whether that revenue survives you leaving. That's what they're actually pricing into the model. So the answer is no that you can't leave, then let's be honest about what you own. You don't own a business. You own a job with overhead, a payroll and a lease. And it's a job you can't quit and nobody can buy it from you. So my question to you is this, if you took four weeks off starting Monday, what is going to happen to that revenue? If it drops by more than half, this is probably your biggest problem. It's not your pricing, it's not your marketing, it's this.

The number five biggest mistake that I often see physician entrepreneurs and practice owners make, you bought it at a conference. All right, and this is the one I do first if I could. I was at a conference, I was walking the floor like you do and I actually got to meet the CEO of this company. It was a brand spanking new marketing app. It was something that was going to help bring in patients. All I needed to do was turn it on and field of dreams are going to come. Now, I don't want to name the company, it's out there. If I say it, you'll probably know it. But it doesn't really matter what the company is. They were good, they had sharp people, they brought in another person. I felt a little bit of pressure, you know how that goes in a conference floor. Everybody's excited, there's energy in the room and there's this feeling that if you walk away, you're the guy who missed it. So what did I do? I signed. Put in my credit card and off we went. And we were with them for about a year, but I got tired of them probably 3 or 4 months into it. Why was it a year? Cuz it was a mandatory 1-year contract that I couldn't get out of. The product was good. I want to say that again because if this was a story about getting scammed, I don't think it'd be very useful. But it was a decent product. It just wasn't the right time for us. It was the wrong fit for our practice was and where we were at the moment. And I was locked in for a year and having to find that out. What was the actual mistake made here? Wasn't the product. It wasn't even really the money. It's that I never asked anybody. I could have called two people. I could have called a couple of practice owners I knew who already were using and I guaranteed you one of them would have said, "Mike, I think it's solid, but it works best if you already have X in place. So, do you have that yet?" One phone call now would have made the whole difference. And I didn't make it because I was standing on the conference floor and the rep was there and everybody seemed excited and they got to give me a deal if I wanted it now. You've all heard this, right? Got a good pitch and I felt like this was the moment to decide. So, here's a reframe. Excitement is not information. You know this in medicine. You know, most of us don't change your management of patient because a rep was enthusiastic at a booth. You want the data. You want to know who else is doing it. You want to talk to somebody who's actually used this. But what happens? We often walk 20 ft down the hall. We sign a business contract on vibes. And you can't run your business on vibes. So, the question you need to ask is, what are you paying for right now that you'd have to be talked back into buying today? Go look at your statement. There's usually one. And it's usually got bought in a room exactly like the one I'm describing.

All right. There's a few other things before we finish. If you felt that this was helpful to you, if two or three of these landed harder than others, if you're making the mistakes, it's okay. That's normal. Everybody's maybe done in of these at least. But here's what matters. You can fix one of them at a time. And the order matters more than the fixes. If you go rework your pricing when your real problem is that everyone's running it through, you didn't just waste 6 months, you actually just made it worse. Now, you got higher prices on a business that still can't run without you. So, figuring out which one is actually costing you the most right now, today, that's what I do on one of my strategy sessions. It's one call, you spend an hour with me, you tell me your numbers if you're comfortable, we find the most expensive one, we find them where you're leaking profits, and you'll leave knowing where your next three moves are and what order they're going to go in. I give you a whole blueprint of what you need to do in the next 3 months. So, if that sounds like you, and if you want to work with a physician who's been doing this for over two decades, running a clinic for 13, 14 years, who've advised hundreds of physicians on their own practices, I want you to go to my website, go to bootstrapmd.com, and at the right at the top of the page, there's a button that says book a strategy session or link that says book a strategy session. Go ahead and click that and grab a spot. I do maybe a handful of those a month. But, we've had some tremendous people, and I'll be sharing you their stories very soon. I've helped We've actually turned things around from just treading water to a highly profitable practice.

All right. So, to sum up the five biggest mistakes physician entrepreneurs, practice owners make, number one, making yourself easy to price shop. Two, buying the machine and just hoping. Number three, hiring too fast. Number four, building the practice around yourself. And number five, signing something on a conference floor without you doing your due diligence. All right. So, if you felt that this was helpful to you, go ahead and share. Again, reach out to me at bootstrapmd, and if this is something that you want to dig deeper, I do my one-on-one strategy sessions. I do a few of these a month. You can go ahead and see if there's any openings. We'd love to hear from you on here. And if you if gone through these problems, that's okay. These are things that I've learned over time. I didn't need an MBA. It's really the real school of hard knocks is where I learned, right? You could figure it out. You're a physician. You know what it is, what you need to do. There's two ways to go, again. And if you want my help, I mentioned we do have a strategy session that we're doing. We'd love to help you out and see what we can do for you. Remember, guys, you're going to have your ups and downs as a physician entrepreneur. Do something a little each day to get you closer to your goals and keep moving forward.